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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required). For the
fiscal year ended December 31, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (No Fee Required). For
the transition period from to
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Commission file number 1-8485
MILACRON INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1062125
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4701 Marburg Avenue
Cincinnati, Ohio 45209
(Address of principal executive offices)
Registrant's telephone number including area code
(513) 841-8100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
Common Shares - Par Value $1.00 New York Stock
Exchange, Inc.
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
The aggregate market value of voting stock held by non-
affiliates of the registrant is $679,968,999 at 3/12/99.*
*Voting stock held by officers, directors and principal
holders is not included in the computation. The Company,
however, has not made a determination that such individuals
are "affiliates" within the meaning of Rule 405 under the
Securities Act of 1933.
Number of shares of Common Stock, $1.00 par value,
outstanding as of March 12, 1999: 37,292,033
Documents incorporated by reference:
PART III - Proxy statement, dated March 26, 1999
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MILACRON INC.
1998 FORM 10-K
Table of Contents
PAGE
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PART I
Item 1. Business 3
Executive Officers of the Registrant 18
Item 2. Properties 20
Item 3. Legal Proceedings 20
Item 4. Submission of Matters to a Vote
of Security Holders 20
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters 20
Item 6. Selected Financial Data 21
Item 7. Management's Discussion and Analysis of
Financial Condition and Results
of Operations 23
Item 7A. Qualitative and Quantitative
Disclosures About Market Risk 32
Item 8. Financial Statements and
Supplementary Data 32
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 53
PART III
Item 10. Directors and Executive Officers
of the Registrant 53
Item 11. Executive Compensation 53
Item 12. Security Ownership of Certain
Beneficial Owners and Management 53
Item 13. Certain Relationships and
Related Transactions 53
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 54
Signatures 58
Index to Certain Exhibits and
Financial Statement Schedules 59
Exhibit 11 - Computation of
Per-Share Earnings 60
Exhibit 21 - Subsidiaries of
the Registrant 61
Exhibit 23 - Consent of Experts
and Counsel 63
Exhibit 27 - Financial Data Schedule 64
Schedule II - Valuation and Qualifying
Accounts and Reserves 65
PART I
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Item 1. BUSINESS
GENERAL
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Milacron is a leading global manufacturer of products and
provider of services and technology used to help the world's
leading companies manufacture many of the world's favorite
products. Incorporated in Delaware in 1983, Milacron is a
successor to a business established in 1884. Since our
founding, we had been engaged in the machine tools business.
In recent years, however, our other segments had grown
rapidly, and by 1997 accounted for over 75% of consolidated
sales.
On October 2, 1998, we sold our machine tools segment,
completing an important transformation from a machine tool
company to a manufacturing technologies company and changed
our name from Cincinnati Milacron Inc. to Milacron Inc. The
sale allowed us to concentrate our resources on our two more
profitable and stable business segments: plastics
technologies and cutting process technologies (formerly
industrial products).
Unless noted otherwise in this "Business" section, amounts
refer to continuing operations (i.e., excluding machine
tools).
Our plastics technologies business produces machines and
systems, mold bases, tooling, parts and services for the
three primary processing methods: injection molding, blow
molding and extrusion. Virtually all of our machines are
computer controlled and many of them are sold with advanced
application software. Our cutting process technologies
business includes metalcutting tools, metalworking fluids,
precision grinding wheels, carbide wear parts and industrial
magnets.
From 1993 to 1998, our consolidated sales have grown at a
compound annual rate of 18% from $675 million to $1.5
billion. We have grown our two businesses over the last five
years through strategic acquisitions and internal growth
fueled by accelerated new product and process development
and expanded distribution. In 1998, 53% of sales came from
the plastics technologies segment and 47% came from the
cutting process technologies segment. With the sale of
machine tools, we are less dependent upon the capital goods
market. In 1998, 32% of our sales were generated through the
sale of capital goods, with the remainder being made up of
durable goods, consumables, components and services.
Milacron sells products and provides services to industrial
customers throughout the world. Sales to customers outside
the U.S. increased from $206 million in 1993, representing
30% of total sales, to $672 million in 1998, representing
44% of total sales. Milacron has been successful in
penetrating international markets through acquisitions,
expanded distribution, increased exports, and license and
joint venture agreements. We believe our current geographic
sales balance helps compensate for varying economic cycles
around the world and that our increased presence outside the
U.S. reduces our dependence upon the U.S. economy. (See
"Presence Outside the U.S." in Item 7: Management's
Discussion and Analysis of Financial Condition and Results
of Operations.)
STRATEGIC ACQUISITIONS AND DIVESTITURES
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Milacron continually explores acquisition, divestiture and
consolidation opportunities when we believe such actions can
expand markets, enhance product synergies or improve
earnings potential for the long term. Over the last six
years, we have completed sixteen strategic acquisitions,
which we believe will increase our potential for further
growth.
In our plastics technologies segment, we acquired FM
Maschinenbau GmbH (Ferromatik), an injection molding machine
business, from Kloeckner-Werke AG in 1993; The Fairchild
Corporation's D-M-E business (D-M-E) in 1996; and the Uniloy
plastics machinery division of Johnson Controls, Inc. in
1998.
Ferromatik is one of Europe's leading manufacturers of
plastics injection molding machines. Ferromatik's market
coverage expanded our plastics processing technology base
and product line and enabled us to achieve our objective of
establishing a plastics machinery manufacturing and
distribution base in Germany to serve Europe and other
markets.
D-M-E is the largest U.S. producer of mold bases, components
and supplies for the plastic injection moldmaking industry.
D-M-E serves customers throughout much of the world with ten
major manufacturing facilities, plus several international
joint-venture operations. We believe D-M-E will continue to
enhance our plastics technologies business because it
provides the mold bases, supplies and components used in the
mold apparatus inside an injection molding machine. D-M-E is
the U.S. market leader with a well-established reputation
for high quality.
On September 30, 1998, we acquired the assets of Uniloy for
approximately $190 million, subject to post-closing
adjustments. Uniloy, which is known for its Uniloy brand of
equipment, as well as various other brands, had sales of
over $190 million for its fiscal year ending September 30,
1998, and is one of the world's leading providers of blow
molding machines, as well as structural foam systems,
aftermarket parts, services and molds for blow molding.
In 1998, Milacron made four smaller acquisitions in the
plastics technologies segment. In February, we acquired Wear
Technology, with annual sales of approximately $10 million,
which serves the aftermarket for new and rebuilt screws for
PVC (poly vinyl chloride) extrusion systems. Also in
February, we acquired Northern Supply, with annual sales of
approximately $5 million, a regional catalog distribution
company offering supplies to plastics processors for
injection molding, blow molding and extrusion. In May, we
acquired Autojectors, Inc., a leading U.S. producer of
vertical insert injection molding machinery widely used to
make medical, electrical and automotive components. With
annual sales of approximately $20 million, Autojectors
operates through two manufacturing facilities near Fort
Wayne, Indiana. Finally, in September, we acquired Master
Unit Die Products, Inc., the leading North American
manufacturer of quick-change mold bases for the plastics
industry. Master Unit Die Products has annual sales in
excess of $10 million.
In the last six years, Milacron has also made various
strategic acquisitions in its cutting process technologies
segment: GTE Valenite Corporation (Valenite); Krupp Widia
GmbH (Widia); Talbot Holdings, Ltd. (Talbot); Minnesota
Twist Drill; Data Flute CNC, Inc.; and Werkzeugfabrik GmbH
Konigsee (Werko), all of which have metalcutting and
metalworking tools as their primary product lines. We
believe that Milacron is now the second-largest North
American and third-largest worldwide producer of carbide
metalcutting tool systems.
Valenite was acquired in February, 1993. With principal
operations in the U.S. and Canada, it is a leading producer
of consumable industrial metalcutting tools. Widia was
acquired in February 1995. It is one of the world's leading
producers of industrial metalcutting products. Widia's
strong presence in Europe and India complements Valenite's
strengths in the North American and Japanese markets. Widia
also enhanced our technological base, diversified our
product line and expanded our worldwide sales and
distribution network. In 1995, Milacron implemented an
integration plan to achieve certain synergies between
Valenite and Widia worldwide. In 1998, we began managing
the Valenite and Widia carbide insert and steel insert
holder businesses on a global scale with a combined
management structure and operating with a new brand name,
WidiaValenite. The new organization reinforces our global
strategy and strengthens our worldwide brand identities and
customer focus. With common tooling brands we expect to
benefit from reduced design, manufacturing and marketing
costs, higher inventory turnover, improved capacity
utilization, and simultaneous product introductions around
the world.
We acquired Talbot in July, 1995. Talbot is a major supplier
of round high-speed steel and carbide metalcutting tools,
such as mills and taps, and is the largest U.S. producer of
end mills. These cutting tools, which are not produced by
either Valenite or Widia, are sold through independent
distributors and a direct sales force. The Talbot
acquisition enabled us to increase our product coverage from
approximately 40% to 65% of the types of cutting tools
consumed by the world market.
In September, 1997, we acquired Minnesota Twist Drill, Inc.,
a manufacturer of standard high-speed twist drills which are
sold mainly through private branding. Also, in June, 1997,
we acquired Data Flute CNC, Inc., a manufacturer of high-
performance solid carbide end mills. Both businesses, with
sales of approximately $10 million each, have been
integrated with Talbot.
On December 30, 1998, we acquired Werko, a manufacturer of
high-speed steel drills. Located in eastern Germany, Werko
has annual sales of approximately $25 million. We believe it
is the third largest European producer of high-speed drills.
In addition to our 1998 machine tool divestiture, in
December, 1995 we sold our Electronic Systems Division
(ESD). To maintain control system continuity and
development, Milacron entered into an extensive seven-year
supply contract with the purchaser for electronic controls
used on our machinery. Milacron continues to develop and
maintain our own applications software. The decision to
sell ESD was made to redeploy assets to more strategic
businesses.
PRODUCT DEVELOPMENT AND CAPITAL EXPENDITURES
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As part of our objective to enhance Milacron's growth
potential and global competitiveness, we continue to invest
in research and development and in new capital equipment.
Research and development investment in 1998 totaled $36.7
million, or 2.4% of sales. Research and development expense
totaled $35.6 million in 1997 and $36.4 million in 1996. In
1998, we invested $71.0 million for capital additions in our
continuing operations, primarily to install advanced
technology and increase productive capacity throughout our
operations worldwide. For 1999, we are budgeting an
additional $80 million in capital expenditures.
To enhance our research and development effort, we have
maintained a major program for product development, process
improvement and modernization. This program is named
"Wolfpack" because of its emphasis on teamwork and fierce
competitiveness. The objectives of Wolfpack are to design
and produce new products at world-competitive levels of
quality, performance, efficiency and cost. Substantially all
of Milacron's current plastics technologies machine designs
have been developed using the Wolfpack methodology.
PLASTICS TECHNOLOGIES BUSINESS
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We believe Milacron is the largest and broadest-line U.S.
producer of plastics machinery and one of the three largest
in the world, as well as the largest U.S. producer of mold
bases, standard components and supplies for the moldmaking
industry. In 1998, Milacron's plastics technologies
segment's sales were $796 million, which included only one
quarter's sales for Uniloy. Our plastics technologies
business sells plastics machinery and supplies for
processing plastics to manufacturers in several key
industries, including automotive, construction, electronics,
consumer goods and packaging. We believe Milacron offers
more varieties of machinery to process plastic than any
other U.S. company.
One of our strengths in the plastics machinery business is
that we offer complete lines of machines for three major
plastics processing technologies: injection molding and
systems for extrusion and blow molding. Another strength is
our presence in the durable goods market with the production
of mold bases, standard components and supplies for the
moldmaking industry. Milacron also sells specialty auxiliary
equipment for plastics processing and rebuilds and retrofits
older injection molding equipment manufactured by Milacron
or others.
We distribute all of our plastics machinery products through
a combination of a direct sales force and independent agents
who are geographically spread throughout our key markets. We
sell our mold bases, supplies and components through a
distribution network in the U.S. and Europe and through a
large network of joint venture sales and service offices in
Asia.
Our plastics technologies businesses sell products primarily
in North American and Europe. Approximately 17% of the
group's 1998 sales were to customers located in the eleven
European countries which are participating in a new common
currency, the Euro. To date, the introduction of the Euro
has not caused any material changes in our competitive
position in the plastics industry or the operation of the
business. While the future impact of the Euro is uncertain,
management does not expect the introduction of the Euro to
have a material effect on the business in the future.
PLASTICS TECHNOLOGIES INDUSTRY
The market for plastics machinery and supplies for
processing plastics has grown steadily over the past four
decades. Plastics have continued to replace traditional
materials such as metal, wood, glass and paper in an
increasing number of manufactured products, particularly in
the transportation, construction, housewares, electrical,
and medical industries. Advancements in both the development
of materials, which make plastic products more functional,
and the capabilities of plastics processing equipment have
been major contributors to the steady growth in the plastics
technologies market. In addition, consumer demand for
safer, more convenient and recyclable products has increased
the general demand for plastic products. Like other capital
goods markets, machines within the plastics technologies
market are subject to economic cycles, but historically to a
lesser degree than the machine tools market. In particular,
the market for injection molding machines is driven by resin
prices and production, the consumer economy and the
construction and automotive industries.
Custom molders, which produce a wide variety of components
for many industries, are the single largest group of
plastics technologies buyers. Other customer categories
include the automotive industry, the electrical and
packaging industries, the construction industry,
manufacturers of housewares and appliances, and producers of
consumer goods, toys and medical supplies. Among the factors
that affect the plastics technologies market are the health
of the consumer economy, residential and commercial
construction and automotive production. Because of intense
competition from international plastics technologies
producers, currency exchange rates also have a significant
impact. Fluctuations in the prices of petrochemical feed
stocks for resin and subsequent supply of resin may affect
the businesses of our customers and, in turn, the market for
our products.
Environmental concerns about plastics could slow the growth
of the plastics technologies market. However, some plastics
raw materials suppliers, machinery makers and processors are
developing methods of recycling to address environmental
issues. We believe that environmental concerns have not had
any discernible negative effect on the market to date.
Nevertheless, Milacron, through its membership in The
Society of Plastics Industry (an industry trade association)
and this association's affiliate, The American Plastics
Council, is working with other leading companies within the
plastics industry to address the role of plastics in the
environment.
MILACRON'S PLASTICS TECHNOLOGIES BUSINESS
Milacron's plastics technologies segment consists of five
product lines: injection molding machines; extrusion
systems; blow molding systems; standardized mold bases,
components, supplies for the plastics injection moldmaking
industry; and specialty equipment used in the processing of
plastics.
INJECTION MOLDING. We believe Milacron is the largest U.S.
producer of injection molding machines. Injection molding is
the most common and versatile method of processing plastic,
and it is used to make a wide variety of parts and products
ranging from housewares and consumer goods to medical
supplies and industrial components. Milacron manufactures
many types of injection molding machines, almost all of
which were developed using Wolfpack principles. The
injection molding machine line includes machines powered
conventionally (with hydraulics) as well as ones that are
driven by servo motors (fully electric). Product
standardization (which facilitates part commonality) and the
modernization of our manufacturing facilities and methods,
as well as increased volumes, have enabled us to achieve
significant economies of scale for the production of
injection molding machines. We believe these factors have
enabled Milacron to become the lowest-cost U.S. producer of
these machines.
In November, 1993, Milacron acquired Ferromatik, one of
Europe's leading producers of injection molding machines.
Ferromatik is recognized for its high-end technology,
including multi-color machines, multi-component systems and
other specialty applications. The acquisition included the
Ferromatik lines of hydraulic and electric injection molding
machines and a modern manufacturing facility in
Malterdingen, Germany, as well as Ferromatik's marketing,
sales and service network. The Ferromatik acquisition
expanded our plastics processing technology base and product
line and enabled us to achieve our objective of establishing
a plastics machinery manufacturing and distribution base in
Germany to serve Europe and other markets. Ferromatik has
provided a complementary fit with Milacron's other injection
molding machine businesses.
Milacron has completed a restructuring of Ferromatik
designed to derive synergies between Ferromatik and other
Milacron operations and to improve Ferromatik operations
through implementation of manufacturing techniques and
methods used in our U.S. plastics technologies operations.
The restructuring reduced overall marketing costs through
the consolidation of Milacron's former European marketing
organization into the Ferromatik marketing organization. We
believe that this restructuring has helped, and will
continue to help, us achieve our cost reduction goals in
both marketing and manufacturing.
In May, 1995, Milacron announced the formation of a joint
venture, Cincinnati Milacron Pvt. Ltd. (CMPL), with a group
of individuals experienced in the building of plastics
machinery in Ahmedabad, India. This operation builds
injection molding machines for domestic and world markets.
In 1995, CMPL completed the implementation of its product
introductions and opened sales offices in major cities of
India. In 1998, CMPL completed construction of a new factory
in Ahmedabad to support their operations.
In 1997, Milacron formed a separate elektron technologies
business unit to develop all-electric injection molding
machines for world markets and to build and sell these
machines in North America. Machine designs are transferred
to Ferromatik for manufacture and sale in world markets.
Milacron opened a new manufacturing area for elektron
technologies early in 1998 at our facilities in Cincinnati,
Ohio. This business is charged with promoting our leading-
edge technology in all-electric injection molding, which,
when compared to hydraulic machines, provides lower cost of
operation, better repeatability, and elimination of
environmental issues associated with use of hydraulic oils.
We believe we are extremely well positioned to lead the
industry-wide shift to all-electric technology, which we
believe will take place over the next decade.
In May, 1998, Milacron strengthened its market position in
vertical insert injection molding machinery by acquiring
Autojectors Inc. This Indiana-based operation is one of the
largest producers of these machines used to make complex
components for the medical, electrical and automotive
industries, as well as multi-component items for the sports
and leisure industry.
Autojectors has excellent worldwide brand equity and offers
customers a wide range of machines, a high percentage of
which are customized for end users. Previously, Autojectors
built vertical injection molding machines sold under the
Milacron name.
BLOW MOLDING SYSTEMS. Milacron is a major global player in
blow molding, offering high-volume producers the widest
range of plastic blow molding and structural foam and web
solutions in the industry. Blow molding is the third-largest
and fastest-growing segment of the plastics machinery
market. Milacron manufactures and sells many types of blow
molding machines and structural foam and web systems used to
make a wide variety of products, including rigid consumer
packaging, industrial components, outdoor furniture,
appliance parts, refuse and shipping containers, and toys.
In September, 1998, Milacron acquired Uniloy, which we
believe is the largest worldwide producer of blow molding
systems, from Johnson Controls, Inc. Uniloy serves three
main blow molding markets: HDPE (high density polyethylene)
packaging, PET (polyethylene terephthalate) packaging and
industrial. Uniloy machines produce containers for milk,
juice, water and household chemicals, as well as
pharmaceutical and personal care products; industrial
components ranging from plastic drums and fuel tanks to
plastic pallets; and home items from shutters, screen doors
and furniture to dog houses and camping and boating
equipment. Also known for aftermarket parts, services, molds
and related tooling for blow molding, Uniloy has
manufacturing facilities in North America and Europe.
Uniloy greatly expanded our product offerings with
reciprocating, rotary, shuttle, USB and IBS series for blow
molding containers of all sizes, shapes and tolerances, as
well as structural foam and web series for producing large
industrial, construction and leisure parts. Milacron also
gained a stronger European presence with the acquisition.
EXTRUSION SYSTEMS. Milacron's extrusion systems business
consists of the manufacture, sale and distribution of
individual extruders and systems comprised of multiple units
which are tooled to extrude a specific product in quantity.
Such systems take longer to manufacture than injection
molding machines. Extrusion systems, which are manufactured
in both the U.S. and Austria, include twin-screw extruders
and single-screw extruders. We believe we have a strong
competitive position in each of these lines, and that we are
the largest worldwide maker of twin-screw extruders. Twin-
screw extruders are used to produce continuous-flow products
such as pipe, residential siding, sheet and window frames.
As a result, the business is closely tied to construction
market cycles. Single-screw extruders are used in a variety
of applications and systems such as blow molding, blown-film
and cast-film systems, pipe and profiles and wire and cable
applications. In early 1998, Milacron acquired Wear
Technology, which expands our replacement business for both
new and rebuilt screws.
MOLD BASES AND COMPONENTS. In January, 1996, Milacron
completed the acquisition of D-M-E, which we believe is the
largest U.S. producer of mold bases, standard components and
supplies for the moldmaking industry. D-M-E serves customers
throughout much of the world with ten major manufacturing
facilities and several international joint venture
operations. Like most of our plastics business, D-M-E serves
the largest segment of the market, the injection molding
process. D-M-E complements Milacron's other businesses
because it provides the mold bases, supplies and components
used in the mold apparatus inside injection molding
machines. We believe we are achieving synergies in a number
of areas, including manufacturing process, technology,
marketing and distribution.
In early 1998, Milacron acquired Northern Supply, a regional
catalog distribution company. Northern Supply's business is
complementary to the catalog business of D-M-E and is being
managed by D-M-E.
In October, 1998, Milacron acquired Master Unit Die
Products, which we believe is the leading North American
maker of quick-change insert mold bases for the plastics
industry. These mold bases help OEM and custom molders
achieve quicker production changeovers and lower labor and
tooling costs for multiple mold programs. Master Unit Die
has three frame and insert unit product lines, a quick-
change adapter frame for standard mold bases, and a complete
line of related components and accessories.
SPECIALTY EQUIPMENT. Milacron sells a variety of specialty
equipment used in the processing of plastics products,
including peripheral auxiliary equipment such as material
management systems, heat exchangers and product handling
systems, all of which are manufactured by third parties to
Milacron's specifications. We also rebuild and retrofit
older types of injection molding equipment manufactured by
Milacron and others, refitting them with new controls and
software.
PRODUCTION FACILITIES.
For the plastics technologies segment, Milacron maintains
the following principal production facilities:
FACILITY PRODUCTS
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Abbiategrasso, Italy Blow molding machines.
Ahmedabad, India Injection molding machines.
Batavia, Ohio Injection machines, blow
molding machines and
extrusion systems.
Berlin, Germany (a) Blow molding machines.
Charlevoix, Michigan Mold components.
Cincinnati, Ohio All-electric injection
molding machines.
Florence, Italy Blow molding machines.
Greenville, Michigan (a) Mold base manufacturing.
Hillside, New Jersey Special mold base components.
Lewistown, Pennsylvania Mold components.
Madison Heights, Michigan Mold base components.
Malterdingen, Germany Injection molding machines.
Manchester, Michigan Blow molding machines.
McPherson, Kansas (a) Extrusion screw coating.
Mechelen, Belgium Mold base components.
Melrose Park, Illinois Special mold base components.
Monterey Park, California Special mold base components.
Mt. Orab, Ohio Plastics machinery parts.
Neuenstadt am Kocher, Special mold base components.
Germany
Shinoli, India Mold base components.
Vienna, Austria Extrusion systems.
Windsor, Ontario, Canada Special machinery for mold
bases.
Youngwood, Pennsylvania Steel processing and mold
components.
(a) The Berlin, Germany, Greenville, Michigan and McPherson,
Kansas plants are leased from unrelated third parties.
SALES, MARKETING AND CUSTOMER SERVICE
Milacron maintains a large direct sales force in the U.S.
for its plastics technologies segment, which it supplements
with independent agents. Internationally, Milacron uses both
a direct sales force and independent agents. In the U.S.,
the plastics technologies business uses our Cincinnati,
Ohio, headquarters, as well as sales and service centers in
Allentown, Pennsylvania; Charlotte, North Carolina; Chicago,
Illinois; Dallas, Texas; Detroit, Michigan; Leominster,
Massachusetts; and Los Angeles, California to market our
products and provide customer support and training. Through
our Austrian and Ferromatik subsidiaries, we have an
extensive sales, marketing, service and distribution system
throughout Europe. D-M-E operates through catalog and
telemarketing sales, as well as distribution centers
strategically located in industrial and manufacturing areas
where most injection molding takes place. Distribution is
through a broad network in the U.S. and Europe. In Asia, D-M-
E sells through a large network of joint venture sales and
service offices. In 1997, we formally dedicated a new sales
and marketing office in Singapore and expect to continue to
expand our presence in this region.
COMPETITION
The markets for plastics technologies in North America and
worldwide are highly competitive and are made up of a number
of U.S., European and Asian competitors. We believe Milacron
has a significant share of the U.S. market for the types of
products it produces, and that we are the broadest-line
manufacturer of equipment, supplies and systems for plastics
processing in the world. Our competitors vary in size and
resources; some are larger than us, most are smaller, and
only a few compete in more than one product category.
Principal competitive factors in the plastics technologies
industry are: product features, technology, quality,
performance, reliability, speed of delivery, price and
customer service. The Wolfpack program is designed to
maintain and enhance our competitive position worldwide with
respect to each of these competitive factors. In addition,
we focus on new product development, the containment of
costs, maintaining competitive market pricing and expanded
marketing in order to maintain and grow our presence in the
market.
CUTTING PROCESS TECHNOLOGIES BUSINESS
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Milacron produces five basic types of industrial products:
metalcutting tools, metalworking fluids, precision grinding
wheels, carbide wear parts and industrial magnets, in total
representing over 150,000 different products. In 1998, sales
for our cutting process technologies segment were $718
million. We believe Milacron is a leader in many new product
technologies, including synthetic lubricants, use of
synthetic ceramic abrasives, high-performance cutting tool
coatings, and product designs using computer modeling. Over
75% of this segment's sales are of consumable products and
components. Consumable products are depleted during the
process for which they are used, offering us a continuous
opportunity to sell replacement products to our customers.
We believe that Milacron's cutting process technologies
business complements our plastics machinery businesses,
because the cutting process technologies business is exposed
to less pronounced business cycles.
Our cutting process technologies businesses sell products
primarily in North America, Europe and Asia. Approximately
29% of the group's 1998 sales were to customers located in
the eleven European countries which are participating in a
new common currency, the Euro. To date, the introduction of
the Euro has not caused any material changes in our
competitive position in the industry or the operation of the
business. Management recognizes that we, along with our
competitors, could experience adverse price realization over
the longer term as a result of price transparency associated
with single currency pricing in those countries. While the
future impact of the Euro is uncertain, we do not expect
this to have a material adverse effect on Milacron.
CUTTING PROCESS TECHNOLOGIES INDUSTRY
Milacron's cutting process technologies business
participates in a $35 billion world market, which has
historically grown at a rate approximating the growth of the
world GDP. Milacron's products address approximately $20
billion of this market. We have the heaviest market
penetration in the U.S. and Europe, and in the case of
metalcutting tools, India. We serve customers in the
industrial components and machinery, automotive and
electrical industries, as well as job shops.
MILACRON'S CUTTING PROCESS TECHNOLOGIES BUSINESS
METALCUTTING TOOLS (CARBIDE INSERTS AND ROUND TOOLS).
Metalcutting tools are made of carbide, steel and other
materials and include systems to hold metalcutting tools.
They are used on machine tools for use in a wide variety of
metalcutting operations. We believe that through our
WidiaValenite and Talbot businesses, we are the second-
largest producer of carbide metalcutting tool systems in the
U.S. and the third-largest worldwide. In addition, we
believe that we are also the third-largest producer of round
tools in North America. Valenite manufactures over 38,000
products, including an extensive line of cutting tool
inserts in a wide variety of materials and geometries for
turning, boring, milling and drilling, and standard and
special steel insert holders. Valenite has an excellent
market position in the automotive, off-road vehicle and
truck industries and has strong market positions in carbide
wear parts for metalforming and in products requiring the
wear and corrosion-resistant properties of tungsten carbide.
In February, 1995, Milacron completed the acquisition of
Widia, a major European metalcutting tool maker with key
production facilities in Germany and other Western European
countries. Widia also owns a 51% interest in Widia (India)
Ltd., an Indian public company. Widia's product lines
include tungsten carbide cutting tool inserts and steel
insert holders needed for metalcutting operations, carbide
wear parts used in forming and stamping metal, and both soft
and permanent industrial magnets, used in automotive and
other applications.
In 1995, Milacron initiated a $28 million plan to integrate
certain Valenite and Widia operations, primarily in Europe
and Japan. This plan involved the closing of two
manufacturing plants, the downsizing of another plant, as
well as the consolidation of numerous sales, customer
service and warehousing operations in Europe and Japan. In
total, the execution of the plan has resulted in the
elimination of over 370 production and administrative
personnel. As a result, Milacron is achieving annual cost
savings in excess of $20 million. In addition, a global
management organization was announced in 1998, as described
on page 4.
In July, 1995, we completed the acquisition of Talbot, a
major supplier of round high-speed steel and carbide
metalcutting tools. Talbot is the largest U.S. producer of
end mills, as well as a leading tap producer. With annual
sales at that time of approximately $40 million, Talbot
enabled us to enter the market for round tools, including
high-speed steel and carbide end mills, taps, countersinks,
counterbores and reamers. These products are highly
complementary to the products made by WidiaValenite. We
expect to expand Talbot products into non-U.S. markets.
To further broaden our product coverage in the round
metalworking tooling business, we made two smaller
acquisitions in 1997: Minnesota Twist Drill, Inc., a
manufacturer of standard high-speed twist drills in its
Chisholm, Minnesota plant and Data Flute CNC, Inc., a
manufacturer of high-performance solid carbide end mills
located in Pittsfield, Massachusetts. These acquisitions are
highly complementary to our Valenite and Talbot product
lines and broaden our already extensive product offerings in
the market place. In 1998, we initiated a $15 million
expansion program, which includes a second plant for Data
Flute, a doubling of production capacity at Minnesota Twist
Drill and the expansion of a Talbot facility.
In December 1998, we acquired Werko, the German high-speed
steel drill and tap producer, in order to enter the European
market for round tools. Werko also gives us a full line of
high-speed steel drills in metric sizes and completes our
inch-sized line.
METALWORKING FLUIDS. Metalworking fluids are proprietary
chemical compounds and emulsions used as lubricants,
coolants and corrosion inhibitors in a wide variety of
metalcutting and metalforming operations. Major customers
are producers of precision metal components for many
industries, including manufacturers of automotive power
trains, aerospace engines and bearings, as well as general
metalworking shops. Milacron is a full-line supplier,
offering water-based fluids (synthetics), water-based oil-
bearing fluids (semi-synthetics) and oil-based fluids. Over
the last four years, Milacron expanded its lines of soluble
oils, base oils and synthetic fluids. Milacron has marketed
these products under the Cimcool brand since the mid-1940s.
With the acquisitions of Valenite and Widia, we developed
two additional brands of fluids. In 1994, we introduced the
Valcool brand, which is designed to work with all
metalcutting tools and is being marketed through Valenite's
market channels. In 1996, we introduced the Widacool line of
fluids in Europe, which we are selling through Widia's
market channels.
Milacron also is a leader in providing comprehensive
chemicals management programs. This involves our engineers
working full-time on site at the customer's plant to oversee
and optimize all wet chemistry, including metalworking
fluids, used in the plant.
PRECISION GRINDING WHEELS. Grinding wheels are rotating
tools made of granular abrasive materials bonded together
with vitreous or resin materials. They are used by
manufacturers in the metalworking industry. We believe that
Milacron is now the second-largest U.S. producer of grinding
wheels. Major customers are producers of precision metal
components for many industries, including manufacturers of
automotive power trains, aerospace engines and bearings, as
well as general metalworking machine shops. Milacron designs
and manufactures a wide variety of precision abrasive
grinding wheels, including resin-bonded, vitrified, cubic
boron nitride (CBN), diamond and synthetic ceramic abrasive
types.
We believe, based on tests in our laboratories, as well as
in customer plants, that Milacron's proprietary formulae,
our modern production equipment and our techniques for
manufacturing precision grinding wheels give us advantages
in terms of product quality, lower production costs and
faster deliveries. We believe that Milacron has also
benefited from technologies common to both grinding wheels
and metalcutting fluids. We have lowered our production
costs, in part, by finishing some of our wheels on CNC
(computer numeric control) machines designed and built by
our former machine tool business.
CARBIDE WEAR PARTS. Carbide wear parts represent various
components made from sintered tungsten carbide having
physical properties of extreme hardness, wear resistance and
resistance to chemical activity. Valenite and Widia
manufacture three types of carbide wear parts: tooling
components for metalforming, carbide rod for use in round
tools, and metalforming and general wear parts to resist
frictional wear and chemical activity.
INDUSTRIAL MAGNETS. Widia is a leader in injection molded
plastic bonded magnets. Widia manufactures permanent
industrial magnets and magnetic circuits for automotive,
electrical and other industrial applications, as well as
soft magnets for the telecommunications and construction
industries.
PRODUCTION FACILITIES
For its cutting process technologies segment, Milacron
maintains the following principal production facilities:
FACILITY PRODUCTS
- -------- --------
Altenburg, Germany Taps.
Andrezieux, France Carbide inserts.
Bangalore, India Carbide inserts, steel
insert holders, carbide
wear parts and special
machine tools.
Carlisle, Pennsylvania Resin grinding wheels.
Chisholm, Minnesota High-speed twist drills.
Cincinnati, Ohio Metalworking fluids and
precision grinding
wheels.
Detroit, Michigan
(metro area) (6 plants)(a) Carbide inserts, special
steel products and
gauging systems.
Essen, Germany (3 plants) Carbide inserts, magnets,
metallurgical powders and
carbide rods.
Gainesville, Texas (a) Tool holding systems for
turning, milling and
boring.
Hardenberg,
The Netherlands Carbide wear parts.
Konigsee, Germany (a) High-speed drills and
taps.
Lichtenau, Germany Steel insert holders.
Millersburg, Pennsylvania
(2 plants) End mills, taps and
counterbores.
Nogales, Mexico (a) Resin grinding wheels.
Patancheru, India Rock tools.
Pittsfield, Massachusetts Carbide end mills.
(2 plants)
Sinsheim, Germany (a) Special steel tooling
products.
Tokyo, Japan (a) Carbide inserts and steel
tools.
Valley View, Ohio (a) End mills.
Vlaardingen,
The Netherlands Metalworking fluids.
West Branch, Michigan
(2 plants) Metallurgical powders
and carbide wear parts.
Westminster and Seneca,
South Carolina (6 plants) Carbide and diamond
inserts.
(a) The Gainesville, Texas plant; Konigsee, Germany plant;
Nogales, Mexico plant; Tokyo, Japan plant; Sinsheim, Germany
plant; Valley View, Ohio plant; and three plants in the
Detroit, Michigan (metro area) are leased from unrelated
third parties.
SALES, MARKETING AND CUSTOMER SERVICE
Our cutting process technologies business generally sells
its products under multiple brands through parallel market
channels, using direct sales, industrial distributors,
agents and manufacturers' representatives, as well as
industrial catalog sales. Most of our sales are of products
that we manufacture and sell under company-owned brands. In
addition, we sell our products under the brand names of
other companies through their own market channels. We also
use Milacron brand names to sell products that are made by
other companies.
At the beginning of 1999, we launched our "Milpro"
initiative to reach a potentially large market: 117,000
small U.S. metalworking job shops. "Milpro" includes "MILPRO
Mobile Tool Cribs," a planned nationwide network of truck
routes to provide delivery of on-site sales and value-added
services. We also introduced a business-to-business
commercial web site for heavy industry. We believe that the
"Milpro" initiatives could begin to make significant revenue
contributions within three to five years.
COMPETITION
We have many competitors for metalcutting tools but only two
have higher worldwide sales. Our main global competitors in
our metalworking fluids business are large petrochemical
companies and smaller companies specializing in similar
fluids. There are a few large competitors in the U.S.
grinding wheel market, one of which is significantly larger
than Milacron. Principal competitive factors in these
markets include market coverage, technology, performance,
delivery, price and customer service.
PATENTS
- -------
Milacron holds a number of patents, none of which is
material to any business segment.
EMPLOYEES
- ---------
Excluding machine tools, Milacron employed an average of
10,993 people in 1998, of whom 5,576 were employed outside
the U.S. As of year-end 1998, we employed 11,855 people.
Backlog
- -------
The backlog of unfilled orders was $247 million at the end
of 1998 and $196 million at the end of 1997. The backlog at
year-end 1998, substantially all of which is expected to be
delivered in 1999, is believed to be firm.
SEGMENT INFORMATION
- -------------------
Financial data for the past three years for the company's
business segments are shown in the following tables.
<TABLE>
(In millions) Fiscal Year
-------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Sales
- -----
Plastics technologies $ 796.4 $ 735.7 $ 662.4
Cutting process technologies 718.3 703.0 695.5
-------- -------- --------
Total sales $1,514.7 $1,438.7 $1,357.9
======== ======== ========
Backlog of unfilled orders
- --------------------------
Plastics technologies $ 142.8 $ 89.5 $ 105.6
Cutting process technologies 103.6 106.2 107.0
-------- -------- --------
Total backlog $ 246.4 $ 195.7 $ 212.6
======== ======== ========
Operating earnings
- ------------------
Plastics technologies $ 80.3 $ 59.7 $ 59.2
Cutting process technologies 82.2 81.2 73.7
Corporate expenses (18.9) (17.2) (16.8)
Other unallocated expenses (a) (5.7) (5.8) (5.7)
-------- -------- --------
Operating earnings 137.9 117.9 110.4
Interest expense - net (30.7) (27.5) (30.9)
-------- -------- --------
Earnings from continuing
Operations before income
taxes and minority
shareholders'interests $ 107.2 $ 90.4 $ 79.5
======== ======== ========
Assets
- ------
Plastics technologies $ 882.8 $ 587.2 $ 591.8
Cutting process technologies 547.2 476.8 452.0
1,430.0 1,064.0 1,043.8
-------- -------- --------
Discontinued machine
tools segment - 246.6 233.0
Cash and cash equivalents 48.9 25.7 27.8
Receivables sold (63.1) (75.0) (75.0)
Deferred income taxes 55.0 54.4 35.1
Unallocated corporate and other 86.3 76.8 71.6
-------- -------- --------
Total assets $1,557.1 $1,392.5 $1,336.3
======== ======== ========
Capital expenditures
- --------------------
Plastics technologies $ 29.6 $ 26.0 $ 19.9
Cutting process technologies 38.8 33.9 27.9
Unallocated corporate 2.4 2.0 2.3
-------- -------- --------
70.8 61.9 50.1
Discontinued machine tools
segment 10.6 17.6 15.1
-------- -------- --------
Total capital expenditures $ 81.4 $ 79.5 $ 65.2
======== ======== ========
Depreciation and amortization
- -----------------------------
Plastics technologies $ 26.6 $ 21.9 $ 20.3
Cutting process technologies 23.3 23.0 23.0
Unallocated corporate 1.5 2.9 2.9
-------- -------- --------
51.4 47.8 46.2
Discontinued machine tools
segment 6.0 5.9 4.7
-------- -------- --------
Total depreciation
and amortization $ 57.4 $ 53.7 $ 50.9
======== ======== ========
</TABLE>
(a) Includes financing costs related to the sale of
accounts receivable.
Geographic Information
- ----------------------
The following table summarizes the company's U.S. and non-
U.S. operations.
Sales of U.S. operations include export sales of $180.5
million in 1998, $168.0 million in 1997, and $141.1 million in 1996.
Total sales of the company's U.S. and non-U.S. operations to
unaffiliated customers outside the U.S. were $672.3 million,
$678.1 million, and $689.3 million in 1998, 1997 and 1996,
respectively.
<TABLE>
Fiscal Year
----------------------------
(In millions) 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Sales (a)
- --------
United States $ 912.7 $ 845.3 $ 719.2
Non-U.S. operations
Germany 235.6 219.5 249.3
Other western Europe 252.2 248.2 271.6
Asia 74.5 87.1 82.2
Other 39.7 38.6 35.6
-------- -------- --------
Total sales $1,514.7 $1,438.7 $1,357.9
======== ======== ========
Noncurrent assets
- -----------------
United States $ 542.3 $ 377.7 $ 347.8
Non-U.S. operations
Germany 108.6 80.7 92.6
Other western Europe 117.9 78.9 82.7
Asia 18.4 17.8 15.1
Other 7.5 6.1 5.3
Discontinued operations - 64.4 55.5
-------- -------- --------
Total noncurrent assets $ 794.7 $ 625.6 $599.0
======== ======== ========
</TABLE>
(a) Sales are attributed to specific countries or geographic
areas based on the origin of the shipment.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is included in accordance with the
provisions for Part III, Item 10:
<TABLE>
Positions Held During
Name and Age Position Last Five Years
- ------------ -------- --------------------
<C> <C> <C>
Daniel J. Meyer Chairman, President Elected Chairman and Chief
(62) And Chief Executive Executive Officer in
Officer, Director November, 1991. During 1997,
was also elected President of
the company. Has served as
Director since 1985. Also,
is a member of the Executive
Committee.
Ronald D. Brown Senior Vice President Elected Senior Vice President -
(45) Finance and Finance and Administration
Administration and and Chief Financial Officer
Chief Financial in 1998. Prior thereto was
Officer Vice President - Finance and
Administration and Chief
Financial Officer from
1997 and Vice President -
Finance and Chief Financial
Officer from 1993.
Harold J. Faig Group Vice President- Elected Group Vice
(50) Plastics Technologies President - Plastics
Technologies in February, 1994.
Prior thereto was Vice
President - Injection Molding
from 1990.
Alan L. Shaffer (a) Group Vice President- Elected Group Vice
(48) Industrial Products President - Industrial
Products in 1986.
James R. Christie (a) Vice President- Elected Vice President -
(53) Industrial Products Industrial Products in 1997.
Has served as President of
Valenite since 1993.
William J. Gruber Vice President - Elected Vice President -
(45) U.S. Plastics U.S. Plastics Technologies
Technologies in 1996. Prior thereto was
Manager of U.S. Plastics
Technologies from 1995 and
General Manager, Products
Division from 1984.
Barbara G. Kasting Vice President- Elected Vice President -
(46) Human Resources Human Resources in 1997.
Prior thereto was Assistant
Treasurer from 1995, Director
of Treasury Operations from
1994, and Corporate Quality
Manager from 1992.
Richard L. Kegg (b) Vice President - Elected Vice President -
(63) Technology and Technology and
Manufacturing Manufacturing
Development Development in 1993.
Robert P. Lienesch (c) Vice President Elected Vice President and
(53) and Treasurer Treasurer in 1998. Prior
thereto was Controller from
1989.
James M. Stergiopoulos Vice President- Elected Vice President -
(60) Plastics Plastics Technologies Europe
Technologies, Europe in 1995. Prior thereto was
Director, Plastics Technologies
Europe from 1994 and General
Manager, Milacron
Austria from 1987.
Wayne F. Taylor (d) Vice President- Elected Vice President -
(55) General Counsel and General Counsel and
Secretary Secretary in 1990.
Jerome L. Fedders (e) Controller Elected Controller in 1998.
(55) Prior thereto was Group
Controller, Plastics
Technologies from 1994.
</TABLE>
Notes:
Parenthetical figure below name of individual indicates age
at most recent birthday prior to December 31, 1998.
There are no family relationships among the executive
officers of the Registrant.
Officers of the company are elected each year by the Board
of Directors.
(a) In March, 1999, the company changed the name of its
industrial products segment to the cutting process
technologies segment. In connection with this change, Alan
L. Shaffer's title was changed to Group Vice President -
Cutting Process Technologies and James R. Christie's title
was changed to Vice President - Cutting Tools.
(b) Richard L. Kegg has announced his intention to retire
on April 30, 1999.
(c) Robert P. Lienesch succeeds Kenneth W. Mueller who
retired from the company as Treasurer and Assistant
Secretary on April 30, 1998.
(d) Wayne F. Taylor retired on February 28, 1999. Hugh C.
O'Donnell was elected Vice President, General Counsel and
Secretary effective March 1, 1999.
(e) Jerome L. Fedders succeeds Robert P. Lienesch who was
elected Vice President and Treasurer effective April 30,
1998.
ITEM 2. PROPERTIES
As part of the sale of the machine tools business, we sold
our corporate headquarters building. We plan to move this
summer into a new headquarters building which is currently
under construction. The facility, which will be leased from
a third party, is located approximately 2 miles north of
downtown Cincinnati, Ohio.
The remaining information required by Item 2 is included in
Part I on pages 9 and 13 of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
In the opinion of management and counsel, there are no
material pending legal proceedings to which the company or
any of its subsidiaries is a party or of which any of its
property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 1998.
PART II
- -------
ITEM. 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The company's common shares are listed on the New York Stock
Exchange. Such shares are also traded on the Cincinnati
Stock Exchange, Boston Stock Exchange, Pacific Stock
Exchange, Philadelphia Stock Exchange and Midwest Stock
Exchange, with options traded on the Philadelphia Stock
Exchange. As of March 12, 1999, there were approximately
5,470 holders of record of the company's common shares. The
company's preferred shares are not actively traded.
The table below shows the price range of the common shares
for 1997 and 1998, as reported by the New York Stock
Exchange. Cash dividends of $.09 per common share were paid
for the first two quarters of 1997. A cash dividend of $.12
per common share was paid for the third and fourth quarters
of 1997 and for each quarter of 1998. In addition, cash
dividends of $1.00 per preferred share were paid in each
quarter of 1997 and 1998.
<TABLE>
COMMON STOCK
PRICE RANGE
--------- ------
<S> <C> <C>
FISCAL 1997, QUARTER ENDED HIGH LOW
------ ------
March 22 $23.63 $19.13
June 14 25.50 17.88
October 4 28.38 23.88
December 27 29.88 24.38
FISCAL 1998, QUARTER ENDED
March 31 $32.06 $23.19
June 30 33.75 23.38
September 30 24.88 15.13
December 31 23.31 14.50
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
(Dollars in millions, except per-share amounts)
1998 1997 1996 1995 1994
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
- ---------------------
Sales from continuing
operations $1,514.7 $1,438.7 $1,357.9 $1,240.3 $858.6
Cost of products sold 1,092.3 1,051.5 994.5 909.2 642.3
-------- -------- -------- -------- ------
Manufacturing margins 422.4 387.2 363.4 331.1 216.3
Other costs and expenses
Selling and
Administrative 271.6 259.9 250.3 226.4 152.2
Integration charge - - - 9.8 (a) -
Gain (loss) on
disposition of
business - - - (5.0)(b) -
Other-net (c) 12.9 9.4 2.7 10.7 5.1
-------- -------- -------- -------- ------
Total other costs
and expenses 284.5 269.3 253.0 241.9 157.3
-------- -------- -------- -------- ------
Operating earnings 137.9 117.9 110.4 89.2 59.0
Interest
Income 2.5 2.4 4.8 3.2 2.6
Expense (c) (33.2) (29.9) (35.7) (29.4) (19.4)
-------- -------- -------- -------- ------
Interest-net (30.7) (27.5) (30.9) (26.2) (16.8)
-------- -------- -------- -------- ------
Earnings from continuing
operations before income taxes
and minority shareholders'
interests 107.2 90.4 79.5 63.0 42.2
Provision for income
taxes 28.1 17.0 22.6 15.3 11.0
-------- -------- -------- --------- -------
Earnings from continuing
operations before minority
shareholders' interests 79.1 73.4 56.9 47.7 31.2
Minority shareholders'
interests in earnings of
subsidiaries (c) 3.7 4.3 3.1 2.3 -
-------- -------- -------- --------- -------
Earnings from continuing
operations 75.4 69.1 53.8 45.4 31.2
Discontinued operations
net of income taxes
Earnings from
operations 1.3 11.5 12.5 60.2 (d) 6.5
Loss on sale (35.2) - - - -
-------- -------- --------- --------- -------
Total discontinued
operations (33.9) 11.5 12.5 60.2 6.5
-------- -------- --------- --------- -------
Net earnings $ 41.5 $ 80.6 $ 66.3 105.6 37.7
======== ======== ======== ========= =======
Earnings per common share
Basic
Continuing operations $ 1.93 $ 1.74 $ 1.42 $ 1.33 $ .93 Discontinued operations (.87) .29
-------- -------- -------- --------- -------
Net earnings $ 1.06 $ 2.03 $ 1.75 $ 3.11 $ 1.12
======== ========= ======== ========= =======
Diluted
Continuing operations $ 1.91 $ 1.72 $ 1.41 $ 1.32 $ .92
Discontinued operations (.86) .29 .33 $ 1.75 $ .19
-------- -------- -------- -------- -------
Net earnings $ 1.05 $ 2.01 $ 1.74 $ 3.07 $ 1.11
======== ========= ======== ======== =======
</TABLE>
Note: The amounts presented above for years 1994 through
1997 have been restated to reflect the presentation of the
company's machine tools segment as a discontinued operation.
The segment was sold on October 2, 1998.
See notes (a) - (d) on page 22.
<TABLE>
(Dollars in millions, except employees and per-share amounts)
1998 1997 1996 1995 1994
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Financial Position
at Year End
- ------------------
Working capital $ 179.6 $ 325.7 $ 318.3 $ 392.7 $151.4
Property, plant and
equipment-net 350.9 343.1 319.1 265.5 198.8
Total assets 1,557.1 1,392.5 1,336.3 1,173.7 787.6
Long-term debt 335.7 304.2 301.9 332.2 143.0
Total debt 520.9 371.7 372.8 355.8 226.9
Shareholders' equity 476.6 471.9 446.2 270.7 157.8
Per common share 12.45 11.77 11.06 7.72 4.50
Other Data
- ----------
Dividends paid to common
shareholders 18.8 16.8 13.4 12.3 12.2 Per common share .48 .42
Capital expenditures 81.4 79.5 65.2 52.3 43.0
Depreciation and
amortization 57.4 53.7 50.9 43.6 28.6
Backlog of unfilled
orders at year-end (e) 246.5 195.6 212.2 226.7 169.7
Employees (average) (e) 10,993 10,450 10,466 8,840 5,812
</TABLE>
(a) Represents a charge of $9.8 million ($7.8 million after tax) for the
integration of certain Widia and Valenite operations.
(b) Represents a gain of $5.0 million ($4.0 million after tax) on the sale of
the company's American Mine Tool business.
(c) Beginning in 1998, expense for minority shareholders' interests in the
earnings of subsidiaries, which was previously included as a component of
operating earnings, is presented as a separate component of earnings from
continuing operations after income taxes. Also beginning in 1998,
amortization expense related to deferred debt issuance costs has been
reclassified from other costs and expenses-net to interest expense. Amounts
for prior years have been reclassified to conform to the 1998
presentation.
(d) Earnings from discontinued operations includes a gain of $66.0 million
($52.4 million after tax) on the sale of the company's Electronic Systems
Division.
(e) Restated to exclude discontinued machine tools segment.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Milacron operates in two business segments: plastics
technologies and cutting process technologies (formerly
industrial products).
DISCONTINUED OPERATIONS
On October 2, 1998, we completed the sale of our machine
tools group (MTG) for proceeds of approximately $185
million, subject to post-closing adjustments. The after-tax
loss on the sale of $35.2 million ($45.9 million before
income taxes), or $.90 per share, was recorded in the third
quarter of 1998. MTG consists largely of aerospace systems
and stand-alone machinery for general metalworking. All
comparisons of "results of operations" in this Management's
Discussion and Analysis have been restated to exclude the
historical operations of MTG.
COMPARABILITY OF FINANCIAL STATEMENTS
Beginning in the first quarter of 1998, Milacron changed its
fiscal year from a 52-53 week year ending on the Saturday
closest to December 31st to a calendar year ending on
December 31st of each year. In 1998, the transition year,
the company's fiscal year began December 28, 1997 and ended
on December 31, 1998. The change did not have a material
effect on financial condition, results of operations, or
cash flows for the year 1998.
RECLASSIFICATION OF FINANCIAL STATEMENT
Beginning in 1998, expense for minority shareholders'
interests in the earnings of subsidiaries, which was
previously included as a component of operating earnings in
the Consolidated Statement of Earnings, is presented as a
separate component of earnings from continuing operations
after income taxes. Also beginning in 1998, amortization
expense related to deferred debt issuance costs has been
reclassified from other costs and expenses-net to interest
expense. Amounts for prior years have been reclassified to
conform to the 1998 presentations.
ACQUISITIONS
In February, 1998, we acquired Wear Technology and Northern
Supply. Wear Technology is a McPherson, Kansas company with
annual sales of approximately $10 million which primarily
serves the aftermarket for new and rebuilt twin screws for
extrusion systems. Northern Supply, with annual sales of
approximately $5 million, offers supplies to plastics
processors for injection molding, blow molding and extrusion
through distribution centers in Minneapolis, Minnesota and
Charlotte, North Carolina.
In May, 1998, Milacron acquired Autojectors, Inc., a leading
U.S. producer of vertical insert injection molding machinery
widely used to make medical, electrical and automotive
components. With annual sales of approximately $20 million,
Autojectors operates through two manufacturing facilities
near Fort Wayne, Indiana.
Effective September 30, 1998, Milacron acquired Master Unit
Die Products, Inc., a leading North American manufacturer of
quick-change mold bases for the plastics industry. Master
Unit Die Products has annual sales in excess of $10 million.
Also on September 30, 1998, Milacron acquired the assets of
Uniloy, the plastics machinery division of Johnson Controls,
Inc., for approximately $190 million, subject to post-
closing adjustments. Uniloy, which is known for its Uniloy
brand of equipment, as well as various other brands, had
sales of more than $190 million for the fiscal year ending
on September 30, 1998, and is one of the world's leading
providers of blow molding machines, as well as structural
foam systems, aftermarket parts, services and molds for
blowmolding.
On December 30, 1998, Milacron acquired Werkzeugfabrik GmbH
Konigsee (Werko), a manufacturer of high-speed steel drills.
Located in eastern Germany, Werko has annual sales of
approximately $25 million.
With the exception of Werko, all of the businesses purchased
in 1998 are included in the plastics technologies segment
from the respective dates of acquisition. In the aggregate,
these acquisitions had the effect of increasing 1998 new
orders and sales by $72 million and $73 million,
respectively, in relation to 1997. Werko is included in the
Consolidated Balance Sheet at December 31, 1998, and will be
included in the operating results of the cutting process
technologies segment beginning in 1999.
In 1997, Milacron acquired two businesses: Data Flute CNC
in June and Minnesota Twist Drill in September. Both
businesses are included in the cutting process technologies
segment. These acquisitions resulted in an increase in new
orders and sales in 1997 of approximately $8 million in
relation to 1996.
In January, 1996, Milacron acquired D-M-E, which is included
in the company's plastics technologies segment for eleven
months of 1996.
All of the acquisitions were financed by the use of
available cash and bank borrowings and have been accounted
for under the purchase method of accounting.
PRESENCE OUTSIDE THE U.S.
In recent years, Milacron's growth outside the U.S. has
allowed it to become more globally balanced. In 1998,
markets outside the U.S. represented the following
percentages of consolidated sales: Europe 29%; Asia 7%;
Canada and Mexico 6%; and the rest of the world 2%. As a
result of this geographic mix, foreign currency exchange
rate fluctuations affect the translation of sales and
earnings, as well as consolidated shareholders' equity. In
1997 and early 1998, the British pound was somewhat stable
in relation to the U.S. dollar while the German mark
continued to weaken. However, during the second quarter of
1998, the German mark also stabilized and then strengthened
slightly. As a result, Milacron experienced favorable
currency translation effects on new orders and sales of
about $5 million in 1998. The effect on earnings from
continuing operations was not significant. There was a $4
million increase in shareholders' equity due to foreign
currency translation effects in 1998. This amount excludes
$17 million of unfavorable currency translation effects that
are included in the loss on the sale of MTG.
If non-U.S. currencies should weaken against the U.S. dollar
in future periods, Milacron will experience a negative
effect on translating non-U.S. new orders, sales and,
possibly, net earnings in the future when compared with
historical results.
1998 COMPARED TO 1997
NEW ORDERS AND BACKLOG
New orders in 1998 were $1,512 million, which represented a
$91 million, or 6%, increase from $1,421 million in 1997.
Excluding the effect of acquisitions, new orders were $7
million higher in 1998. Orders for plastics technologies
products increased by $78 million, or 11%; excluding the
acquisitions, orders increased by approximately 1%. Orders
for cutting process technologies products increased by $13
million, or 2%; excluding the effect of the 1997
acquisitions, new orders were flat, due principally to the
General Motors strike.
U.S. export orders were $178 million in 1998 representing a
14% increase from $156 million in 1997. Uniloy accounted for
about one half of the increase.
The company's backlog of unfilled orders totaled $247
million at December 31, 1998. This compares to $196 million
at December 27, 1997, and $212 million at December 28, 1996.
SALES
Sales in 1998 were $1,515 million, which represented a $76
million, or 5%, increase from $1,439 million in 1997.
Excluding the effect of acquisitions, consolidated sales
decreased modestly in relation to 1997. Sales of plastics
technologies products increased by $61 million, or 8%. The
segment's sales include an incremental $73 million related
to 1998 acquisitions. Sales of cutting process technologies
products increased by $15 million, or 2%; excluding the
effect of the 1997 acquisitions, sales in 1998 approximated
the 1997 amount.
Export sales were $181 million in 1998 compared to $168
million in 1997. The 1998 amount includes $13 million for
Uniloy.
Sales of both segments to non-U.S. markets, including
exports, totaled $672 million, a decrease in 1998 of $6
million. In 1998 and 1997, products manufactured outside the
U.S. approximated 40% and 41% of sales, respectively, while
products sold outside the U.S. approximated 44 % and 47 % of
sales, respectively.
MARGINS, COSTS AND EXPENSES
The manufacturing margin percent of 27.9% in 1998 increased
from 26.9% in 1997. Margins for both segments showed
improvement in both the U.S. and in Europe. In 1997, margins
in the plastics technologies segment had been held back by
pricing pressure on U.S.- built injection molding machines,
which began to ease in the third quarter of that year.
Total selling and administrative expense increased in amount
in relation to 1997. However, these expenses decreased
modestly in 1998 as a percentage of sales due to increased
sales volume.
Other expense-net, including amortization of goodwill,
increased to $12.9 million in 1998 from $9.4 million in
1997. The 1998 amount includes severance expenses totaling
approximately $6.7 million relating to approximately 185
employees at Widia, the company's European cutting tool
company and at the company's extrusion machinery facility in
Austria. As a result of these and other actions at Widia and
in Austria, we expect to achieve annualized pretax savings
of approximately $8.0 million, which began to phase-in
during the fourth quarter of 1998 for Widia and which will
phase-in during 1999 in Austria. The 1997 expense included
severance expenses of approximately $2.0 million relating to
Ferromatik, the company's German injection molding machine
subsidiary. Annual cost savings from this and other cost
reduction measures at Ferromatik were approximately $3.5
million.
Interest expense-net, including amortization of debt
issuance costs, increased in 1998 due primarily to higher
average debt levels associated with acquisitions.
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY
SHAREHOLDERS' INTERESTS
Earnings before income taxes and minority shareholders'
interests of $107.2 million in 1998 exceeded the $90.4
million earned in 1997 by $16.8 million, or 19%. As a
percentage of sales, pretax earnings improved significantly
from 6.3% to 7.1%, which is largely the result of improved
manufacturing margins as discussed above.
INCOME TAXES
The provision for income taxes in 1998 and 1997 includes
U.S. federal and state and local income taxes and income
taxes in other jurisdictions outside the U.S.
Milacron entered both years with sizeable net operating loss
(NOL) carryforwards, along with valuation allowances in
certain jurisdictions against the NOL carryforwards and
other deferred tax assets. Valuation allowances are
evaluated periodically and reversed when it is determined to
be more likely than not that the related deferred tax assets
will be realized. The reversal of these valuation
allowances, as described more fully in the notes to the
consolidated financial statements, serves to reduce the
effective tax rate. Valuation allowances subject to future
reversal were $28 million at year-end 1998, including $13
million related to Werko. We anticipate that these valuation
allowances will be approximately $12 to $15 million at year-
end 1999.
The effective tax rate for 1999 is expected to increase to
within a range of approximately 30-33%. However, the tax
rate will ultimately be contingent on the mix of earnings
between tax jurisdictions and other factors that cannot be
predicted with certainty at this time.
EARNINGS FROM CONTINUING OPERATIONS
Earnings from continuing operations, net of minority
shareholders' interests, were $75.4 million, or $1.91 per
share (diluted), in 1998 compared with $69.1 million, or
$1.72 per share (diluted), in 1997. The increase in earnings
is caused by improved operating margins offset by higher
interest cost and a higher effective tax rate.
DISCONTINUED OPERATIONS
In 1998, discontinued operations includes a provision for
the loss on the sale of MTG of $35.2 million, or $.90 per
share (diluted), and after-tax earnings from operations of
$1.3 million, or $.04 per share (diluted).
NET EARNINGS
For 1998, net earnings were $41.5 million, or $1.05 per
share (diluted), compared to $80.6 million, or $2.01 per
share (diluted), for 1997. The most significant items
affecting the net earnings comparison between years was the
loss on the sale of MTG and its lower operating earnings in
1998 prior to the sale.
1997 COMPARED TO 1996
NEW ORDERS AND BACKLOG
New orders in 1997 were $1,421 million, which represented an
$82 million, or 6%, increase from $1,339 million in 1996.
Orders for plastics technologies products increased by $65
million, or 10%, principally due to increased orders for
U.S.-built injection molding machines. Orders for cutting
process technologies products increased by $17 million, or
2%, of which $8 million resulted from the 1997 acquisitions.
Excluding the effect of acquisitions and foreign currency
translation effects, new orders increased for this segment
by 9% as all major U.S. product lines showed improvement.
U.S. export orders were $156 million in 1997 compared to
$146 million in 1996.
The company's backlog of unfilled orders totaled $196
million at December 27, 1997. This compares to $212 million
at December 28, 1996.
SALES
Sales in 1997 were $1,439 million, which represented an $81
million, or 6%, increase over 1996. This increase was caused
principally by internal growth in the plastics technologies
segment. Sales in 1997 were adversely affected by $75
million of unfavorable currency translation effects.
Excluding the acquisitions and currency translation effects,
sales increased by 11%.
Sales of plastics technologies increased by $73 million, or
11%, primarily due to increased sales of U.S.-built
injection molding machines. Cutting process technologies
sales increased by $8 million, or 1%. However, after
excluding the acquisitions and currency translation effects,
sales increased by $42 million, or 6%.
Sales of both segments to non-U.S. markets totaled $678
million, a decrease in 1997 of $11 million. In 1997 and
1996, products manufactured outside the U.S. approximated
41% and 47% of sales, respectively, while products sold
outside the U.S. approximated 47% and 51% of sales,
respectively.
MARGINS, COSTS AND EXPENSES
Manufacturing margins as a percent of sales were 26.9% in
1997 and 26.8% in 1996. Margins for cutting process
technologies products improved in 1997, while margins for
plastics technologies products were depressed through the
first three quarters of 1997 due to pricing pressures on
U.S.-built injection molding machines. The segment's margins
improved in the fourth quarter of 1997.
Total selling and administrative expense increased in
amount, as expected, due to increases in certain selling
costs that vary with sales levels. Administrative expenses
increased modestly. As a percent to sales, selling expense
declined to approximately 16% of sales and administrative
expenses remained at approximately 2% of sales.
Other expense net increased to $9.4 million in 1997 from
$2.7 million in 1996. The increase was caused primarily by
the absence of favorable settlements of legal claims that
are included in the 1996 amount and the inclusion of
severance expense of approximately $2.0 million in the first
quarter of 1997 relating to approximately 60 employees at
Ferromatik, the company's German injection molding machine
subsidiary.
Interest expense net of interest income was $27.5 million in
1997 compared with $30.9 million in 1996. The decrease was
due to lower average debt levels and lower borrowing rates
as well as the effects of foreign currency translation.
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
MINORITY SHAREHOLDERS' INTERESTS
Earnings before income taxes and minority shareholders'
interests were $90.4 million in 1997, which represented an
increase of $10.9 million, or 14%, in relation to $79.5
million in 1996. As a percentage of sales, pretax earnings
increased from 5.9% to 6.3% due principally to modestly
higher manufacturing margins and reduced interest cost.
INCOME TAXES
The provision for income taxes in 1997 and 1996 includes
U.S. federal and state and local income taxes, and income
taxes in other jurisdictions outside the U.S. Milacron
entered both years with sizeable net operating loss (NOL)
carryforwards, along with valuation allowances in certain
jurisdictions against the NOL carryforwards and other
deferred tax assets.
We periodically reevaluate the future realization of all
deferred tax assets. During the period, we concluded that it
was more likely than not that a portion of these assets
would be offset against future taxable income. As a result,
we reversed valuation allowances in certain jurisdictions
which caused the provision for income taxes to be less than
the statutory rate.
EARNINGS FROM CONTINUING OPERATIONS
Earnings from continuing operations were $69.1 million, or
$1.72 per share (diluted), an increase of 28% over $53.8
million, or $1.41 per share (diluted) in 1996. The increase
resulted principally from increased pretax earnings as
discussed above and a lower effective tax rate.
NET EARNINGS
Net earnings, including the operating results of the
discontinued machine tools segment, were $80.6 million, or
$2.01 per share (diluted) in 1997, compared with $66.3
million, or $1.74 per share (diluted) in 1996. Net earnings
increased 21%, while per-share earnings increased 16%, which
also includes the effect of increased common shares
outstanding throughout 1997.
YEAR 2000
- ---------
The term "Year 2000 problem" (Y2K) refers to processing
difficulties that may occur in information technology (I.T.)
systems, and other equipment with embedded microprocessors,
that were designed without considering the distinction
between dates in the 1900s and the 2000s. If not corrected,
these systems could fail or miscalculate data when
processing date-sensitive information that includes a date
on or after January 1, 2000.
Each of Milacron's business units, as well as our corporate
headquarters, are responsible for developing and executing
comprehensive plans to minimize, and to the extent possible,
eliminate any major business interruptions that could be
caused by the Y2K issue. We have established an executive
level Y2K Compliance Committee, which is monitoring our
progress toward Y2K preparedness. This monitoring process
includes testing by our internal auditors and considering
reports from limited reviews conducted by outside
consultants to identify issues requiring attention by the
Compliance Committee.
Milacron's Y2K effort focuses primarily on three important
elements: 1) I.T. systems; 2) non-I.T. equipment that
includes embedded microprocessors; and 3) supplier
preparedness.
Most of our efforts to date have focused on our most
critical I.T. business systems (e.g., financial; enterprise
resource planning, or "ERP"). Each of our ten major
manufacturing locations operate unique information
technology systems which have been selected to best serve
that business's needs. Four of these businesses operate
systems that are licensed from independent third party
software providers and require third party updates to be Y2K
compliant. Milacron is cooperating with and relying on these
third parties to replace or upgrade its software with Y2K
compliant software on a timely basis. We are installing and
testing the new software to provide assurance that the
updated systems will properly process date-sensitive
information. These systems have already been updated, except
for one that is scheduled to be updated in the first half of
1999. Five other businesses are using the Y2K compliance
process as an opportunity to modernize their systems by
installing new ERP systems licensed from independent
software providers. All of the ERP system installations were
completed by January 11, 1999. Another business unit
operates its own proprietary business systems, which are
being reprogrammed to be Y2K compliant; over 95% of the
applications have already been remediated with the balance
expected to be remediated in the first half of 1999.
In addition, Milacron is in the process of completing
inventories, assessments and testing of non-I.T. systems
(e.g., production equipment) which may contain embedded
chips, which could malfunction with the approach of the year
2000. Wherever critical systems are identified as not being
compliant, Milacron plans to remediate or replace these non-
compliant systems. The remediation phase of this effort is
expected to be substantially completed by June 30, 1999.
All business units are in the process of contacting key
vendors and service providers to obtain information about
their plans and progress on Y2K issues and to obtain their
assurances that they expect to be able to provide an
uninterrupted flow of product or service approaching and
into the year 2000. We are following up on significant
concerns that are identified as a result of these
communications and, in some cases, may be arranging
alternative sources of that product or service.
In 1998, we focused on preventing significant Y2K failures,
rather than preparing formal, written contingency plans.
However, in 1999 Milacron intends to prepare contingency
plans, if any major systems or suppliers are identified as
representing a significant risk of Y2K failure.
Many of our machinery products rely upon computer controls
and embedded microprocessors to achieve optimum performance.
We are making information available publicly to our
customers on the Y2K status of these products, substantially
all of which are Y2K compliant.
Milacron has estimated the cost of major system
implementation and remediation efforts. However, other costs
are being absorbed in departmental operating budgets. Based
on currently available information, we estimate that the
incremental cost of these major implementation and
remediation projects will be approximately $13 million over
1997, 1998 and 1999, of which over 65% has been expended
through December 31, 1998. These costs are not expected to
have a material effect on Milacron's financial position,
results of operations, or cash flows.
Milacron recognizes that the Y2K issue could result in the
interruption or failure of certain normal business
operations which could materially and adversely affect our
results of operations, liquidity and financial condition. We
believe that the reasonable worst case scenario is that
Milacron could encounter production and shipment delays
caused in large part by vendors, service providers and other
third parties. Due to the general uncertainty inherent in
the Y2K problem, resulting in part from the uncertainty of
the Y2K preparedness of third parties, we are unable to
determine at this time whether the consequences of the Y2K
issue will have a material impact on Milacron's results of
operations, liquidity or financial condition. However, as a
result of our past and future Y2K activities, we believe
that the risk of significant interruption of normal
operations should be reduced.
MARKET RISK
- ------------
FOREIGN CURRENCY EXCHANGE RATE RISK
Milacron uses foreign currency forward exchange contracts to
hedge its exposure to adverse changes in foreign currency
exchange rates related to firm commitments arising from
international transactions. The company does not hold or
issue derivative instruments for trading purposes. The
potential loss from a hypothetical 10% adverse change in
foreign currency rates on Milacron's foreign exchange
contracts at December 31, 1998, would not materially affect
consolidated financial position, results of operations, or
cash flows.
INTEREST RATE RISK
At December 31, 1998, Milacron had fixed interest rate debt
of $228 million, including $100 million of 7 7/8% Notes due
May 15, 2000, and $115 million of 8 3/8% Notes due March 15,
2004. Milacron also had floating rate debt totaling $293
million, with interest fluctuating based primarily on
changes in LIBOR. Milacron also sells up to $75 million of
accounts receivable under its receivables purchase
agreement, which results in financing fees that fluctuate
based on changes in commercial paper rates. As a result,
annual interest expense and financing fees in 1999 will
fluctuate based upon fluctuations in short-term borrowing
rates.
Liquidity and Sources of Capital
- --------------------------------
At December 31, 1998, Milacron had cash and cash equivalents
of $49 million, representing an increase of $23 million in
1998.
Operating activities provided $85 million of cash in 1998,
compared with $114 million provided in 1997. The decrease in
cash provided resulted in part from higher inventory levels
to support sales growth that did not materialize when
expected and new product introductions.
In 1998, investing activities resulted in a $133 million use
of cash, due to capital expenditures of $81 million and
acquisitions of $228 million, including $190 million for the
Uniloy acquisition. Cash flows from investing activities
benefited by $174 million from the sale of MTG. In 1997,
investing activities used $100 million of cash, including
capital expenditures of $80 million.
Financing activities provided $72 million of cash in 1998,
compared with a use of $16 million in 1997. The 1998 amount
includes a $125 million net increase in debt to finance
acquisitions and repurchase common shares (as described
below), offset by proceeds from the MTG divestiture.
In the fourth quarter of 1998, we announced a two million
common share repurchase program, of which 1.2 million shares
were purchased through December 31, 1998. Including shares
purchased earlier in the year to partially meet the
anticipated needs of management incentive, employee benefit
and dividend reinvestment plans, Milacron used $41 million
of cash for share repurchases in 1998.
As of December 31, 1998, Milacron's current ratio was 1.3,
as compared to 1.8 at December 27, 1997. The decrease in the
current ratio is principally the result of the MTG sale and
the Uniloy acquisition.
As of December 31, 1998, Milacron had lines of credit with
various U.S. and non-U.S. banks of approximately $633
million, including a $375 million committed revolving credit
facility. Under the provisions of the facility, our
additional borrowing capacity totaled approximately $262
million at December 31, 1998.
Total debt was $521 million at December 31, 1998,
representing an increase of $149 million from December 27,
1997. The increase was caused primarily by increased
borrowings to finance acquisitions and the share repurchase
program, offset in part by the proceeds from the MTG sale.
Total shareholders' equity was $477 million at December 31,
1998, an increase of $5 million from December 27, 1997. The
modest increase resulted principally from earnings from
continuing operations and favorable foreign currency
translation effects, offset by the loss from discontinued
operations and the effect of the share repurchase program.
The ratio of total debt to total capital (debt plus equity)
was 52% at December 31, 1998, compared with 44% at December
27, 1997.
We believe that Milacron's cash flow from operations and its
currently available credit lines are sufficient to meet our
operating and capital requirements in 1999.
OUTLOOK
- --------
While the Asian recession and softness in certain North
American and European industrial sectors persist, business
levels remain healthy in many other economic sectors. In
addition, both of Milacron's business segments have
established leadership positions in their respective markets
and can be expected to benefit from the cost reduction
measures taken in recent years. Therefore, unless there is
unforeseen deterioration in major world markets, Milacron
believes it can achieve continued growth in sales, earnings
and cash flow.
CAUTIONARY STATEMENT
- --------------------
Milacron wishes to caution readers about all of the forward-
looking statements in the "Outlook" section above and
elsewhere. These include all statements that speak about the
future or are based on our interpretation of factors that
might affect our businesses. Milacron believes the following
important factors, among others, could affect its actual
results in 1999 and beyond and cause them to differ
materially from those expressed in any of our forward-
looking statements:
* global and regional economic conditions, consumer
spending and industrial production, particularly in segments
related to the level of automotive production and spending
in the construction industry;
* fluctuations in currency exchange rates of U.S.
and foreign countries, including countries in Europe and
Asia where Milacron has several principal manufacturing
facilities and where many of our competitors and suppliers
are based;
* fluctuations in domestic and non-U.S. interest
rates which affect the cost of borrowing under Milacron's
lines of credit and financing fees related to the sale of
domestic accounts receivable;
* production and pricing levels of important raw
materials, including plastic resins, which are a key
material used by purchasers of Milacron's plastics
technologies products, and steel, cobalt, tungsten and
industrial grains used in the production of metalworking
products;
* lower than anticipated levels of plant utilization
resulting in production inefficiencies and higher costs,
whether related to the delay of new product introductions,
improved production processes or equipment, or labor
relation issues;
* any major disruption in production at key customer
or supplier facilities;
* alterations in trade conditions in and between the
U.S. and non-U.S. countries where Milacron does business,
including export duties, import controls, quotas and other
trade barriers;
* changes in tax, environmental and other laws and
regulations in the U.S. and non-U.S. countries where
Milacron does business;
* unanticipated litigation, claims or assessments,
including but not limited to claims or problems related to
product liability, warranty, or environmental issues;
* the failure of key vendors, software providers,
public utilities, financial institutions or other critical
suppliers to provide products or services that are Y2K
compliant.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The information required by Item 7A is included in Item 7 on
page 30 of this Form 10-K.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Beginning on page 33 and continuing through page 51 are the
consolidated financial statements with applicable notes and
the related Report of Independent Auditors, and the
supplementary financial information specified by Item 302 of
Regulation S-K.
CONSOLIDATED STATEMENT OF EARNINGS
Milacron Inc. and Subsidiaries
Fiscal years ended December 31, 1998, December 27, 1997
and December 28, 1996.
<TABLE>
In millions, except per-share amounts) 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Sales $1,514.7 $1,438.7 $1,357.9
Cost of products sold 1,092.3 1,051.5 994.5
-------- -------- --------
Manufacturing margins 422.4 387.2 363.4
Other costs and expenses
Selling and administrative 271.6 259.9 250.3
Other-net 12.9 9.4 2.7
-------- -------- --------
Total other costs and expenses 284.5 269.3 253.0
-------- -------- --------
Operating earnings 137.9 117.9 110.4
Interest
Income 2.5 2.4 4.8
Expense (33.2) (29.9) (35.7)
-------- -------- --------
Interest-net (30.7) (27.5) (30.9)
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND MINORITY
SHAREHOLDERS' INTERESTS 107.2 90.4 79.5
Provision for income taxes 28.1 17.0 22.6
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE MINORITY SHAREHOLDERS'
INTERESTS 79.1 73.4 56.9
Minority shareholders' interests in
earnings of subsidiaries 3.7 4.3 3.1
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS 75.4 69.1 53.8
Discontinued operations net
of income taxes
Earnings from operations 1.3 11.5 12.5
Loss on sale (35.2) - -
-------- -------- --------
Total discontinued operations (33.9) 11.5 12.5
-------- -------- --------
NET EARNINGS $41.5 $80.6 $ 66.3
======== ======== ========
Earnings per common share
- -------------------------
Basic
Continuing operations $1.93 $1.74 $1.42
Discontinued operations (.87) .29 .33
-------- -------- --------
Net earnings $1.06 $2.03 $1.75
======== ======== ========
Diluted
Continuing operations $1.91 $1.72 $1.41
Discontinued operations (.86) .29 .33
-------- -------- --------
Net earnings $1.05 $2.01 $1.74
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEET Milacron Inc. and Subsidiaries
December 31, 1998 and December 27, 1997.
<TABLE>
(In millions, except par value) 1998 1997
-------- --------
<S> <C> <C>
ASSETS
- ------
Current assets
Cash and cash equivalents $ 48.9 $ 25.7
Notes and accounts receivable
(less allowances of $12.1 in
1998 and $13.0 in 1997) 226.1 275.0
Inventories
Raw materials 45.6 26.5
Work-in-process and finished parts 204.6 217.7
Finished products 150.8 146.2
------- --------
Total inventories 401.0 390.4
Other current assets 54.5 60.0
------- --------
Total current assets 730.5 751.1
Property, plant and equipment-net 350.9 343.1
Goodwill 397.6 231.1
Other noncurrent assets 78.1 67.2
-------- --------
Total assets $1,557.1 $1,392.5
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Amounts payable to banks $ 177.4 $65.9
Long-term debt due within one year 7.8 1.6
Trade accounts payable 155.2 153.7
Advance billings and deposits 31.7 35.7
Accrued and other current liabilities 178.8 168.5
-------- --------
Total current liabilities 550.9 425.4
Long-term accrued liabilities 193.9 191.0
Long-term debt 335.7 304.2
-------- --------
Total liabilities 1,080.5 920.6
======== ========
Commitments and contingencies - -
Shareholders' equity
4% Cumulative Preferred shares 6.0 6.0
Common shares, $1 par value (outstanding:
37.8 in 1998 and 39.6 in 1997) 37.8 39.6
Capital in excess of par value 341.2 377.8
Reinvested earnings 106.0 83.5
Accumulated other
comprehensive income (loss) (14.4) (35.0)
-------- --------
Total shareholders' equity 476.6 471.9
-------- --------
Total liabilities and shareholders' equity $1,557.1 $1,392.5
======== ========
</TABLE>
See notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND
SHAREHOLDERS' EQUITY
Milacron Inc. and Subsidiaries
Fiscal years ended December 31, 1998, December 27, 1997
and December 28, 1996.
<TABLE>
(In millions, except share amounts)
Other 4% Cumu- Common Total
Compre- Compre- lative Shares, Capital in Reinvested Share-
hensive hensive Preferred $1 Par Excess of Earnings holders'
Income Income Shares Value Par Value (Deficit) Equity
------- ------- --------- ------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
year-end 1995 $(2.8) $6.0 $34.3 $266.0 $(32.8) $270.7
Issuance of 5,500,000
common shares
in public offering 5.5 123.0 128.5
Stock options exercised
and restricted stock
awarded for 69,619
common shares 1.0 1.0
Issuance of 6,474
treasury shares .1 .1
Net earnings for
the year $ 66.3 66.3 66.3
Foreign currency
translation
adjustments (6.8) (6.8) (6.8)
------
Total comprehensive
income $ 59.5
======
Cash dividends
Preferred shares
($4.00 per share) (.2) (.2)
Common shares
($.36 per share) (13.4) (13.4)
- -------------------------------------------------------------------------------------------------------
Balance at
year-end 1996 (9.6) 6.0 39.8 390.1 19.9 446.2
Stock options exercised
and restricted stock
awarded for 379,127
common shares .4 1.8 2.2
Purchase of 589,695
treasury and
other common shares (.6) (14.1) (14.7)
Net earnings for
the year $ 80.6 80.6 80.6
Foreign currency
translation
adjustments (25.4) (25.4) (25.4)
------
Total comprehensive
income $ 55.2
======
Cash dividends
Preferred shares
($4.00 per share) (.2) (.2)
Common shares
($.42 per share) (16.8) (16.8)
- -------------------------------------------------------------------------------------------------------
Balance at
year-end 1997 (35.0) 6.0 39.6 377.8 83.5 471.9
Stock options
exercised and
restricted stock
awarded for 340,251
common shares .3 5.7 6.0
Purchase of 2,129,930
treasury and
other common shares (2.1) (42.3) (44.4)
Net earnings for
the year $41.5 41.5 41.5
Foreign currency
translation
adjustments 20.6 20.6 20.6
------
Total comprehensive
income $62.1
======
Cash dividends
Preferred shares
($4.00 per share) (.2) (.2)
Common shares
($.48 per share) (18.8) (18.8)
- -------------------------------------------------------------------------------------------------------
Balance at
year-end 1998 $(14.4) $6.0 $37.8 $341.2 $106.0 $476.6
=======================================================================================================
</TABLE>
See notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Milacron Inc. and Subsidiaries
Fiscal years ended December 31, 1998, December 27, 1997
and December 28, 1996
<TABLE>
(In millions) 1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
OPERATING ACTIVITIES CASH FLOWS
Net earnings $ 41.5 $ 80.6 $ 66.3
Operating activities
providing (using) cash
Depreciation and
amortization 57.4 53.7 50.9
Loss on sale of discontinued
machine tools segment 35.2 - -
Deferred income taxes (6.3) (14.5) (2.5)
Working capital changes
Notes and accounts
receivable 10.4 (20.7) (5.6)
Inventories (45.5) (16.3) (20.7)
Other current assets .8 (6.1) 7.4
Trade accounts payable (.4) 21.8 16.8
Other current liabilities 1.0 6.8 (55.1)
Decrease (increase) in other
noncurrent assets (6.0) .1 (1.9)
Increase (decrease) in
long-term accrued
liabilities (1.9) 13.2 8.8
Other-net (1.3) (4.7) (4.5)
------- ------- -------
Net cash provided by
operating activities 84.9 113.9 59.9
------- ------- -------
INVESTING ACTIVITIES CASH FLOWS
Capital expenditures (81.4) (79.5) (65.2)
Net disposals of property,
plant and equipment 2.4 5.7 4.3
Acquisitions (228.0) (25.9) (246.8)
Divestitures 173.7 - -
Net cash used by
investing activities (133.3) (99.7) (307.7)
------- ------- -------
FINANCING ACTIVITIES CASH FLOWS
Dividends paid (19.0) (17.0) (13.6)
Issuance of long-term debt 25.7 14.4 -
Repayments of long-term debt (6.0) (4.9) (21.1)
Increase in amounts
payable to banks 105.5 3.7 47.6
Issuance of common shares 6.0 2.2 129.6
Purchase of treasury
and other common shares (40.6) (14.7) -
------- ------- -------
Net cash (used) provided by
financing activities 71.6 (16.3) 142.5
------- ------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 23.2 (2.1) (105.3)
Cash and cash equivalents at
beginning of year 25.7 27.8 133.1
------- ------- -------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 48.9 $ 25.7 $ 27.8
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CHANGE IN FISCAL YEAR END
Effective in 1998, the company changed its fiscal year from a 52-53 week year
ending on the Saturday closest to December 31 to a calendar year ending on
December 31. Fiscal year ends are as follows:
1998: December 31, 1998
1997: December 27, 1997
1996: December 28, 1996
The change in fiscal year did not have a material effect on financial
condition, results of operations or cash flows for the year 1998.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
CONSOLIDATION
The consolidated financial statements include the accounts of the company and
its subsidiaries. All significant intercompany transactions are eliminated.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of the company's non-U.S. operations are translated
into U.S. dollars at period-end exchange rates. Net exchange gains or losses
resulting from such translation are excluded from net earnings and accumulated
in a separate component of shareholders' equity. Income and expense accounts
are translated at weighted-average exchange rates for the period. Gains and
losses from foreign currency transactions are included in other costs and
expenses-net in the Consolidated Statement of Earnings. Gains and losses on
foreign exchange contracts that are designated as hedges of foreign currency
commitments are recognized as part of the specific transactions hedged under
the deferral method of accounting consistent with the requirement for a firm
commitment.
RECLASSIFICATION OF FINANCIAL STATEMENT
Beginning in 1998, expense for minority shareholders' interests in the
earnings of subsidiaries, which was previously included as a component of
operating earnings in the Consolidated Statement of Earnings, is presented as
a separate component of earnings from continuing operations after income
taxes. Also beginning in 1998, amortization expense related to deferred debt
issuance costs has been reclassified from other costs and expenses-net to
interest expense. Amounts for prior years have been reclassified to conform to
the 1998 presentations.
REVENUE RECOGNITION
The company's policy is to recognize sales when products are shipped to
unaffiliated customers.
CASH AND CASH EQUIVALENTS
The company considers all highly liquid investments with a maturity of three
months or less to be cash equivalents.
INVENTORY VALUATION
Inventories are stated at the lower of cost or market, including provisions
for obsolescence commensurate with known or estimated exposures. The principal
methods of determining costs are last-in, first-out (LIFO) for certain U.S.
inventories and average or standard cost, which approximates first-in, first-
out (FIFO), for other inventories.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost or, for assets acquired
through business combinations, at fair value at the dates of the respective
acquisitions. For financial reporting purposes, depreciation is generally
determined on the straight-line method using estimated useful lives of the
assets. Depreciation expense was $49.4 million, $47.6 million and $45.1
million for 1998, 1997 and 1996, respectively, of which $6.0 million, $5.9
million and $4.7 million relates to discontinued operations.
Property, plant and equipment that are idle and held for sale are valued at
the lower of historical cost less accumulated depreciation or fair value less
cost to sell. Carrying costs through the expected disposal dates of such
assets are accrued at the time expected losses are recognized or, in the case
of assets to be sold at a gain, charged to expense as incurred.
GOODWILL
Goodwill, which represents the excess of acquisition cost over the net assets
acquired in business combinations, is amortized on the straight-line method
over periods ranging from 25 to 40 years. The carrying amount of goodwill is
reviewed annually using estimated undiscounted cash flows for the businesses
acquired over the remaining amortization periods. Amortization expense charged
to earnings, all of which relates to continuing operations, amounted to $8.0
million, $6.1 million and $5.8 million in 1998, 1997 and 1996, respectively.
RETIREMENT BENEFIT PLANS
The company maintains various defined benefit and defined contribution pension
plans covering substantially all U.S. employees and certain non-U.S.
employees. For defined benefit plans, pension benefits are based primarily on
length of service and compensation. The company's policy is to fund the plans
in accordance with applicable laws and regulations.
STOCK-BASED COMPENSATION
The company accounts for stock-based compensation under the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and the related interpretations.
INCOME TAXES
The company provides deferred income taxes for cumulative temporary
differences between the financial reporting basis and income tax basis of its
assets and liabilities. Provisions are made for all currently payable federal
and state and local income taxes at applicable tax rates. Provisions are also
made for any additional taxes on anticipated distributions from subsidiaries.
EARNINGS PER COMMON SHARE
Basic earnings per common share data are based on the weighted-average number
of common shares outstanding during the respective periods. Diluted earnings
per common share data are based on the weighted-average number of common
shares outstanding adjusted to include the effects of potentially dilutive
stock options and certain restricted shares.
RECENTLY ISSUED PRONOUNCEMENT
During the second quarter of 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This standard is effective for
the company beginning in 2000. It establishes comprehensive accounting and
reporting requirements for the recognition and measurement of derivative
financial instruments and hedging activities including a requirement that
derivatives be measured at fair value and recognized in the statement of
financial position. The company enters into forward contracts, which are a
form of derivative financial instrument, to minimize the effect of foreign
currency exchange rate fluctuations. The company is evaluating the effect of
this standard on its financial position and results of operations. However,
management currently believes that the effect will not be material.
DISCONTINUED OPERATIONS
On October 2, 1998, the company completed the sale of its machine tools group
(MTG). The proceeds from the sale, which are subject to post-closing
adjustments, are ultimately expected to be approximately $185 million, of
which $180 million was received on the closing date and used to repay bank
borrowings incurred for the acquisition of Uniloy (see Acquisitions). The
after-tax loss on the sale of $35.2 million ($45.9 million before income
taxes), or $.90 per share, was recorded in the third quarter of 1998. The
Consolidated Statement of Earnings has been restated to present MTG's
operating results through September 30, 1998, as a discontinued operation. MTG
sales were $346.4 million in 1998, $458.0 million in 1997 and $371.8 million
in 1996.
ACQUISITIONS
In January, 1996, the company acquired The Fairchild Corporation's D-M-E
business (D-M-E) for approximately $246 million. D-M-E is the largest U.S.
producer of mold bases, standard components and supplies for the plastics
injection mold-making industry. The company financed the acquisition through
the execution of promissory notes to the seller in the amount of $182 million
and cash on hand of $64 million. The promissory notes were subsequently repaid
using the proceeds from an equity offering, available cash and borrowings
under the company's existing lines of credit.
In the third quarter of 1997, the company acquired Minnesota Twist Drill,
Inc., a maker of high-speed twist drills, and Data Flute CNC, Inc., a
manufacturer of high-performance solid carbide end mills. Each business has
annual sales of approximately $10 million. These acquisitions were financed by
the use of available cash and bank borrowings.
In February, 1998, the company made two additional acquisitions: Wear
Technology, which has annual sales of approximately $10 million and serves the
aftermarket for new and rebuilt twin screws for extrusion systems, and
Northern Supply, a regional catalog distribution company offering supplies to
plastics processors for injection molding, blow molding and extrusion with
annual sales of approximately $5 million.
In May, 1998, the company acquired Autojectors, Inc., a leading U.S. producer
of vertical insert injection molding machinery widely used to make medical,
electrical and automotive components. Autojectors has annual sales of
approximately $20 million.
In September, 1998, the company acquired Master Unit Die Products, Inc., a
leading North American manufacturer of quick-change mold bases for the
plastics industry. Master Unit Die Products has annual sales in excess of $10
million.
Also, in September, 1998, the company acquired the assets of the plastics
machinery division of Johnson Controls, Inc. (Uniloy) for approximately $190
million, subject to post-closing adjustments. Uniloy, which is known for its
Uniloy brand of equipment, as well as various other brands, has annual sales
of approximately $190 million and is one of the world's leading providers of
blow molding machines, as well as structural foam systems, aftermarket parts,
services and molds for blowmolding.
On December 30, 1998, the company acquired Werkzeugfabrik GmbH Konigsee
(Werko), a manufacturer of high-speed steel drills. Located in eastern
Germany, Werko has annual sales of approximately $25 million.
All of these acquisitions were accounted for under the purchase method. The
aggregate cost of the acquisitions, including professional fees and other
related costs, is expected to be approximately $244.4 million in 1998, and was
$27.4 million in 1997 and $248.1 million in 1996. The following table presents
the allocation of the aggregate acquisition cost to the assets acquired and
liabilities assumed.
ALLOCATION OF ACQUISITION COST
<TABLE>
(In millions) 1998 1997 1996
------ ----- ------
<S> <C> <C> <C>
Cash and cash equivalents $ 1.0 $ .6 $ 1.3
Accounts receivable 37.3 3.6 25.5
Inventories 71.3 4.0 29.6
Other current assets 3.2 .1 1.2
Property, plant and equipment 36.2 7.0 43.9
Goodwill 176.0 14.4 162.5
Other noncurrent assets 5.7 - 7.9
------ ----- ------
Total assets 330.7 29.7 271.9
------ ----- ------
Amounts payable to banks
and long-term debt due
within one year (7.0) - -
Other current liabilities (67.0) (2.1) (18.9)
Long-term accrued liabilities (1.5) (.2) (4.9)
Long-term debt (10.8) - -
------ ----- ------
Total liabilities (86.3) (2.3) (23.8)
------ ----- ------
Total acquisition cost $244.4 $27.4 $248.1
====== ===== ======
</TABLE>
Unaudited pro forma sales and earnings information for 1998 and 1997
reflecting the Uniloy acquisition is presented in the following table. The
amounts included therein assume that the acquisition had taken place at the
beginning of the respective years. The inclusion of the other 1998 and 1997
acquisitions discussed above would not have a material effect on the amounts
presented.
The company expects to realize earnings improvements in future years resulting
from synergies between Uniloy and the company's existing businesses. However,
the pro forma amounts presented below do not give effect to these benefits
because they have yet to be realized and cannot be precisely quantified. As a
result, the company believes that these amounts are not necessarily indicative
of Uniloy's contributions to consolidated operating results in future years.
PRO FORMA INFORMATION
<TABLE>
(In millions, except per-share amounts)
1998 1997
-------- --------
<S> <C> <C>
Sales $1,669.2 $1.622.7
======== ========
Earnings from continuing
operations $ 75.0 $ 74.3
Per common share
Basic 1.92 1.87
Diluted 1.90 1.85
-------- --------
Net earnings $ 41.1 $ 85.8
======== ========
Per common share
Basic $ 1.05 $ 2.16
Diluted $ 1.04 $ 2.14
======== ========
</TABLE>
RESEARCH AND DEVELOPMENT
Charges to continuing operations for research and development activities are
summarized below. The amounts include expenses related to the company's
Wolfpack product development and process improvement program.
RESEARCH AND DEVELOPMENT
<TABLE>
(In millions) 1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Research and development $36.7 $35.6 $36.4
===== ===== =====
</TABLE>
RETIREMENT BENEFIT PLANS
Pension cost for all defined benefit plans is summarized in the following
table. For all years presented, the table includes amounts for plans for
certain employees in the U.S., the United Kingdom (U.K.) and Germany.
PENSION COST
<TABLE>
(In millions) 1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Service cost (benefits earned
during the period) $ 10.0 $ 9.6 $ 9.5
Interest cost on projected
benefit obligation 38.8 38.9 37.5
Expected return on plan assets (43.8) (42.2) (39.8)
Amortization of unrecognized
transition asset (5.4) (5.3) (5.6)
Amortization of unrecognized
prior service cost 1.3 1.3 1.2
Amortization of unrecognized
gains and losses .4 (.2) 2.0
------ ------ ------
Pension cost $ 1.3 $ 2.1 $ 4.8
====== ====== ======
</TABLE>
The above amounts include income of $1.0 million in 1998, $1.7 million in 1997
and $1.2 million in 1996 related to the plan for U.K. employees. Such amounts
are included in the operating results of the discontinued machine tools
segment in the Consolidated Statement of Earnings. Amounts related to the
plan for U.S. employees that are included in discontinued operations cannot be
precisely quantified.
The following table summarizes changes in the projected benefit obligation for
all defined benefit plans.
PROJECTED BENEFIT OBLIGATION
<TABLE>
(In millions) 1998 1997
------- -------
<S> <C> <C>
Balance at beginning of year $(540.3) $(503.6)
Service cost (10.0) (9.6)
Interest cost (38.8) (38.9)
Benefits paid 35.7 33.0
Actuarial gain (loss) (18.4) 8.8
Sale of machine tools segment 90.7 -
Change in discount rate (41.9) (35.3)
Foreign currency translation
adjustments (2.1) 5.3
------- -------
Balance at end of year $(525.1) $(540.3)
======= =======
</TABLE>
The following table summarizes the changes in plan assets for the U.S. and
U.K. plans. Consistent with customary practice in Germany, the plans for
employees in that country have not been funded.
PLAN ASSETS
<TABLE>
(In millions) 1998 1997
------ ------
<S> <C> <C>
Balance at beginning of year $511.5 $464.4
Actual investment return 42.8 77.7
Benefits paid (32.8) (30.7)
Sale of machine tools segment (71.9) -
Foreign currency translation
adjustments - .1
------ ------
Balance at end of year $449.6 $511.5
====== ======
</TABLE>
The following table sets forth the funded status of the plan for U.S.
employees at year-end 1998 and plans for U.S. and U.K. employees at year-end
1997.
FUNDED STATUS AT YEAR-END
<TABLE>
(In millions) 1998 1997
------- -------
<S> <C> <C>
Vested benefit obligation $(419.7) $(430.8)
======= =======
Accumulated benefit obligation $(435.4) $(451.8)
======= =======
Projected benefit obligation $(483.4) $(502.2)
Plan assets at fair value 449.6 511.5
------- -------
Excess (deficiency) of
plan assets in relation
to projected benefit
obligation (33.8) 9.3
Unrecognized net (gain) loss 29.6 (9.6)
Unrecognized prior service cost 3.7 11.9
Unamortized transition asset (1.4) (7.7)
------- -------
Prepaid (accrued) pension cost $ (1.9) $ 3.9
======= =======
</TABLE>
The plans' assets consist principally of stocks, debt securities and mutual
funds. The U.S. plan also includes common shares of the company with a market
value of $28.0 million in 1998 and $25.4 million in 1997.
The following table sets forth the status of the company's defined benefit
pension plans for certain employees in Germany.
STATUS AT YEAR-END
<TABLE>
(In millions) 1998 1997
------ ------
<S> <C> <C>
Vested benefit obligation $(35.6) $(32.1)
====== ======
Accumulated benefit obligation $(38.1) $(34.8)
====== ======
Projected benefit obligation $(41.7) $(38.1)
Unrecognized net gain (1.3) (.9)
------ ------
Accrued pension cost $(43.0) $(39.0)
====== ======
</TABLE>
The following table presents the weighted-average actuarial assumptions used
for all defined benefit plans in 1998, 1997 and 1996.
ACTUARIAL ASSUMPTIONS
<TABLE>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Discount rate 6.8% 7.4% 8.0%
Expected long-term rate of
return on plan assets 9.5% 9.6% 9.6%
Rate of increase in future
compensation levels 5.0% 5.2% 5.1%
</TABLE>
The company also maintains certain defined contribution and 401(k) plans.
Participation in these plans is available to certain U.S. employees. Costs for
these plans were $9.7 million, $8.5 million and $7.7 million in 1998, 1997 and
1996, respectively.
In addition to pension benefits, the company also provides varying levels of
postretirement health care benefits to certain U.S. employees. Substantially
all such employees are covered by the company's principal plan, under which
benefits are provided to employees who retire from active service after having
attained age 55 and ten years of service. The plan is contributory in nature.
For employees retiring prior to 1980, such contributions are based on varying
percentages of the current per-contract cost of benefits, with the company
funding any excess over these amounts. For employees retiring after 1979, the
dollar amount of the company's current and future contributions is frozen.
The following table presents the components of the company's postretirement
health care cost under the principal U.S. plan.
POSTRETIREMENT HEALTH CARE COST
<TABLE>
(In millions) 1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Service cost (benefits
earned during the period) $ .3 $ .3 $ .3
Interest cost on
accumulated post-retirement
benefit obligation 2.7 3.0 3.2
----- ----- -----
Postretirement health
care cost $ 3.0 $ 3.3 $ 3.5
===== ===== =====
</TABLE>
The following table summarizes changes in the accumulated postretirement
health care obligation for the principal U.S. plan.
ACCUMULATED POSTRETIREMENT HEALTH CARE OBLIGATION
<TABLE>
(In millions) 1998 1997
------ ------
<S> <C> <C>
Balance at beginning of year $(38.7) $(40.3)
Service cost (.3) (.3)
Interest cost (2.7) (3.0)
Benefits paid net of
contributions 3.4 4.4
Actuarial gain 3.9 2.0
Sale of machine tools segment 6.1 -
Change in discount rate (1.0) (1.5)
------ ------
Balance at year-end $(29.3) $(38.7)
====== ======
</TABLE>
The following table presents the components of the company's liability for
postretirement health care benefits under the principal U.S. plan.
Accrued Postretirement Health Care Benefits
<TABLE>
(In millions) 1998 1997
------ ------
<S> <C> <C>
Accumulated postretirement
benefit obligation
Retirees $(22.9) $(26.6)
Fully eligible active
participants (2.3) (5.3)
Other active participants (4.1) (6.8)
------ ------
(29.3) (38.7)
Unrecognized net gain (8.3) (4.7)
------ ------
Accrued postretirement health
care benefits $(37.6) $(43.4)
====== ======
</TABLE>
The discount rates used in calculating the accumulated postretirement benefit
obligation were 6.75% for 1998 and 7.5% for 1997. For 1999, the assumed rate
of increase in health care costs used to calculate the accumulated
postretirement benefit obligation is 8.8%. This rate is assumed to decrease to
varying degrees annually to 5.0% for years 2005 and thereafter. Because the
dollar amount of the company's contributions for most employees is frozen, a
one percent change in each year in relation to the above assumptions would not
significantly change the accumulated postretirement benefit obligation or the
total cost of the plan.
INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the company's deferred tax assets and liabilities as of year-end
1998 and 1997 are as follows:
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES
<TABLE>
(In millions) 1998 1997
------ ------
<S> <C> <C>
Deferred tax assets
Net operating loss and
tax credit carryforwards $ 58.9 $ 48.5
Accrued postretirement
health care benefits 12.6 14.6
Inventories, principally
due to obsolescence
reserves and additional
costs inventoried
for tax purposes 6.4 8.7
Accrued employee benefits
other than pensions and
retiree health care benefits 12.3 11.4
Accrued pension costs 9.6 6.7
Accrued warranty costs 1.0 3.3
Accrued taxes 4.3 4.9
Accounts receivable,
principally due to
allowances for doubtful
accounts 3.0 3.5
Accrued liabilities
and other 30.8 19.8
------ ------
Total deferred tax assets 138.9 121.4
Less valuation allowances (28.2) (25.5)
------ ------
Deferred tax assets
net of valuation
allowances $110.7 $ 95.9
====== ======
Deferred tax liabilities
Property, plant and
equipment, principally
due to differences in
depreciation methods $ 23.0 $ 21.3
Accounts receivable
and inventories 13.9 2.4
Goodwill 6.7 4.4
Prepaid pension costs 3.5 6.6
Undistributed earnings
of non-U.S. subsidiaries 1.2 1.2
Other 14.4 11.7
------ ------
Total deferred tax liabilities $ 62.7 $ 47.6
====== ======
Net deferred tax assets $ 48.0 $ 48.3
====== ======
</TABLE>
Valuation allowances related to Widia's preacquisition net operating loss
carryforwards are being applied to reduce goodwill arising from the
acquisition as the related tax benefits are realized. During 1998 and 1997,
reversals of valuation allowances applied to reduce goodwill totaled $3.1
million and $5.7 million, respectively. Additional reductions of goodwill in
years subsequent to 1998 will not be material.
Summarized in the following tables are the company's earnings before income
taxes, its provision for income taxes, the components of the provision for
deferred income taxes and a reconciliation of the U.S. statutory rate to the
tax provision rate.
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
<TABLE>
(In millions) 1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
United States $ 65.3 $54.1 $43.0
Non-U.S. 41.9 36.3 36.5
------ ----- -----
$107.2 $90.4 $79.5
====== ===== =====
</TABLE>
PROVISION FOR INCOME TAXES
<TABLE>
(In millions) 1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Current provision
United States $ 18.2 $ 12.0 $ 9.4
State and local 4.3 4.7 3.3
Non-U.S. 11.9 14.8 12.4
------ ------ ------
34.4 31.5 25.1
------ ------ ------
Deferred provision
United States .8 (13.7) (2.9)
Non-U.S. (7.1) (.8) .4
------ ------ ------
(6.3) (14.5) (2.5)
------ ------ ------
$ 28.1 $ 17.0 $ 22.6
====== ====== ======
</TABLE>
COMPONENTS OF THE PROVISION FOR DEFERRED INCOME TAXES
<TABLE>
(In millions) 1998 1997 1996
----- ------ -----
<S> <C> <C> <C>
Change in valuation allowances $(7.1) $(26.7) $ 1.8
Change in deferred taxes
related to operating
loss carryforwards (1.3) 10.5 (.1)
Depreciation and amortization 6.7 2.0 (3.9)
Inventories and accounts receivable 3.3 (1.3) (2.0)
Accrued pension and other
employee costs (3.6) .9 2.4
Other (4.3) .1 (.7)
----- ------ -----
$(6.3) $(14.5) $(2.5)
===== ====== =====
</TABLE>
RECONCILIATION OF THE U.S. STATUTORY RATE TO THE TAX PROVISION RATE
<TABLE>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
U.S. statutory tax rate 35.0% 35.0% 35.0%
Increase (decrease) resulting from
Tax benefits from net
reversal of valuation
allowances (10.1) (24.1) -
Losses without current
tax benefits 2.3 9.9 4.1
Tax benefits from net
reversal of U.S.
temporary differences - (.2) (4.7)
U.S. federal income
tax credits (2.6) (3.2) (6.0)
Effect of operations
outside the U.S. (1.3) (4.0) (4.1)
State and local income
taxes, net of
federal benefit 2.6 3.2 2.9
Other .3 2.2 1.2
----- ----- -----
26.2% 18.8% 28.4%
===== ===== =====
</TABLE>
At year-end 1998, certain of the company's non-U.S. subsidiaries had net
operating loss carryforwards aggregating approximately $120 million, including
approximately $39 million related to Werko. Substantially all of these
carryforwards have no expiration dates.
Undistributed earnings of foreign subsidiaries which are intended to be
indefinitely reinvested aggregated $149 million at the end of 1998.
Income taxes of $32.2 million, $25.2 million and $33.8 million were paid in
1998, 1997 and 1996, respectively.
EARNINGS PER COMMON SHARE
The following tables present the calculation of earnings available to common
shareholders and a reconciliation of the shares used to calculate basic and
diluted earnings per common share.
EARNINGS AVAILABLE TO COMMON SHAREHOLDERS
<TABLE>
(In millions) 1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Net earnings $41.5 $80.6 $66.3
Less dividends on Preferred
shares (.2) (.2) (.2)
----- ----- -----
Net earnings available to
common shareholders $41.3 $80.4 $66.1
===== ===== =====
</TABLE>
RECONCILIATION OF SHARES
<TABLE>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Weighted-average common
shares outstanding 38,875 39,583 37,667
Effect of dilutive stock options
and restricted shares 366 373 276
------ ------ ------
Weighted-average common shares
assuming dilution 39,241 39,956 37,943
====== ====== ======
</TABLE>
Weighted-average shares assuming dilution excludes restricted shares subject
to contingent vesting based on the attainment of specified earnings objectives
that have not yet been achieved. Such shares totaled 216,840 at year-end 1998
and 205,075 at year-end 1997.
RECEIVABLES
Under the terms of the company's receivables purchase agreement, the company
sells on an ongoing basis and without recourse an undivided percentage
ownership interest in designated pools of accounts receivable. To maintain the
balance in the designated pools of accounts receivable sold, the company is
obligated to sell undivided percentage interests in new receivables as
existing receivables are collected. The agreement permits the sale of up to
$75.0 million of undivided interests in accounts receivable through January,
1999. Subsequent to December 31, 1998, the term of the agreement was extended
to August, 2001.
At December 31, 1998, December 27, 1997, and December 28, 1996, the undivided
interests in the company's gross accounts receivable that had been sold to the
purchasers aggregated $63.1 million, $75.0 million and $75.0 million,
respectively. Increases and decreases in the amount sold are reported as
operating cash flows in the Consolidated Statement of Cash Flows. Costs
related to the sales are included in other costs and expenses-net in the
Consolidated Statement of Earnings.
INVENTORIES
Inventories amounting to $89.6 million in 1998 and $130.1 million in 1997 are
stated at LIFO cost. If stated at FIFO cost, such inventories would be greater
by approximately $17.0 million in 1998 and $66.4 million in 1997.
As presented in the Consolidated Balance Sheet, inventories are net of
reserves for obsolescence of $37.3 million and $41.6 million in 1998 and 1997,
respectively.
PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment are shown in the following
table.
PROPERTY, PLANT AND EQUIPMENT-NET
<TABLE>
(In millions) 1998 1997
------- -------
<S> <C> <C>
Land $ 16.3 $ 14.9
Buildings 153.9 179.4
Machinery and equipment 435.0 459.0
------- -------
605.2 653.3
Less accumulated depreciation (254.3) (310.2)
------- -------
$ 350.9 $ 343.1
======= =======
</TABLE>
LIABILITIES
The components of accrued and other current liabilities and long-term accrued
liabilities are shown in the following tables.
ACCRUED AND OTHER CURRENT LIABILITIES
<TABLE>
(In millions) 1998 1997
------ ------
<S> <C> <C>
Accrued salaries, wages and
other compensation $ 49.1 $ 50.4
Other accrued expenses 129.7 118.1
------ ------
$178.8 $168.5
====== ======
</TABLE>
LONG-TERM ACCRUED LIABILITIES
<TABLE>
(In millions) 1998 1997
------ ------
<S> <C> <C>
Accrued pension and
other compensation $ 74.9 $ 73.2
Accrued postretirement
health care benefits 40.6 46.4
Accrued and deferred
income taxes 26.6 31.5
Minority shareholders'
interests 19.9 16.7
Other 31.9 23.2
------ ------
$193.9 $191.0
====== ======
</TABLE>
LONG-TERM DEBT
The components of long-term debt are shown in the following table.
LONG-TERM DEBT
<TABLE>
(In millions) 1998 1997
------ ------
<S> <C> <C>
7 7/8 % Notes due 2000 $100.0 $100.0
8 3/8 % Notes due 2004 115.0 115.0
Revolving credit facility 84.8 80.3
Other 43.7 10.5
------ ------
343.5 305.8
Less current maturities (7.8) (1.6)
------ ------
$335.7 $304.2
====== ======
</TABLE>
Except for the 7 7/8% Notes due 2000 and the 8 3/8% Notes due 2004, the
carrying amount of the company's long-term debt approximates fair value, which
is determined using discounted cash flow analysis based on the company's
incremental borrowing rate for similar types of financing arrangements. At
year-end 1998, the fair value of the 7 7/8% Notes due 2000 was $102.2 million
and the fair value of the 8 3/8% Notes due 2004 was $117.6 million. Such
amounts are based on recent trade prices through registered securities
brokers.
Certain of the above long-term debt obligations contain various restrictions
and financial covenants relating principally to additional secured
indebtedness.
Outstanding borrowings under the company's revolving credit facility of $10.0
million and DM 125 million ($74.8 million at December 31, 1998 and $70.3
million at December 27, 1997) are included in long-term debt based on the
expectation that these borrowings will remain outstanding for more than one
year. These borrowings are at variable interest rates which had a weighted-
average of 4.8% at year-end 1998.
Interest paid was $31.9 million in 1998, $29.1 million in 1997 and $35.1
million in 1996.
Maturities of long-term debt for the five years after 1998 are:
MATURITIES OF LONG-TERM DEBT
<TABLE>
(In millions)
<S> <C>
1999 $ 7.8
2000 111.3
2001 12.9
2002 85.8
2003 1.1
</TABLE>
The company leases certain equipment and facilities under operating leases,
some of which include varying renewal and purchase options. Future minimum
rental payments applicable to noncancelable operating leases during the next
five years and in the aggregate thereafter are:
RENTAL PAYMENTS
<TABLE>
(In millions)
<S> <C>
1999 $17.3
2000 11.6
2001 9.2
2002 7.7
2003 6.3
After 2003 35.1
</TABLE>
Rent expense for continuing operations was $17.8 million, $19.6 million and
$19.6 million in 1998, 1997 and 1996, respectively.
LINES OF CREDIT
At year-end 1998, the company had lines of credit with various U.S. and non-
U.S. banks of approximately $633 million, including a $375 million committed
revolving credit facility. These credit facilities support letters of credit
and leases in addition to providing borrowings under varying terms.
The size of the revolving credit facility was increased in January, 1998, to
$250 million, and increased again in December, 1998, to $375 million. This
facility requires a facility fee on the total loan commitment at a variable
rate which was .25% per annum as of December 31, 1998, and limits the
company's debt to a multiple of earnings before interest, income taxes,
depreciation and amortization. At December 31, 1998, the company's additional
borrowing capacity totaled approximately $262 million.
The weighted-average interest rate on short-term borrowings outstanding as of
year-end was 6.4% and 6.6% for 1998 and 1997, respectively.
SHAREHOLDERS' EQUITY
In October, 1998, the company announced its intention to repurchase up to two
million of its common shares on the open market, of which 1,239,700 had been
purchased through December 31, 1998. Including shares repurchased earlier in
the year to partially meet current and future needs of management incentive,
employee benefit and dividend reinvestment plans, the company purchased a
total of 2,079,600 treasury shares at a cost of $43.1 million during 1998. A
total of 499,600 treasury shares were purchased in 1997 at a cost of $12.2
million. Additional shares totaling 50,330 million in 1998 and 90,095 in 1997
were purchased with respect to current exercises of stock options and
restricted stock grants in lieu of the issuance of authorized but unissued
shares or treasury shares.
SHAREHOLDERS' EQUITY - PREFERRED AND COMMON SHARES
(In millions, except share and per-share amounts)
<TABLE>
1998 1997
----- -----
<S> <C> <C>
4% Cumulative Preferred
shares authorized,
issued and outstanding,
60,000 shares at
$100 par value, redeemable
at $105 a share $ 6.0 $ 6.0
Common shares, $1 par value,
authorized 50,000,000 shares,
issued and outstanding,
1998: 37,806,374 shares,
1997: 39,635,829 shares 37.8 39.6
</TABLE>
As presented above, common shares outstanding are net of treasury shares of
2,075,835 in 1998 and 286,671 in 1997.
The company has authorized ten million serial preference shares with $1 par
value. None of these shares has been issued. In February, 1999, the company's
Board of Directors approved a stockholder rights plan that provides for the
issuance to shareholders of one right per common share owned to acquire, under
certain circumstances, 1/1000 of a share of Series A Participating Cumulative
Preferred Stock (See Subsequent Event).
Holders of company common stock have one vote per share until they have held
their shares for at least 36 consecutive months, after which they are entitled
to ten votes per share.
COMPREHENSIVE INCOME
Effective at the beginning of 1998, the company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." The statement
establishes standards for the reporting and display of total comprehensive
income and its components in financial statements. The adoption of this
statement has no effect on the company's net earnings or total shareholders'
equity.
Total comprehensive income represents the net change in shareholders' equity
during a period from sources other than transactions with shareholders and as
such, includes net earnings. For the company, the only other component of
total comprehensive income is the change in the cumulative foreign currency
translation adjustments recorded in shareholders' equity.
Changes in cumulative foreign currency translation adjustments are as follows:
CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
<TABLE>
(In millions) 1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Balance at beginning of year $(35.0) $ (9.6) $ (2.8)
Effect of exchange rate
fluctuations 3.5 (25.4) (6.8)
Reclassification to loss
on sale of discontinued
machine tools segment 17.1 - -
------ ------ ------
$(14.4) $(35.0) $ (9.6)
====== ====== ======
</TABLE>
CONTINGENCIES
The company is involved in remedial investigations and actions at various
locations, including former plant facilities, and EPA Superfund sites where
the company and other companies have been designated as potentially
responsible parties. The company accrues remediation costs, on an undiscounted
basis, when it is probable that a liability has been incurred and the amount
of the liability can be reasonably estimated. Accruals for estimated losses
from environmental remediation obligations generally are recognized no later
than the completion of a remediation feasibility study. The accruals are
adjusted as further information becomes available or circumstances change.
Environmental costs have not been material in the past.
Various lawsuits arising during the normal course of business are pending
against the company and its consolidated subsidiaries.
In the opinion of management, the ultimate liability, if any, resulting from
these matters will have no significant effect on the company's consolidated
financial position or results of operations.
FOREIGN EXCHANGE CONTRACTS
The company enters into forward contracts to hedge foreign currency
commitments on an ongoing basis for periods commensurate with known exposures.
The purpose of this practice is to minimize the effect of foreign currency
exchange rate fluctuations on the company's operating results. The company
does not engage in speculation. The company's exposure to credit-related
losses from these transactions is considered to be minimal due to the high
credit ratings of the parties involved.
At December 31, 1998, the company had outstanding forward contracts totaling
$19.1 million, which generally mature in periods of six months or less. These
contracts require the company and its subsidiaries to exchange currencies at
the maturity dates at exchange rates agreed upon at inception. Due to the
short-term nature of these contracts, their fair values approximate their
contract values as of December 31, 1998.
STOCK-BASED COMPENSATION
The 1997 Long-Term Incentive Plan (1997 Plan) permits the company to grant its
common shares in the form of non-qualified stock options, incentive stock
options, restricted stock and performance awards.
Non-qualified and incentive stock options outstanding under the 1997 Plan are
granted at market value, vest in increments over a five year period, and
expire ten years subsequent to the award. Of the 3,409,403 options outstanding
at year-end 1998, 235,000 are incentive stock options.
Summaries of stock options granted under the 1997 Plan and prior plans are
presented in the following tables.
STOCK OPTION ACTIVITY
<TABLE>
Weighted-
Average
Exercise
Shares Price
--------- ---------
<S> <C> <C>
Outstanding at year-end 1995 2,136,996 $19.22
Granted 626,800 25.75
Exercised (31,045) 20.51
Canceled (26,182) 22.95
--------- ---------
Outstanding at year-end 1996 2,706,569 20.70
Granted 568,600 23.25
Exercised (94,485) 17.64
Canceled (117,072) 24.28
--------- ---------
Outstanding at year-end 1997 3,063,612 21.13
Granted 633,700 27.35
Exercised (259,303) 20.13
Canceled (28,606) 23.82
--------- ---------
Outstanding at year-end 1998 3,409,403 $22.34
========= =========
</TABLE>
EXERCISABLE STOCK OPTIONS AT YEAR-END
<TABLE>
Stock Options
-------------
<S> <C>
1996 1,147,869
1997 1,245,931
1998 1,433,759
</TABLE>
SHARES AVAILABLE FOR FUTURE GRANT AT YEAR-END
<TABLE>
Shares
---------
<S> <C>
1996 131,675
1997 1,306,959
1998 599,057
</TABLE>
The following tables summarize information about stock options outstanding at
December 31, 1998.
COMPONENTS OF OUTSTANDING STOCK OPTIONS
<TABLE>
Average Weighted-
Range of Remaining Average
Exercise Number Contract Exercise
Prices Outstanding Life Price
------------- ----------- --------- --------
<S> <C> <C> <C>
$ 8.50 - 17.75 637,794 2.2 $14.14
19.41 - 27.91 2,771,609 7.1 24.22
---------
$ 8.50 - 27.91 3,409,403 6.2 $22.34
=========
</TABLE>
COMPONENTS OF EXERCISABLE STOCK OPTIONS
<TABLE>
Weighted-
Range of Average
Exercise Number Exercise
Prices Exercisable Price
-------------- ----------- ---------
<S> <C> <C>
$ 8.50 - 17.75 637,794 $14.14
19.41 - 27.91 795,965 22.79
---------
$ 8.50 - 27.91 1,433,759 $18.94
=========
</TABLE>
Under the 1997 Plan, performance awards are granted in the form of restricted
stock awards which vest based on the achievement of specified earnings
objectives over a three year period. The 1997 Plan also permits the granting
of other restricted stock awards, which also vest three years from the date of
grant. During the restriction period, restricted stock awards entitle the
holder to all the rights of a holder of common shares, including dividend and
voting rights. Unvested shares are restricted as to disposition and subject to
forfeiture under certain circumstances. The amount of compensation expense
recognized for restricted stock, including performance awards, was $4.6
million, $5.0 million and $.9 million in 1998, 1997 and 1996, respectively.
Restricted stock award activity is as follows:
RESTRICTED STOCK ACTIVITY
<TABLE>
1998 1997 1996
------ ------- ------
<S> <C> <C> <C>
Restricted stock awarded 92,194 281,190 58,746
Weighted-average market value
on date of grant $27.02 $22.99 $25.55
</TABLE>
Of the 92,194 shares of restricted stock awarded in 1998, 52,694 were
performance awards subject to contingent vesting. A total of 205,075 such
shares were issued in 1997.
Cancellations of restricted stock, including shares canceled to pay employee
withholding taxes at maturity, totaled 50,595 in 1998, 6,758 in 1997 and
20,172 in 1996.
During 1998, 10,819 shares related to performance awards earned under a prior
plan and to deferred director's fees were issued. A total of 10,210
performance shares under the prior plan were issued in 1997.
Pro forma earnings amounts prepared under the assumption that the stock
options granted in years 1995 through 1998 had been accounted for based on
their fair value as determined under Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," are as follows:
PRO FORMA EARNINGS
<TABLE>
(In millions, except per-share amounts)
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Net earnings $38.1 $77.5 $63.5
===== ===== =====
Net earnings per common share
Basic $ .97 $1.95 $1.68
===== ===== =====
Diluted $ .96 $1.93 $1.67
===== ===== =====
</TABLE>
The weighted-average fair value of stock options granted during 1998, 1997 and
1996 was $8.38, $7.51 and $8.66, respectively. The fair value of the options
was calculated as of the date of grant using the Balck-Scholes option pricing
model using the following assumptions:
FAIR VALUE ASSUMPTIONS
<TABLE>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Dividend yield 1.76% 2.06% 1.40%
Expected volatility 32 - 39% 31 - 41% 30 - 41%
Risk free interest
rate at grant date 5.4 - 5.6% 5.9 - 6.3% 5.3 - 5.6%
Expected life in years 2 - 7 2 - 7 2 - 7
</TABLE>
Statement of Financial Accounting Standards No. 123 does not apply to awards
granted prior to 1995. Because additional awards in future years are
anticipated the pro forma effects of applying this statement presented above
are not indicative of future amounts.
ORGANIZATION
Milacron Inc. is a worldwide manufacturer of machinery and supplies for
processing plastics and cutting tools and other products for metalworking. The
company has operations in the United States and other countries located
principally in western Europe.
The company's business segments are determined based on the nature of the
products produced and the markets served. The plastics technologies segment
includes the production of injection molding machines, mold bases, systems for
extrusion and blow molding and various other specialty equipment. The market
is driven by the consumer economy and the automotive industry. The cutting
process technologies segment serves a variety of metalworking industries,
including the automotive industry. It produces five basic types of products:
metalcutting tools, metalworking fluids, precision grinding wheels, carbide
wear parts and industrial magnets. The markets for both business segments are
highly competitive and can be cyclical in nature.
Financial data for the past three years for the company's business segments
are shown in the following tables. The accounting policies followed by the
segments are identical to those used in the preparation of the company's
consolidated financial statements. The effects of intersegment transactions,
which are not material in amount, have been eliminated. The company incurs
costs and expenses and holds certain assets at the corporate level which
relate to its business as a whole. Certain of these amounts have been
allocated to the company's business segments by various methods, largely on
the basis of usage. Management believes that all such allocations are
reasonable.
SALES BY SEGMENT
<TABLE>
(In millions) 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Plastics technologies $ 796.4 $ 735.7 $ 662.4
Cutting process technologies 718.3 703.0 695.5
-------- -------- --------
Total sales $1,514.7 $1,438.7 $1,357.9
======== ======== ========
</TABLE>
OPERATING INFORMATION BY SEGMENT
<TABLE>
(In millions) 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Operating earnings
Plastics technologies $ 80.3 $ 59.7 $ 59.2
Cutting process technologies 82.2 81.2 73.7
Corporate expenses (18.9) (17.2) (16.8)
Other unallocated expenses (a) (5.7) (5.8) (5.7)
-------- -------- --------
Operating earnings 137.9 117.9 110.4
-------- -------- --------
Interest expense-net (30.7) (27.5) (30.9)
-------- -------- --------
Earnings from
continuing operations
before income taxes
and minority
shareholders' interests $ 107.2 $ 90.4 $ 79.5
======== ======== ========
Segment assets (b)
Plastics technologies $ 882.8 $ 587.2 $ 591.8
Cutting process technologies 547.2 476.8 452.0
-------- -------- --------
1,430.0 1,064.0 1,043.8
Discontinued machine
tools segment - 246.6 233.0
Cash and cash equivalents 48.9 25.7 27.8
Receivables sold (63.1) (75.0) (75.0)
Deferred income taxes 55.0 54.4 35.1
Unallocated corporate
and other (c) 86.3 76.8 71.6
-------- -------- --------
Total assets $1,557.1 $1,392.5 $1,336.3
======== ======== ========
Capital expenditures
Plastics technologies $ 29.6 $ 26.0 $ 19.9
Cutting process technologies 38.8 33.9 27.9
Unallocated corporate 2.4 2.0 2.3
-------- -------- --------
70.8 61.9 50.1
Discontinued machine
tools segment 10.6 17.6 15.1
-------- -------- --------
Total capital expenditures $ 81.4 $ 79.5 $ 65.2
======== ======== ========
Depreciation and
amortization
Plastics technologies $ 26.6 $ 21.9 $ 20.3
Cutting process technologies 23.3 23.0 23.0
Unallocated corporate 1.5 2.9 2.9
-------- -------- --------
51.4 47.8 46.2
Discontinued machine
tools segment 6.0 5.9 4.7
-------- -------- --------
Total depreciation and
amortization $ 57.4 $ 53.7 $ 50.9
======== ======== ========
</TABLE>
(a) Includes financing costs related to the sale of accounts receivable.
(b) Segment assets consist principally of accounts receivable, inventories,
goodwill and property, plant and equipment which are considered
controllable assets for management reporting purposes.
(c) Consists principally of corporate assets, nonconsolidated investments,
certain intangible assets, cash surrender value of company-owned life
insurance, prepaid expenses and deferred charges.
GEOGRAPHIC INFORMATION
<TABLE>
(In millions) 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Sales (a)
United States $ 912.7 $ 845.3 $ 719.2
Non-U.S. operations
Germany 235.6 219.5 249.3
Other western Europe 252.2 248.2 271.6
Asia 74.5 87.1 82.2
Other 39.7 38.6 35.6
-------- -------- --------
Total sales $1,514.7 $1,438.7 $1,357.9
======== ======== ========
Noncurrent assets
United States $ 542.3 $ 377.7 $ 347.8
Non-U.S. operations
Germany 108.6 80.7 92.6
Other western Europe 117.9 78.9 87.2
Asia 18.4 17.8 15.1
Other 7.5 6.1 5.3
Discontinued operations - 64.4 55.5
-------- -------- --------
Total noncurrent assets $ 794.7 $ 625.6 $ 599.0
======== ======== ========
</TABLE>
(a) Sales are attributed to specific countries or geographic areas based
on the origin of the shipment.
Sales of U.S. operations include export sales of $180.5 million in 1998,
$168.0 million in 1997 and $141.1 million in 1996.
Total sales of the company's U.S. and non-U.S. operations to unaffiliated
customers outside the U.S. were $672.3 million, $678.1 million and $689.3
million in 1998, 1997 and 1996, respectively.
SUBSEQUENT EVENT
On February 5, 1999, the company's Board of Directors approved a stockholder
rights plan which provides for the issuance of one nonvoting preferred stock
right for each common share issued as of that date or issued subsequent
thereto. Each right, if activated, will entitle the holder to purchase 1/1000
of a share of Series A Participating Cumulative Preferred Stock at an initial
exercise price of $70.00. Each 1/1000 of a preferred share will be entitled to
participate in dividends and vote on an equivalent basis with one whole common
share. Initially, the rights are not exercisable. The rights will become
exercisable if any person or group acquires, or makes a tender offer for, more
than 15% of the company's outstanding common shares. In the event that any
party should acquire more than 15% of the company's common shares without the
approval of the Board of Directors, the rights entitle all other shareholders
to purchase the preferred shares at a substantial discount. In addition, if a
merger occurs with any potential acquirer owning more than 15% of the shares
outstanding, holders of rights other than the potential acquirer will be able
to purchase the acquirer's common stock at a substantial discount. The rights
plan expires in February, 2009.
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Milacron Inc.
We have audited the accompanying Consolidated Balance Sheet of Milacron Inc.
and subsidiaries as of December 31, 1998 and December 27, 1997, and the
related Consolidated Statements of Earnings, Comprehensive Income and
Shareholders' Equity, and Cash Flows for each of the three years in the period
ended December 31, 1998. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Milacron Inc.
and subsidiaries at December 31, 1998 and December 27, 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
/s/ ERNST & YOUNG LLP
Cincinnati, Ohio
February 8, 1999
OPERATING RESULTS BY QUARTER (UNAUDITED)
<TABLE>
(In millions, except per-share amounts)
1998 ( a)
------------------------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales $356.5 $370.5 $352.1 $435.6
Manufacturing margins 96.6 103.7 99.9 122.2
Percent of sales 27.1% 28.0% 28.4% 28.1%
Earnings from
continuing operations 15.0 18.3 18.5 23.6
Per common share
Basic .38 .47 .47 .62
Diluted .37 .45 .47 .62
Discontinued operations 2.6 2.6 (39.1) -
Per common share
Basic .07 .06 (1.00) -
Diluted .07 .07 (1.00) -
Net earnings 17.6 20.9 (20.6) 23.6
Per common share
Basic .45 .53 (.53) .62
Diluted .44 .52 (.53) .62
1997 ( a)
------------------------------------
Sales $287.7 $346.9 $431.2 $372.9
Manufacturing margins 78.1 92.3 114.9 101.9
Percent of sales 27.1% 26.6% 26.6% 27.3%
Earnings from
continuing operations 10.8 16.5 20.3 21.5
Per common share
Basic .27 .42 .51 .54
Diluted .27 .41 .51 .53
Discontinued operations 2.2 1.7 2.3 5.3
Per common share
Basic .06 .04 .06 .13
Diluted .05 .05 .05 .14
Net earnings 13.0 18.2 22.6 26.8
Per common share
Basic .33 .46 .57 .67
Diluted .32 .46 .56 .67
</TABLE>
(a) In 1998, the fiscal year consists of twelve calendar months with three
months in each quarter. In 1997, the fiscal year consisted of 13 four-week
periods. The first, second and fourth quarters consisted of three periods
(or twelve weeks) each, and the third quarter, four periods (or 16 weeks).
Given the number of subjective assumptions and estimations that would be
required, quarterly amounts for 1997 have not been restated because precise
calculations would be impracticable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
- --------
ITEM 10. RECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is (i) incorporated herein by reference to
the "Election of Directors" section of the company's proxy statement dated
March 26, 1999 and (ii) included in Part I on pages 18 through 19 of this Form
10-K.
ITEM 11. EXECUTIVE COMPENSATION
The "Components of Compensation" section of the company's proxy statement
dated March 26, 1999 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The "Principal Holders of Voting Securities" section of the company's proxy
statement dated March 26, 1999 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The paragraph captioned "Stock Loan Programs" of the company's proxy statement
dated March 26, 1999 is incorporated herein by reference.
PART IV
- -------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Item 14(a)(1)&(2)-- LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES
The following consolidated financial statements of Milacron Inc. and
subsidiaries are included in Item 8:
Page No.
Consolidated Statement of Earnings -
1998, 1997 and 1996 33
Consolidated Balance Sheet - 1998 and 1997 34
Consolidated Statement of Comprehensive
Income And Shareholders' Equity -
1998, 1997 and 1996 35
Consolidated Statement of Cash Flows -
1998, 1997 and 1996 36
Notes to Consolidated Financial Statements 37
Report of Independent Auditors 51
Supplementary Financial Information 52
The following consolidated financial statement schedule of Milacron Inc. and
subsidiaries is included in Item 14(d) for the years ended 1998, 1997 and
1996:
Page No.
Schedule II- Valuation and
Qualifying Accounts and Reserves 65
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
ITEM 14 (A)(3) - LIST OF EXHIBITS
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation,
or Succession - not applicable
(3) Articles of Incorporation and By-Laws
3.1 Restated Certificate of Incorporation filed with the
Secretary of State of the State of Delaware on November
17, 1998
-Incorporated herein by reference to the company's
Registration Statement on Form S-8 (Registration
No. 333-70733)
3.2 By-laws, as amended
-Incorporated herein by reference to the company's
Registration Statement on Form S-8 (Registration
No. 333-70733)
(4) Instruments Defining the Rights of Security Holders, Including
Indentures:
4.1 8-3/8% Notes due 2004
-Incorporated herein by reference to the company's
Amendment No. 3 to Form S-4 Registration Statement dated
July 7, 1994 (File No. 33-53009)
4.2 7-7/8% Notes due 2000
-Incorporated by reference to the company's Registration
Statement on Form S-4 dated July 21, 1995 (File
No. 33-60081)
4.3 Milacron Inc. hereby agrees to furnish to the
Securities and Exchange Commission, upon its request,
the instruments with respect to long-term debt for
securities authorized thereunder which do not
exceed 10% of the registrant's total consolidated assets
(9) Voting Trust Agreement- not applicable
(10) Material Contracts:
10.1 Milacron 1987 Long-Term Incentive Plan
-Incorporated herein by reference to the company's
Proxy Statement dated March 27, 1987.
10.2 Milacron 1991 Long-Term Incentive Plan
-Incorporated herein by reference to the company's
Proxy Statement dated March 22, 1991.
10.3 Milacron 1994 Long-Term Incentive Plan
-Incorporated herein by reference to the company's
Proxy Statement dated March 24, 1994.
10.4 Milacron 1997 Long-Term Incentive Plan, as amended
-Filed herewith.
10.5 Milacron 1996 Short-Term Management Incentive Plan
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 28, 1996.
10.6 Milacron Inc. Supplemental Pension Plan, as amended
-Filed herewith.
10.7 Milacron Inc. Supplemental Retirement Plan, as amended
-Filed herewith.
10.8 Milacron Inc. Plan for the Deferral of Directors'
Compensation, as amended
-Filed herewith.
10.9 Milacron Inc. Retirement Plan for Non-Employee
Directors, as amended
-Filed herewith.
10.10 Milacron Supplemental Executive Retirement Plan,
as amended
-Filed herewith.
10.11 Amended and Restated Revolving Credit Agreement
dated as of November 30, 1998 among Milacron Inc.,
Cincinnati Milacron Kunststoffmaschinen Europe GmbH,
the lenders listed therein and Bankers Trust
Company, as agent.
-Filed herewith.
10.12 Milacron Compensation Deferral Plan, as amended
-Filed herewith.
10.13 Rights Agreement dated as of February 5, 1999,
between Milacron, Inc. and Chase Mellon Shareholder
Services, L.L.C., as Rights Agent.
-Incorporated herein by reference to the company's
Registration Statement on Form 8-A (File No. 001-08485).
10.14 Purchase and Sale Agreement between UNOVA, Inc.,
UNOVA Industrial Automation Systems, Inc., UNOVA U.K.
Limited and Cincinnati Milacron, Inc. dated
August 20, 1998.
-Incorporated herein by reference to the company's
Form 8-K dated December 30, 1995.
10.15 Purchase and Sale Agreement between Johnson
Controls, Inc., Hoover Universal, Inc. and Cincinnati
Milacron Inc., dated August 3, 1998.
-Incorporated herein by reference to the company's
Form 8-K dated September 30, 1998.
(11) Statement Regarding Computation of Per-Share Earnings
(12) Statement Regarding Computation of Ratios - not applicable
(13) Annual report to security holders, Form 10-Q or quarterly
report to security holders - not applicable
(16) Letter re Change in Certifying Accountant - not applicable
(18) Letter Regarding Change in Accounting Principles
- not applicable
(21) Subsidiaries of the Registrant
(22) Published Report Regarding Matters Submitted to Vote of
Security Holders
-Incorporated by reference to the company's Proxy
Statement dated March 26, 1999.
(23) Consent of Experts and Counsel
(24) Power of Attorney - not applicable
(27) Financial Data Schedule
(99) Additional Exhibits - not applicable
ITEM 14(B)-- REPORTS ON FORM 8-K
- A Current Report on Form 8-K, Item 2, dated September 30, 1998, was
filed regarding the closing of the acquisition of the plastics
machinery division of Johnson Controls, Inc., and the terms thereof.
Financial statements were not required to be filed.
- A Current Report on Form 8-K, Items 2, 5 and 7, dated October 2, 1998,
was filed regarding the closing of the sale of the company's machine
tools segment to UNOVA, Inc. Pro forma financial statements under
Item 7 (b) were included in this filing. The filing also disclosed
the change of the change of the company's name to Milacron Inc. and
its intention to purchase up to two million shares of its outstanding
common stock.
ITEM 14(C)&(D)-- EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The responses to these portions of Item 14 are submitted as a
separate section of this report.
SIGNATURES
- ----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MILACRON INC.
BY: /s/ Daniel J. Meyer
----------------------------
Daniel J. Meyer; Chairman,
President and Chief
Executive Officer
(Chief Executive Officer)
BY: /s/ Ronald D. Brown
----------------------------
Ronald D. Brown; Vice
President- Senior Finance
and Administration and Chief
Financial Officer
(Chief Financial Officer)
BY: /s/ Jerome L. Fedders
----------------------------
Jerome L. Fedders; Controller
(Chief Accounting Officer)
Date: March 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
/s/ Darryl F. Allen /s/ Neil A. Armstrong
- -------------------------------- -------------------------------
Darryl F. Allen; Neil A. Armstrong;
March 26, 1999 March 26, 1999
(Director) (Director)
/s/ Barbara Hackman Franklin /s/ Harry A. Hammerly
- -------------------------------- -------------------------------
Barbara Hackman Franklin; Harry A. Hammerly;
March 26, 1999 March 26, 1999
(Director) (Director)
/s/ David L. Burner
- --------------------------------
David L. Burner;
March 26, 1999
(Director)
ITEM 14(C) AND (D)-- INDEX TO CERTAIN EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
Page No.
Exhibit 10.4 Milacron 1997 Long-Term Incentive Plan,
as amended Bound Separately
Exhibit 10.6 Milacron Inc. Supplemental Pension Plan,
as amended Bound Separately
Exhibit 10.7 Milacron Inc. Supplemental Retirement
Plan, as amended Bound Separately
Exhibit 10.8 Milacron Inc. Plan for the Deferral of
Directors' Compensation, as amended Bound Separately
Exhibit 10.9 Milacron Inc. Retirement Plan for Non-
Employee Directors, as amended Bound Separately
Exhibit 10.10 Milacron Supplemental Executive
Retirement Plan, as amended Bound Separately
Exhibit 11 Computation of Per-Share Earnings 60
Exhibit 21 Subsidiaries of the Registrant 61
Exhibit 23 Consent of Experts of Counsel 63
Exhibit 27 Financial Data Schedule 64
Schedule II Valuation and Qualifying Accounts and Reserves 65
MILACRON INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Years Ended 1998, 1997 and 1996
(In Thousands)
<TABLE>
COL. A COL. B COL. C COL. D COL. E
- -------------------------------------------------------------------------------------------------
Additions
------------------------
Balance at Charged to Balance
Beginning Costs and Other Deductions at End
Description of Period Expenses -Describe -Describe of Period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED 1998
Allowances for
doubtful accounts $13,004 $ 5,757 $ 1,341 (a) $ 4,639 (b) $12,083
199 (c) 3,579 (e)
Restructuring and
consolidation, closing
and relocation and
special charge reserves $ 933 $ - $ - $ 412 (b) $ 521
Allowances for inventory
obsolescence $41,657 $10,074 $ 1,093 (a) $10,137 (b) $37,350
1,771 (c) 7,108 (e)
YEAR ENDED 1997
Allowances for
doubtful accounts $13,715 $ 5,528 $ 200 (a) $ 5,624 (b) $13,004
815 (c)
Restructuring and
consolidation, closing
and relocation and
special charge reserves $ 2,324 $ - $ - $ 1,266 (b) $ 933
125 (c)
Allowances for inventory
Obsolescence $45,649 $12,636 $ - $13,223 (b) $41,657
3,405 (c)
YEAR ENDED 1996
Allowances for
doubtful accounts $12,935 $ 4,667 $ 1,429 (a) $ 4,687 (b) $13,715
629 (c)
Restructuring and
integration charge
reserves $18,336 $ - $ - $14,646 (b) $ 2,324
766 (c)
600 (d)
Allowances for inventory
Obsolescence $53,458 $10,805 $ 1,598 (a) $18,557 (b) $45,649
1,655 (c)
</TABLE>
(a) Consists of reserves of subsidiaries purchased during the year.
(b) Represents amounts charged against the reserves during the year.
(c) Represents foreign currency translation adjustments during the year.
(d) Reversal of excess Valenite restructuring reserve established in 1993.
(e) Consists of reserves of businesses sold during the year.
Milacron Inc. and Subsidiaries
Computation of Per Share Earnings
(Unaudited)
<TABLE>
(In thousands, except per-share amounts)
1998 1997 1996
-------- ------- --------
<S> <C> <C> <C>
Net earnings $ 41,532 $80,589 $66,301
Less preferred dividends 240 240 240
-------- ------- -------
Net earnings available
to common shareholders $ 41,292 $80 349 $66,061
======== ======= =======
Basic Earnings Per Share
Weighted-average common shares
outstanding 38,875 39,583 37,667
======== ======= =======
Per share amount $ 1.06 $ 2.03 $ 1.75
======== ======= =======
Diluted Earnings Per Share
Weighted-average common shares
outstanding 38,875 39,583 37,667
Add dilutive effect of stock
options and restricted
shares based on treasury
stock method 366 373 276
-------- ------- -------
Total 39,241 39,956 37,943
======== ======= =======
Per share amount $ 1.05 $ 2.01 $ 1.74
======== ======= =======
</TABLE>
SUBSIDIARIES OF THE REGISTRANT
MILACRON INC.
<TABLE>
Date
Incorporated
Incorporated or (if later) Percentage
State or Country Date Acquired Owned
------------------- ------------- ----------
<S> <C> <C> <C>
MILACRON INC. Delaware(Registrant) 1983
Milacron Assurance Ltd. Bermuda 1977 100%
Cincinnati Milacron B.V. The Netherlands 1952 100%
Cincinnati Milacron Nederland B.V. The Netherlands 1998 100%
Cimcool Europe B.V. The Netherlands 1989 100%
Widia Nederland B.V. The Netherlands 1995 100%
Cimcool IndustrialProducts B.V. The Netherlands 1960 100%
Cincinnati Milacron Holding
Gesellschaft, MbH Austria 1970 100%
Cincinnati Milacron
Austria Gesellschaft MbH Austria 1976 100%
Cincinnati Milacron
Kunststoffmaschinen Europa GmbH Germany 1990 100%
Ferromatik Milacron
Maschinenbau GmbH Germany 1993 100%
Ferromatik Milacron S.A. France 1993 100%
Ferromatik Milacron
Benelux B.V. The Netherlands 1993 100%
Ferromatik Milacron S.A. Spain 1993 100%
Ferromatik Milacron Ltd. England 1993 100%
Ferromatik Milacron South Africa 1993 100%
Widia GmbH Germany 1995 100%
Widia Valenite France S.A. France 1995 100%
Widia Valenite U.K. Ltd. England 1995 100%
Widia Valenite Italia S.P.A. Italy 1995 100%
Widia Valenite Iberica S.L. Spain 1995 100%
Herko Vitoria S.A. Spain 1995 100%
Widia Vertriebsgesellschaft mbH Austria 1995 100%
Widia Valenite KFT Hungary 1998 100%
Widia Polska S 00 Poland 1998 99%
Meturit A.G. Switzerland 1995 100%
Widia (India) Ltd. India 1995 51%
DME Normalien GmbH Germany 1996 100%
DME France S.a.r.l. France 1996 100%
D-M-E Belgium N.V. Belgium 1996 100%
Uniloy France S.A. France 1998 100%
Uniloy (U.K.) Ltd. England 1998 100%
B&W Kunstsofmaschinenbau &
Handelsgesellschaft GmbH Germany 1998 100%
Indu Tecnospol s.r.o. Czech Republic 1998 100%
Uniloy Holdings S.R.L. Italy 1993 100%
Uniloy S.R.L. Italy 1998 100%
Expulsores Girona SL Spain 1997 100%
Cincinnati Milacron Foreign Sales Corp. Barbados 1996 100%
Milacron-Holdings Mexicana S.A. de C.V. Mexico 1992 100%
Milacron-Mexicana S.A. de C.V. Mexico 1993 100%
Milacron Marketing Company Ohio 1931 100%
Milacron Commercial Corp. Delaware 1993 100%
Milacron International
Marketing Company Delaware 1966 100%
Milacron Equipamentos Plasticos Ltda. Brazil 1997 100%
Northern Supply Company, Inc. Minnesota 1998 100%
Autojectors, Inc. Indiana 1998 100%
Cincinnati Milacron Private Ltd. India 1995 74%
Milacron Resin Abrasives Inc. Delaware 1991 100%
D-M-E Company Delaware 1996 100%
D-M-E UK Limited England 1996 100%
VSI International N.V. Belgium 1996 100%
D-M-E of Canada Limited Canada 1996 100%
450500 Ontario Limited Canada 1996 100%
Japan D-M-E Corporation Japan 1996 51%
Master Unit Die Products, Inc. Delaware 1998 100%
Uniloy Milacron Inc. Delaware 1998 100%
Uniloy Milacron Machinery -
Mexico, S.A. d.e.C.V. Mexico 1998 100%
Uniloy Milacron Services -
Mexico, S.A. d.e.C.V. Mexico 1998 100%
Valenite Inc. Delaware 1993 100%
Valenite-Modco International Inc. Michigan 1993 100%
Valenite-Widia Japan Inc. Japan 1993 100%
Valenite-Modco Limited Canada 1993 100%
Milacron Canada, Inc. Canada 1996 100%
Valenite de Mexico, S.A. d.e.C.V. Mexico 1993 100%
Cincinnati Milacron IPK, Inc. Korea 1993 100%
Talbot Holdings, Ltd. Delaware 1995 100%
Fastcut Tool Corporation Delaware 1995 100%
</TABLE>
CONSENT OF EXPERTS AND COUNSEL
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement (Form S-8 No. 2-89499) pertaining to
the 1984 Long-term Incentive Plan, in the Registration
Statement (Form S-8 No. 33-20503) pertaining to the 1987
Longterm Incentive Plan, in the Registration Statement (Form
S-8 No. 33-33623) pertaining to the Retirement Savings Plan,
in the Registration Statement (Form S-8 No. 33-44423)
pertaining to the 1991 Long-term Incentive Plan, in the
Registration Statement (Form S-8 No. 33-56403) pertaining to
the 1994 Longterm Incentive Plan, in the Registration
Statement (Form S-8 No. 333-36743) pertaining to the 1997
Long-term Incentive Plan of Milacron Inc., and in the
Registration Statement (Form S-8 No. 333-70733) pertaining
to the Milacron Inc. Plan for the Deferral of Director's
Compensation, of our report dated February 8, 1999, with
respect to the consolidated financial statements and
schedule included in this Annual Report (Form 10-K) of
Milacron Inc. for the year ended December 31, 1998.
/s/ ERNST & YOUNG LLP
Cincinnati, Ohio
March 24, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> DEC-27-1997
<PERIOD-END> DEC-31-1998
<CASH> 48,900
<SECURITIES> 0
<RECEIVABLES> 249,000
<ALLOWANCES> 12,100
<INVENTORY> 401,000
<CURRENT-ASSETS> 730,500
<PP&E> 605,200
<DEPRECIATION> 254,300
<TOTAL-ASSETS> 1,557,100
<CURRENT-LIABILITIES> 550,900
<BONDS> 0
<COMMON> 379,000
0
6,000
<OTHER-SE> 91,600
<TOTAL-LIABILITY-AND-EQUITY> 1,557,100
<SALES> 1,514,700
<TOTAL-REVENUES> 1,514,700
<CGS> 1,092,300
<TOTAL-COSTS> 1,092,300
<OTHER-EXPENSES> 288,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,700
<INCOME-PRETAX> 103,500
<INCOME-TAX> 28,100
<INCOME-CONTINUING> 75,400
<DISCONTINUED> 33,900
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,500
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.05
</TABLE>
Exhibit 10.4
MILACRON INC. 1997 Long-Term Incentive Plan, As Amended
Section 1. GENERAL PROVISIONS
1.1 Purposes
The purposes of the 1997 Long-Term Incentive Plan
(the "Plan") of Milacron Inc. (the "Company") are
to promote the interests of the
Company and its shareowners by (i) helping to
attract and retain individuals of outstanding
ability; (ii) strengthening the Company's
capability to develop, maintain and direct a
competent management team; (iii) motivating key
employees by means of performance-related
incentives; (iv) providing incentive
compensation opportunities which are competitive
with those of other major corporations; and (v)
enabling such individuals to participate in the long-
term growth and financial success of the Company.
1.2 Definitions
"Affiliate"- means any corporation or other entity
which is not a Subsidiary but as to which the
Company possesses a direct or indirect ownership
interest and has power to exercise management
control.
"Award"- means a Stock Option grant, a Restricted
Stock grant and/or a Performance Share Grant under
the Plan.
"Board of Directors"- means the board of
directors of the Company.
"Code"- means the Internal Revenue Code of 1986, as
it may be amended from time to time.
"Committee"- means those members of the
Personnel and Compensation Committee of the Board
of Directors who qualify as "Non-Employee Directors"
pursuant to Rule 16b-3(b)(3) issued under the Exchange
Act and who qualify as outside directors pursuant to
Code Section 162(m) and any regulations issued
thereunder.
"Common Stock"- means the common shares of the
Company.
"Corporation"- means the Company, its divisions,
Subsidiaries and Affiliates.
"Director"- means a member of the Board of
Directors of the Company.
"Disability Date"- means the date on which a
Participant is deemed disabled under the
employee benefit plans of the Corporation
applicable to the Participant.
"Earnings Per Share"- shall mean earnings
from continuing operations before extraordinary
items and cumulative effect of changes in methods
of accounting, but including or excluding any
income or expense items which, in the opinion of
the Committee, are properly includable or
excludable in the determination of earnings
within the intent of the Plan, reduced by the
preferred dividend requirement, divided by the
number of common share used to calculate "basic
earnings per share" as that term is defined in
Statement of Financial Accounting Standards No. 128.
In the event that generally accepted accounting
principles for the calculation of Earnings Per
Share change during the term of a Performance
Period, the number of common shares used to
calculate Earnings Per Share at the beginning and
end of the Performance Period shall be
determined by a method, to be chosen at the
Committee's discretion, which shall be applied
consistently throughout the Performance Period.
"Employee"- means any salaried employee of the
Corporation.
"Exchange Act" - means the Securities Exchange Act
of 1934, as amended.
"Fair Market Value"- means the average of the high
and low prices of the Common Stock on the date on
which it is to be valued hereunder, as reported
for New York Stock Exchange-Composite Transactions,
or if there were no sales of Common Stock on that day,
the next preceding day on which there were sales.
"Incentive Stock Options"- means Stock Options
which constitute "incentive stock options" under
Section 422 (or any successor section) of the
Code.
"Initial Performance Period"- shall mean the
Performance Period beginning December 29, 1996.
"Non-Employee Director"- means a Director who
is not an Employee.
"Non-Qualified Stock Options" means Stock Options
which do not constitute Incentive Stock Options.
"Participant"- means an Employee who is
selected by the Committee to receive an Award
under the Plan.
"Performance Cycle"- means a fiscal year of the
Company in which this Plan is in effect.
"Performance Period"- shall mean the three year
period following the beginning of the fiscal
year in which the Performance Share Grant is
awarded.
"Performance Share Grant"- shall mean a number of
shares of Restricted Stock granted to the
Participant at the beginning of a Performance
Period that ranges from 20% to 100%, as determined
by the Committee, of the Participant's base
earnings during the year of award divided by the
average of the closing prices per share of Common
Stock during the month immediately preceding the
Performance Period.
"Performance Share Multiple"- shall mean a
percentage of 0%, 100%, 150% or 200% which,
when multiplied by the Performance Share Grant,
results in the final number of Performance Shares
Earned by the Participant for a specific Performance
Period.
"Performance Shares Earned"- shall mean the
product of the Performance Share Multiple
multiplied by the Performance Share Grant.
"Restricted Period"- means the period of up to three
(3) years selected by the Committee during which
a grant of Restricted Stock may be forfeited to
the Company.
"Restricted Stock"- means shares of Common Stock
contingently granted to a Participant under Sections
3, 4 or 5 of the Plan.
"Retirement Date" - means the actual date of
retirement from the Company (i) for those
Participants who have attained age 55 and have at
least ten Years of Credited Service (as that term is
defined in the Milacron Retirement Plan); or, (ii)
as may be determined under a temporary early
retirement program.
"Stock Options" - means an Incentive Stock
Option and/or a Non-Qualified Stock Option granted
under Section 2 of the Plan.
"Subsidiary"- means any corporation in which
the Company possesses directly or indirectly fifty
percent (50%) or more of the total combined voting
power of all classes of its stock.
"Total Growth Rate"- shall mean the percentage
increase in Earnings Per Share for threshold,
target and maximum levels of attainment in the
third year of the Performance Period divided by
the Earnings Per Share in the year immediately prior
to that Performance Period, and will be the
result of the annual compound growth rate over
the three year Performance Period.
1.3 Administration
The Plan shall be administered by the Committee,
which shall at all times consist of three or more
members. The Committee shall have sole and complete
authority to adopt, alter and repeal such
administrative rules, guidelines and practices
governing the operation of the Plan as it shall
from time to time deem advisable, and to
interpret the terms and provisions of the Plan.
The Committee's decisions are binding upon all
parties.
1.4 Eligibility
All Employees who have demonstrated significant
management potential or who have contributed in a
substantial measure to the successful performance
of the Corporation, as determined by the
Committee, are eligible to be Participants in the
Plan. Also, in instances where another corporation
or other business entity is being acquired by the
Company, and the Company has assumed outstanding
employee option grants and/or the obligation to
make future or potential grants under a prior
existing plan of the acquired entity,
adjustments are permitted at the discretion of
the Committee subject to Section 1.5(a) below.
Awards to Employees are made at the discretion of
the Committee. Non-Employee Directors shall also
participate pursuant to Section 5 herein.
1.5 Shares Reserved
(a) There shall be reserved for grant pursuant to
the Plan a total of 2,000,000 shares of Common
Stock. In the event that (i) a Stock Option expires
or is terminated unexercised as to any shares
covered thereby, or (ii) Restricted Stock grants,
are forfeited or unearned for any reason under the
Plan, such shares shall thereafter be again
available for grant pursuant to the Plan.
(b) In the event of any change in the outstanding
shares of Common Stock by reason of any stock
dividend or split, recap italization, merger,
consolidation, spin-off, combination or exchange
of shares or other corporate change, or any
distri butions to common shareholders other than
cash dividends, the Committee shall make such
substitution or adjustment, if any, as it deems to
be equitable, as to the number or kind of shares of
Common Stock or other securities granted or
reserved for grant pursuant to the Plan, the
number of outstanding Stock Options and the
option price thereof, and the number of
payable Performance Share Grants and shares of
Restricted Stock.
1.6 Change of Control
A "Change of Control" shall be deemed to have
occurred if and when (a) any person (as such term
is defined in Section 13(d) of the Exchange
Act), corporation or other entity, which
theretofore beneficially owned securities
representing less than twenty percent of the
voting power of the Company in the election of
directors, acquires, in a transaction or series of
transactions, outstanding securities of the Company
when, added to the voting power previously held,
entitles such person to exercise more than twenty
percent of the total voting power of the Company
in the election of directors (the formation of a
syndicate or group of existing shareholders not
being deemed to constitute such an acquisition);
(b) the Board of Directors (or, if approval of
the Board of Directors is not required as a
matter of law, the stockholders of the Company)
shall approve (1) any consolidation or merger of
the Company in which the Company is not the
continuing or surviving corporation or pursuant
to which shares of Common Stock would be converted
into cash, securities or other property, other than
a merger of the Company in which the holders of
Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of
the surviving corporation immediately after the
merger, or (2) any sale, lease, exchange, or
other transfer (in one transaction or a series
of related transactions) of all, or substantially
all, of the assets of the Company, or (3) the
adoption of any plan or proposal for the
liquidation or dissolution of the Company; or (c)
any person (as such term is defined in Section
13(d) of the Exchange Act), corporation or other
entity other than the Company shall make a
tender or exchange offer to acquire any Common
Stock or securities convertible into Common Stock
for cash, securities or any other consideration if,
after giving effect to the acquisition of all
Common Stock or securities sought pursuant to such
offer, such person, corporation or other entity
would become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of thirty percent or more of
the outstanding Common Stock (calculated as
provided in paragraph (d) of such Rule 13d-3 in
the case of rights to acquire Common Stock);
provided, that at least ten percent of such Common
Stock or securities sought pursuant to such offer is
acquired.
In the event of a Change of Control of the Company
(i) all time periods relating to the exercise or
realization of Awards shall be accelerated so that
such Awards may be exercised or realized in full
beginning immediately following the Change of
Control and extending for the remaining normal
exercise period, and (ii) all Performance Share
Grants eligible to be earned for the outstanding
Performance Cycle will be immediately payable in
full in cash.
1.7 Withholding
The Corporation shall have the right to deduct from
all amounts paid in cash any taxes required by law
to be withheld therefrom. In the case of payments
of Awards in the form of Common Stock, the amount of
any taxes required to be withheld with respect to
such Common Stock from the Participant may, at the
Committee's discretion, be paid in cash, by tender
by the Employee of the number of shares of Common
Stock whose Fair Market Value equals the amount
required to be withheld or, except for Non-Employee
Directors receiving Awards of Common Stock pursuant
to Section 5 herein, use of the Company's Key
Employee Withholding Tax Loan Program.
1.8 Nontransferability
No Award shall be assignable or transferable except
by will or the laws of descent and distribution,
and no right or interest of any Participant shall
be subject to any lien, obligation or liability of
the Participant.
1.9 No Right to Employment
No person shall have any claim or right to be
granted an Award, and the grant of an Award shall
not be construed as giving a Participant the
right to be retained in the employ of the
Corporation. Further, the Corporation expressly
reserves the right at any time to dismiss a
Participant free from any liability, or any
claim under the Plan, except as provided herein
or in a Stock Option or Restricted Stock agreement.
1.10 Construction of the Plan
The validity, construction, interpretation,
administration and effect of the Plan and of its
rules and regulations, and rights relating to the
Plan, shall be determined solely in accordance with
the laws of Ohio.
1.11 Amendment
(a) The Board of Directors may amend, suspend or
terminate the Plan or any portion thereof at
any time, provided that no amendment shall be
made without stockholder approval which shall (i)
increase (except as provided in Section 1.5(b)
hereof) the total number of shares reserved for
grant pursuant to the Plan, (ii) change the class
of Employees eligible to be Participants, (iii)
decrease the minimum option prices stated in Section
2.1 hereof (other than to change the manner of
determining Fair Market Value to conform to any
then applicable provision of the Code or
regulations thereunder) (iv) extend the maximum
period during which Non-Qualified Stock Options
or Incentive Stock Options may be exercised, or
(v) reduce the restriction period for Restricted
Stock Awards (except as provided in Section 1.6
hereof).
(b) With the consent of the Participant
adversely affected thereby, the Committee may amend
or modify any outstanding Award in any manner not
inconsistent with the terms of the Plan,
including without limitation, to change the form of
payment or the date or dates as of which (i) a
Stock Option becomes exercisable, (ii) the
restrictions on shares of Restricted Stock are
removed, or (iii) a Performance Share Grant is
payable.
1.12 Authority of Committee
Subject to the provisions of the Plan, the Committee
shall have the sole and complete authority to
determine the Employees to receive Awards, and:
(a) Stock Options. The number of shares to be
covered by each Stock Option and the conditions
and limitations, if any, in addition to those
set forth in Section 2.2 hereof, applicable to the
exercise of the Stock Option shall be determined by
the Committee. The Committee shall have the
authority to grant Incentive Stock Options, or
to grant Non-Qualified Stock Options, or to
grant both types of Stock Options. In the case of
Incentive Stock Options, the maximum aggregate Fair
Market Value (at the date of grant) of the shares,
under this Plan or any other plan of the Company
or a corporation which (at the date of grant)
is a parent of the Company or a Subsidiary, which
are exercisable by an Employee for the first time
during any calendar year shall not exceed $100,000
or, if different, the maximum limitation in
effect at the time of grant under Section 422 of
the Code, or any successor provision.
(b) Restricted Stock. The number of shares of
Restricted Stock to be granted to each
Participant, the duration of the Restricted
Period during which and the conditions under which
the Restricted Stock may be forfeited to the
Company, and the terms and conditions of the Award
in addition to those contained in Section 3.1
shall be determined by the Committee. Such
determinations shall be made by the Committee at the
time of the grant.
1.13 Effective Dates
The Plan shall be effective on December 29, 1996,
and shall expire on the earlier of (i) a date
determined by the Board of Directors, or (ii) the
full use of the shares reserved for grant pursuant
to the Plan, provided however, that the Plan shall
be null and void unless approved at the 1997 annual
meeting of the shareholders of the Company.
1.14 Government and Other Regulations
The obligation of the Company with respect to
Awards shall be subject to all applicable laws,
rules and regulations and such approvals by any
governmental agencies as may be required,
including, without limitation, the
effectiveness of any registration statement
required under the Securities Act of 1933, and
the rules and regulations of any securities
exchange on which the Common Stock may be listed.
For so long as the Common Stock is registered
under the Exchange Act, the Company shall use its
reasonable efforts to comply with any legal
requirements (a) to maintain a registration
statement in effect under the Securities Act of
1933 with respect to all shares of Common Stock
that may be issued to Holders under the Plan, and
(b) to file in a timely manner all reports required
to be filed by it under the Exchange Act.
1.15 Non-Exclusivity
Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the
stockholders of the Company for approval shall be
construed as creating any limitations on the power
of the Board of Directors to adopt such other
incentive arrangements as it may deem desirable
including, without limitation, the granting of
stock options and the awarding of stock and cash
otherwise than under the Plan, and such
arrangements may be either generally applicable
or applicable only in specific cases.
1.16 Forfeiture Provision
If the Employee has (i) used for profit or
disclosed confidential information or trade secrets
of the Company to unauthorized persons, or (ii)
breached any contract with or violated any
legal obligations to the Company, or (iii) failed
to make himself or herself available to consult
with, supply information to, or otherwise
cooperate with the Company at reasonable times
and upon a reasonable basis, or (iv) engaged in any
other activity which would constitute grounds for
his or her discharge for cause by the Company or a
Subsidiary, the Employee will forfeit all
undelivered portions of an Award.
Section 2: STOCK OPTIONS
2.1 Option Price
The Committee shall establish the option price at
the time each Stock Option is granted, which price
shall not be less than 100% of the Fair Market
Value of the Common Stock on the date of grant.
The option price shall be subject to adjustment
in accordance with the provisions of Section 1.5(b)
hereof.
2.2 Exercise of Options
(a) Except as stated in Section 2.2(c), each Stock
Option by its terms shall require the Participant
to remain in the continuous employ, or service to
the Board of Directors if the individual is a Non-
Employee Director and awarded Stock Options
under Section 5 herein, of the Corporation for at
least two years from the date of grant of the
Stock Option before any part of the Stock Option
shall be exercisable. Non-Qualified Stock Options
and Incentive Stock Options may not be exercisable
later than ten years after their date of grant.
(b) Stock Options shall become exercisable in
installments with twenty-five percent (25%) becoming
exercisable upon the second anniversary of the
date of grant of the Stock Option and
additional increments of twenty-five percent (25%)
of the Stock Option shall become exercisable on
each anniversary thereafter until the entire Stock
Option is exercisable.
(c) In the event a Participant ceases to be an
Employee or a Non-Employee Director as a result
of his death, all time periods related to the
exercise of any outstanding Stock Options shall
be accelerated and the Stock Options shall become
exercisable immediately following the Participant's
death and extending for the remaining normal
exercise period. In the event a Participant
ceases to be an Employee or a Non-Employee Director
upon the occurrence of his Retirement Date,
Disability Date, or otherwise with the consent of
the Committee, his Stock Options shall be
exercisable as described in 2.2(b) above as if the
individual had remained as an Employee or Non-
Employee Director and extending for the normal
exercise period. The Committee may at any time
and with regard to all Participants or any
individual Participant accelerate time periods
related to the exercise of any outstanding Stock
Options, and the Stock Option shall become
exercisable immediately thereafter and extending
for the remaining normal exercise period. In
all other circumstances when a Participant ceases
to be an Employee or a Non-Employee Director, his
rights under all Stock Options shall terminate
immediately.
(d) Each Stock Option shall be confirmed by a
Stock Option agreement executed by the Company and
by the Participant which agreement shall designate
the Stock Options granted as Incentive Stock Options
or NonQualified Stock Options. The option price of
each share as to which an Option is exercised shall
be paid in full five (5) days from the date of
such exercise, but in no event shall the shares
issued pursuant to said option exercise be
delivered to the Participant until said payment
has been received by the Company. Such payment
shall be made in cash, by tender of shares of
Common Stock owned by the Participant valued at Fair
Market Value as of the date of exercise, subject to
such limitations on the tender of Common Stock as
the Committee may impose, pursuant to the
provisions of the Company's Key Employee Stock
Option Loan Program, if applicable, (or any other
loan program or arrangement which may be
established by the Company under this Plan, or
otherwise) or by a combination of the foregoing.
2.3 Maximum Number of Shares
The maximum number of shares that may be
granted to any Participant under all Stock Option
Awards under this Plan during any one year shall not
exceed 100,000 shares.
Section 3: RESTRICTED STOCK GRANTS
3.1 The terms and conditions regarding Restricted
Stock grants are as follows:
(a) Shares of Restricted Stock may not be
sold, assigned, transferred, pledged or otherwise
encumbered, except as herein provided, during the
Restricted Period. Certificates issued in respect
of shares of Restricted Stock shall be registered in
the name of the Participant and deposited by him,
together with a stock power endorsed in blank,
with the Company. At the expiration of the
Restricted Period, the Company shall deliver such
certificates to the Participant or his
legal representative, except that the Participant
may defer receipt of his Restricted Stock under
terms established by the Committee by extending the
Restricted Period.
(b) Except as provided in subsection (a) hereof, the
Participant shall have all the rights of a holder of
Common Stock, including but not limited to the
rights to receive dividends and to vote during the
Restricted Period.
(c) In the event a Participant ceases to be an
Employee or a Non-Employee Director during the
Restricted Period as a result of his death,
the restrictions imposed hereunder shall
immediately lapse with respect to such shares of
Restricted Stock. In the event a Participant ceases
to be an Employee or a Non-Employee Director during
the Restricted period and upon the occurrence of
his Retirement Date, Disability Date, or with the
consent of the Committee, the restrictions
imposed hereunder shall continue as if the
individual had remained as an Employee or Non-
Employee Director. The Committee may at any time and
with regard to all Participants or any individual
Participant lapse any restrictions imposed
hereunder with respect to shares of Restricted
Stock. In all other circumstances in which a
Participant ceases to be an Employee or Non-
Employee Director, all shares of Restricted Stock
shall thereupon be forfeited to the Company and
the certificate or certificates representing such
Restricted Stock shall be immediately canceled.
(d) Each grant shall be confirmed by a
Restricted Stock agreement executed by the Company
and by the Participant.
Section 4: PERFORMANCE SHARE GRANTS
(a) Not later than May 1 of each calendar year in
which this Plan is in effect, the Committee may
make a Performance Share Grant, effective as of
the beginning of the year, to any Participant
selected by the Committee. The Committee may make a
Performance Share Grant to a Participant in any
given year which relates to a Performance Period
already in progress. In such event, (i) the
Performance Share Grant determined under Section
4(b) shall be prorated based on the remaining whole
years of the relevant Performance Period as of the
date of grant compared to the entire length of the
relevant Performance Period, (ii) the Participant
shall receive Restricted Shares immediately upon the
date of grant, and, (iii) the Total Growth Rate
and level of attainment factors determined by the
Committee at the beginning of the relevant
Performance Period shall be used to determine the
Participant's ultimate payout under Section 4(d)
herein. If awarded not later than May 1, the
Performance Share Grant shall relate back to the
beginning of the year in which made for purposes
of proration.
(b) The Committee shall, at the beginning of each
Performance Period or not later than 90 days
thereafter, determine the Performance Share
Grant to be made to each Participant in
Restricted Stock and establish the threshold, target
and maximum levels of attainment for Total
Growth Rate during the Performance Period.
(c) If Earnings Per Share during the third
year of a Performance Period are equal to or
exceed the threshold for a Total Growth Rate set
by the Committee at the beginning of a Performance
Period, a Performance Share Multiple of 100%, 150%
or 200% will be applied to the Performance Share
Grant. If Earnings Per Share are below the
threshold level of attainment, the Performance
Share Multiple will be 0%. Below is the Total
Growth Rate and the threshold, target and maximum
levels of attainment for the Initial Performance
Period.
<TABLE>
<CAPTION>
Earnings Per Share Total Level of Performance
Compounded Growth Attainment Share
Annually Rate Multiple
________________________________________________________________
<S> <C> <C> <C>
Less than 12% Less than
40.5% 0%
At least 12%, At least
but less than 15% 40.5% but Threshold 100%
less than
52.1%
At least 15%, At least Target 150%
but less than 18% 52.1% but
less than
64.3%
Equal to or greater 64,3% or Maximum 200%
than 18% greater
</TABLE>
(d) Payment for the value of Performance Shares Earned shall
be made to a Participant not later than three months
following the end of a Performance Period. If the
threshold Total Growth Rate during the Performance Period is
not attained in the third year the performance goals
attached to the Performance Share Grant will not have
been met and the Participant shall forfeit his Restricted
Stock. Payment related to a Performance Share
Multiple of 100% shall be the lapse of restrictions for
the Participant's Performance Share Grant and he shall
receive the certificate for unrestricted ownership of such
shares. Payment related to that portion, if any, of a
Performance Share Multiple of 150% or 200% shall be as
follows: a) for the first 100%, payment shall be the
transfer of unrestricted share certificates as a result
of the lapse of restrictions on the Performance Share
Grant and b) for the 50% or 100% premium, payment shall be
an amount of cash equal to the value of the Performance
Shares Earned in excess of the 100% multiplied by the
average of the closing prices per share of the Common
Stock for the last month in the Performance Period. In
the event of a Change of Control (as defined in Section 1.6),
payment shall be made as if the maximum targets for the
three year performance period had been met and shall be paid within
thirty days following the Change of Control. Such payment
shall be in a cash amount equal to the Performance Share
Grant multiplied by the higher of (i) the highest
average of the high and low prices per share of the
Common Stock on any date within the period commencing 30
days prior to the Change in Control or (ii) if the Change
in Control occurs as a result of a tender or exchange offer
or consummation of a corporate transaction, the highest
price paid per share of Common Stock pursuant thereto.
(e) The Committee may make adjustments from time to time in
the Performance Share Multiple, in the Total Growth Rate
or in Earnings Per Share in such reasonable manner as the
Committee may determine to reflect (i) any increase or
decrease in the number of issued shares of Common Stock of
the Company resulting from a subdivision or consolidation
of shares or any other capital adjustment, the payment
of stock dividends or other increases or decreases in
such shares effected without receipt of consideration by
the Company, (ii) material changes in the Company's
accounting practices or principles, the effect of which
would be to cause inconsistency in reporting earnings per
share, (iii) material acquisitions or dispositions, the
effect of which would be to cause fluctuations in reported
earnings per share which are not within the intent of the
Plan, or (iv) extraordinary, unusual and nonrecurring
items (such as restructuring charges or a disposal of a
business) which are disclosed in the published,
audited financial statements; provided, however, that no
such adjustments shall be made to the extent that the
Committee determines that the adjustment would cause
payment in respect of Performance Share Grant to fail to be
fully deductible by the Company on account of Section 162(m)
of the Code.
(f) With respect to a Performance Share Grant, the
Participant shall have the rights of a holder of Common
Stock, including but not limited to the rights to receive
dividends and to vote during the Restricted Period until
such Participant ceases to be an Employee of the
Corporation for any reason other than death or termination
of Employment on a Disability Date or Retirement Date.
(g) In the event a Participant ceases to be an Employee
upon the occurrence of his death, Retirement Date or
Disability Date prior to the end of a Period, payment
for the value of Performance Shares Earned shall be
prorated for the amount of time the Participant remained
an Employee compared to the length of the Performance
Period, provided the Participant has completed at least
the first full year of the Performance Period. In such
event, any prorated payment for Performance Shares Earned
shall be distributed in unrestricted share certificates
or paid in cash (depending on whether the
threshold, target or maximum Total Growth Rate is attained)
in accordance with Paragraphs (c) and (d) above. In all
other circumstances in which a Participant ceases to be an
Employee, Performance Share Grant shall terminate and no
amounts shall be payable at any time.
(h) If there is an event constituting a Change of Control
(as defined in Section 1.6), the value of any
outstanding Performance Share Grant shall immediately
vest in the Participant to whom such Performance
Share Grant has been awarded as of the date such Change
of Control occurs and at the closing price per share of
Common Stock on such date. Such value shall be equal to
the maximum Performance Share Multiple multiplied by the
Performance Share Grant.
Section 5: NON-EMPLOYEE DIRECTORS
(a) Each individual then serving as a Non-Employee
Director shall receive a Non-Qualified Stock Option of 2,000
shares at or about the effective date of the Plan and at
the beginning of each of the Company's fiscal years
thereafter so long as the Plan is in effect. As a portion
of their compensation, the Committee may also award to Non-
Employee Directors shares of Restricted Stock, as it may
determine, not to exceed 2,000 shares per individual every
three years.
Exhibit 10.6
MILACRON
SUPPLEMENTAL PENSION PLAN, As Amended
This Plan is an amended version of the plan originally approved
by the Board of Directors on September 10, 1980, to provide
supplemental retirement benefits to certain officers of the
Company, as described in letters to them dated September 26,
1980.
1. The term Plan means the Milacron Supplemental
Pension Plan as described in this document.
2. The following terms shall have the same meanings as those
defined In the Milacron Retirement Plan,
hereinafter called the Retirement Plan -
Highest Average Compensation;
Accrued Benefit;
Year of Credited Service;
Benefit Commencement Date;
Normal Retirement Date;
Early Retirement Date;
Primary Social Security Benefit;
Actuarial Equivalent;
Company;
Board;
Participant.
For purposes of this Plan, the term Highest Average
Compensation shall be determined using "Compensation" as
defined under the Milacron Retirement Plan
without regard to any dollar limitations and including
employee deferrals under the Milacron
Compensation Deferral Plan.
3. The term Recipient shall mean a Participant who has been
designated by the Board as being entitled to benefits under
the Plan.
4. As used in this document, the words "he", "him" and "his"
shall be taken to refer equally to a man or a woman.
5. Subject to the possible choice of a different form of
benefit as provided in Section 8, a Recipient shall receive,
beginning on his Benefit Commencement Date and ending on the
first day of the month in which he dies, a monthly pension
equal to one-twelfth of the net annual benefit defined in
Section 6, provided that his benefit has become vested as
provided in Section 9.
6. The net annual benefit shall consist of a gross amount, as
defined in Section 7, reduced by the sum of (a) the
Recipient's Accrued Benefit under the Retirement Plan, (b)
one-half of his Primary Social Security Benefit, and (c) the
annual amount of a straight life annuity computed as the
Actuarial Equivalent of any and all pensions paid or payable
to him by employers other than the Company.
7. The gross amount for any Recipient shall be the sum of (a)
1.5% of his Highest Average Compensation multiplied by the
number (not greater than 35) of his Years of Credited
Service, and (b) 1% of his Highest Average Compensation
multiplied by the number (not greater than 12) of his years
of service as an officer of the Company; provided, however,
that the gross amount shall not be less than 52.5%, nor
greater than 64.5%, of his Highest Average Compensation.
8. A Recipient shall have options to elect different forms of
benefit, and his spouse shall have pre-retirement survivor
benefits, consistent with those provided by the Retirement
Plan. Elections made under the Retirement Plan and under
this Plan need not be the same.
9. Unless forfeited pursuant to Section 13, a Recipient's
benefit shall become vested -
(a) on his Normal Retirement Date; or
(b) on his Early Retirement Date; or
(c) on involuntary termination of employment before
reaching the age of 55 but after completion of ten
Years of Credited Service.
10. By accepting payment of any benefit under the Plan the
Recipient agrees not to be employed, or consult, in any
business which is, or is about to be, engaged in a business
of the same or substantially the same nature as the
businesses of the Company or its subsidiaries without prior
written consent of the Company, and breach of this agreement
by the Recipient shall be cause for termination of payment
of benefits under the Plan.
11. The establishment of the Plan shall not be construed as
conferring any legal rights upon any Recipient or other
person for a continuation of employment, nor shall it
interfere with the rights of the Company to discharge any
Recipient and to treat him without regard to the effect
which such treatment might have upon him as a Recipient.
12. Any benefit payable under the Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, lien or charge, and any
attempt to cause any such benefit to be so subjected shall
not be recognized except to such extent as may be required
by law.
13. In the event that a Recipient shall at any time be convicted
of a crime involving dishonesty or fraud on his part in his
relationship with the Company, all benefits which would
otherwise be payable to him under the Plan shall be
forfeited.
14. The Plan shall be administered by the Personnel and
Compensation Committee of the Board.
15. The Company shall have the right to deduct from each payment
to be made under the Plan any required withholding taxes.
16. In the event that a Recipient is unable to care for his
affairs because of illness or accident, the Board may direct
that any benefit payment due him, unless claim shall have
been made therefor by a duly appointed legal representative,
be paid to his spouse, a child, a parent or other blood
relative, or to a person with whom he resides, and any such
payment so made shall be a complete discharge of the
liabilities of the Plan therefor.
17. The Board reserves the right to modify or to amend, in whole
or in part, or to terminate, this Plan at any time.
However, no modification, amendment or termination of the
Plan shall adversely affect the right of any Recipient to
receive the benefits granted to him under the Plan before
the date of modification, amendment or termination.
18. Amounts, if any, contributed to the Plan by the Company
shall be held in trust, but shall not be held for the
separate account of any Recipient.
19. The Plan shall be governed and construed by the laws of the
State of Ohio.
Exhibit 10.7
MILACRON INC.
SUPPLEMENTAL RETIREMENT PLAN, As Amended
This Plan was approved by the Board of Directors on September 15,
1987, to provide supplemental retirement benefits to certain
officers of Milacron Inc.
1. The term Plan means the Milacron Inc.
Supplemental Retirement Plan as described in this document.
2. The following terms shall have the same meanings as those
defined in the Milacron Retirement Plan,
hereinafter called the Retirement Plan -
Highest Average Compensation;
Accrued Benefit;
Year of Credited Service;
Benefit Commencement Date;
Normal Retirement Date;
Early Retirement Date;
Primary Social Security Benefit;
Actuarial Equivalent;
Company;
Board;
Participant.
For purposes of this Plan, the term Highest Average
Compensation shall be determined using "Compensation" as
defined under the Milacron Retirement Plan
without regard to any dollar limitations and including
employee deferrals under the Milacron
Compensation Deferral Plan.
3. The term Recipient shall mean a Participant who also holds
one of the following offices in Milacron Inc.:
Chairman, President, Vice President, Treasurer, Secretary or
Controller.
4. As used in this document, the words "he", "him" and "his"
shall be taken to refer equally, to a man or a woman.
5. Subject to the possible choice of a different form of
benefit as provided in Section 8, a Recipient shall receive,
beginning on his Benefit Commencement Date and ending on the
first day of the month in which he dies, a monthly pension
equal to one-twelfth of the net annual benefit defined in
Section 6, provided that his benefit has become vested as
provided in Section 9.
6. The net annual benefit shall consist of a gross amount, as
defined in Section 7, reduced by the sum of (a) the
Recipient's Accrued Benefit under the Retirement Plan, and
(b) the product obtained by multiplying 1/70th of his
Primary Social Security Benefit by the number, not in excess
of 35, of his years of Credited Service.
7. The gross amount for any Recipient shall be 1.5% of his
Highest Average Compensation multiplied by the number (not
greater than 35) of his Years of Credited Service and shall
be adjusted to reflect an Actuarial Equivalent unless
retirement is elected under a Company sponsored temporary
early retirement program.
8. A Recipient shall have options to elect different forms of
benefit, and his spouse shall have pre-retirement survivor
benefits and costs associated therewith, consistent with
those provided by the Retirement Plan. Elections made under
the Retirement Plan and under this Plan need not be the
same.
9. Unless forfeited pursuant to Section 13, a Recipient's
benefit shall become vested -
(a) on his Normal Retirement Date; or
(b) on his Early Retirement Date; or
(c) on involuntary termination of employment before
reaching the age of 55 but after completion of ten
Years of Credited Service.
10. By accepting payment of any benefit under the Plan the
Recipient agrees not to be employed, or consult, in any
business which is, or is about to be, engaged in a business
of the same or substantially the same nature as the
businesses of the Company or its subsidiaries without prior
written consent of the Company, and breach of this agreement
by the Recipient shall be cause for termination of payment
of benefits under the Plan.
11. The establishment of the Plan shall not be construed as
conferring any legal rights upon any Recipient or other
person for a continuation of employment, nor shall it
interfere with the rights of the Company to discharge any
Recipient and to treat him without regard to the effect
which such treatment might have upon him as a Recipient.
12. Any benefit payable under the Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, lien or charge, and any
attempt to cause any such benefit to be so subjected shall
not be recognized except to such extent as may be required
by law.
13. In the event that a Recipient shall at any time be convicted
of a crime involving dishonesty or fraud on his part in his
relationship with the Company, all benefits which would
otherwise by payable to him under the Plan shall be
forfeited.
14. The Plan shall be administered by the Personnel and
Compensation Committee of the Board.
15. The Company shall have the right to deduct from each payment to
be made under the Plan any required withholding taxes.
16. In the event that a Recipient is unable to care for his affairs
because of illness or accident, the Board may direct that any
benefit payment due him, unless claim shall have been made
therefor by a duly appointed legal representative, be paid to
his spouse, a child, a parent or other blood relative, or to a
person with whom he resides, and any such payment so made shall
be a complete discharge of the liabilities of the Plan therefor.
17. The Board reserves the right to modify or to amend, in whole or
in part, or to terminate, this Plan at any time. However, no
modification, amendment or termination of the Plan shall
adversely affect the right of any Recipient to receive the
benefits granted to him under the Plan before the date of
modification, amendment or termination.
18. Amounts, if any, contributed to the Plan by the Company shall be
held in trust, but shall not be held for the separate account of
any Recipient.
19. The Plan shall be governed and construed by the laws of the
State of Ohio.
Exhibit 10.8
MILACRON INC.
Plan for the Deferral of Directors' Compensation, As Amended
1. Purposes. The purposes of the Milacron Inc.
(the "Company") Plan for the Deferral of Directors' Compensation
(the "Plan") are to encourage the Company's Directors to invest
in the future of the Company through ownership of its common
stock and to insure the availability to the Company of its
current and prospective Directors.
2. Eligibility. Any Director of the Company who is not an
officer or employee of the Company or a subsidiary of the Company
is eligible to participate in the Plan.
3. Participant Accounts. A Participant Account shall be
established for each participant which shall include a Deferred
Cash Account and a Deferred Stock Account. A separate Special
Deferred Stock Account shall be established as set forth in
Section 10.
Each Deferred Cash Account shall be credited with the
amounts deferred on behalf of a participant plus annual interest
as described in Section 7. The total cumulative value of the
Deferred Cash Account shall be adjusted not less frequently than
annually, usually on the 31st day of December, to reflect
contributions to the Account, payments from the Account as
hereinafter provided, and assumed interest.
Each Deferred Stock Account shall be credited with the
number of shares as determined pursuant in Section 4 herein.
Additional shares shall be credited to the participant's Deferred
Stock Account on the payment date for dividends on the Company's
common shares in an amount equal to the quotient of (1) dividends
attributable to the number of shares of stock credited in the
participant's Deferred Stock Account as of the record date set by
the Company's Board of Director's for the payment of dividends
divided by (2) the fair market value of the Company's common
stock as of the close of business on the dividend payment date.
Any cash amounts remaining in a Deferred Stock Account after
shares are credited to the account shall be held in the Deferred
Stock Account to be added to future cash amounts for the
determination of the number of shares to be credited to the
account. Cash amounts held in a Deferred Stock Account shall
accrue interest as described in Section 7.
4. Amount of Deferral. A participant may elect to defer
receipt of all or a specified portion of the fees otherwise
payable to the participant for serving on the Company's Board of
Directors or any committee thereof. Deferred compensation will
be credited to the participant's Participant Account on the date
such compensation is otherwise payable. A portion of the base
retainer, as determined by the Company's Board of Directors, that
is payable to the participant for serving on the Company's Board
of Directors or any committee thereof, shall automatically be
deferred and credited to the participant's Deferred Stock Account
and shall not be eligible to be transferred to the Deferred Cash
Account. The number of shares to be credited to a participant's
Deferred Stock Account shall be the quotient of (1) the amount of
the deferral divided by (2) the fair market value of the
Company's common stock on the date of deferral. Any cash amounts
remaining in a Deferred Stock Account after shares are credited
to the account shall be held in the Deferred Stock Account to be
added to future cash amounts for the determination of the number
of shares to be credited to the account. Cash amounts held in a
Deferred Stock Account shall accrue interest as described in
Section 7.
5. Fair Market Value. For purposes of this Plan, fair
market value of the Company's common stock shall be the average
of the high and low prices at which the stock was traded on the
New York Stock Exchange determined as of the (1) dividend payment
date for Section 3, or (ii) date of deferral for Section 4.
6. Time for Electing Deferral. Any election to: (i) defer
Directors' fees, (ii) alter percentages applied to the
participant's Deferred Cash Account and Deferred Stock Account,
or (iii) revoke an election to defer, must be made no later than
the time that such fees are to be earned by the participant and
must be made on a form designated by the Administrator. An
election to commence a deferral may be made at any time in
accordance with the procedures set forth in Section 9 and shall
indicate the amount of fees deferred and the percentage of such
deferral to be credited to the participant's Deferred Cash
Account and Deferred Stock Account. Any election so made shall
remain in effect beginning from the date of election until the
participant ceases to be a Director or elects in writing to
change his or her election. A change in election may alter the
amount of total deferral or alter the percentage of the total
deferral for credit to the Deferred Cash and Deferred Stock
Accounts. A change in election to defer shall be effective only
with regard to fees subsequently earned. Those Directors who
have deferred fees pursuant to previous plans may, on or before
May 10, 1991, elect what, if any, portion of previously deferred
fees shall be transferred to the participant's Deferred Stock
Account. Absent such an election on or before May 10, 1991, one
hundred percent (100%) of previously deferred fees shall be
credited to the participant's Deferred Cash Account.
Funds shall be transferred following the date the
election is made and the number of shares credited to the
participant's account shall be based on the fair market value of
the Company's common stock on the day the election becomes
effective.
7. Interest. Interest will be credited to each Participant
Account at a rate equal to that interest rate prescribed from
time to time by the Internal Revenue Service under Section
6621(b) of the Internal Revenue Code of 1986, as amended. This
assumed interest shall be compounded annually and treated as
earned from the date deferred compensation is credited to the
date of withdrawal.
8. Payment of Deferred Amounts. No payment may be made
from any Participant Account except as provided in this Section
8.
Payments from a Participant Account shall be made at
such time as the participant has elected in accordance with
Section 9. Payments shall be made in the form of either a lump
sum or annual installments over a period of years not to exceed
ten. Payments from a Deferred Cash Account shall be made only in
cash, and payments from a Deferred Stock Account shall be made
only in the common stock of the Company.
If annual installments are elected, such payments shall
be made on each January 15 in accordance with the participant's
election as provided for in Section 9. The first installment may
be in the calendar year following termination of service as a
Director or in a subsequent year. The amount of the first
payment shall be a fraction of the value of the participant's
Deferred Cash Account and a fraction of the shares in the
participant's Deferred Stock Account. The fraction shall have a
numerator of one and a denominator of the total number of
installments elected. The amount of each subsequent payment
shall be a fraction of the value of the Deferred Cash Account
(including interest earned) and a fraction of the number of
shares credited to the Deferred Stock Account on the day
preceding each subsequent payment. The fraction for determining
subsequent payments shall have a numerator of one and a
denominator of the total number of installments elected minus the
number of installments previously paid.
In the event of a participant's death before he or she
has received all of the deferred payments to which he or she is
entitled hereunder, the value of the participant's Deferred Cash
Account and the number of shares in the participant's Deferred
Stock Account shall be determined as of the day immediately
following death and such amount and number of shares shall be
paid in a single payment to the participant's estate as soon as
reasonably practical thereafter.
Notwithstanding a participant's election of installment
payments, the Company, in its sole discretion, shall have a right
to accelerate any such payments or to make payment of the balance
in a Participant Account in a lump sum.
9. Manner of Electing Deferral. A participant shall elect
a deferral by giving written notice to the Administrator (as
defined in Section 13) on a form designated by the Administrator.
The notice shall include (1) the amount to be deferred; (2) the
time as of which deferral is to commence; (3) the percentage of
the deferral to be credited to the Deferred Cash Account and the
Deferred Stock Account; (4) an election of a lump sum payment or
the number of annual installments (not to exceed 10) for the
payment of the deferred amounts; and (5) the date of the lump sum
payment or the first installment payment (not to be later than
January 15th of the year following the participant's 72nd
birthday).
10. Special Deferred Stock Account. A Special Deferred
Stock Account shall be established for each participant in the
Plan who has elected to cease participation under the Cincinnati
Milacron Inc. Retirement Plan for Non-Employee Directors and
shall be credited with the number of shares of the common stock
of the Company as determined by the Board of Directors of the
Company. Any dividends on the Company's common shares shall be
credited to the Special Deferred Stock Account in accordance with
the provisions of Section 3. Amounts credited to the Special
Deferred Stock Account shall not be eligible to be transferred to
the Deferred Cash Account.
The entire Special Deferred Stock Account shall be paid to
the participant in the form of common stock of the Company in the
month following the date the participant ceases to be a Director
of the Company.
In the event of a participant's death before he or she has
received a distribution from the Special Deferred Stock Account,
the number of shares in the participant's Special Deferred Stock
Account shall be determined as of the day immediately following
death and the number of shares shall be paid in a single payment
to the participant's estate as soon as reasonably practical
thereafter.
11. Participant's Rights Unsecured. The right of any
participant to receive a distribution under the provisions of
this Plan shall be an unsecured claim against the general assets
of the Company. The maintenance of individual accounts is for
bookkeeping purposes only. The Company is not obligated to
acquire or set aside any particular assets for the discharge of
its obligations, nor is any participant to have any property
rights in any particular assets held by the Company, whether or
not held for the purpose of funding the Company's obligations.
12. Statement of Account. Statements will be sent on or
about January 15th of each year to participants as to the value
of their accounts.
13. Assignability. No right to receive payments hereunder
shall be transferable or assignable by a participant, except by
will or by the laws of descent and distribution.
14. Plan Administrator. The Administrator of this Plan
shall be an officer of the Company who is from time to time
appointed by the chief executive officer of the Company. The
Administrator shall have the authority to adopt rules and
regulations for carrying out the Plan, and to interpret, construe
and implement the provisions of the Plan.
15. Amendment or Termination. This Plan may at any time or
from time to time be amended, modified or terminated by the Board
of Directors of the Company. No amendment, modification or
termination shall, without the consent of a participant,
adversely affect such participant's accruals in his or her
accounts.
16. Governing Law. This Plan and any participant elections
hereunder shall be interpreted and enforced in accordance with
the laws of the State of Ohio.
17. Effective Date. The effective date of this Plan is
January 1, 1991.
Exhibit 10.9
MILACRON INC.
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE I
PURPOSE
1.1 The purpose of this Plan is to provide retirement benefits
to Directors of Milacron Inc. (the "Company") who
meet the eligibility requirements of the Plan.
ARTICLE II
DEFINITIONS
2.1 "Base Retainer" means the basic annual retainer for non-
employee Directors in effect as of an Eligible Director's
last date of service on the Milacron Inc. Board
of Directors. As used herein, Base Retainer shall not
include any additional annual retainer available as a result
of a Director acting as chairman of any committee nor shall
it include any fees available as a result of attendance at
Board of Directors' or its committees' meetings, or other
payments made for other services a Director may render.
2.2 "Board of Directors" means the Board of Directors of
Milacron Inc.
2.3 "Company" means Milacron Inc.
2.4 "Compensation Committee" means the Compensation Committee of
the Board of Directors.
2.5 "Director" means a duly-elected member of the Board of
Directors.
2.6 "Eligible Director" means a Director or former Director who
has served on the Board of Directors on or after the
Effective Date of this Plan as set forth in Item 3.1, who is
not an employee of the Company and who does not qualify to
receive a retirement benefit under any pension plan of the
Company or its subsidiaries other than this Plan.
2.7 "Employee" means a person employed by the Company or its
subsidiaries in any capacity other than as a Director.
2.8 "Plan" means this Retirement Plan for Non-Employee
Directors.
2.9 "Service" means service as an Eligible Director.
ARTICLE III
EFFECTIVE DATE
3.1 This Plan shall be effective as of September 12, 1989 (the
"Effective Date").
ARTICLE IV
PARTICIPATION
4.1 Each Eligible Director serving on the Board of Directors on
or after the Effective Date and prior to February 6, 1998,
who does not elect to cease participation under the Plan as
set forth in Item 4.2, shall participate in the Plan.
4.2 During the period of February 6, 1998 to April 6, 1998, an
Eligible Director who is currently serving on the Board of
Directors may make an irrevocable one time election to cease
participation under the Plan effective January 1, 1998 and have
the current value of the Eligible Director's projected
benefit under the Plan, as determined by the Board of Directors,
credited to a special account under the Milacron Inc.
Plan for the Deferral of Directors' Compensation, to be held
and paid in accordance with the terms of such plan, as
amended effective February 6, 1998. No benefits shall be payable
from the Plan after the date of the election.
ARTICLE V
RETIREMENT BENEFITS/VESTING
5.1 An Eligible Director's annual retirement benefit under this
Plan shall be vested when he has six (6) years of Service
and shall be equal to a percentage of that Director's Base
Retainer in accordance with the table below:
Years of Service Percentage of Base Retainer
Less than 6 years 0%
6 years 60%
7 years 70%
8 years 80%
9 years 90%
10 years and above 100%
In no event shall an Eligible Director's percentage of
benefit under this Plan exceed One Hundred Percent (100%) of
the Eligible Director's Base Retainer.
ARTICLE VI
YEARS OF SERVICE
6.1 For purposes of this Plan, one year of Service shall mean
365 days of Service as an Eligible Director beginning with
an Eligible Director's initial election or appointment to
the Board of Directors.
6.2 In the event of a break in Service, a Director's Service as
an Eligible Director before and after the break in Service
shall be combined to determine years of service for vesting
as set forth in Item 5.1.
6.3 A Director's Service as an Eligible Director prior to the
Effective Date of this Plan shall count toward the vesting
rules of Item 5.1.
ARTICLE VII
PAYMENT OF RETIREMENT BENEFITS
7.1 An Eligible Director will be entitled to receive retirement
benefits upon (i) the vesting of the benefit as set forth in
Item 5.1 and (ii) the Eligible Director reaching age seventy
(70). An Eligible Director who has met the two requirements
in the preceding sentence shall be entitled to receive
retirement benefits whether or not the Eligible Director is
a member of the Board of Directors on his seventieth (70th)
birthday.
7.2 All retirement benefits hereunder shall be payable in
monthly installments equal to one-twelfth (1/12th) of the
annual amounts determined under this Plan. An Eligible
Director's vested retirement benefit hereunder, if any,
shall be payable for the life of the Eligible Director,
commencing on the month next following the Eligible
Director's seventieth (70th) birthday.
ARTICLE VIII
DEATH BENEFIT
8.1 Notwithstanding anything herein to the contrary, in the
event an Eligible Director whose benefit under this Plan is
vested dies prior to age seventy (70), his estate shall
receive thirty-six (36) monthly payments in an amount equal
to one-twelfth (1/12th) of his annual vested benefit on the
date of his death. In the event an Eligible Director whose
benefit under this Plan is vested dies after attaining age
seventy (70) but prior to receiving thirty-six (36) monthly
retirement payments, the Eligible Director's estate shall
receive monthly payments in an amount equal to the last
monthly payment received hereunder by the Eligible Director
before his death and for a number of months which, when
added with the number of payments the Eligible Director
received during life, equal thirty-six (36). The Company
may, at its option, make the payments above to the
Director's estate in a lump sum payment calculated on a
present value basis.
ARTICLE IX
FUNDING
9.1 This Plan shall be unfunded.
ARTICLE X
PLAN ADMINISTRATION
10.1 The general administration of this Plan and the
responsibility for carrying out the provisions hereof shall
be vested in the Compensation Committee. The Compensation
Committee may adopt such rules and regulations as it may
deem necessary for the proper administration of this Plan,
which are not inconsistent with the provisions hereof, and
its decision in all matters shall be final, conclusive and
binding.
ARTICLE XI
AMENDMENT AND TERMINATION
11.1 The Board of Directors reserves in its sole and exclusive
discretion the right at any time and from time to time to
amend this Plan in any respect or terminate this Plan
without restriction and without the consent of any Eligible
Director, provided, however, that no amendment or
termination of this Plan shall impair the right of any
Eligible Director to receive benefits which have become
vested pursuant to Item 5.1 prior to such amendment or
termination, except as provided in Item 4.2.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Nothing contained in this Plan guarantees the continued
retention of a Director on the Board of Directors, nor does
this Plan limit the right to terminate a Director's Service
on the Board of Directors.
12.2 No retirement benefit payable hereunder may be assigned,
pledged, mortgaged or hypothecated and, to the extent
permitted by law, no such retirement benefit shall be
subject to legal process or attachment for the payment of
any claims against any person entitled to receive the same.
12.3 If an Eligible Director entitled to receive any retirement
benefit payments hereunder is deemed by the Compensation
Committee or is adjudged by a court of competent
jurisdiction to be legally incapable of giving valid receipt
and discharge for such retirement benefit, such payments
shall be paid to such person or persons as the Compensation
Committee shall designate or to the duly appointed guardian
or other legal representative of such Eligible Director.
Such payments shall, to the extent made, be deemed a
complete discharge for such payments under this Plan.
12.4 Payments made by the Company under this Plan to any Eligible
Director shall be subject to withholding as shall, at the
time for such payment, be required under any income tax or
other laws, whether of the United States or any other
jurisdiction.
12.5 All expenses and costs in connection with the operation of
this Plan shall be borne by the Company.
12.6 The provisions of this Plan will be construed according to
the laws of the State of Ohio.
12.7 The masculine pronoun wherever used herein shall include the
feminine gender and the feminine the masculine and the
singular number as used herein shall include the plural and
the plural the singular unless the context clearly indicates
a different meaning.
12.8 The titles to articles and headings of sections of this Plan
are for convenience of reference only and in case of any
conflict, the text of the Plan, rather than such titles and
headings, shall control.
ARTICLE XIII
CHANGE OF CONTROL
13.1 The provisions of Section 13.3 shall become effective
immediately upon the occurrence of a Change of Control (as
defined in Section 13.2).
13.2 "Change of Control" - shall mean any one of the following:
(a) Any person or group of persons (as defined in
Rule 13d-5 under the Securities Exchange Act of
1934), together with its affiliates, becomes the
beneficial owner, directly or indirectly, of
twenty (20%) percent or more of the voting power
of the then outstanding securities of the Company
entitled to vote for the election of the Company's
Directors; provided that the acquisition of any
amount of the outstanding securities of the
Company entitled to vote for the election of the
Company's Directors by any employee benefit plan
(within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974,
as amended) maintained by the Company or any
affiliate of the Company shall not constitute a
Change of Control for purposes of this Plan;
(b) the sale of substantially all of the assets of the
Company, or the liquidation or dissolution of the
Company, or the approval by the Company
stockholders of the merger or consolidation of the
Company with any other corporation, except, if in
the case of a merger or consolidation, the
incumbent Directors in office immediately prior to
such merger or consolidation will constitute at
least 2/3 of the Directors of the surviving
corporation or of any parent (as such term is
defined in Rule 12b-2 under the Securities
Exchange Act of 1934) of such corporation; or
(c) at least 2/3 of the incumbent Directors in office
immediately prior to any action, taken by the
Company's stockholders or otherwise occurring,
determines that such action, if taken, would
constitute a change of control of the Company and
such action is taken.
13.3 (a) Section 7.2 is deleted and the following is
inserted in lieu thereof:
All vested retirement benefits hereunder
shall be immediately payable upon a Change of
Control in one lump sum payment. The lump
sum shall be the present value actuarially
determined with reference to the life
expectancy of the Eligible Director whose
benefits have vested pursuant to this Plan
and prevailing interest rates.
(b) Section 12.4 is deleted.
(c) New Section 12.9 is inserted as follows:
Notwithstanding any other provisions of
the Plan to the contrary:
(i) the vested benefit hereunder of any
Eligible Director as of the date of a
Change of Control may not be reduced;
(ii) any Service accrued by an Eligible
Director as of the date of a Change of
Control cannot be reduced.
Exhibit 10.10
MILACRON SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN, As Amended
I. Purpose
The purpose of the Milacron Supplemental
Executive Retirement Plan (the "Plan") is to provide
supplemental retirement benefits to certain key
employees of Milacron Inc. and its subsidiaries
(the "Company") who meet the eligibility requirements
of the Plan.
II. Definitions
"Benefit Commencement Date" - shall be the date as
determined by Article IX herein.
"Compensation" - shall have the same meaning as that
term is defined in the Milacron Retirement
Plan, without regard to any dollar limitations and
including employee deferrals under the Milacron
Compensation Deferral Plan.
"Compensation Committee" - shall mean the Compensation
Committee of the Milacron Inc. Board of Directors.
"Eligible Position" - shall mean the position of
Chairman, President or Vice President of Milacron Inc.
held by an individual who is first elected to the
position of either Chairman, President or Vice
President of Milacron Inc. prior to July 30, 1998
and who continues to hold any such position after
July 30, 1998 or any specific position held by an
individual subsequent to that individual's
designation as a key employee by the Compensation
Committee for purposes of this Plan.
"Highest Average Compensation" - shall mean the highest
average of the Participant's Compensation for three
consecutive years.
"Normal Retirement Date" - shall have the same meaning
as that term is defined in the Milacron Retirement Plan.
"Participant" - shall mean an individual eligible to
participate in this Plan as set forth in Article V.
"Years of Credited Service" - shall have the same
meaning as that term is defined in the Milacron Retirement
Plan.
Solely for purposes of this Plan, the above terms that
are defined in the Milacron Retirement Plan shall be
applied to the Participant with respect to his
employment with the Company, regardless of the
Participant's eligibility under the Milacron
Retirement Plan.
III. Effective Date/Plan Year
This Plan will be effective beginning January 1, 1994.
The Plan year shall coincide with the calendar year.
IV. Election
Individuals may not participate in both this Plan and
the Milacron Supplemental Pension Plan or the Milacron
Supplemental Executive Pension Plan. Individuals
eligible to participate in this Plan and the Milacron
Supplemental Pension Plan or the Milacron Supplemental Executive
Pension Plan must inform the Compensation Committee at the time
of termination of the employment relationship between the Company
and the individual as to which plan the individual shall
participate.
V. Eligibility
An individual shall be eligible to participate in the
Plan and thus become a "Participant" if:
A. The individual holds or has held an Eligible
Position; and,
(i) the individual remains in the employ of
the Company at least until his Normal
Retirement Date; or,
(ii) the individual is an employee of the
Company on or after his 55th birthday and
has at least ten (10) Years of Credited
Service with the Company; or,
(iii) the individual terminates employment with
the Company due to disability as set forth
in Article VIII, below. Or,
B. The individual dies while holding an Eligible
Position as set forth in Article X, below.
VI. Benefit
Participants who have ten (10) Years of Credited
Service or more as an officer of Milacron
Inc. shall receive as the annual benefit as of the
Benefit Commencement Date the greater of: (i) one
percent (1%) of the Participant's Highest Average
Compensation for each Year of Credited Service the
Participant served as an officer of Milacron
Inc., however, in no event shall this annual benefit
exceed ten percent (10%) of the Participant's Highest
Average Compensation; or, (ii) an amount necessary to
increase the Participant's combined annual benefits
under this Plan, the Milacron Retirement Plan, the
Milacron Retirement Savings Plan, the Milacron
Compensation Deferral Plan and the Milacron Inc.
Supplemental Retirement Plan to fifty-two and one half
percent (52.5%) of the Participant's Highest Average Compensation.
For purposes of this Plan, the Participant's vested
account balance, if any, attributable to Employer Basic
Contributions under the Milacron Retirement Savings Plan
and Basic Credits and Discretionary Credits under the
Milacron Compensation Deferral Plan will be converted
to an actuarially equivalent annual benefit payable for the
Participant's lifetime commencing at the Participant's Benefit
Commencement Date, determined based on the actuarial
assumptions used to calculate lump sum amounts as set
forth in the Milacron Retirement Plan.
All other Participants shall receive as the annual
benefit as of the Benefit Commencement Date, one
percent (1%) of the Participant's Highest Average
Compensation for each Year of Credited Service the
Participant served in an Eligible Position, however, in
no event shall this annual benefit exceed ten percent
(10%) of the Participant's Highest Average
Compensation.
VII. Maximum Benefit
In no event shall a Participant receive total combined
annual benefits from this Plan, the Milacron
Retirement Plan, the Milacron Retirement
Savings Plan (as determined under Article VI), the
Milacron Compensation Deferral Plan (as
determined under Article VI) and the Milacron Inc.
Supplemental Retirement Plan in excess of 60% of the
Participant's Highest Average Compensation
and benefits from this Plan shall be reduced
accordingly, if necessary.
VIII. Disability
An individual who terminates employment with the
Company due to disability prior to his 55th birthday
will be a Participant if:
(i) the individual at the time of disability held
an Eligible Position; and
(ii) the individual has ten (10) years Credited
Service with the Company; and
(iii) the disability is certified by a physician or
physicians designated by the Compensation
Committee.
IX. Benefit Commencement Date
Except as otherwise stated in this Article IX and
Article X, benefits shall commence on a Participant's
Normal Retirement Date.
For those Participants retiring prior to their Normal
Retirement Date, benefits shall commence upon the date
of retirement and shall not be actuarially reduced.
Benefits to a Participant who terminates employment
with the Company due to disability prior to age 55
shall commence upon the date the Participant begins
receiving benefits from the Milacron Retirement Plan
or would be eligible to receive benefits from the
Milacron Retirement Plan if he participated therein.
X. Death
An individual who dies while employed by the Company
and who is not otherwise a Participant in this Plan
shall be a Participant if:
(i) the individual holds an Eligible Position at
the time of death; and,
(ii) the individual was at the time of his death
vested in the Milacron Retirement
Plan or the Milacron Retirement
Savings Plan.
If a Participant dies prior to commencement of benefits
under this Plan and the Participant is survived by a
spouse to whom he was married on the date he became
vested under this Plan, the Participant's surviving
spouse shall receive monthly benefits under this Plan,
at the time benefits may begin to the surviving spouse
under the Milacron Retirement Plan, in the form of a life
annuity in the amount of fifty percent (50%) of the
Participant's benefits under this Plan (with a reduction
for commencement prior to the date the Participant would
have attained age 55, with such reduction determined in
accordance with the Milacron Retirement Plan), determined in
accordance with Article VI.
XI. Payment Options
Benefits shall be paid to Participants on a monthly
basis. Participants who are single shall receive
benefits under this Plan in the form of a life annuity.
Participants who are married shall receive benefits in
the form of a fifty (50%) percent joint and survivor
annuity which shall not be actuarially reduced;
however, the benefit to the Participant's spouse shall
be available only if the Participant is survived by a
spouse to whom he was married on the date he became
vested under this Plan.
XII. Vesting
Unless forfeited pursuant to Article XIII, a
Participant's benefit shall become vested -
(i) on his Normal Retirement Date; or
(ii) on the date he reaches age 55 and has at least
ten (10) Years of Credited Service with the
Company; or
(iii) on the date of termination of employment due to
disability or death.
If a Participant no longer holds an Eligible Position,
but remains an employee of the Company, the Participant's
service in the Eligible Position and his resulting benefit
under this Plan shall not be forfeited.
XIII. Fraud
In the event that a Participant shall at any time be
dismissed for, or convicted of a crime involving,
dishonesty or fraud on his part in his relationship
with the Company, all benefits which would otherwise be
payable to him under the Plan shall be forfeited.
XIV. Competition
By accepting payment of any benefit under the Plan the
Participant agrees not to be employed, or consult, in
any business which is, or is about to be, engaged in a
business of the same or substantially the same nature
as the businesses of the Company without prior written
consent of the Company, and breach of this agreement by
the Participant shall be cause for termination of
payment of benefits under the Plan.
XV. Funding
The Plan shall be unfunded and benefits shall be paid
only from the general assets of the Company.
XVI. Administration
The general administration of this Plan and the
responsibility for carrying out and interpreting the
provisions hereof shall be vested in the Compensation
Committee. The Compensation Committee may adopt such
rules and regulations as it may deem necessary for the
proper administration of this Plan, which are not
inconsistent with the provisions hereof, and its
decision in all matters shall be final, conclusive and
binding.
XVII. Amendment and Termination
The Board of Directors reserves in its sole and
exclusive discretion the right at any time and from
time to time to amend this Plan in any respect or
terminate this Plan without restriction and without the
consent of any Participant, provided however, that no
amendment or termination of this Plan shall impair the
right of any Participant to receive benefits which have
become vested prior to such amendment or termination.
XVIII. Miscellaneous
(a) Nothing contained in this Plan guarantees the
continued employment of a Participant with the Company.
(b) No benefit hereunder may be assigned, pledged,
mortgaged or hypothecated and, to the extent permitted
by law, no such benefit shall be subject to legal
process or attachment for the payment of any claims
against any person entitled to receive the same.
(c) If a Participant entitled to receive a benefit
under this Plan is deemed by the Compensation Committee
or is adjudged by a court of competent jurisdiction to
be legally incapable of giving valid receipt and
discharge for such benefit, such payments shall be paid
to such person or persons as the Compensation Committee
shall designate or to the duly appointed guardian or
other legal representative of such Participant. Such
payment shall, to the extend made, be deemed a complete
discharge for such payments under this Plan.
(d) Payments made under this Plan shall be subject to
withholding as shall at the time be required under any
income tax or other laws, whether of the United States
or any other jurisdiction.
(e) All expenses and costs in connection with the
operation of this Plan shall be borne by the Company.
(f) The provisions of this Plan shall be construed
according to the laws of the State of Ohio.
(g) The masculine pronoun wherever used herein shall
include the feminine gender and the feminine shall
include the masculine and the singular number as used
herein shall include the plural and the plural shall
include the singular unless the context clearly
indicates otherwise.
(h) The titles and headings used herein are for
convenience of reference only and in case of any
conflict, the text of this Plan, rather than such
titles or headings, shall be controlling.
$375,000,000
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of
November 30, 1998
among
MILACRON INC.,
CINCINNATI MILACRON KUNSTSTOFFMASCHINEN EUROPA GMBH,
THE LENDERS LISTED HEREIN
and
BANKERS TRUST COMPANY,
as Agent
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS. 1
1.1 Definitions 1
1.2 Accounting Principles 27
1.3 Other Definitional Provisions 27
1.4 Closing Date 27
SECTION 2. AMOUNT AND TERMS OF LOANS. 27
2.1 The Revolving Loans 27
2.2 Minimum Amount of Each Borrowing 29
2.3 Notice of Borrowing 30
2.4 Disbursement of Funds 31
2.5 Evidence of Debt 32
2.6 Conversion or Continuation of Revolving
Loans 33
2.7 Pro Rata Borrowings and Issuances 34
2.8 Interest 34
2.9 Interest Periods 36
2.10 Increased Costs, Illegality, etc. 37
2.11 Compensation 42
2.12 Proceeds of Revolving Loans 43
2.13 Fees and Commissions 43
2.14 Letters of Credit. 44
2.15 Replacement Lender 52
2.16 Certain Computations 53
2.17 Change of Lending Office 53
2.18 EURO Provisions 54
SECTION 3. REDUCTIONS IN COMMITMENTS; PREPAYMENTS AND
PAYMENTS. 55
3.1 Voluntary Reductions in Total Revolving
Loan Commitment 55
3.2 Voluntary Prepayments 55
3.3 Mandatory Prepayments 56
3.4 Method and Place of Payment 57
3.5 Net Payments 57
SECTION 4. CONDITIONS TO REVOLVING LOANS AND LETTERS
OF CREDIT. 58
4.1 Conditions to All Revolving Loans 58
4.2 Conditions to All Letters of Credit 59
SECTION 5. AFFIRMATIVE COVENANTS. 60
5.1 Furnish Financial Statements and
Information, etc. 60
5.2 Inspection 61
5.3 Taxes, Charges, etc. 61
5.4 Corporate Existence, etc. 62
5.5 Notice of Default 62
5.6 Consolidated Net Worth 62
5.7 ERISA 62
5.8 Insurance 63
5.9 Maintenance of Property 63
5.10 Compliance with Laws, etc. 63
5.11 Consolidated Total Indebtedness to
Consolidated EBITDA 64
5.12 Environmental Events 64
5.13 Year 2000 65
SECTION 6. NEGATIVE COVENANTS. 65
6.1 Liens 65
6.2 Restrictions on Fundamental Changes 67
6.3 Domestic Subsidiary Indebtedness 68
6.4 Fixed Charge Coverage Ratio 69
6.5 ERISA 69
6.6 Sale or Discount of Notes Receivables 69
6.7 Amendments or Waivers of Charter or By-
laws or of Certain Documents Relating
to Certain Indebtedness 70
6.8 Sale-leaseback Transactions 70
6.9 No Further Negative Pledges 71
6.10 Refinancing Indebtedness 71
6.11 Investments 71
6.12 Sale, Transfer, etc. of Assets 72
SECTION 7. EVENTS OF DEFAULT. 72
7.1 Failure To Make Payments When Due 72
7.2 Breach of Certain Covenants 72
7.3 Breach of Warranty 72
7.4 Default in Other Agreements 73
7.5 Judgments 73
7.6 Other Defaults Under Agreement or Loan
Documents 73
7.7 Bankruptcy; Appointment of Receiver,
Dissolution, etc. 73
7.8 Unfunded ERISA Liabilities 74
7.9 Change in Control 74
SECTION 8. REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. 76
8.1 Financial Information; Undisclosed
Liabilities 76
8.2 Adverse Changes 77
8.3 Litigation 77
8.4 Authorization, etc. 77
8.5 Corporate Status 78
8.6 Title; Insurance 78
8.7 Taxes, etc. 79
8.8 ERISA 79
8.9 Margin Regulations 80
8.10 Disclosure 80
8.11 Patents, Trademarks, etc. 80
8.12 Environmental Matters 81
8.13 Year 2000 82
SECTION 9. AGENT. 83
9.1 Appointment 83
9.2 Nature of Duties 83
9.3 Rights, Exculpation, etc. 84
9.4 Reliance 84
9.5 Indemnification 85
9.6 The Agent, Individually 85
9.7 Holders of Notes 85
9.8 Resignation by the Agent 86
9.9 Removal 86
SECTION 10. CONDITIONS PRECEDENT. 87
10.1 Conditions to Effectiveness 87
SECTION 11. MISCELLANEOUS. 88
11.1 Exercise of Rights 88
11.2 Amendment and Waiver, etc 89
11.3 Expenses and Indemnification 90
11.4 Successors and Assigns; Participations
and Assignments 92
11.5 Notices, Requests, Demands 95
11.6 Determination of Dollar Equivalent 96
11.7 Survival of Representations and
Warranties 96
11.8 Governing Law 96
11.9 Counterparts 96
11.10 Set-Off 96
11.11 Proration of Excess Payments 97
11.12 Submission to Jurisdiction; Venue;
Waiver of Jury Trial 98
11.13 Survival 99
11.14 Lender's Representation and Certain
Agreements 99
11.15 Headings 101
11.16 Change in Accounting Principles 101
11.17 Defaulting Lender 101
11.18 Confidentiality 102
11.19 Judgment Currency 103
11.20 Register 104
SCHEDULES
Schedule 2.1 - Lenders' Revolving Loan Commitment
and Pro Rata Share
Schedule 6.11 - Investments
Schedule 8.6(b) - Insurance
EXHIBITS
EXHIBIT A-1 - Form of Dollar Revolving Note
EXHIBIT A-2 - Form of Deutsche Mark Revolving Note
EXHIBIT B-1 - Form of Notice of Borrowing
EXHIBIT B-2 - Form of Notice of Conversion/Continuation
EXHIBIT B-3 - Form of Request for Issuance
EXHIBIT C-1 - Form of Opinion of Cravath, Swaine & Moore
EXHIBIT C-2 - Form of Opinion of Wayne F. Taylor
EXHIBIT C-3 - Form of Opinion of German Counsel
EXHIBIT D - Form of Opinion of Cahill Gordon & Reindel
EXHIBIT E - Form of Officers' Certificate
EXHIBIT F - Form of Company Guaranty
EXHIBIT G - Form of Assignment and Assumption Agreement
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated
November 30, 1998 (the "Agreement") among MILACRON INC., a
Delaware corporation (the "Borrower" and the "Company"),
CINCINNATI MILACRON KUNSTSTOFFMASCHINEN EUROPA GMBH, a German
corporation (the "German Borrower" and, collectively with the
Company, the "Borrowers"), the LENDERS listed on Schedule 2.1
hereto (each, a "Lender" and collectively, the "Lenders") and
BANKERS TRUST COMPANY, as the agent for the Lenders (in such
capacity, the "Agent"). All capitalized terms used herein and
not otherwise defined shall have the meaning specified in
Section 1.1.
R E C I T A L S :
WHEREAS, the Company has requested that the Agent and
the Lenders amend and restate the Existing Credit Agreement to
provide for, among other things, an increase in the amount of
the Commitments and the modification of certain covenants;
WHEREAS, the Company, the Lenders and the Agent
desire to amend and restate the Existing Credit Agreement in
connection therewith and to reflect certain other agreed upon
changes, all upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and
of the mutual covenants herein contained, the Company, the
German Borrower, the Lenders and the Agent hereto agree as
follows:
SECTION 1. DEFINITIONS.
1.1 Definitions. As used herein the following terms
shall have the meanings herein specified:
"Affiliate" shall mean, with respect to any Person,
any other Person directly or indirectly controlling, controlled
by or under common control with that Person. For the purposes
of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Agent's Office" shall mean the office of the Agent
located at 130 Liberty Street, New York, New York 10006, or
such other office in New York as the Agent may hereafter
designate in writing as such to the other parties hereto.
"Agreement" shall mean this Amended and Restated
Revolving Credit Agreement, as the same may after its execution
be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
"Alternate Currency" shall mean Deutsche Marks.
"Alternate Currency Equivalent" shall mean the
Deutsche Mark Equivalent.
"Alternate Currency Loan" shall mean any Alternate
Currency Revolving Loan.
"Alternate Currency Revolving Loan" shall mean a
Deutsche Mark Revolving Loan.
"Alternative Currency Sublimit" shall have the
meaning provided in Section 2.1(b).
"Applicable" shall mean, with respect to Regulation D
being applicable to any determination of the Deutsche Mark Euro
Rate, that Regulation D reserves would be applicable to the
Deutsche Mark Revolving Loan as to which such interest rate
would apply (including by giving effect to the assumption that
a Lender had funded such Deutsche Mark Revolving Loan through
the purchase of a Deutsche Mark deposit by a Subsidiary or
Affiliate of such Lender in the London interbank market and the
transfer thereof to such Lender from such Subsidiary or
Affiliate).
"Applicable Borrowing Margin" shall mean:
(a) with respect to Eurodollar Loans and Alternate
Currency Loans, if the ratio of Consolidated Total
Indebtedness to Consolidated EBITDA, as evidenced by the
Compliance Certificate of the Company from the preceding
quarter and upon receipt of such Compliance Certificate
the relevant applicable Borrowing Margin will be given
effect, is (x) greater than 3.25 to 1.0, 2.125% per annum,
(y) equal to or less than 3.25 to 1.00 but greater than
2.75 to 1.0, 1.500% per annum, (z) equal to or less than
2.75 to 1.0 but greater than 2.50 to 1.0, 1.250% per
annum, (xx) equal to or less than 2.50 to 1.0 but greater
than 2.25 to 1.0, 1.000% per annum (yy) equal to or less
than 2.25 to 1.0 but greater than 2.00 to 1.0, .750% per
annum, (zz) equal to or less than 2.00 to 1.0 but greater
than 1.50 to 1.0 .550% per annum and (xxx) equal to or
less than 1.50 to 1.0, .350% per annum; and
(b) with respect to Fixed CD Rate Loans, if the
ratio of Consolidated Total Indebtedness to Consolidated
EBITDA, as evidenced by the Compliance Certificate of the
Company from the preceding quarter and upon receipt of
such Compliance Certificate the relevant applicable
Borrowing Margin will be given effect, is (x) greater than
3.25 to 1.0, 3.375% per annum, (y) equal to or less than
3.25 to 1.00 but greater than 2.75 to 1.0, 2.750% per
annum, (z) equal to or less than 2.75 to 1.0 but greater
than 2.50 to 1.0, 2.500% per annum, (xx) equal to or less
than 2.50 to 1.0 but greater than 2.25 to 1.0, 2.250% per
annum, (yy) equal to or less than 2.25 to 1.0 but greater
than 2.00 to 1.0, 1.325% per annum (zz) equal to or less
than 2.00 to 1.0 but greater than 1.50 to 1.0, 1.305% per
annum and (xxx) equal to or less than 1.50 to 1.0, 1.285%
per annum.
"Applicable Currency" shall mean Dollars and each
Available Alternate Currency.
"Applicable Fee Percentage" shall mean, with respect
to the Facility Fee as defined in Section 2.13, if the ratio of
Consolidated Total Indebtedness to Consolidated EBITDA, as
evidenced by the Compliance Certificate of the Company from the
preceding quarter and upon receipt of such Compliance
Certificate the relevant Applicable Fee Percentage will be
given effect, is (x) greater than 3.25 to 1.0, .375% per annum,
(y) equal to or less than 3.25 to 1.0 but greater than 2.75 to
1.0, .375% per annum, (z) equal to or less than 2.75 to 1.0 but
greater than 2.50 to 1.0, .250% per annum, (xx) equal to or
less than 2.50 to 1.0 but greater than 2.25 to 1.0, .250% per
annum, (yy) equal to or less than 2.25 to 1.0 but greater than
2.00 to 1.0, .250% per annum, (zz) equal to or less than 2.00
to 1.0 but greater than 1.50 to 1.0, .200% per annum and (xxx)
equal to or less than 1.50 to 1.0, .150% per annum.
"Authorized Officer" shall mean, in the case of the
Company, any of the chief executive officer, the president, the
chief financial officer, the treasurer, any assistant
treasurer, any vice-president, the secretary or the general
counsel or, in case of the German Borrower, any of its managing
directors or any other officer of the Borrower or German
Borrower, as the case may be, who is designated in writing to
the Agent and the Issuing Lender by any of the foregoing
officers of such Borrowers as being authorized to give such
notices under this Agreement.
"Available Alternate Currency" shall mean the
Alternate Currency except to the extent that the Agent has
given notice to the Company and the German Borrower pursuant to
Section 2.10(a) (which notice has not been rescinded by the
Agent) that the Alternate Currency is no longer available.
"Average Life" shall mean, as of the date of
determination, with respect to any Indebtedness, the quotient
obtained by dividing (a) the sum of the product of (i) the
number of days from such date to the date of each successive
scheduled principal or redemption payment of such Indebtedness
multiplied by (ii) the amount of such principal or redemption
payment by (b) the sum of all such principal or redemption
payments, and then by (c) 365.25.
"Bankruptcy Code" shall mean Title 11 of the United
States Code entitled "Bankruptcy," as amended from time to
time, and any successor statute.
"Base Rate" shall mean at any time the higher of
(i) the Federal Funds Rate plus 1/2 of 1% and (ii) the Prime
Lending Rate.
"Base Rate Loan" or "Base Rate Loans" shall mean any
Dollar Revolving Loan or Dollar Revolving Loans during any
period during which such Dollar Revolving Loan or Dollar
Revolving Loans are bearing interest at the rates provided for
in Section 2.8(a).
"Borrower" shall mean Milacron Inc., a Delaware
corporation.
"Borrowing" shall mean and include the incurrence
pursuant to a Notice of Borrowing and to the Loan Facility of
one Type of Revolving Loan from all the Lenders on a given
date, having the same Interest Period; provided, however, that
Revolving Loans of a different Type extended pursuant to
Section 2.10(b) shall be considered part of the related
Borrowing.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other
than as covered by clause (ii) below, any day except Saturday,
Sunday and any day which shall be in New York City a legal
holiday or a day on which banking institutions are authorized
or required by law or other government action to close and
(ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on,
Fixed Rate Loans, any day which is a Business Day described in
clause (i) above and which is also a day for trading by and
between banks in the London interbank Eurodollar market and
which shall not be a legal holiday or a day on which banking
institutions are authorized or required by law or other
government action to close in the city where the applicable
Payment Office of the Agent is located including, but not
limited to, German banking holidays, including but not limited
to those in Frankfurt, in respect of such Fixed Rate Loan.
"Capital Lease" shall mean, as applied to any Person,
any lease of any property (whether real, personal or mixed) by
that Person as lessee which, in accordance with GAAP, is or
should be accounted for as a capital lease on the balance sheet
of such Person.
"Capitalized Lease Obligations" of any Person shall
mean all obligations under Capital Leases of such Person or any
of its Subsidiaries in each case taken at the amount thereof
accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued
or directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States
of America is pledged in support thereof) having maturities of
not more than three years from the date of acquisition,
(ii) marketable direct obligations issued by any State of the
United States of America or any local government or other
political subdivision thereof rated (at the time of acquisition
of such security) at least AA by S&P or the equivalent thereof
by Moody's having maturities of not more than one year from the
date of acquisition, (iii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of
(x) any Lender or (y) any domestic financial institution having
a short-term commercial paper rating (at the time of
acquisition of such security) by S&P of at least A-1 or the
equivalent thereof or by Moody's of at least P-1 or the
equivalent thereof (any such Lender or financial institution,
an "Approved Bank"), in each case with maturities of not more
than one year from the date of acquisition, (iv) commercial
paper and variable or fixed rate notes issued by any Approved
Bank or by the parent company of any Approved Bank and
commercial paper and variable rate notes issued by, or
guaranteed by, any industrial or financial company with a short-
term commercial paper rating (at the time of acquisition of
such security) of at least A-1 or the equivalent thereof by S&P
or at least P-1 or the equivalent thereof by Moody's, or
guaranteed by any industrial company with a long-term unsecured
debt rating (at the time of acquisition of such security) of at
least AA or the equivalent thereof by S&P or the equivalent
thereof by Moody's and in each case maturing within one year
after the date of acquisition, (v) repurchase agreements with
any bank or any primary dealer maturing within one year from
the date of acquisition that are fully collateralized by
investment instruments that would otherwise be Cash
Equivalents; provided that the terms of such repurchase
agreements comply with the guidelines set forth in the Federal
Financial Institutions Examination Council Supervisory Policy -
- - Repurchase Agreements of Depository Institutions With
Securities Dealers and Others, as adopted by the Comptroller of
the Currency on October 31, 1985 and (vi) investments in money
market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i)
through (v) above.
"CD Office" shall mean the office of each Lender set
forth opposite its name on the signature page of this Agreement
under such heading, or if no such office is set forth opposite
its name, then its Domestic Office, or such other office as
such Lender may specify from time to time.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986, as
amended from time to time.
"Certain Existing Indebtedness" shall mean (i) the
$115,000,000 aggregate principal amount of 8 3/8% Notes of the
Company due 2004 and (ii) the $100,000,000 aggregate principal
amount of 7 7/8% Notes of the Company due 2000.
"Certificate of Deposit Rate" shall mean, with
respect to each Interest Period for a Fixed CD Rate Loan, the
average (rounded upward to the next whole multiple of 1/100 of
1%) of the consensus bid rates determined by the Agent for the
bid rates per annum, at approximately 10:00 a.m. (New York
time) on the first day of such Interest Period, of two or more
New York certificate of deposit dealers of recognized standing
selected by the Agent for the purchase at face value from the
Agent in New York of its certificates of deposit in an
aggregate amount approximately comparable to the Fixed CD Rate
Loan to which such Interest Period is applicable and with a
maturity equal to such Interest Period.
"Closing Date" is defined in Section 1.4 hereof.
"CMKE" shall mean Cincinnati Milacron
Kunststoffmaschinen Europa GmbH, a German corporation and a
wholly-owned Subsidiary of the Company.
"Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time and any successor statute thereto.
Section references to the Code are to the Code as in effect at
the date of this Agreement and any subsequent provisions of the
Code amendatory thereof, supplemental thereto or substituted
therefor.
"Commitment" shall mean, with respect to each Lender,
the amount specified opposite such Lender's name on Schedule
2.1 hereto, as the same may be reduced from time to time
pursuant to Section 3.1 hereof.
"Company" shall have the meaning provided in the
preamble of this Agreement.
"Company Guarantee" shall have the meaning provided
in Section 10.1(a)9.
"Compliance Certificate" means a certificate
delivered to the Lenders by the Company pursuant to Section
5.1(d)(ii).
"Consolidated Capital Expenditures" shall mean, for
any period, the aggregate of all expenditures (whether paid in
cash or accrued as a liability and including expenditures for
maintenance and repairs which should in accordance with GAAP be
capitalized on the balance sheet of the Company and all
obligations with respect to Capital Leases and all capitalized
interest) by the Company and its Consolidated Subsidiaries
during that period, which, in conformity with GAAP, are
included or required to be included in "additions to property,
plant or equipment" or similar items reflected in the
consolidated statement of cash flows of the Company.
"Consolidated EBIT" means, without duplication, for
any consecutive four fiscal quarter period, the sum of the
amounts for such period of (i) the Company's Consolidated Net
Income, excluding therefrom any extraordinary or non-recurring
items of gain or loss for such period (including, but not
limited to, the loss resulting from discontinued operations in
the fiscal quarter ending September 30, 1998 in the amount of
$39,100,000), plus (ii) the aggregate amounts deducted in
determining Consolidated Net Income for such period in respect
of (a) the provision for taxes based on income of the Company
and its Consolidated Subsidiaries and (b) Interest Expense, all
as determined on a consolidated basis for the Company and its
Consolidated Subsidiaries for such period in conformity with
GAAP.
"Consolidated EBITDA" means, without duplication, for
any consecutive four fiscal quarter period, the sum of the
amounts for such period of (i) the Company's Consolidated Net
Income, excluding therefrom any extraordinary or non-recurring
items of gain or loss for such period (including, but not
limited to, the loss from discontinued operations in the fiscal
quarter ending September 30, 1998 in the amount of
$39,100,000), plus (ii) the aggregate amounts deducted in
determining Consolidated Net Income for such period in respect
of (a) the provision for taxes based on income of the Company
and its Consolidated Subsidiaries, (b) Interest Expense and (c)
depreciation, amortization and other similar non-cash expenses
of the Company and its Consolidated Subsidiaries, all as
determined on a consolidated basis for the Company and its
Consolidated Subsidiaries for such period in conformity with
GAAP.
"Consolidated Net Income" of the Company for any
period shall mean the net earnings of the Company and its
Consolidated Subsidiaries determined on a consolidated basis
for such period, after all proper charges, including charges
for depreciation, depletion, obsolescence, amortization,
interest on indebtedness and all taxes, including taxes in
respect of income.
"Consolidated Net Worth" shall mean, as at any date
at which the amount thereof shall be determined, the sum for
the company and its Consolidated Subsidiaries (determined
without duplication in accordance with GAAP) of the following:
(i) the amount of capital stock and paid in capital (excluding
the cost of treasury shares or other similar equity interests),
plus (ii) the amount of surplus and retained earnings (or, in
the case of surplus or retained earnings deficit, minus the
amount of such deficit).
"Consolidated Subsidiary" shall mean, with respect to
the Company, each Subsidiary of the Company the accounts of
which are consolidated in the financial statements referred to
in Section 8.1 or 5.1.
"Consolidated Total Indebtedness" shall mean the
aggregate of all Total Indebtedness of the Company and its
Consolidated Subsidiaries determined on a consolidated basis;
provided, however, that such amount shall be reduced by the
amount in Dollars of cash and Cash Equivalents on the
consolidated balance sheet of the Company and its Consolidated
Subsidiaries on a consolidated basis in conformity with GAAP in
excess of $25,000,000 as of the date of the amount thereof
shall be determined; and provided further, however, that for
the purposes of determining the ratio of Consolidated Total
Indebtedness to Consolidated EBITDA in connection with any
determination of the Applicable Borrowing Margin, such amount
for the fiscal quarter ending September 30, 1998 shall also be
reduced by the amount of $180,000,000 received in connection
with the divestiture of the "Machine Tools" group.
"Contingent Obligations" shall mean, as to any
Person, without duplication, any obligation of such person
guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any
other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain
the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of
the ability of the primary obligor to make payment of such
primary obligation or (d) otherwise to assure or hold harmless
the owner of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation
shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of
any Contingent Obligation shall be deemed to be an amount equal
to the maximum amount that such Person may be obligated to
expend pursuant to the terms of such Contingent Obligation or,
if such Contingent Obligation is not so limited, the stated or
determinable amount of the primary obligation in respect of
which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform
thereunder) as determined by such person in good faith.
"Contractual Obligation" shall mean, as applied to
any Person, any provision of any security issued by that Person
or of any loan or credit agreement, indenture, mortgage, lease
or other instrument or agreement.
"Default" shall mean any event, act or condition
which with notice or lapse of time or both would constitute an
Event of Default if that condition or event were not cured or
removed within any applicable grace or cure period.
"Defaulting Lender" shall mean (i) any Lender that
fails in its obligation to fund any Revolving Loan pursuant to
Section 2.1 and such failure continues for five Business Days;
(ii) any Lender as to which any event of the type described in
Section 7.7 occurs (with all references in such Section to the
Borrower instead being to such Lender); (iii) any Lender as to
which any Governmental Authority (including, without
limitation, the OTS, RTC, FDIC, OCC or Federal Reserve Board)
directly or indirectly seizes, takes possession of or
undertakes, authorizes or orders similar action with respect
to, or authorizes, or orders the liquidation, dissolution,
winding up, sale, transfer or other disposition of, or takes
steps or institutes proceedings or otherwise proceeds to
liquidate, dissolve, wind up, sell, transfer or otherwise
dispose of, such Lender or all or any part of such Lender's
property or appoints or authorizes or orders the appointment of
a receiver, liquidator, sequestrator, trustee, custodian,
conservator or other officer or entity having similar powers
over such Lender or over all or any part of such Lender's
property; or (iv) any Lender that fails in its obligation to
make available to an Issuing Lender such Lender's participation
in any unreimbursed amount of any drawing under any Letter of
Credit as provided in Section 2.14(a) and such failure
continues for five Business Days.
"Deutsche Mark Equivalent" shall mean, at any time
for the determination thereof, the amount of Deutsche Marks
which could be purchased with the amount of Dollars involved in
such computation at the spot exchange rate therefor as quoted
by BTCo as of 11:00 a.m. (London time) on the date two Business
Days prior to the date of any determination thereof for
purchase on such date.
"Deutsche Mark Euro Rate" shall mean (a) (i) the rate
per annum that appears on page 3750/3740 of the Dow Jones
Telerate Screen (or any successor page) for Deutsche Mark
deposits with maturities comparable to the Interest Period
applicable to the Deutsche Mark Loans subject to the respective
Borrowing, determined as of 11:00 A.M. (London time) on the
date which is three Business Days prior to the commencement of
such Interest Period or, if such a rate does not appear on page
3750/3740 of the Dow Jones Telerate Screen (or any successor
page), (ii) the offered quotation to first-class banks in the
London interbank Eurodollar market by BTCo for Deutsche Mark
deposits of amounts in immediately available funds comparable
to the outstanding principal amount of the Deutsche Mark Loan
of BTCo with maturities comparable to the Interest Period
applicable to such Deutsche Mark Loan commencing two Business
Days thereafter as of 11:00 a.m. (London time) on the date
which is two Business Days prior to the commencement of such
Interest Period, in either case divided (and rounded off to the
nearest 1/16 of 1%) by (b) a percentage equal to 100% minus the
then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable
law) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of
liabilities under Regulation D) to the extent Applicable;
provided, in the event that the Agent has made any
determination pursuant to Section 2.10(a)(i) in respect of
Deutsche Mark Loans, the Deutsche Mark Euro Rate determined
pursuant to clause (a) of this definition shall instead be the
rate determined by BTCo as the all-in cost of funds for BTCo to
fund such Deutsche Mark Loan with maturities comparable to the
Interest Period applicable thereto.
"Deutsche Mark Loan" shall mean a Deutsche Mark
Revolving Loan.
"Deutsche Mark Revolving Loan" shall have the meaning
provided in Section 2.1(b).
"Deutsche Mark Revolving Note" shall have the meaning
provided in Section 2.5(a).
"Deutsche Marks" shall mean freely transferable
lawful money of Germany.
"Dividends" shall mean any dividends declared or paid
on the shares of capital stock of the Company (other than stock
dividends), any cash distribution to the stockholders of the
Company or any funds set aside for any such purpose and the
excess of the cost of redemption or purchase by the Company of
any of its shares of capital stock of any class over any cash
proceeds from the sale of other shares of the Company's capital
stock of any class used for the purpose of such redemption or
purchase.
"Dollar Equivalent" shall mean, at any time for the
determination thereof, the amount of Dollars which could be
purchased with the amount of Deutsche Marks involved in such
computation at the spot exchange rate therefor as quoted by
BTCo as of 11:00 a.m. (London time) on the date two Business
Days prior to the date of any determination thereof for
purchase on such date.
"Dollar Loan" shall mean each Dollar Revolving Loan.
"Dollar Revolving Loan" shall have the meaning
provided in Section 2.1(b).
"Dollar Revolving Note" shall have the meaning
provided in Section 2.5(a).
"Dollars" and the symbol "$" shall each mean freely
transferable lawful money of the United States.
"Domestic Office" shall mean the office of each
Lender set forth opposite its name on the signature pages of
this Agreement under such heading, or if only one office is set
forth opposite its name, then such office.
"Domestic Subsidiary" shall mean a Subsidiary whose
jurisdiction of incorporation is within the United States that
is not a Foreign Subsidiary.
"Effective Date" shall mean November 30, 1998.
"Eligible Assignee" shall have the meaning assigned
to such term in Section 11.4(c).
"Eligible Transferee" shall mean and include a
commercial bank, financial institution or other accredited
investor" (as defined in Regulation D of the Securities Act).
"EMU" shall have the meaning provided in Section
2.18.
"Environmental Laws" shall mean the common law and
all Federal, state, local and foreign laws or regulations,
guidance or standards codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder
now or hereafter in effect, including, without limitation,
CERCLA, RCRA, FWPCA, FCAA and TSCA, relating to pollution or
protection of human health and the environment, including,
without limitation, laws relating to (i) emissions, discharges,
releases or threatened releases of and exposure to pollutants,
constituents, hazardous or toxic substances or wastes,
including, without limitation, asbestos or asbestos containing
material, petroleum, including crude oil or any fraction
thereof, or any petroleum product (collectively referred to as
"Hazardous Materials") into the environment (including, without
limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or (ii) relating to the
manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of
Hazardous Materials, and (iii) underground storage tanks, as
defined by any law regulating Hazardous Materials, and
emissions, discharges, releases or threatened releases
therefrom.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time. Section
references to ERISA are to ERISA, as in effect at the date of
this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted
therefor.
"ERISA Affiliate" shall mean any person (as defined
in Section 3(9) of ERISA) that is a member of any group of
persons described in Section 414(b) or (c) of the Code of which
the Company is a member; provided, however, that for purposes
of those provisions of Sections 5.7, 6.5, 7.8 and 8.8 hereof
relating to Section 412 of the Code or Section 302 of ERISA,
the term "ERISA Affiliate" shall also mean any such person that
is a member of any group of persons described in Section 414(m)
or (o) of the Code of which the Company is a member.
"Euro" shall have the meaning provided in Section
2.18.
"Eurodollar Loan" or "Eurodollar Loans" shall mean
any Revolving Loan or Revolving Loans during any period during
which such Revolving Loan or Revolving Loans are maintained in
Eurodollars or otherwise are bearing interest at the rates
provided for in Section 2.8(b).
"Eurodollar Office" shall mean the office of each
Lender set forth opposite its name on the signature pages of
this Agreement under such heading, or if only one office is set
forth opposite its name, then such office, or such other office
as such Lender may specify from time to time.
"Eurodollar Rate" shall mean (a) the offered
quotation to first-class banks in the Interbank Eurodollar
market by BTCo for Dollar deposits of amounts in immediately
available funds comparable to the outstanding principal amount
of the Eurodollar Loan of BTCo with maturities comparable to
the Interest Period applicable to such Eurodollar Loan
commencing two Business Days thereafter as of 10:00 a.m. (New
York time) on the date which is two Business Days prior to the
commencement of such Interest Period, divided (and rounded off
to the nearest 1/16 of 1%) by (b) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable
law) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of
liabilities under Regulation D).
"Event of Default" shall mean each of the Events of
Default provided in Section 7.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated
thereunder.
"Existing Credit Agreement" shall mean the credit
agreement as amended and restated as of December 31, 1994 by
and among the Company (formerly Cincinnati Milacron Inc.),
CMKE, the lenders listed in Schedule 2.1 thereto and BTCo as
Agent and as amended, modified and supplemented in accordance
with the terms thereof prior to the Effective Date.
"Facility Fee" shall have the meaning assigned to
such term in Section 2.13.
"Fair Market Value" shall mean, in respect of any
property of the Company and its Subsidiaries, the fair market
value thereof, determined in the good faith judgment of the
chief financial officer of the Company on the basis of an
assumed arms-length sale of such property to an independent
Person not affiliated with the Company or its Subsidiaries,
assuming neither party is under any compulsion to buy or sell
and that each has knowledge of all relevant facts and
circumstances.
"FCAA" shall mean the Federal Clean Air Act, as
amended.
"FDIC" shall mean the Federal Deposit Insurance
Corporation and any successor entity.
"Federal Funds Rate" shall mean on any one day the
weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers as published as of such day
by the Federal Reserve Lender of New York; provided that if
such day is not a Business Day, the Federal Funds Rate shall be
measured as of the immediately preceding Business Day.
"Fees" shall mean the fees and commissions payable
pursuant to Sections 2.13 and 2.14(f)(1)(ii), (2) and (3).
"Final Maturity Date" means January 31, 2002 unless
such date is extended for one year; provided, however, that the
Company gives the Agent written notice no later than January
15, 2001 of its desire to extend the Final Maturity Date, which
extension shall be subject to the consent of each Lender (other
than a Defaulting Lender).
"Fixed CD Rate" shall mean with respect to each
Interest Period in respect of a Fixed CD Rate Loan the sum
(rounded upward to the next whole multiple of 1/100 of 1%) of
(A) the Certificate of Deposit Rate for the Interest Period in
respect of a Fixed CD Rate Loan plus (B) the then daily net
annual assessment rate as estimated by the Agent on the first
day of such Interest Period for determining the current annual
assessment payable by the Agent to the FDIC for insuring a
negotiable certificate of deposit of at least $100,000 with a
maturity equal to such Interest Period of any member bank of
the Federal Reserve System.
"Fixed CD Rate Loan" or "Fixed CD Rate Loans" shall
mean any Revolving Loan or Revolving Loans during any period
during which such Revolving Loan or Revolving Loans are bearing
interest at the rates provided for in Section 2.7(c).
"Fixed Charges" of a Person for any period shall
mean, without duplication, the sum of (i) Interest Expense plus
(ii) Dividends.
"Fixed Rate" shall mean and include the Fixed CD
Rate, the Eurodollar Rate and the Deutsche Mark Euro Rate.
"Fixed Rate Loan" shall mean any Fixed CD Rate Loan,
any Eurodollar Loan and any Deutsche Mark Loan.
"Foreign Subsidiary" shall mean any Subsidiary of the
Company, wherever incorporated, which operates and owns or
leases assets principally outside the United States.
"Funding Date" shall mean the date of the funding of
a Revolving Loan.
"FWPCA" shall mean the Federal Water Pollution
Control Act, as amended.
"GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or in such other
statements by such accounting profession, which are applicable
to the circumstances as of the date of determination.
"German Borrower" shall mean CMKE.
"Government Acts" shall have the meaning assigned to
such term in Section 2.14.
"Governmental Authority" shall mean any federal,
state, local, foreign or other governmental or administrative
(including self-regulatory) body, instrumentality, department
or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar
dispute-resolving panel or body including, without limitation,
those governing the regulation and protection of the
environment.
"Guarantor" shall mean the Company in respect of
Obligations of the German Borrower hereunder.
"Indebtedness" of any Person shall mean, without
duplication, (i) all indebtedness of such Person for borrowed
money, (ii) the deferred purchase price of assets or services
which in accordance with GAAP would be shown on the liability
side of the balance sheet of such Person, (iii) the face amount
of all letters of credit issued for the account of such Person
and, without duplication, all drafts drawn thereunder, (iv) all
Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such
Indebtedness has been assumed by such first Person, (v) all
Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted,
i.e., take-or-pay and similar obligations and (vii) all
Contingent Obligations of such Person; provided that
Indebtedness shall not include trade payables, accrued
expenses, accrued dividends and accrued income taxes, in each
case arising in the ordinary course of business.
"Information Systems and Equipment" shall mean all
computer hardware, firmware and software, as well as other
information processing systems, or any equipment containing
embedded microchips, whether directly owned, licensed, leased,
operated or otherwise controlled by the Company or any of its
Subsidiaries, including through third-party service providers,
and which, in whole or in part, are used, operated, relied
upon, or integral to, the Company's or any of its Subsidiaries'
conduct of their business.
"Interest Determination Date" shall mean, with
respect to any Fixed Rate Loan, the second Business Day prior
to the commencement of any Interest Period relating to such
Fixed Rate Loan.
"Interest Expense" of the Company for any period
shall mean the total interest expense, whether paid in cash or
accrued as a liability, less any interest income of the Company
and its Consolidated Subsidiaries for such period determined in
accordance with GAAP; provided that Interest Expense shall be
deemed to be $1 if the above calculation would otherwise result
in zero or a negative number; and provided, further, that
Interest Expense shall include without duplication (i) any
payment or accrual of interest on a obligation held by an
entity that is a pass-through entity for Federal income tax
purposes and is not a Consolidated Subsidiary and (ii) any
payment of fees and expenses under the Receivables Purchase
Agreement.
"Interest Payment Date" shall mean, with respect to
any Fixed Rate Loan, the last day of the Interest Period
applicable thereto; provided that in the case of any Eurodollar
Loan or Alternate Currency Loan having an Interest Period of
six months or any Fixed CD Rate Loan having an Interest Period
of 180 days, "Interest Payment Date" shall also include each
Interest Period Anniversary Date for such Interest Period.
"Interest Period" with respect to any Revolving Loan
shall mean the interest period applicable thereto, as
determined pursuant to Section 2.9.
"Interest Period Anniversary Date" shall mean, for
any Interest Period applicable to a Eurodollar Loan or
Alternate Currency Loan that is six months and for any Interest
Period applicable to a Fixed CD Rate Loan that is 180 days, the
three-month anniversary or 90-day anniversary, respectively, of
the commencement of that Interest Period with respect to such
Eurodollar Loan or Alternate Currency Loan or Fixed CD Rate
Loan.
"Investment" shall mean, as applied to any Person,
any direct or indirect purchase or other acquisition by that
Person of, or a beneficial interest in, stock or other
Securities of any other Person or any direct or indirect loan,
advance or capital contribution by that Person to any other
Person, including all indebtedness and accounts receivable from
that other Person that are not current assets, do not
constitute a Consolidated Capital Expenditure or did not arise
from sales to that other Person in the ordinary course of
business, or any payment in respect of a Contingent Obligation
in respect of an obligation of any other Person. The amount of
any Investment shall be the original cost of such Investment
plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs
or write-offs with respect to such Investment; provided,
however, that Investments made with or in exchange for
intangible assets of the Company or its Subsidiaries (or the
portion of the value of such Investment that is reasonably
attributable to the value of any such intangible assets) shall
be deemed to be valued at $1.00 for purposes of Section 6.11.
"Issuing Lender" shall mean the Lender that agrees to
issue a Letter of Credit, determined as provided in
Section 2.14.
"Lender" shall have the meaning provided in the
preamble of this Agreement.
"Letter of Credit" or "Letters of Credit" means any
standby letter or letters of credit or similar instrument
(which shall be denominated in Dollars) issued or to be issued
by an Issuing Lender for the account of the Company pursuant to
Section 2.14 for the purpose of supporting (i) workers'
compensation liabilities of the Company, (ii) the obligations
of third party insurers of the Company arising by virtue of the
laws of any jurisdiction requiring third party insurers to
obtain such letters of credit, (iii) obligations with respect
to Capital Leases or Operating Leases of the Company, or
(iv) performance, payment, deposit or surety obligations of the
Company if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry in
which the Company and its Subsidiaries are engaged.
"Letter of Credit Participation" has the meaning
assigned to that term in Section 2.14(a).
"Letters of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount that
is, or, with respect to any Letter of Credit that by its terms
provides for increases over time in the maximum amount
available to be drawn thereunder, may become at any given time,
available under all Letters of Credit then outstanding plus
(ii) the aggregate amount of all drawings under Letters of
Credit honored by all Issuing Lenders and not theretofore
reimbursed by the Company; provided, however, the Letters of
Credit Usage of an Issuing Lender shall be deemed to be only
such portion of the Letters of Credit Usage of such Issuing
Lender that is not subject to participation pursuant to Section
2.14(a).
"Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority or other
security interest or agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other
title retention agreement, any financing or similar statement
or notice filed under the UCC or any other similar recording or
notice statute, and any lease having substantially the same
effect as any of the foregoing).
"Loan" shall have the meaning assigned to such term
in Section 2.1(a).
"Loan Documents" shall mean this Agreement, the
Company Guarantee, the Notes, if any, and the Letters of
Credit.
"Loan Facility" shall mean the credit facility
evidenced by the Total Revolving Loan Commitment.
"Margin Stock" shall have the meaning provided in 12
C.F.R. 221.3(v) or in any successor provision thereto.
"Material Adverse Effect" shall mean (i) any material
adverse change with respect to the business, operations,
assets, liabilities (contingent or otherwise), condition
(financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole or (ii) any fact or circumstance
(net of available insurance coverage from financially sound
insurers), including any pending or threatened litigation or
proceeding, arising as to which singly or in the aggregate
there is a reasonable likelihood of (x) a material adverse
change described in clause (i) occurring or (y) the Company
failing to perform in any material respect its respective
material Obligations hereunder or under any of the other Loan
Documents or the Lenders and the Agent becoming unable to
enforce in any material respect their rights taken as a whole
purported to be granted hereunder and under the other Loan
Documents.
"Moody's" shall mean Moody's Investors Service, Inc.,
or any successor to its rating business.
"Multiemployer Plan" shall mean a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA with respect to
which the Company or any of its ERISA Affiliates is or has,
within any of the preceding six years, been required to
contribute.
"Notes Receivable" shall mean promissory notes
evidencing the obligations of purchasers of inventory
consisting of equipment of the Company originally representing
that portion of the purchase price of such inventory not paid
to the Company in cash at the time of purchase.
"Notice of Borrowing" shall have the meaning assigned
to such term in Section 2.3.
"Notice of Conversion/Continuation" shall have the
meaning assigned to such term in Section 2.6.
"Notice Office" shall mean the office of the Agent
located at 130 Liberty Street, Commercial Loan Division, l4th
Floor, New York, New York 10006, Attention: Loan Department,
or such other office as the Agent may hereafter designate in
writing as such to the other parties hereto.
"Obligations" shall mean all obligations of every
nature of the Company and the German Borrower, as the case may
be, from time to time owed to the Agent and the Lenders or any
of them under any of the Loan Documents.
"OCC" shall mean the Office of the Comptroller of the
Currency and any successor agency or other entity.
"Officers' Certificate" shall mean, as applied to any
corporation, a certificate executed on behalf of such
corporation by an Authorized Officer; provided that every
Officers' Certificate with respect to compliance with a
condition precedent to the making of any Revolving Loan
hereunder shall include (i) a statement that the officers
making or giving such Officers' Certificate have read such
condition and any definitions or other provisions contained in
this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be
made such examination or investigation as is necessary to
enable them to express an informed opinion as to whether or not
such condition has been satisfied, and (iii) a statement as to
whether, in the opinion of the signers, such condition has been
satisfied.
"Operating Lease" of any Person shall mean any lease
(including, without limitation, leases which may be terminated
by the lessee at any time) of any property (whether real,
personal or mixed) by such Person as Lessee which is not a
Capital Lease.
"Original Dollar Equivalent" shall mean, in respect
of any Alternate Currency Revolving Loan, the Dollar Equivalent
thereof at the time of the incurrence of such Alternate
Currency Revolving Loan.
"OTS" shall mean the Office of Thrift Supervision and
any of its successors or assigns.
"Payment Office" shall mean (i) in respect of Dollar
Loans, Letters of Credit, Fees and, except as provided in
clause (ii) of this definition, all other amounts owing under
this Agreement, the office of the Agent located at 130 Liberty
Street, New York, New York 10006, ABA Number: 021-001-003,
Account Name: Commercial Loan Division, Account Number:
99401268, Attention: Loan Department, Reference: Milacron
Inc., (ii) in respect of Deutsche Mark Loans, the Agent's
account located at Bankers Trust Company, Frankfurt, Germany in
Favor of Bankers Trust Company New York, Account #70000036.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Section 4002 of ERISA, or
any successor thereto.
"Permitted Acquisition" shall mean (a) the merger or
consolidation of any Person into or with the Company or into or
with any wholly-owned Subsidiary of the Company or (b) the
acquisition by the Company or any of its wholly-owned
Subsidiaries of all or substantially all of the assets of any
Person (or all or substantially all of the assets of a product
line or division of any Person) not already a Subsidiary of the
Company or 90% or more of the capital stock of any such Person;
provided that any such merger, consolidation or acquisition
shall only be a Permitted Acquisition so long as (i) no Default
or Event of Default exists (or will result from such
acquisition) and (ii) the total consideration payable (whether
in cash, securities, property, evidence of indebtedness or
otherwise) is $100,000,000 or less.
"Permitted Liens" shall mean those Liens permitted
pursuant to Section 6.1.
"Person" shall mean and include any person, firm,
corporation, association, trust or other enterprise or any
governmental or political subdivision or agency, department or
instrumentality thereof including either Borrower, any Lender
or the Agent.
"Plan" shall mean any employee plan that is subject
to the provisions of Title IV of ERISA and that is maintained
by or contributed to, or at any time during the five calendar
years preceding the date of this Agreement was maintained or
contributed to, by the Company or any of its ERISA Affiliates,
other than a Multiemployer Plan.
"Prime Lending Rate" shall mean the rate that the
Agent announces from time to time at its principal office as
its prime lending rate for domestic commercial loans; any
change of interest resulting from a change in the Prime Lending
Rate shall be effective on the effective date of each change
therein. The Prime Lending Rate is a reference rate and does
not necessarily represent the lowest or best rate actually
charged to any customer. The Agent may make commercial or
other loans at rates of interest at, above or below the Prime
Lending Rate.
"Pro Rata Share" shall mean, with respect to each of
the Commitments of, or Obligations owed to, each Lender, the
percentage designated by dividing such Lender's Commitment or
Obligation by all of the Lenders' Commitments or all such
Obligations owed to such Lenders, as such Pro Rata Share may
change from time to time as a result of assignments made
pursuant to Section 11.4 and as a result of Section 11.16; with
respect to any obligations or amounts owing or potentially
owing by any Lender, Pro Rata Share means the percentage
designated by dividing the sum of such Lender's Revolving Loan
Commitment by the Total Revolving Loan Commitment as such Pro
Rata Share may change from time to time as a result of
assignments made pursuant to Section 11.4 and as a result of
Section 11.16.
"RCRA" shall mean the Resource, Conservation and
Recovery Act, as amended from time to time, and any successor
statute.
"Receivables Purchase Agreement" shall mean the
Amended and Restated Receivables Purchase Agreement, as
amended, dated as of January 26, 1996 among the Company,
Cincinnati Milacron Marketing Company, Cincinnati Milacron
Commercial Corp., Valenite Inc., DME Company, Market Street
Funding Corporation and PNC Bank, National Association or as
the same may be amended to include the sale of the Borrower's
subsidiaries' domestic Notes Receivable, as the same may be
amended, supplemented or modified from time to time in
accordance with its terms and Section 6.7 hereof.
"Reference Lender" shall mean BTCo and any one or
more other Lenders that may be designated from time to time by
BTCo.
"Regulation D" shall mean Regulation D of the Board
of Governors of the Federal Reserve System as from time to time
in effect or any successor to all or a portion thereof
establishing reserve requirements.
"Reportable Event" shall mean an event described in
Section 4043(b) of ERISA with respect to a Plan as to which the
30-day notice requirement has not been waived by regulation by
the PBGC (provided, however, that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of
ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m)
of the Code or Section 302(e) of ERISA, shall be a reportable
event regardless of the issuance of any waivers in connection
with Section 412(d) of the Code).
"Request for Issuance" shall mean a request
substantially in the form of Exhibit B-3 annexed hereto with
respect to a proposed issuance of a Letter of Credit.
"Requisite Lenders" shall mean Lenders whose
Commitments constitute greater than 50% of the Total Revolving
Loan Commitment.
"Restricted Payment", with respect to any specified
Indebtedness or equity Securities, shall mean, whether in cash,
additional securities or property of any kind, any prepayment
of principal of, or premium, if any, or interest on, or any
similar redemption, purchase, retirement, defeasance, sinking
fund or similar payment (other than, in the case of Certain
Existing Indebtedness only, any of the foregoing in respect of
mandatory scheduled payment obligations or any payment at the
regularly scheduled final maturity thereof).
"Revolving Loan" shall have the meaning assigned to
such term in Section 2.1(a).
"Revolving Loan Commitment" shall have the meaning
assigned to such term in Section 2.1(a).
"RTC" shall mean the Resolution Trust Corporation and
any successor entity.
"S&P" shall mean Standard & Poor's Corporation or any
successor to its rating business.
"Sale-leaseback" shall mean any Capital Lease of the
Company or any of its Subsidiaries whereby the Company or any
of its Subsidiaries, directly or indirectly, becomes or remains
liable as lessee or as guarantor or other surety, of any
property (whether real or personal or mixed) whether now owned
or hereafter acquired, (i) that the Company or any of its
Subsidiaries has sold or transferred or is to sell or transfer
to any other Person (other than the Company), or (ii) that the
Company or any of its Subsidiaries intends to use for
substantially the same purpose as any other property that has
been or is to be sold or transferred by the Company or any of
its Subsidiaries to any person (other than the Company) in
connection with such lease.
"Sale-leaseback Agreement" shall mean any
Sale-leaseback agreement entered into prior to the Effective
Date by the Company or any of its Subsidiaries and any
replacement thereof, in each case as the same may be amended,
amended and restated, supplemented or modified from time to
time in accordance with its terms and Section 6.7 hereof.
"Securities" shall mean any stock, shares, voting
trust certificates, bonds, debentures, options, warrants,
notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in
general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary
or interim certificates for the purchase or acquisition of, or
any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated
thereunder.
"Significant Subsidiary" shall mean, at any time, in
the case of the Company each Subsidiary of the Company now
existing or hereafter acquired or formed by the Company which
(x)(i) accounted for more than $100,000,000 in revenues of the
Company or (ii) $5,000,000 of Consolidated EBIT of the Company,
in each case on the date of the most recent consolidated
financials of the Company delivered to the Lenders pursuant to
Section 5.1, (y) was the owner of more than $10,000,000 of the
consolidated total assets of Company during the twelve-month
period ending on the date of the most recent consolidated
balance sheet of the Company delivered to the Lenders pursuant
to Section 5.1 or (z) is CMKE; provided, however, that any
special purpose Subsidiary of the Company formed or used in
connection with the transactions contemplated by the
Receivables Purchase Agreement (or any similar "bankruptcy
remote" subsidiary) shall be deemed not to be a Significant
Subsidiary.
"Stated Maturity" means, with respect to any
Indebtedness, the date specified therein as the fixed date on
which the then outstanding principal amount of such
Indebtedness is due and payable, including (if applicable)
pursuant to any mandatory redemption provision.
"Subsidiary" of any Person means (i) a corporation
more than 50% of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of
the directors of such corporation (irrespective of whether or
not at the time stock of any class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned or
controlled by such Person, directly or indirectly through
Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such Person, directly or
indirectly through Subsidiaries, has more than a 50% equity
interest at the time. A wholly-owned Subsidiary of any Person
shall mean (i) any Domestic Subsidiary, with "99%" being
substituted for "50%" in the prior sentence each time it
appears and (ii) any Foreign Subsidiary, with "95%" being
substituted for "50%" in the prior sentence each time it
appears.
"Subsidiary Borrower" shall mean the German Borrower.
"Taxes" shall have the meaning assigned to such term
in Section 3.5.
"Total Indebtedness" shall mean, for any Person, the
sum of (i) short term debt, (ii) the current portion of long
term debt, (iii) long term debt, (iv) rental obligations under
Capital Leases, (v) all contingent obligations in support of
indebtedness and (vi) outstanding letters of credit, which in
the case of clauses (i)-(vi) are required to be set forth on
the balance sheet (including the notes thereto) as debt of such
Person as determined in accordance with GAAP.
"Total Modified Revolving Commitment" shall mean the
Total Revolving Loan Commitment then in effect plus, in the
event that any Alternate Currency Revolving Loans are
outstanding at such time, the amount (not to exceed 10%) by
which the Dollar Equivalent of the principal amount of such
Alternate Currency Revolving Loan has increased from the
Original Dollar Equivalent thereof; provided, however, that at
no time shall the Total Modified Revolving Commitment exceed
the Total Revolving Loan Commitment.
"Total Revolving Loan Commitment" shall have the
meaning assigned to such term in Section 2.1(a).
"Treasury Regulations" shall mean the Regulations
promulgated by the Secretary of the Treasury from time to time
pursuant to the Code.
"TSCA" shall mean the Toxic Substances Control Act.
"Type" shall mean the type of Revolving Loan
determined with regard to the interest option applicable
thereto, i.e., whether a Base Rate Loan, a Fixed CD Rate Loan,
a Eurodollar Loan or a Deutsche Mark Loan.
"UCC" shall mean the Uniform Commercial Code, as in
effect in each applicable jurisdiction.
"Unfunded Current Liability" of any Plan shall mean
an amount equal to the "amount of unfunded benefit liabilities"
for such Plan, as defined in Section 4001(a)(18) of ERISA.
"Year 2000 Compliant" shall mean that all Information
Systems and Equipment accurately process date data (including,
but not limited to, calculating, comparing and sequencing),
before, during and after the year 2000, as well as same and
multi-century dates, or between the years 1999 and 2000, taking
into account all leap years, and further, that when used in
combination with, or interfacing with, other Information
Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue
to function in the same manner as it performs today and shall
not otherwise impair the accuracy or functionality of
Information Systems and Equipment.
The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular
provision of this Agreement, and Article, Section, schedule,
exhibit and like references are to this Agreement unless
otherwise specified.
1.2 Accounting Principles. Except as otherwise
specifically provided herein, all statements (other than the
financial statements to be provided pursuant to Section 5.1)
to be prepared and determinations to be made under this
Agreement, including (without limitation) those pursuant to
Sections 5, 6 and 8 shall be prepared and made in accordance
with GAAP applied on a basis consistent with the accounting
principles reflected in the consolidated financial statements
of the Company and its Subsidiaries for the fiscal quarter
ended September 30, 1998 referred to in Section 8.1. All
accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP.
1.3 Other Definitional Provisions. References to
"Sections," "clauses" or "subclauses" shall be to Sections,
clauses and subclauses, respectively, of this Agreement unless
otherwise specifically provided. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used
in the singular or the plural depending on the reference.
1.4 Closing Date. This Agreement shall close on the
date (the "Closing Date") on which (i) each party hereto shall
have returned an executed copy hereof to the Agent at the
address designated on its signature page hereto or, in the case
of the Lenders, shall have given the Agent written notice
(actually received) at such office or such other office as the
Agent may designate that the same has been signed and sent by
it to the Agent, (ii) each of the conditions specified in
Section 10.1 will have been satisfied or waived by the
Requisite Lenders and (iii) the Agent shall have given the
Company and each Lender notice that the foregoing has occurred.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1 The Revolving Loans. (a) Subject to the terms
and conditions of this Agreement, and in reliance upon the
representations and warranties of the Borrowers set forth
herein and in the other Loan Documents, each Lender hereby
severally agrees to lend to the Company or to the German
Borrower, as the case may be, at any time and from time to
time, during the period from and including the Closing Date to
but excluding the date that is one day before the Final
Maturity Date, its Pro Rata Share of the Total Revolving Loan
Commitment, by making loans to the Company or to the German
Borrower, as the case may be (each, a "Loan" or "Revolving
Loan"), to be used for the purposes identified in Section 2.12.
Each Lender's commitment to make Revolving Loans to the
Borrowers pursuant to this Section 2.1 is herein called its
"Revolving Loan Commitment" and such commitments of all Lenders
in the aggregate are herein called the "Total Revolving Loan
Commitment." The initial amount of each Lender's Revolving
Loan Commitment is set forth opposite its name on Schedule 2.1
annexed hereto and the initial amount of the Total Revolving
Loan Commitment is $375,000,000. The amount of the Total
Revolving Loan Commitment shall be reduced by the amount of all
reductions thereof made pursuant to Section 3.1 through the
date of determination. At any time the Total Revolving Loan
Commitment is reduced pursuant to the terms of this Agreement,
each Lender's Revolving Loan Commitment shall be reduced by an
amount equal to its Pro Rata Share of such reduction. Each
Lender's Revolving Loan Commitment shall expire on the Final
Maturity Date and all Revolving Loans and all other amounts
owed hereunder with respect to the Revolving Loans shall be
paid in full no later than that date. No Revolving Loans may
be borrowed by the Company or the German Borrower, as the case
may be, if the sum of (i) the aggregate principal amount of
Revolving Loans then outstanding, after giving effect to the
making of all Revolving Loans then requested by all outstanding
but unfunded Notices of Borrowing, plus (ii) the then
outstanding Letters of Credit Usage, after giving effect to the
issuance of all Letters of Credit subject to outstanding
Requests for Issuance, would exceed the Total Revolving Loan
Commitment then in effect. In no event shall the sum of
(i) the aggregate principal amount of the Revolving Loans from
any Lender outstanding at any time plus (ii) such Lender's Pro
Rata Share of the then outstanding Letters of Credit Usage
exceed such Lender's Revolving Loan Commitment then in effect.
Subject to Sections 2.10 and 11.16, all Revolving
Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares, it
being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation
to make Revolving Loans hereunder nor shall the Revolving Loan
Commitment of any Lender be increased or decreased as a result
of the default by any other Lender in that other Lender's
obligation to make Revolving Loans hereunder.
(b) Each Revolving Loan (i) shall, in the case of
Revolving Loans made to the Company, be made and maintained in
Dollars (each a "Dollar Revolving Loan" and, collectively, the
"Dollar Revolving Loans"), which Dollar Revolving Loans shall,
at the option of the Company, be either Base Rate Loans, Fixed
CD Rate Loans or Eurodollar Loans, provided that all Dollar
Revolving Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, be of the same
Type, (ii) shall, in the case of Revolving Loans made to the
German Borrower, be made and maintained in Deutsche Marks (each
a "Deutsche Mark Revolving Loan" and, collectively, the
"Deutsche Mark Revolving Loans"), (iii) may be repaid and
reborrowed in accordance with the provisions hereof, and
(iv) shall not exceed for any Lender at the time of the making
of any such Revolving Loans, that aggregate principal amount
(or the Dollar Equivalent of each outstanding Deutsche Mark
Revolving Loan) which, when added to the sum of (I) the
aggregate principal amount of all other Dollar Revolving Loans
then outstanding from such Lender (or the Dollar Equivalent of
each Deutsche Mark Revolving Loan then outstanding) and
(II) the product of (A) such Lender's Pro Rata Share of the
Total Revolving Loan Commitment and (B) the aggregate amount of
all Letter of Credit Outstandings (exclusive of Unpaid Drawings
which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective Dollar Revolving Loans) at
such time, equals the Revolving Loan Commitment of such Lender
at such time; provided, however, that no Deutsche Mark
Revolving Loan shall be made if the Dollar Equivalent thereof,
when added to the Dollar Equivalent of all other outstanding
Deutsche Mark Revolving Loans, would exceed $125,000,000 (the
"Alternate Currency Sublimit").
(c) Deutsche Mark Loans shall be made by the Lenders
only to the German Borrower and, further, the German Borrower
may only incur Deutsche Mark Loans pursuant to this
Section 2.1.
2.2 Minimum Amount of Each Borrowing. Each
Borrowing of Revolving Loans shall be in an integral multiple
of $500,000 and, if a Base Rate Loan, shall be in a minimum
amount of $1,000,000 and, if a Fixed CD Rate Loan or a
Eurodollar Loan, shall be in a minimum amount of $5,000,000 (or
the respective Alternate Currency Equivalent thereof in the
case of a Borrowing of Alternate Currency Revolving Loans).
2.3 Notice of Borrowing. (a) Whenever the Company
or the German Borrower, as the case may be, desires to incur
Revolving Loans hereunder, it shall give the Agent at its
Notice Office at least one Business Day's prior written notice
(or telephonic notice promptly confirmed in writing) of each
Base Rate Loan, at least two Business Days' prior written
notice (or telephonic notice confirmed in writing) in the case
of each Fixed CD Rate Loan to be made hereunder, at least three
Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each Eurodollar Loan and at
least five Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of each Alternate
Currency Loan to be made hereunder, provided that any such
notice shall be deemed to have been given on a certain day only
if given before 11:00 A.M. (New York time) on such day. Each
such written notice or written confirmation of telephonic
notice (each a "Notice of Borrowing") shall be written in
English, irrevocable and shall be given by the Company or the
German Borrower, as the case may be, in the form of Exhibit B-
1, appropriately completed to specify (i) the name of such
Borrower, (ii) the date of such incurrence (which shall be a
Business Day), (iii) that the Loans being made shall constitute
Revolving Loans and the Applicable Currency for such Revolving
Loans, (iv) the aggregate principal amount of the Loans to be
made (stated in the Applicable Currency), (v) in the case of
Dollar Loans, whether such Dollar Loans being made are to be
initially maintained as Base Rate Loans, Fixed CD Rate Loans or
Eurodollar Loans and (vi) in the case of Fixed Rate Loans, the
initial Interest Period to be applicable thereto. The Agent
shall promptly give each Lender notice of such proposed
incurrence, of such Lender's proportionate share thereof and of
the other matters required by the immediately preceding
sentence to be specified in the Notice of Borrowing.
(b) Without in any way limiting the obligation of
any Borrower to confirm in writing any telephonic notice of any
incurrence of Revolving Loans, the Agent may act without
liability upon the basis of telephonic notice of such
incurrence, believed by the Agent in good faith to be from an
Authorized Officer of such Borrower prior to receipt of written
confirmation. In each such case, each Borrower hereby waives
the right to dispute the Agent's record of the terms of such
telephonic notice of such incurrence of Loans absent manifest
error.
(c) Notwithstanding any other provision to the
contrary in the Loan Documents, (i) an Authorized Officer of
the Company may request the advance of a Revolving Loan to the
German Borrower in the same manner as may an Authorized Officer
of the German Borrower and (ii) no Revolving Loan shall be
advanced to the German Borrower without the prior written
consent of an Authorized Officer of the Company.
2.4 Disbursement of Funds. (a) No later than 12:00
Noon (local time in the city in which the proceeds of such
Revolving Loans are to be made available in accordance with the
terms hereof) on the date specified in each Notice of
Borrowing, each Lender with a Commitment will make available
its Pro Rata Share of each Borrowing of Revolving Loans
requested to be made on such date, in Dollars or in the
relevant Alternate Currency, as the case may be, and in
immediately available funds at the appropriate Payment Office
of the Agent. All such amounts shall be made available in
immediately available funds at the appropriate Payment Office
of the Agent, and the Agent will make available to the Company
or the German Borrower, as the case may be, at such Payment
Office, in Dollars or the relevant Alternate Currency, as the
case may be, and in immediately available funds, the aggregate
of the amounts so made available by the Lenders (prior to 1:00
P.M. (local time in the city in which the proceeds of such
Revolving Loans are to be made available in accordance with the
terms hereof) on such day), to the extent of funds actually
received by the Agent.
(b) Unless the Agent shall have been notified by any
Lender prior to the date of Borrowing that such Lender does not
intend to make available to the Agent such Lender's portion of
any Borrowing to be made on such date, the Agent may assume
that such Lender has made such amount available to the Agent on
such date of Borrowing and the Agent may, in reliance upon such
assumption, make available to the relevant Borrower a
corresponding amount. If such corresponding amount is not in
fact made available to the Agent by such Lender, the Agent
shall be entitled to recover such corresponding amount on
demand from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Company or the
German Borrower, as the case may be, and the Company or the
German Borrower, as the case may be, shall immediately pay such
corresponding amount to the Agent. The Agent shall also be
entitled to recover on demand from such Lender or the Company
or the German Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to such
Borrower until the date such corresponding amount is recovered
by the Agent, at a rate per annum equal to (i) if recovered
from such Lender, at the overnight Federal Funds Rate and
(ii) if recovered from the Company or the German Borrower, as
the case may be, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 2.8.
Nothing in this Section 2.4 shall be deemed to relieve any
Lender from its obligation to make Revolving Loans hereunder or
to prejudice any rights which the Company or the German
Borrower, as the case may be, may have against any Lender as a
result of any failure by such Lender to make Revolving Loans
hereunder.
2.5 Evidence of Debt. (a) Each Lender shall
maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Company and the
German Borrower to such Lender resulting from the Loans made by
such Lender including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(b) The Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the
Type thereof and the Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to
become due and payable from the Company or the German Borrower,
as the case may be, to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder for the
account of the Lenders and each Lender's share thereof.
(c) The entries made in the accounts maintained
pursuant to paragraph (a) or (b) of this Section shall be prima
facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of any Lender or
the Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Company or the
German Borrower, as the case may be, to repay the Loans in
accordance with the terms of this Agreement.
(d) Any Lender may request that Loans of any Type
made by it be evidenced by a promissory note. In such event,
the Company or the German Borrower, as the case may be, shall
prepare, execute and deliver to such Lender a promissory note
payable to the order of such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) in
accordance with the terms of this Agreement; and substantially
in the form of Exhibit A-1 or Exhibit A-2, as the case may be,
and approved by the Agent. Thereafter, the Loans evidenced by
such promissory note(s) and interest thereon shall at all times
be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such
promissory note(s) is a registered note, to such payee and its
registered assigns).
2.6 Conversion or Continuation of Revolving Loans.
Provided that no Default or Event of Default is then in
existence, the Company shall have the option (i) to convert
(pro rata with respect to each Lender) at any time all or any
part of its outstanding Dollar Revolving Loans equal to
$5,000,000 ($1,000,000 in the case of conversion into Base Rate
Loans and Fixed CD Rate Loans) and integral multiples of
$1,000,000 in excess of that amount from Dollar Revolving Loans
of one Type to Dollar Revolving Loans of another Type or
(ii) upon the expiration of any Interest Period applicable to a
Fixed CD Rate Loan or Eurodollar Loan, to continue all or any
portion of such Fixed CD Rate Loan or Eurodollar Loan equal to
$5,000,000 in the case of any Eurodollar Loan ($1,000,000 in
the case of any Fixed CD Rate Loan) and integral multiples of
$1,000,000 in excess of that amount as a Fixed CD Rate Loan or
Eurodollar Loan of the same Type, and the succeeding Interest
Period(s) of such continued Revolving Loan shall commence on
the last day of the Interest Period of the Dollar Revolving
Loan to be continued; provided, however, that a Fixed CD Rate
Loan or Eurodollar Loan may only be converted into a Dollar
Revolving Loan of another Type on the expiration date of the
Interest Period applicable thereto.
The Company shall deliver a Notice of
Conversion/Continuation to the Agent, substantially in the form
of Exhibit B-2 annexed hereto, no later than 12:00 Noon
(New York time) at least three Business Days in advance of the
proposed conversion/continuation date in the case of a
conversion to, or a continuation of, a Eurodollar Loan and two
Business Days in advance of the proposed
conversion/continuation date in the case of a conversion to, or
a continuation of, a Fixed CD Rate Loan. The Agent shall give
each Lender notice as promptly as practicable of any such
proposed conversion or continuation affecting any of its Dollar
Revolving Loans. A Notice of Conversion/Continuation shall, in
the case of a conversion to, or continuation of, a Fixed CD
Rate Loan or Eurodollar Loan, be irrevocable and shall specify
(i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Dollar Revolving Loan to
be converted/continued, (iii) (A) whether the Dollar Revolving
Loan to be converted/continued is a Base Rate Loan, Fixed CD
Rate Loan or a Eurodollar Loan and (B) whether the Dollar
Revolving Loan into which such Dollar Revolving Loan is
converted/continued is to be a Base Rate Loan, Fixed CD Rate
Loan or a Eurodollar Loan, and (iv) in the case of a conversion
to, or a continuation of, a Fixed CD Loan or Eurodollar Loan,
the requested Interest Period. In lieu of delivering the
above-described Notice of Conversion/Continuation, the Company
may give the Agent telephonic notice by the required time of
any proposed conversion/continuation under this Section 2.6;
provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to
the Agent on or before the proposed conversion/continuation
date. If the Company has failed to timely deliver a Notice of
Conversion/Continuation or give such telephonic notice with
respect to a Fixed CD Rate Loan or Eurodollar Loan the Company
shall be deemed to have delivered to the Agent a Notice of
Conversion/Continuation to convert such Fixed CD Rate Loan or
Eurodollar Loan, into a Base Rate Loan.
Except as provided in Section 2.10, a Notice of
Conversion/Continuation pursuant to this Section 2.6 (or
telephonic notice in lieu thereof) shall be irrevocable on and
after the date of delivery thereof to the Agent, and the
Company shall be bound to convert or continue in accordance
therewith.
2.7 Pro Rata Borrowings and Issuances. All
Revolving Loans under this Agreement shall be made by the
Lenders simultaneously and in such amount as necessary so that
after giving effect thereto, to the extent possible, the
outstanding Revolving Loans of each Lender shall be such
Lender's Pro Rata Share thereof. It is understood that no
Lender shall be responsible for any default by any other Lender
in its obligation to make Revolving Loans hereunder or
participate in the issuance of each Letter of Credit as
provided for by Section 2.14(a) nor shall the Commitment of any
Lender be increased as a result of the default by any other
Lender in its obligation to make Revolving Loans hereunder or
participate in the issuance of each Letter of Credit as
provided for by Section 2.14(a) and that each Lender shall be
obligated to make the Revolving Loans provided to be made by it
hereunder or participate in the issuance of each Letter of
Credit as provided for by Section 2.14(a), regardless of the
failure of any other Lender to fulfill its Commitment hereunder
or pursuant to Section 2.14(a).
2.8 Interest. (a) The Company agrees to pay
interest in respect of the unpaid principal amount of each Base
Rate Loan incurred by the Company from the date the proceeds
thereof are made available to the Company until maturity
thereof (whether by acceleration or otherwise) at a rate per
annum which shall be equal to the Base Rate. Such interest
rates shall be adjusted automatically on and as of the
effective date of any change in the Base Rate.
(b) The Company agrees to pay interest in respect of
the unpaid principal amount of each Eurodollar Loan incurred by
the Company from the date the proceeds thereof are made
available to the Company until maturity thereof (whether by
acceleration or otherwise) at a rate per annum which shall,
during each Interest Period applicable thereto, be the relevant
Eurodollar Rate plus the Applicable Borrowing Margin.
(c) The Company agrees to pay interest in respect of
the unpaid principal amount of each Fixed CD Rate Loan incurred
by the Company from the date the proceeds thereof are made
available to the Company until maturity thereof (whether by
acceleration or otherwise) at a rate per annum which shall,
during each Interest Period applicable thereto, be the relevant
Fixed CD Rate plus the Applicable Borrowing Margin.
(d) The German Borrower agrees to pay interest in
respect of the unpaid principal amount of each Deutsche Mark
Loan from the date the proceeds thereof are made available to
the German Borrower until the maturity (whether by acceleration
or otherwise) of such Deutsche Mark Loan at a rate per annum
which shall, during each Interest Period applicable thereto, be
equal to the sum of the Deutsche Mark Euro Rate plus the
Applicable Borrowing Margin for such Interest Period.
(e) Overdue principal and, to the extent permitted
by law, overdue interest in respect of each Revolving Loan
shall bear interest at a rate per annum equal to the greater of
(i) 2% in excess of the rate of interest then payable in
respect of such Revolving Loan and (ii) 1-1/4% per annum in
excess of the Base Rate in effect from time to time.
(f) Interest on each Loan shall accrue from and
including the date of any Borrowing to but excluding the date
of any repayment thereof and shall be payable (x) on the last
day of each April, July, October and January of each year,
commencing January 31, 1999, in the case of Base Rate Loans and
on each Interest Payment Date applicable thereto, in the case
of Fixed Rate Loans and (y) in all cases, on any prepayment (on
the amount prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(g) All computations of interest hereunder in
respect of Revolving Loans shall be made on the basis of the
actual number of days elapsed in a 360-day year comprised of
twelve 30-day months.
(h) Upon each Interest Determination Date, the Agent
shall determine the respective interest rate for each Interest
Period applicable to the Fixed Rate Loans for which such
determination is being made and shall promptly notify the
Company or the German Borrower, as the case may be, and the
Lenders thereof. Each such determination shall, absent
manifest error, be final and conclusive and binding on all
parties hereto.
2.9 Interest Periods. (a) At the time it gives any
Notice of Borrowing as provided for in Section 2.3 or Notice of
Conversion/Continuation as provided for in Section 2.6 in
respect of the making of, continuation of or conversion into,
any Fixed CD Rate Loan or Eurodollar Loan (in the case of the
initial Interest Period applicable thereto) or on the second
Business Day, in the case of any Fixed CD Rate Loan, and on the
third Business Day, in the case of any Eurodollar Loan, and on
the Fifth Business Day in the case of Alternate Currency Loans
prior to the expiration of an Interest Period applicable to
such Fixed Rate Loan (in the case of any subsequent Interest
Period), the Company or the German Borrower, as the case may
be, shall have the right to elect, by giving the Agent notice
thereof, the interest period (each an "Interest Period")
applicable to such Revolving Loan. If the Agent shall not have
received timely notice of a designation of an Interest Period
as herein provided upon the expiration of an Interest Period
with respect to a Fixed Rate Loan, the Company or the German
Borrower, as the case may be, shall be deemed to have elected
(x) if Fixed CD Rate Loans or Eurodollar Loans, to convert such
Fixed CD Rate Loans or Eurodollar Loans to which such expiring
Interest Period is applicable into Base Rate Loans and (y) if
Alternate Currency Loans, to select a one-month Interest Period
for such Alternate Currency Loans, in either case effective on
the last day of such current Interest Period.
(b) The determination of Interest Periods with
respect to all Fixed Rate Loans shall be subject to the
following provisions:
(i) each Interest Period shall at the option of the
Borrower (x) in the case of a Fixed CD Rate Loan, be
either a 30, 60, 90 or 180-day period, and (y) in the case
of a Eurodollar Loan, be either a one, two, three or
six-month period;
(ii) each Interest Period shall at the option of the
German Borrower in the case of an Alternate Currency Loan
be either a one, two, three or six month period;
(iii) all Fixed Rate Loans comprising a Borrowing
shall at all times have the same Interest Period except as
otherwise required by Section 2.10(b);
(iv) the initial Interest Period for any Fixed Rate
Loan shall commence on the date of Borrowing of such
Revolving Loan (including the date of any conversion
thereof into a Dollar Revolving Loan of a different Type
Dollar Loan) and each Interest Period occurring thereafter
in respect of such Revolving Loan shall commence on the
day on which the next preceding Interest Period applicable
thereto expires;
(v) if any Interest Period would otherwise expire on
a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day;
provided, however, that if any Interest Period for a
Eurodollar Loan or Alternate Currency Loan (other than a
Eurodollar Loan made pursuant to Section 2.10(b)) would
otherwise expire on a day that is not a Business Day but
is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on
the next preceding Business Day;
(vi) any Interest Period in respect of a Eurodollar
Loan or Alternate Currency Loan that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject
to subsection (vii) below, end on the last Business Day of
a calendar month;
(vii) the Interest Period for a Revolving Loan that is
converted pursuant to Section 2.10(b) shall commence on
the date of such conversion and shall expire on the date
on which the Interest Periods for the Revolving Loans of
the other Lenders that were not converted expire;
(viii) no Interest Period shall extend beyond the Final
Maturity Date; and
(ix) there shall be no more than 15 Interest Periods
outstanding at any time.
2.10 Increased Costs, Illegality, etc. (a) In the
event that any Lender shall have determined (which
determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto but, with
respect to clauses (i) and (iv) below, may be made only by the
Agent):
(i) on any Interest Determination Date that, by
reason of any changes arising after the date of this
Agreement affecting the London interbank market, adequate
and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the
definition of the respective Eurodollar Rate or Deutsche
Mark Euro Rate; or
(ii) at any time, that such Lender shall incur
increased costs or reductions in the amounts received or
receivable hereunder with respect to any Eurodollar Loan
or Deutsche Mark Loan because of (x) any change since the
date of this Agreement in any applicable law or
governmental rule, regulation, order, guideline or request
(whether or not having the force of law) or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule,
regulation, order, guideline or request, such as, for
example, but not limited to: (A) a change in the basis of
taxation of payment to any Lender of the principal of or
interest on such Eurodollar Loan or Deutsche Mark Loan or
any other amounts payable hereunder (except for changes in
the rate of tax on, or determined by reference to, the net
income or profits of such Lender, pursuant to the laws of
the jurisdiction in which such Lender is organized or in
which such Lender's principal office or applicable lending
office is located or any subdivision thereof or therein),
or (B) a change in official reserve requirements (except
to the extent covered by Section 2.10(d) in respect of
Alternate Currency Loans or included in the computation of
the respective Eurodollar Rate or Deutsche Mark Euro Rate)
or any special deposit, assessment or similar requirement
against assets of, deposits with or for the account of, or
credit extended by, any Lender (or its applicable lending
office) and/or (y) other circumstances since the date of
this Agreement affecting such Lender or the London
interbank market or the position of such Lender in such
market; or
(iii) at any time, that the making or continuance of
any Eurodollar Loan or Deutsche Mark Loan has been made
(x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Lender in
good faith with any governmental request (whether or not
having force of law) or (z) impracticable as a result of a
contingency occurring after the Effective Date which
materially and adversely affects the London interbank
market; or
(iv) at any time that any Alternate Currency is not
available in sufficient amounts, as determined in good
faith by the Agent, to fund any Borrowing of Alternate
Currency Revolving Loans;
then, and in any such event, such Lender (or the Agent, in the
case of clause (i) or (iv) above) shall promptly give notice
(by telephone confirmed in writing) to the Company and the
German Borrower, as the case may be, and, except in the case of
clause (i) or (iv) above, to the Agent of such determination
(which notice the Agent shall promptly transmit to each of the
other Lenders). Thereafter (w) in the case of clause (i)
above, (A) in the event that Eurodollar Loans are so affected,
Eurodollar Loans shall no longer be available until such time
as the Agent notifies the Company and the Lenders that the
circumstances giving rise to such notice by the Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion
given by the Company with respect to Eurodollar Loans which
have not yet been incurred (including by way of
conversion/continuation) shall be deemed rescinded by the
Company and (B) in the event that any Alternate Currency Loan
is so affected, the interest rate for such Alternate Currency
Loan shall be determined on the basis provided in the proviso
to the definition of the respective Fixed Rate applicable to
such Alternate Currency Loan, (x) in the case of clause (ii)
above, the Company or the German Borrower, as the case may be,
shall pay to such Lender, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such
Lender in its reasonable discretion shall determine) as shall
be required to compensate such Lender for such increased costs
or reductions in amounts received or receivable hereunder (a
written notice as to the additional amounts owed to such
Lender, showing the basis for the calculation thereof,
submitted to the Company or the German Borrower, as the case
may be, by such Lender in good faith shall, absent manifest
error, be final and conclusive and binding on all the parties
hereto), (y) in the case of clause (iii) above, the Company or
the German Borrower, as the case may be, shall take one of the
actions specified in Section 2.10(b) as promptly as possible
and, in any event, within the time period required by law and
(z) in the case of clause (iv) above, Alternate Currency
Revolving Loans in the affected Alternate Currency shall no
longer be available until such time as the Agent notifies the
Company, the German Borrower and the Lenders that the
circumstances giving rise to such notice by the Agent no longer
exists, and any Notice of Borrowing given by the German
Borrower with respect to such Alternate Currency Revolving
Loans which have not yet been incurred shall be deemed
rescinded by the German Borrower. Each of the Agent and each
Lender agrees that if it gives notice to the Company or the
German Borrower of any of the events described in clause (i),
(iii) or (iv) above, it shall promptly notify the Company and
the German Borrower and, in the case of any such Lender, the
Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Lender,
the obligations of such Lender to make Eurodollar Loans or
Deutsche Mark Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained herein
shall be reinstated.
(b) At any time that any Eurodollar Loan or Deutsche
Mark Loan is affected by the circumstances described in Section
2.10(a)(ii) or (iii), the Company or the German Borrower, as
the case may be, may (and in the case of a Eurodollar Loan or
Deutsche Mark Loan affected by the circumstances described in
Section 2.10(a)(iii) shall) either (x) if the affected
Eurodollar Loan or Deutsche Mark Loan is then being made
initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Agent telephonic notice (confirmed in
writing) on the same date that such Borrower was notified by
the affected Lender or the Agent pursuant to Section
2.10(a)(ii) or (iii) or (y) if the affected Fixed Rate Loan is
then outstanding, upon at least three Business Days' written
notice to the Agent and the affected Lender, (A) in the case of
a Eurodollar Loan, require the affected Lender to convert such
Eurodollar Loan into a Base Rate Loan and (B) in the case of
any Alternate Currency Loan, repay such Alternate Currency Loan
in full, provided that, if more than one Lender is affected at
any time, then all affected Lenders must be treated the same
pursuant to this Section 2.10(b).
(c) If any Lender determines that after the
Effective Date the introduction of or any change in any
applicable law or governmental rule, regulation, order,
guideline, directive or request (whether or not having the
force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental
authority, central bank or comparable agency, will have the
effect of increasing the amount of capital required to be
maintained by such Lender or any corporation controlling such
Lender based on the existence of such Lender's Commitments
hereunder or its obligations hereunder, then the Company and
the German Borrower jointly and severally agree to pay to such
Lender, upon its written demand therefor, such additional
amounts as shall be required to compensate such Lender or such
other corporation for the increased cost to such Lender or such
other corporation or the reduction in the rate of return to
such Lender or such other corporation as a result of such
increase of capital. In determining such additional amounts,
each Lender will act reasonably and in good faith and will use
averaging and attribution methods which are reasonable;
provided that such Lender's reasonable good faith determination
of compensation owing under this Section 2.10(c) shall, absent
manifest error, be final and conclusive and binding on all the
parties hereto. Each Lender, upon determining that any
additional amounts will be payable pursuant to this Section
2.10(c), will give prompt written notice thereof to the Company
and the German Borrower, which notice shall show the basis for
calculation of such additional amounts.
(d) In the event that any Lender shall determine
(which determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto) at any time that
such Lender is required to maintain reserves (including,
without limitation, any marginal, emergency, supplemental,
special or other reserves required by applicable law) which
have been established by any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or
regulatory body with jurisdiction over such Lender (including
any branch, Affiliate or funding office thereof) in respect of
any Alternate Currency Loans or any category of liabilities
which includes deposits by reference to which the interest rate
on any Alternate Currency Loan is determined or any category of
extensions of credit or other assets which includes loans by a
non-United States office of any Lender to non-United States
residents, then, unless such reserves are included in the
calculation of the interest rate applicable to such Alternate
Currency Loans or in Section 2.10(a)(ii), such Lender shall
promptly notify the Company and the German Borrower in writing
specifying the additional amounts required to indemnify such
Lender against the cost of maintaining such reserves (such
written notice to provide in reasonable detail a computation of
such additional amounts) and the German Borrower shall pay to
such Lender such specified amounts as additional interest at
the time that the German Borrower is otherwise required to pay
interest in respect of such Alternate Currency Loan or, if
later, on written demand therefor by such Lender.
(e) If any Lender requests compensation under this
Section 2.10, or if the Company or the German Borrower, as the
case may be, is required to pay any additional amount to any
Lender pursuant to this Section 2.10, then such Lender shall
use reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender,
such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to this Section in the future and (ii)
would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such
Lender. The Company and the German Borrower hereby agree to
pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(f) If any Lender requests compensation under this
Section 2.10, or if the Company or the German Borrower, as the
case may be, is required to pay any additional amount to any
Lender pursuant to this Section 2.10, or if any Lender defaults
in its obligation to fund Loans hereunder, then the Company or
the German Borrower, as the case may be, may, at its sole
expense and effort, upon notice to such Lender and the Agent,
require such Lender to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained
in Section 11.4), all its interests, rights and obligations
under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender
accepts such assignment, or any other party); provided that (i)
the Company or the German Borrower, as the case may be, shall
have received the prior written consent of the Agent, which
consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the
outstanding principal of its Loans and Letter of Credit
Participation, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder, from the assignee (to
the extent of such outstanding principal and accrued interest
and fees) or the Company of the German Borrower, as the case
may be (in the case of all other amounts), and (iii) in the
case of any such assignment resulting from a claim for
compensation under this Section, such assignment will result in
a reductions in such compensation or payments. A Lender shall
not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Company or the
German Borrower, as the case may be, to require such assignment
and delegation cease to apply.
2.11 Compensation. The Company and the German
Borrower, as the case may be, shall compensate each Lender,
upon its written request (which request shall set forth the
basis for requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation, any
interest paid by such Lender to lenders of funds borrowed by it
to make or carry its Fixed Rate Loans to the extent not
recovered by such Lender in connection with the re-employment
of such funds), which such Lender may sustain (including,
without limitation, in the case of payments made pursuant to
Sections 3.2 and 3.3): (i) if for any reason (other than a
default by such Lender) a Borrowing of Fixed Rate Loans or
conversion from Fixed CD Rate Loans or Eurodollar Loans or into
Fixed CD Rate Loans or Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation (whether or not withdrawn or deemed
withdrawn pursuant to Section 2.10(a)), (ii) if any repayment
(including any repayment pursuant to Section 2.4(b) or Section
2.10(b)) or conversion of any of its Fixed CD Rate Loans or
Eurodollar Loans or Deutsche Mark Loans occurs on a date that
is not the last day of an Interest Period applicable thereto,
(iii) if any prepayment of any of its Fixed Rate Loans is not
made on any date specified in a notice of prepayment given by
the Company or the German Borrower, or (iv) as a consequence of
(x) any other default by the Company or the German Borrower to
repay its Fixed Rate Loans when required by the terms of this
Agreement or the Note of such Lender or (y) an election made by
the Company or the German Borrower pursuant to Section 2.10(b).
2.12 Proceeds of Revolving Loans. The Borrowers
shall use the proceeds of any Revolving Loan made hereunder for
general corporate purposes (including to finance Permitted
Acquisitions pursuant to Section 6.11(v)) of the Borrowers and
their respective Subsidiaries.
2.13 Fees and Commissions. The Company agrees to
pay to the Agent, for pro rata distribution to the Lenders, to
the extent not previously paid, a facility fee (the "Facility
Fee") accruing any day on or prior to the day before the
Effective Date at the rate set forth in the Existing Credit
Agreement and from and including the Effective Date to and
including the Final Maturity Date (or, in the case of each
Lender, such earlier date as each such Lender's Commitment
shall have been terminated) computed at a rate per annum equal
to the Applicable Fee Percentage multiplied by the daily
average of the Total Revolving Loan Commitments under the Loan
Facility, regardless of usage, on the basis of the actual
number of days elapsed in a 360-day year comprised of twelve 30-
day months. The Facility Fee shall be payable quarterly in
arrears on each January 31, April 30, July 31 and October 31,
commencing on the first such date to occur after the Effective
Date. The Company agrees to pay to the Agent certain fees in
such amount at times previously agreed upon in writing.
2.14 Letters of Credit.
(a) Letters of Credit. Subject to the terms and
conditions of this Agreement and in reliance upon the
representations and warranties of the Company set forth herein
and in the other Loan Documents, in addition to requesting that
the Lenders make Revolving Loans pursuant to Section 2.1, the
Company may request, in accordance with the provisions of this
Section 2.14(a), that one or more Issuing Lenders issue Letters
of Credit for the account of the Company or its Subsidiaries;
provided that (i) the Company shall not request that any Lender
issue any Letter of Credit if, after giving effect to such
issuance the sum of (a) the then outstanding Letters of Credit
Usage, after giving effect to the issuance of all Letters of
Credit subject to outstanding Requests for Issuance plus (b)
the aggregate principal amount of Revolving Loans then
outstanding, after giving effect to the making of all Revolving
Loans then requested by all outstanding but unfunded Notices of
Borrowing, would exceed the Total Revolving Loan Commitment
then in effect, (ii) in no event shall any Issuing Lender issue
any Letter of Credit (x) having an expiration date later than
the Final Maturity Date, (y) as to which a drawing can be made
in a location other than in the United States of America, or
(z) which is denominated in a currency other than Dollars and
(iii) the Company shall not request that any Issuing Lender
issue and no Issuing Lender shall issue any Letter of Credit
if, after giving effect to such issuance, the then outstanding
Letters of Credit Usage in respect of all Letters of Credit
would exceed $20,000,000. Notwithstanding clause (x) in the
preceding sentence, an Issuing Lender may issue any Letter of
Credit (I) having an expiration date later than the Final
Maturity Date or (II) having an expiration date prior to the
Final Maturity Date, but containing a provision to the effect
that such Letter of Credit in the case of this clause (II) will
automatically be extended for a single period not to exceed the
initial period of such Letter of Credit, (A) so long as in the
case of Letters of Credit referred to in either clauses (I) or
(II) above the expiration date for any such Letter of Credit is
no more than 18 months beyond the Final Maturity Date and
(B) at the time any such Letter of Credit is issued or
extended, as the case may be, the Borrower shall cash
collateralize such Letter of Credit in an amount equal to 102%
of the face amount of such Letter of Credit. The issuance of
any Letter of Credit in accordance with the provisions of this
Section 2.14 shall be given effect in the calculation of the
Letters of Credit Usage and shall require the satisfaction of
each condition set forth in Section 4.2.
Immediately upon the issuance of each Letter of
Credit, each Lender other than the Issuing Lender or Lenders
shall be deemed to, and hereby agrees to, have irrevocably
purchased from the Issuing Lender a participation (such
participation of each Lender in each Letter of Credit being
hereinafter referred to as its "Letter of Credit
Participation") in such Letter of Credit and any drawings
thereunder in an amount equal to such Lender's Pro Rata Share
of the maximum amount which is or at any time may become
available to be drawn thereunder.
Each Letter of Credit may provide that the Issuing
Lender may (but shall not be required to) pay the beneficiary
thereof upon the occurrence of an Event of Default and the
acceleration of the maturity of the Revolving Loans or, if
payment is not then due to the beneficiary, provide for the
deposit of funds in an account to secure payment to the
beneficiary and that any funds so deposited shall be paid to
the beneficiary of the Letter of Credit if conditions to such
payment are satisfied or returned to the Issuing Lender for
distribution to the Lenders (or, if all Obligations shall have
been indefeasibly paid in full, to the Company) if no payment
to the beneficiary has been made and the final date available
for drawings under the Letter of Credit has passed. Each
payment or deposit of funds by an Issuing Lender as provided in
this paragraph shall be treated for all purposes of this
Agreement as a drawing duly honored by such Issuing Lender
under the related Letter of Credit.
(b) Request for Issuance. Whenever the Company
desires the issuance of a Letter of Credit, it shall deliver to
the Issuing Lender a Request for Issuance in the form of
Exhibit B-3 annexed hereto no later than 1:00 P.M. (New York
time) at least five Business Days, or such shorter period as
may be agreed to by any Issuing Lender in any particular
instance, in advance of the proposed date of issuance. Such
Issuing Lender shall immediately notify the Agent of such
Request for Issuance. The Request for Issuance with respect to
any Letter of Credit shall specify (i) the proposed date of
issuance (which shall be a business day under the laws of the
jurisdiction of the Issuing Lender) of such Letter of Credit,
(ii) the face amount of such Letter of Credit, (iii) the
expiration date of such Letter of Credit and (iv) the name and
address of the beneficiary of such Letter of Credit. As soon
as practicable after delivery of such Request for Issuance, the
Issuing Lender for such Letter of Credit shall be determined as
provided in Section 2.14(c). Prior to the date of issuance,
the Company shall specify a precise description of the
documents and the verbatim text of any certificate to be
presented by the beneficiary of such Letter of Credit which, if
presented by such beneficiary on or before the expiration date
of the Letter of Credit, would require the Issuing Lender to
make payment under the Letter of Credit; provided that the
Issuing Lender, in its sole judgment, may require changes in
any such documents and certificates; and provided, further,
that no Letter of Credit shall require payment against a
conforming draft to be made thereunder earlier than 1:00 P.M.
in the time zone of the Issuing Lender on the Business Day
(which shall be a business day under the laws of the
jurisdiction of the Issuing Lender) next succeeding the
Business Day (which shall be a business day under the laws of
the jurisdiction of the Issuing Lender) that such draft or
other form of demand for payment is presented. In determining
whether to pay under any Letter of Credit, the Issuing Lender
shall be responsible only to determine that the documents and
certificates required to be delivered under that Letter of
Credit have been delivered and that they comply on their face
with the requirements of that Letter of Credit.
(c) Determination of Issuing Lender.
(1) The Company may request any Lender to issue a
Letter of Credit, it being expressly understood that no Lender
will have any obligation to issue any Letter of Credit. The
Lender that elects to issue a Letter of Credit shall be the
Issuing Lender with respect thereto.
(2) Each Issuing Lender that elects to issue or
amend a Letter of Credit shall immediately give written notice
to each Lender and the Agent of such issuance and/or amendment
accompanied by a copy of such issuance and/or amendment.
(3) Each Issuing Lender shall keep each Lender and
the Agent advised of the status of each Letter of Credit issued
by it and will provide to each Lender and the Agent a
calculation quarterly of all fees owed to them with respect to
any Letter of Credit issued by such Issuing Lender.
(d) Payment of Amounts Drawn Under Letters of
Credit. In the event of a drawing under any Letter of Credit
by the beneficiary thereof, the Issuing Lender shall notify the
Company and the Agent reasonably promptly following the receipt
of the drawing but in any event at or before 10:00 A.M. on the
date on which the Issuing Lender intends to honor the drawing.
The Company shall reimburse the Issuing Lender on the day which
such drawing is honored in an amount in immediately available
funds equal to the drawing amount. It being further provided
that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless the Company shall have notified the
Agent and the Issuing Lender prior to 11:00 A.M. (New York
Time) on the drawing payment date that the Company intends to
reimburse the Issuing Lender for the amount of the payment with
funds other than the proceeds of Revolving Loans, the Company
shall be deemed to have given a timely Notice of Borrowing to
the Agent requesting Lenders to make Revolving Loans that are
Base Rate Loans on the drawing payment date in an amount equal
to the payment amount, and (ii) subject to the satisfaction or
waiver of the conditions specified in Section 4.1, the Lenders
shall, on the drawing payment date, make Base Rate Revolving
Loans equal to the payment amount. The proceeds of such Loans
shall be applied directly by the Agent to reimburse the Issuing
Lender for the amount of the payment. If for any reason,
proceeds of Revolving Loans are not received by the Issuing
Lender, on such date in amount equal to the payment amount, the
Company shall reimburse the Issuing Lender, on the Business Day
(which shall be a business day under the laws of the
jurisdiction of the Issuing Lender) immediately following the
drawing payment date, in immediately available funds the amount
which equals the excess of the payment amount over the amount
of Revolving Loans, if any, so received, plus interest on such
amount at the rate set forth in Section 2.14(f)(1)(i).
(e) Payment by Lenders. In the event that the
Company shall fail to reimburse an Issuing Lender as provided
in Section 2.14(d) in an amount equal to the amount of any
drawing honored by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall promptly notify the
Agent and the Agent shall promptly notify each Lender of the
unreimbursed amount of such drawing so honored and of such
Lender's respective participation therein. Each Lender shall
make available to the Agent an amount equal to its Pro Rata
Share of the aggregate participation in such Letter of Credit
in immediately available funds, at the office of the Agent
specified in such notice, not later than 1:00 P.M. (New York
time) on the Business Day (which shall be a business day under
the laws of the jurisdiction of such Issuing Lender) after the
date notified by the Agent. In the event that any Lender fails
to make available to the Agent the amount of such Lender's
participation in such Letter of Credit as provided in this
Section 2.14(e), an Issuing Lender shall be entitled to recover
such amount on demand from such Lender together with interest
at the customary rate set by the Agent for the correction of
errors among banks for three Business Days and thereafter at
the Base Rate. Each Issuing Lender shall distribute to each
Lender which has paid all amounts payable by it under this
Section 2.14(e) with respect to any Letter of Credit issued by
such Issuing Lender such Lender's Pro Rata Share of all
payments received by such Issuing Lender from the Company in
reimbursement of drawings honored by such Issuing Lender under
such Letter of Credit when such payments are received. Nothing
in this Section 2.14(e) shall be deemed to relieve any Lender
from its obligation to pay all amounts payable by it under this
Section 2.14(e) with respect to any Letter of Credit issued by
an Issuing Lender or to prejudice any rights that the Company,
the Agent, the Issuing Lender or any other Lender may have
against a Lender as a result of any default by such Lender
hereunder.
(f) Compensation.
(1) The Company agrees to pay the following amount
with respect to all Letters of Credit:
(i) with respect to drawings made under any Letter
of Credit, interest, payable on demand, on the amount paid
by such Issuing Lender in respect of each such drawing
from and including the drawing payment date through the
date such amount is reimbursed by the Company (including
any such reimbursement out of the proceeds of Revolving
Loans pursuant to Section 2.14(d)) at the relevant
Eurodollar Rate plus if the ratio of Consolidated Total
Indebtedness to Consolidated EBITDA is (x) greater than
3.25 to 1.0, 2.125% per annum, (y) equal to or less than
3.25 to 1.00 but greater than 2.75 to 1.0, 1.500% per
annum, (z) equal to or less than 2.75 to 1.0 but greater
than 2.50 to 1.0, 1.250% per annum, (xx) equal to or less
than 2.50 to 1.0 but greater than 2.25 to 1.0, 1.000% per
annum, (yy) equal to or less than 2.25 to 1.0 but greater
than 2.00 to 1.0, .750% per annum and (zz) equal to or
less than 2.00 to 1.0 but greater than 1.50 to 1.0, .550%
per annum and (xxx) equal to or less than 1.50 to 1.0,
.350% per annum; provided that amounts reimbursed after
1:00 p.m. (New York time) on any date shall be deemed to
be reimbursed on the next succeeding Business Day); and
(ii) with respect to the issuance, amendment or
transfer of each Letter of Credit and each payment of a
drawing made thereunder, documentary and processing
charges in accordance with such Issuing Lender's standard
schedule for such charges in effect at the time of such
issuance, amendment, transfer or payment, as the case may
be.
(2) The Company agrees to pay to the Issuing Lender
for distribution to each Lender in respect of all Letters of
Credit outstanding such Lender's Pro Rata Share of a commission
equal to the Applicable Borrowing Margin with respect to
Eurodollar Loans multiplied by the average maximum amount
available from time to time to be drawn under such outstanding
Letters of Credit, in respect of the quarterly period through
the last day of each January, April, July and October and
payable on the first Business Day following each such last day
of the aforesaid months and calculated on the basis of a 360-
day year and the actual number of days elapsed. Upon the
happening and during the continuance of an Event of Default
described in Section 7.1, the commission referred to in the
preceding sentence shall be the Applicable Borrowing Margin
with respect to Eurodollar Loans plus 2%.
(3) The Company agrees to pay to each Issuing Lender
in respect to all Letters of Credit outstanding issued by each
such Issuing Lender a facing fee at such time and in the amount
or amounts agreed to in writing by the Company and such Issuing
Lender.
Amounts payable under this Section 2.14(f) shall be
paid to the Issuing Lender. Subject to the provisions of
Section 11.16, the Issuing Lender shall distribute to each
Lender its Pro Rata Share of such amount. Amounts payable
under clauses (1)(ii) and (3) of this Section 2.14(f) shall be
paid directly to the Issuing Lender.
(g) Obligations Absolute. The obligation of the
Company to reimburse each Issuing Lender for drawings made
under the Letters of Credit issued by it and the obligations of
the Lenders under Section 2.14(d) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including,
without limitation, the following circumstances:
(1) any lack of validity or enforceability of any
Letter of Credit;
(2) the existence of any claim, setoff, defense or
other right that the Company or any Affiliate of the
Company or any other Person may have at any time against a
beneficiary or any transferee of any Letter of Credit (or
any Person for whom any such beneficiary or transferee may
be acting), such Issuing Lender, any Lender or any other
Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated
transaction;
(3) any draft, demand, certificate or any other
document presented under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or
inaccurate in any respect;
(4) payment by such Issuing Lender under any Letter
of Credit against presentation of a demand, draft or
certificate or other document that does not comply with
the terms of such Letter of Credit;
(5) any other circumstances or happening whatsoever
that is similar to any of the foregoing; or
(6) the fact that an Event of Default or Default
shall have occurred and be continuing.
(h) Additional Payments. If by reason of (i) any
change in applicable law, regulation, rule, decree or
regulatory requirement or any change in the interpretation or
application by any judicial or regulatory authority of any law,
regulation, rule, decree or regulatory requirement (except for
changes in the rate of tax on, or determined by reference to,
the net income or profits of such Lender or its Applicable
Lending Office imposed by the jurisdiction in which it is
organized or in which its principal office or Applicable
Lending Office is located) or (ii) compliance by any Issuing
Lender or any Lender with any direction, request or requirement
(whether or not having the force of law) of any governmental or
monetary authority including, without limitation, Regulation D:
(A) such Issuing Lender or any Lender shall be
subject to any tax, levy, charge or withholding of any
nature or to any variation thereof or to any penalty or
interest with respect to the maintenance or fulfillment of
its obligations under this Section 2.14, whether directly
or by such being imposed on or suffered by such Issuing
Lender or any Lender;
(B) any reserve, deposit or similar requirement is
or shall be applicable, imposed or modified in respect of
any Letter of Credit issued by such Issuing Lender or
participations therein purchased by any Lender; or
(C) there shall be imposed on such Issuing Lender or
any Lender any other condition regarding this Section
2.14, any Letter of Credit or any participation therein;
and the result of the foregoing is to directly or indirectly
increase the cost to such Issuing Lender or any Lender of
issuing, making or maintaining any Letter of Credit or of
purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by such Issuing
Lender or any Lender, then and in any such case such Issuing
Lender or such Lender may, at any time within a reasonable
period after the additional cost is incurred or the amount
received is reduced, notify the Company and the Company shall
pay on demand such amounts as such Issuing Lender or such
Lender may specify to be necessary to compensate such Issuing
Lender or such Lender on a net after-tax basis for such
additional cost or reduced receipt, together with interest on
such amount from the date demanded until payment in full
thereof at a rate per annum equal at all times to the rate
applicable to Base Rate Loans then in effect. A certificate in
reasonable detail as to the amount of such increased cost or
reduced receipt, submitted to the Company and the Agent by that
Issuing Lender or any Lender, as the case may be, shall, except
for manifest error, be final, conclusive and binding for all
purposes.
(i) Indemnification; Nature of Issuing Lender's
Duties. In addition to amounts payable as elsewhere provided
in this Section 2.14 (but in the case of Section 2.14(h), only
in accordance therewith), without duplication, the Company
hereby agrees to protect, indemnify, pay and save each Issuing
Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and expenses) which such
Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of the Letters of
Credit or (ii) the failure of such Issuing Lender to honor a
drawing under any Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority
(all such acts or omissions herein called "Governmental Acts").
As between the Company and each Issuing Lender, the
Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender
by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, such
Issuing Lender shall not be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effects
of any document submitted by any party in connection with the
application for and issuance of such Letters of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any such Letter
of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (iii) for failure of the
beneficiary of any such Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of
Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they are in
cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delays in the transmission or otherwise of
any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit
of the proceeds of any drawing under such Letter of Credit; and
(viii) for any consequences arising from causes beyond the
control of such Issuing Lender, including, without limitation,
any Government Acts. None of the above shall affect, impair,
or prevent the vesting of any of such Issuing Lender's rights
or powers hereunder.
In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken
or omitted by any Issuing Lender or in connection with the
Letters of Credit issued by it or the related certificates, if
taken or omitted in good faith, shall not put such Issuing
Lender under any resulting liability to the Company.
Notwithstanding anything to the contrary contained in
this Section 2.14(i), the Company shall have no obligation to
indemnify any Issuing Lender in respect of any liability
incurred by such Issuing Lender arising solely out of the gross
negligence or willful misconduct of such Issuing Lender.
(j) Computation of Interest. Interest payable
pursuant to this Section 2.14 shall be computed on the basis of
a 360-day year and the actual number of days elapsed in the
period during which it accrues.
2.15 Replacement Lender. In the event the Company
or the German Borrower, as the case may be, becomes obligated
to pay any additional material amounts to any Lender pursuant
to Section 2.10, 2.14(h) or 3.5 (which amounts are generally
not due or payable to all Lenders generally under such
Sections) or such Lender is not able to make Eurodollar Loans
or Deutsche Mark Loans pursuant to Section 2.10, as a result of
any event or condition described in any of such Sections, then,
unless such Lender has theretofore taken steps to remove or
cure, and has removed or cured, the conditions creating the
cause of such obligation to pay such additional amounts, the
Company may designate a substitute lender reasonably acceptable
to the Agent (such lender herein called a "Replacement Lender")
to purchase such Lender's rights and obligations with respect
to its entire Pro Rata Share hereunder, without recourse to or
warranty by, or expense to, such Lender for a purchase price
equal to the outstanding principal amount payable to such
Lender with respect to its Pro Rata Share hereunder, plus any
accrued and unpaid interest and accrued and unpaid fees in
respect of such Lender's Pro Rata Share and on other terms
reasonably satisfactory to the Agent. Upon such purchase by
the Replacement Lender and payment of all other amounts owing
to the Lender being replaced hereunder, such Lender shall no
longer be a party hereto or have any rights or obligations
hereunder, and the Replacement Lender shall succeed to the
rights and obligations of such Lender with respect to its Pro
Rata Share hereunder; provided that the rights of such replaced
Lender pursuant to Sections 2.10, 2.14(h), 3.5 and 11.3, and
the rights and obligations of such Lender pursuant to Section
11.3, shall survive any substitution described in this Section
2.15.
2.16 Certain Computations. All interest, fees and
other amounts accruing under the Existing Credit Agreement on
or prior to, or determined in respect of any day accruing on or
prior to the day before the Effective Date shall be computed
and determined as provided in the Existing Credit Agreement
before giving effect to this Agreement.
2.17 Change of Lending Office. (a) No Lender may
designate another lending office for any Loans or Letters of
Credit which would have the effect of causing any event giving
rise to the operation of Section 2.10(a)(ii) or (iii),
Section 2.10(c), Section 2.10(d), Section 2.14(h) or
Section 3.5 with respect to such Lender without the prior
written consent of the Borrowers.
(b) Each Lender agrees that on the occurrence of any
event giving rise to the operation of Section 2.10(a)(ii) or
(iii), Section 2.10(c), Section 2.10(d), Section 2.14(h) or
Section 3.5 with respect to such Lender, it will, if requested
by the Company, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another
lending office for any Loans or Letters of Credit affected by
such event, provided that such designation is made on such
terms that such Lender and its lending office suffer no
economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the
operation of such Section.
(c) Nothing in this Section 2.17 shall affect or
postpone any of the obligations of the Company or the German
Borrower or the right of any Lender provided in Sections 2.10,
2.14(h) or 3.5.
2.18 EURO Provisions. (a) If, as a result of the
implementation of the European economic and monetary union
("EMU"), (i) any currency available for borrowing under this
Agreement (a "national currency") ceases to be lawful currency
of the state issuing the same and is replaced by a European
single or common currency (the "Euro") or (ii) any national
currency and the Euro are at the same time both recognized by
the central bank or comparable governmental authority of the
state issuing such currency as lawful currency of such state,
then any amount payable hereunder by any party hereto in such
national currency shall instead be payable in the Euro and the
amount so payable shall be determined by denominating or
converting such amount into the Euro at the exchange rate
officially fixed by the European Central Bank of the purpose of
implementing the EMU, provided that to the extent any EMU
legislation provides that an amount denominated either in the
Euro or in the applicable national currency can be paid either
in Euros or in the applicable national currency, each party to
this Agreement shall be entitled to pay or repay such amount in
Euros or in the applicable national currency. Prior to the
occurrence of the event or events described in clause (i) or
(ii) of the preceding sentence, each amount payable hereunder
in any such national currency will, except as otherwise
provided herein, continue to be payable only in that national
currency.
(b) If the basis of accrual of interest or fees
expressed in this Agreement with respect to the currency of any
state that becomes a participating state shall be inconsistent
with any convention or practice in the London interbank market
for the basis of accrual of interest or fees in respect of the
euro, such convention or practice shall replace such expressed
basis effective as of and from the date on which such state
becomes a participating member state.
(c) Except as expressly provided in this Section
2.18 and Section 2.10, this Agreement will be amended to the
extent determined by the Agent (acting reasonably and in
consultation with the Company) to be necessary to reflect such
implementation of the EMU and change in currency and to put the
Lenders and the Borrowers in the same position, so far as
possible, that they would have been in if such implementation
and change in currency had not occurred; provided that any such
amendment shall be made in accordance with the customary
practices of the market. Except as provided in the foregoing
provisions of this Section 2.18, no such implementation or
change in currency nor any economic consequences resulting
therefrom shall (i) give rise to any right to terminate
prematurely, contest, cancel or rescind, the provisions of this
Agreement or (ii) discharge, excuse or otherwise affect the
performance of any obligations of the German Borrower under
this Agreement or any other Loan Document.
SECTION 3. REDUCTIONS IN COMMITMENTS;
PREPAYMENTS AND PAYMENTS.
3.1 Voluntary Reductions in Total Revolving Loan
Commitment. The Company shall have the right, at any time and
from time to time upon at least three Business Days' prior
written notice to the Agent at its Notice Office (which notice
the Agent shall promptly endeavor to notify each Lender),
without premium or penalty, to reduce the Total Revolving Loan
Commitment in whole or in part in integral multiples of
$5,000,000 or integral multiples of $1,000,000 above such
amount; provided that (a) all such reductions shall apply
proportionately to the Revolving Loan Commitment of each
Lender, as the case may be, and (b) any such reduction shall be
permanent.
3.2 Voluntary Prepayments. The Company and the
German Borrower shall have the right to prepay any Borrowing of
any Revolving Loans, at any time, in whole or in part, without
premium or penalty, pursuant to this Section 3.2 on the
following terms and conditions: (i) the Company or the German
Borrower, as the case may be, shall give the Agent at its
Payment Office at least three Business Days' prior written
notice or telephone notice (confirmed in writing) of its intent
to prepay such Revolving Loans, the amount of such prepayment
and the specific Borrowing to be prepaid, which notice the
Agent shall promptly transmit to each of the Lenders; (ii) each
prepayment shall be in an integral multiple of $500,000 and,
with respect to the voluntary prepayment of Base Rate Loans, in
a minimum principal amount of $1,000,000 (or the Alternate
Currency Equivalent thereof in the case of Alternate Currency
Loans) or, with respect to the voluntary prepayment of Fixed
Rate Loans, in a minimum principal amount of $5,000,000 (or, if
less, with respect to any of the Revolving Loans referred to
above, the amount then remaining outstanding in respect of such
Borrowing); (iii) the Company or the German Borrower, as the
case may be, shall not have the right to make a partial
prepayment of any Fixed Rate Loan if the principal amount
outstanding of the Fixed Rate Loans made as part of the
Borrowing to which such prepayment relates after such partial
prepayment shall be less than $5,000,000 (or the Alternate
Currency Equivalent thereof in the case of Alternate Currency
Loans); and (iv) at the time of any prepayment, the Company or
the German Borrower, as the case may be, shall pay all interest
accrued on the principal amount of such prepayment.
3.3 Mandatory Prepayments. (a) The Company or the
German Borrower, as the case may be, shall make prepayments of
Revolving Loans to the extent necessary so that the sum of
(i) the outstanding principal amount of Revolving Loans
(including the Dollar Equivalent thereof in the case of
outstanding Alternate Currency Revolving Loans) at any time,
after giving effect to the making of all Revolving Loans then
requested by all outstanding but unfunded Notices of Borrowing,
plus (ii) the then outstanding Letters of Credit Usage, after
giving effect to the issuance of all Letters of Credit subject
to outstanding Requests for Issuance does not exceed the Total
Modified Revolving Commitment then in effect (after giving
effect to all reductions made pursuant to Section 3.1). Such
prepayment shall be paid within two Business Days of receiving
written notice from the Agent of the excess over the Total
Modified Revolving Commitment as then in effect. Prepayments
in an amount equal to such excess are to be allocated among
Dollar Revolving Loans first and then Deutsche Mark Revolving
Loans.
(b) Any mandatory prepayment shall be applied first
to Base Rate Loans to the full extent thereof, second to Fixed
CD Rate Loans to the full extent thereof, third to Eurodollar
Loans to the full extent thereof and fourth to Deutsche Mark
Loans, as determined by the Agent.
(c) If, after giving effect to the repayment of all
Revolving Loans, the outstanding Letters of Credit Usage
exceeds the Total Revolving Loan Commitment then in effect, the
Company shall be required to cash collateralize in Dollars
outstanding Letters of Credit in an amount such that, after
giving effect thereto, the aggregate Letters of Credit Usage
not supported by cash collateral is equal to or less than the
Total Revolving Loan Commitment then in effect.
3.4 Method and Place of Payment. Except as
otherwise specifically provided herein, all payments under this
Agreement shall be made to the Agent for the account of the
Lender or Lenders entitled thereto no later than 12:00 Noon
(local time in the city in which such payments are to be made)
on the date when due and shall be made in (i) Dollars in
immediately available funds at the appropriate Payment Office
of the Agent in respect of Dollar Loans and Letters of Credit
if such payment is made in respect of any obligation of the
Company under this Agreement except as otherwise provided in
the immediately following clause (ii) and (ii) the appropriate
Alternate Currency in immediately available funds at the
appropriate Payment Office of the Agent if such payment is made
in respect of principal of or interest on any Alternate
Currency Loan and otherwise in Dollars in immediately available
funds at the Payment Office of the Agent described in clause
(i) above in respect of any obligation in respect of an
Alternate Currency Loan. The principal of and interest on each
Alternate Currency Loan shall be paid only in the applicable
Alternate Currency. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such
extension.
3.5 Net Payments. Except as provided below, all
payments made by the Company or the German Borrower hereunder
or under any of the Loan Documents will be made without setoff,
counterclaim or other defense. All such payments will be made
free and clear of, and without deduction or withholding for,
any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (but
excluding, except as provided below, (a) any withholding taxes
or backup withholding taxes imposed by the United States or any
political subdivision thereof as a result of the failure of the
Lender to comply with the provisions of Section 11.14, (b) any
backup withholding tax imposed as a result of a failure to
provide proper certification or a notice by the Internal
Revenue Service regarding a failure to report all dividends and
interest payments and (c) any tax imposed on or measured by the
net income of a Lender pursuant to the laws of the jurisdiction
(or any political subdivision or taxing authority thereof or
therein) in which such Lender is organized or in which the
principal office or Applicable Lending Office of such Lender is
located and all interest, penalties or similar liabilities with
respect thereto) (collectively, "Taxes"). The Company and the
German Borrower, as the case may be, shall also reimburse each
Lender, upon the written request of such Lender, for taxes
imposed on or measured by the net income of such Lender
pursuant to the laws of the jurisdiction (or any political
subdivision or taxing authority thereof or therein) in which
the Lender is organized or in which the principal office or
Applicable Lending Office of such Lender is located as such
Lender shall determine are payable by such Lender in respect of
amounts paid to or on behalf of such Lender pursuant to this
Section 3.5. If any Taxes are so levied or imposed, the
Company and the German Borrower agree to pay the full amount of
such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due hereunder or under any of
the Loan Documents, after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided
for herein or in such Loan Documents. The Company and the
German Borrower will furnish to the Agent within 45 days after
the date the payment of any Taxes is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by
the Company or the German Borrower, as the case may be. The
Company and the German Borrower, as the case may be, will
indemnify and hold harmless each Lender, and reimburse such
Lender upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Lender.
SECTION 4. CONDITIONS TO REVOLVING LOANS AND
LETTERS OF CREDIT.
4.1 Conditions to All Revolving Loans. The
obligations of the Lenders to make any and all Revolving Loans
are subject to the prior or concurrent satisfaction or waiver
of each of the following conditions precedent:
(a) Required Documentation. The Agent shall have
received in accordance with the provisions of Section
2.3 before the applicable Funding Date an originally
executed Notice of Borrowing, signed by the chief
executive officer, the chief financial officer, the
treasurer, assistant treasurer or Authorized Officer of
the Company or the German Borrower, as the case may be,
requesting a Revolving Loan to be made on any such Funding
Date (the furnishing by the Company or the German Borrower
of each such Notice of Borrowing shall be deemed to
constitute a representation and warranty of the Company or
the German Borrower, as the case may be, to the effect
that the conditions set forth in Section 4.1(b) are
satisfied as of the date of delivery and will be satisfied
on the relevant Funding Date).
(b) As of that Funding Date:
(i) Representations and Warranties. The
representations and warranties contained herein shall
be true, correct and accurate in all material
respects on and as of that Funding Date to the same
extent as though made on and as of that date, except
that with respect to Revolving Loans made after the
Effective Date the representations and warranties
need not be true and correct to the extent that
changes in the facts and conditions on which such
representations and warranties are based are required
or permitted under this Agreement or such changes
arise out of events not prohibited by the covenants
set forth in Sections 5 and 6.
(ii) No Default. No event shall have occurred
and be continuing or would result from the
consummation of the borrowing contemplated by such
Notice of Borrowing or the application of the
proceeds thereof that would constitute (a) an Event
of Default, or (b) a Default.
(iii) Agreements and Conditions. The Company and
the German Borrower shall have performed in all
material respects all agreements and satisfied all
conditions that this Agreement and each other Loan
Document provides shall be performed by each of them
on or before such Funding Date.
(iv) Compliance with Laws. No order, judgment
or decree of any court, arbitrator or Governmental
Authority shall purport to enjoin or restrain any
Lender from making that Revolving Loan. The making
of the Revolving Loans requested on such Funding Date
shall not violate Regulation G, T, U, or X of the
Federal Reserve Board.
(c) As of the first Funding Date after the Effective
Date there shall not exist any judgment order, injunction,
decree or other restraint or a hearing seeking injunctive
or other relief pending or noticed with respect to the
making of the Revolving Loans or the issuance of any Notes
or Letters of Credit or the other transactions
contemplated by any of the Loan Documents.
4.2 Conditions to All Letters of Credit. The right
of the Company to obtain the issuance of any Letter of Credit
that the relevant Issuing Lender determines to issue in its
sole discretion hereunder is subject to prior or concurrent
satisfaction of all of the following conditions:
(a) Required Documentation. On or prior to the date
of issuance of a Letter of Credit, the Agent shall have
received in accordance with the provisions of
Section 2.14(b) a Request for Issuance with respect to
such Letter of Credit (the furnishing by the Company of
each such Request for Issuance shall be deemed to
constitute a representation and warranty of the Company to
the effect that the conditions set forth in Section 4.1(b)
are satisfied as of the date of delivery and will be
satisfied on the relevant date of issuance), all other
information specified in Section 2.14(b), and such other
documents as the Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
(b) Conditions. On the date of issuance of each
such Letter of Credit, all conditions precedent described
in Section 4.1(b) shall be satisfied to the same extent as
though the issuance of such Letter of Credit were the
making of a Revolving Loan and the date of issuance of
such Letter of Credit were a Funding Date. On or prior to
the date of issuance of the initial Letter of Credit,
unless previously satisfied in connection with the making
of the initial Revolving Loan, each of the conditions set
forth in Section 4.1 shall have been satisfied or waived.
SECTION 5. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that, so long as any
of the Commitments hereunder shall be in effect and until
payment in full of all of the Revolving Loans and unreimbursed
drawings, if any, under any Letters of Credit and the
cancellation or expiration of all outstanding Letters of
Credit, the Company agrees that it will perform all covenants
in this Section 5:
5.1 Furnish Financial Statements and Information,
etc. The Company shall furnish to each Lender: (a) within 90
days after the close of each of the fiscal years of the
Company, audit reports of independent certified public
accountants, including consolidated balance sheets of the
Company and its Consolidated Subsidiaries as of the end of such
period and related consolidated statements of earnings and
statements of cash flow, each in comparative form for such year
and the preceding year; (b) within 60 days after the close of
each of the first three quarters of the fiscal years of the
Company, similar unaudited consolidated balance sheets of the
Company and its Consolidated Subsidiaries as of the last day of
such quarter, and related consolidated statements of earnings
and statements of cash flows for such quarter, likewise in
reasonable detail and in comparative form for the corresponding
quarterly period in the preceding fiscal year, all of which
shall be prepared, and certified, by an Authorized Officer of
the Company; (c) as soon as available, copies of all proxy
statements and other information and reports, if any, filed by
the Company with the Securities and Exchange Commission (or any
governmental agency substituted therefor); (d) within 60 days
after the close of each of the first three fiscal quarters of
the Company, and within 90 days after the close of the fourth
fiscal quarter of the Company, of each of the fiscal years of
the Company, (i) a statement, certified by an Authorized
Officer of the Company to the effect that a review of the
activities of the Company and all Subsidiaries of the Company
during the period covered by such statement has been made and
that such officer obtained no knowledge of any Default or Event
of Default or, if any Default or Event of Default does exist,
specifying the nature and extent thereof and (ii) a Compliance
Certificate demonstrating in reasonable detail compliance with
the restrictions set forth in Sections 5.6, 5.11, 6.1(i) and
(l), 6.3(b), 6.4, 6.8(b)(ii) and 6.11(vii); and (e) such other
information as any Lender may from time to time reasonably
request; all financial statements of the Company furnished
pursuant to this Section 5.1 shall be prepared on a
consolidated basis in accordance with GAAP.
5.2 Inspection. The Company shall permit, and cause
each of its Significant Subsidiaries to permit, the duly
authorized representatives of any Lender at all reasonable
times to examine the books and records of the Company and any
of its Significant Subsidiaries, and take memoranda and
extracts therefrom.
5.3 Taxes, Charges, etc. The Company shall duly pay
and discharge, or cause to be paid and discharged, when due,
all taxes, assessments and other governmental charges imposed
upon it or any of its Subsidiaries and its and their properties
or assets, or any part thereof or upon the income therefrom, as
well as all claims (including, without limitation, claims for
labor, materials or supplies) which if unpaid might by law
become a lien or charge upon any property of the Company or any
of its Significant Subsidiaries, except each of such items as
are being appropriately contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and as
to which such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been
made therefor by the Company or any such Subsidiary.
5.4 Corporate Existence, etc. Except as permitted
by Section 6.2, the Company shall maintain, and cause its
Significant Subsidiaries to maintain, their respective
corporate existence and their respective material rights,
franchises, licenses and patents, if any, and cause each of its
Significant Subsidiaries to comply in all material respects
with all valid and applicable statutes, rules and regulations.
5.5 Notice of Default. The Company shall
immediately, upon the chief executive officer, chief financial
officer, treasurer, controller or general counsel of the
Company becoming aware of the occurrence of any Default or
Event of Default, give oral notice, promptly confirmed in
writing, to each Lender of the occurrence of such Default or
Event of Default.
5.6 Consolidated Net Worth. The Company shall
maintain, at all times, Consolidated Net Worth of at least
$400,000,000 plus an amount (if positive) equal to 50% of
Consolidated Net Income (excluding net income of any person
acquired by the Company or any of its Subsidiaries prior to
such acquisition) of the Company and its Subsidiaries for each
full fiscal quarter occurring during the period commencing
December 28, 1997 and ending on the date of determination.
5.7 ERISA. As soon as possible and, in any event,
within 10 days after the Company or any ERISA Affiliate knows
or has reason to know of any of the following, the Company
shall deliver to each of the Lenders a certificate of an
Authorized Officer of the Company setting forth details as to
such occurrence and such action, if any, which the Company or
such ERISA Affiliate is required or proposes to take, together
with any notices required or proposed to be given to or filed
with or by the Company, the ERISA Affiliate, the PBGC, a Plan
participant or the plan administrator with respect thereto:
that a Reportable Event has occurred; that an accumulated
funding deficiency has been incurred or an application may be
or has been made to the Secretary of the Treasury for a waiver
or modification of the minimum funding standard (including any
required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect
to a Plan; that a Multiemployer Plan has been or will be
terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA; that a Plan has an Unfunded Current
Liability giving rise to a lien under ERISA or the Code; that
proceedings have been or are reasonably likely to be instituted
to terminate a Plan under Section 4041(c) or Section 4042 of
ERISA; that a proceeding has been instituted pursuant to
Section 515 of ERISA to collect a material delinquent
contribution to a Multiemployer Plan; the adoption of an
amendment to any Plan that, pursuant to Section 401(a)(29) of
the Code or Section 307 of ERISA, would result in a loss of tax-
exempt status of the trust of which such Plan is a part if the
Company or an ERISA Affiliate fails to timely provide security
to the Plan in accordance with the provisions of said Sections;
or that the Company or any ERISA Affiliate will or is
reasonably likely to incur any material liability (including
any contingent or secondary liability) to or on account of the
termination of or withdrawal from a Plan or Multiemployer Plan
under Section 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA.
5.8 Insurance. The Company shall maintain or cause
to be maintained, and cause each of its Subsidiaries to
maintain or cause to be maintained, with financially sound and
reputable insurance companies, insurance with respect to its
properties and business (including, without limitation, all
buildings, machinery, plants, equipment, fixtures and
inventories of raw materials, goods in process and completed
goods) against loss or damage of the kind customarily insured
against by corporations of established reputation engaged in
the same or similar businesses and similarly situated, of such
types and in such amounts as are customarily carried under
similar circumstances by such other corporations; provided,
however, that the Company and any of its Subsidiaries may
maintain self-insurance in connection with the above insurance
requirements to the extent, and only to the extent, reasonably
prudent and not to exceed at any time 25% of the Fair Market
Value of the Company's assets on a consolidated basis.
5.9 Maintenance of Property. The Company shall in
all material respects maintain, preserve and keep, and cause
each of its Significant Subsidiaries to maintain, preserve and
keep, all property material to their respective businesses in
good repair, working order and condition (ordinary wear and
tear excepted) and from time to time make all needful and
proper repairs, renewals, replacements, additions, betterments
and improvements thereto in accordance with industry standards.
5.10 Compliance with Laws, etc. The Company shall
comply, and cause each of its Subsidiaries to comply, with all
applicable laws, statutes, rules, permits, licenses,
franchises, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or
foreign, including, without limitation, Environmental Laws, in
respect of the conduct of its business and the use, ownership
or occupancy of its property, except such noncompliances as
would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.11 Consolidated Total Indebtedness to Consolidated
EBITDA. The Company shall maintain, at all times during the
respective periods indicated below, a ratio of Consolidated
Total Indebtedness to Consolidated EBITDA not to exceed the
respective ratio indicated during such period:
Period Ratio
12/28/97 - 12/31/99 3.75 to 1.00
01/01/00 - 12/31/00 3.00 to 1.00
01/01/2001 and thereafter 2.50 to 1.00
5.12 Environmental Events. The Company shall
promptly give notice to the Lenders upon becoming aware of any
of the following events which could reasonably be expected to
result in a material liability to the Company or any of its
Subsidiaries: (a) any violation of any Environmental Law,
(b) any inquiry, proceeding, investigation or other action
relating to any Environmental Law, including a request for
information or a notice of any actual or purported potential
environmental liability from any Person, and (c) the discovery
of the release of any Hazardous Materials at, on, under or from
any of the Company's or its Subsidiaries' real property or any
facility or equipment thereat in excess of reportable or
allowable standards or levels under any Environmental Law, or
in a manner and/or amount reasonably likely to result in
material liability under any Environmental Law.
In the event of the presence of any Hazardous
Material on any of the Company's or its Subsidiaries' real
property which is in violation of or which results in liability
under any Environmental Law, or any event, condition,
circumstance, thing or fact which results in liability under
any Environmental Law, the Company shall expeditiously take all
reasonable steps to correct any such violation or respond to
such circumstances, conditions or things which would give rise
to such liability, in compliance with Environmental Laws (it
being understood that such steps shall not be required to be
taken while the Company is contesting, in good faith before the
appropriate Governmental Authority, its obligation to take such
steps), and reasonably mitigate attendant health and
environmental risks.
5.13 Year 2000. The Borrowers will ensure that
their Information Systems and Equipment are at all times after
September 30, 1999 Year 2000 Compliant, except insofar as the
failure to do so will not result in a Material Adverse Effect,
and shall notify the Agent promptly upon detecting any such
failure of the Information Systems and Equipment to be Year
2000 Compliant if such failure to be Year 2000 Compliant would
result in a Material Adverse Effect. In addition, the
Borrowers shall provide the Agent with such information about
their year 2000 computer readiness (including, without
limitation, information as to contingency plans, budgets and
testing results) as the Agent shall reasonably request.
SECTION 6. NEGATIVE COVENANTS.
The Company covenants and agrees that, so long as any
of the Commitments hereunder shall be in effect and until
payment in full of all of the Revolving Loans and unreimbursed
drawings, if any, under any Letters of Credit and the
cancellation or expiration of all outstanding Letters of
Credit, the Company agrees that it will perform all covenants
in this Section 6:
6.1 Liens. The Company shall not, and shall not
permit any of its Domestic Subsidiaries or the German Borrower
or any of the German Borrower's Subsidiaries to, contract,
create, incur, assume or suffer to exist any Lien upon or with
respect to any of its or their assets or property (real or
personal, tangible or intangible) now or hereafter owned, or of
or upon the income or profits thereof, except:
(a) Liens existing on the Effective Date and any
extension, renewal or replacement thereof; provided,
however that no such Lien shall be permitted under this
clause (a) if such extension, renewal or replacement
extends to any assets or property other than the assets or
property originally pledged or increases the indebtedness
secured thereby;
(b) deposits or pledges in connection with or to
secure payment of worker's compensation, unemployment
insurance or in connection with the good faith contest of
any tax lien;
(c) any Subsidiary may create Liens in favor of the
Company or another Subsidiary to secure borrowings from
the Company or another Subsidiary;
(d) Liens securing the performance of any contract,
undertaking or obligation or Liens for partial, progress,
advance or other payments pursuant to any contract or
provision of any statute, in any such case not incurred,
created or assumed directly or indirectly in connection
with the borrowing of money, the obtaining of advances or
credits or the securing of any indebtedness (including
rental obligations required to be capitalized) of, or
guaranteed by, the Company which by its terms or at the
option of the debtor may mature more than 12 months from
the date the Lien is granted, and if made and continuing
in the ordinary course of business;
(e) the Company or any of its Subsidiaries may
acquire property subject to a Lien (whether or not
assumed) or, in connection with the acquisition of
property hereafter acquired, may, within 180 days of the
date such property is acquired, subject such property to a
Lien, or may assume indebtedness secured by a Lien
covering the same, in each case up to an amount not to
exceed the lesser of (i) 100% of the cost thereof to the
Company or such Subsidiary and (ii) the fair value
thereof, and the Company or any of its Subsidiaries may
acquire a Subsidiary which, at the time of such
acquisition, has a Lien existing on its property; provided
that the Indebtedness secured by such Lien does not exceed
the fair value of the assets subject to such Lien;
(f) encumbrances consisting of zoning restrictions,
easements, rights of way, survey exceptions, leases and
subleases and other similar restrictions on the use of
real property, or minor irregularities in titles thereto,
which do not materially impair the use of such property in
the operation of the business of the Company or any of its
Subsidiaries;
(g) the Company and any of its Subsidiaries may
incur (i) Liens arising under or in connection with the
Receivables Purchase Agreement; provided that such Liens
do not extend to any assets beyond those contemplated by
the Receivables Purchase Agreement or (ii) similar Liens
incurred in similar financing arrangements (to the extent
otherwise permitted hereunder);
(h) the Company and any of its Subsidiaries may
incur Liens in connection with Sale-leaseback transactions
made in compliance with Section 6.8; provided that such
Liens do not extend to any assets other than the assets
subject to the applicable Sale-leaseback transaction;
(i) the Company and its Subsidiaries may incur Liens
(a) in connection with the issuance of letters of credit
(and reimbursement obligations relating thereto) other
than the Letters of Credit; provided that the aggregate
face amount of all such letters of credit at any one time
outstanding shall not exceed $15,000,000; and provided,
further, that the value of the property subject to Liens
permitted by this clause (a) shall not exceed the
aggregate face amount of letters of credit then
outstanding and (b) on Notes Receivable incurred in
connection with the sale or financing of Notes Receivable;
provided, however, that at no time shall each of the U.S.
and non-U.S. purchasers of such Notes Receivable have
recourse to the Company and its Subsidiaries in respect of
the amounts outstanding on such Notes Receivable in an
amount in excess of $25,000,000 in the aggregate as
provided for in Section 6.2(iv);
(j) Liens arising out of Capital Leases or Operating
Leases;
(k) Liens on property or assets acquired pursuant to
a Permitted Acquisition; provided that (i) any Domestic
Subsidiary Indebtedness that is secured by such Liens is
permitted to exist under Section 6.3(a) and (ii) such
Liens are not incurred in connection with or in
contemplation or anticipation of such Permitted
Acquisition and do not attach to any other asset of the
Company or any of its Subsidiaries; and
(l) other encumbrances to secure Indebtedness in the
aggregate for the Company and all of its Subsidiaries not
in excess of 5% of the Company's Consolidated Net Worth at
any time.
6.2 Restrictions on Fundamental Changes. Neither
the Company nor any of its Significant Subsidiaries shall wind
up, liquidate or dissolve its respective affairs or enter into
any transaction or series of related transactions of merger or
consolidation or convey, sell, lease or otherwise dispose of
its property or assets in one transaction or a series of
related transactions in an aggregate amount equal to or greater
than 10% of the total consolidated assets of the Company
(whether now owned or hereafter acquired), except that (i) any
Subsidiary of the Company may merge into the Company; provided
that the Company shall at all times be the continuing
corporation; (ii) any Subsidiary may merge into or consolidate
with another wholly-owned Subsidiary of the Company; (iii) the
Company may merge or consolidate with any Person; provided that
(a) the Company shall at all times be the continuing or
surviving corporation and (b) no Default or Event of Default
shall have occurred and be continuing or shall occur as a
result of such merger or consolidation; and (iv) the Company
may sell Notes Receivable; provided that at no time shall the
purchasers of such Notes Receivable have recourse to the
Company in respect of amounts outstanding on such Notes
Receivable in an amount in excess of $25,000,000 in the
aggregate with respect to U.S. purchasers and $25,000,000 in
the aggregate with respect to non-U.S. purchasers. Nothing set
forth in this Section 6.2 shall prohibit the Company from
reincorporating itself under the laws of another state (by way
of merger, dissolution or otherwise); provided that no Default
or Event of Default shall have occurred and be continuing or
shall occur as a result of such reincorporation and provided,
further, that such reincorporation would not reasonably be
expected to have a Material Adverse Effect.
6.3 Domestic Subsidiary Indebtedness. The Company
shall not permit any of its Domestic Subsidiaries to contract,
create, incur, assume or suffer to exist any Indebtedness
(which shall be determined for the purpose of this Section 6.3
solely in accordance with clauses (i) and (v) of the definition
of the term "Indebtedness"), except:
(a) Indebtedness of a Domestic Subsidiary acquired
as a result of a Permitted Acquisition (or Indebtedness
assumed at the time of a Permitted Acquisition of an asset
securing such Indebtedness); provided that (i) such
Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Permitted
Acquisition, (ii) at the time of such Permitted
Acquisition such Indebtedness does not exceed 25% of the
total then Fair Market Value of the assets of the
Subsidiary so acquired, or of the asset so acquired, as
the case may be, (iii) so long as, before and after giving
effect to such Permitted Acquisition, no Default or Event
of Default shall have occurred or would result therefrom
and (iv) such Indebtedness is not recourse to any assets
of the Company or its Subsidiaries other than the
Subsidiary and assets so acquired; and
(b) additional Indebtedness of the Company's
Domestic Subsidiaries not otherwise permitted hereunder
not exceeding $25,000,000 in aggregate principal amount at
any time outstanding; provided such Domestic Subsidiary
Indebtedness shall not prohibit or restrict such Domestic
Subsidiary's ability to pay dividends or make any other
distributions on or in respect of its capital stock to the
Company.
6.4 Fixed Charge Coverage Ratio. The Company shall
not permit at any time the ratio of (i) (a) Consolidated EBITDA
of the Company minus (b) Consolidated Capital Expenditures
minus (c) any amounts expended by the Company and its
Consolidated Subsidiaries to redeem or purchase indebtedness
(including current maturities of long-term indebtedness but
excluding in all cases redemptions or repurchases funded from
other sources such as permitted refinancings or the issuance of
Securities) (in the case of each of clauses (b) and (c) only
expenditures actually made and expenses charged against
earnings when determining Consolidated EBITDA during the
applicable four-quarter period shall be included) to (ii) Fixed
Charges of the Company and its Consolidated Subsidiaries to be
less than 1.50 to 1.00.
6.5 ERISA. The Company shall not, and shall not
permit any of its ERISA Affiliates to:
(i) engage in any transaction in connection with
which the Company or any of its ERISA Affiliates could be
reasonably expected to be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a
tax imposed by Section 4975 of the Code in excess of
$500,000;
(ii) fail to make full payment when due of all
amounts which, under the provisions of any Plan or under
ERISA and the Code, the Company or any of its ERISA
Affiliates is required to pay as contributions thereto,
except where the failure to make such payment would not
give rise to a lien under Section 412 of the Code or
Section 302 of ERISA; or
(iii) fail to make any payments to any Multiemployer
Plan that the Company or any of its ERISA Affiliates is
required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto, in
excess of $500,000.
6.6 Sale or Discount of Notes Receivables. The
Company shall not and shall not permit any of its Subsidiaries
to sell, with or without recourse, or discount or otherwise
sell for less than the Fair Market Value thereof, Notes
Receivable except in the ordinary course of business in
accordance with past collection practices of the Company and
its Subsidiaries; provided, however, that the Company and its
Subsidiaries shall be permitted to, directly or indirectly,
sell Notes Receivable as contemplated by the Receivables
Purchase Agreement.
6.7 Amendments or Waivers of Charter or By-laws or
of Certain Documents Relating to Certain Indebtedness. The
Company shall not make or agree to make any (i) amendment to or
other change to its certificate of incorporation or by-laws or
(ii) amendment to, or waiver of any of its rights under, any of
the Certain Existing Indebtedness, the Receivables Purchase
Agreement or the Sale-leaseback Agreement, in each case,
without obtaining the prior written consent of the Requisite
Lenders to such amendment or waiver if such amendment or other
change would reasonably be expected to (a) have a material
adverse effect on the Lenders or on the Company's ability to
perform any of its obligations under any of the Loan Documents
or (b) materially increase the existing, or add a material
amount of new, financial or other material obligations of the
Company.
6.8 Sale-leaseback Transactions. The Company shall
not and shall not permit any of its Subsidiaries to become or
remain liable as a lessee, guarantor or other surety with
respect to any Capital Lease of the Company or any of its
Subsidiaries of any property (whether real or personal or
mixed), whether now owned or hereafter acquired, (a) which the
Company or such Subsidiary, as the case may be, has sold or
transferred after the Effective Date or is to sell or transfer
after the Effective Date to any other Person other than to the
Company or a wholly-owned Subsidiary of the Company, as the
case may be, or (b) which the Company or such Subsidiary, as
the case may be, intends to use for substantially the same
purpose as any other property which after the Effective Date
has been or is to be sold or transferred by the Company or a
wholly-owned Subsidiary of Company, as the case may be, to any
Person in connection with such lease; provided that the Company
and its Subsidiaries may engage in (i) the Sale-leaseback
transactions contemplated by the Sale-leaseback Agreement and
(ii) Sale-leaseback transactions with respect to assets
acquired not more than 270 days prior to the consummation of
such transactions, but only to the extent in the case of clause
(ii) that the proceeds from such Sale-leaseback transactions
(net of taxes and expenses) shall not exceed $25,000,000 in the
aggregate.
6.9 No Further Negative Pledges. Except (a) with
respect to specific property encumbered to secure payment of
particular Indebtedness and (b) as otherwise provided in
Section 6.1, the Company shall not and shall not permit any of
its Subsidiaries to enter into or assume any agreement
prohibiting the creation or assumption of any Lien upon its
respective properties or assets, whether now owned or hereafter
acquired.
6.10 Refinancing Indebtedness. The Company shall
not and shall not permit any of its Subsidiaries to, directly
or indirectly, declare, order, pay or make, or set apart any
sum for any Restricted Payments with respect to Certain
Existing Indebtedness out of the proceeds of any Indebtedness
("Refinancing Indebtedness") unless such Refinancing
Indebtedness: (i) has a Stated Maturity not less than the
Stated Maturity of the Certain Existing Indebtedness to be
refinanced, (ii) has an Average Life not less than the Average
Life of the Certain Existing Indebtedness to be refinanced,
(iii) has an aggregate principal amount not less than the
aggregate principal amount of the Certain Existing Indebtedness
to be refinanced and (iv) contains terms no more materially
adverse to the Company than the terms of the certain Existing
Indebtedness to be refinanced.
6.11 Investments. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly,
make any Investment in any Person except:
(i) the Company and its Subsidiaries may make
Investments in cash and Cash Equivalents; provided that
any such Investments, including in cash, other than
Investments denominated in Dollars, shall only be made to
the extent necessary to fund the local operations of the
Foreign Subsidiaries;
(ii) Investments in existence on the Effective Date
which to the extent exceeding $250,000 on such date are
described in Schedule 6.11 annexed hereto;
(iii) the Company may make Investments in any Person
that is a wholly-owned Subsidiary and any of the Company's
Subsidiaries may make Investments in the Company or any
other Subsidiary of the Company;
(iv) the Company may make Investments made by or in
respect of any employee benefit plan or any other employee
benefits (including, without limitation, life insurance)
granted in the ordinary course of business;
(v) the Company and its wholly-owned Subsidiaries
may make Permitted Acquisitions;
(vi) the Company may purchase shares of its
outstanding common stock through open market purchases or
otherwise; and
(vii) the Company and its Subsidiaries may make other
Investments in an amount not to exceed $25,000,000
outstanding at any one time.
6.12 Sale, Transfer, etc. of Assets. The Company
shall not and shall not permit any of its Domestic Subsidiaries
to sell, convey, transfer or otherwise dispose of any material
assets to any Foreign Subsidiary of the Company except in the
ordinary course of business in accordance with past business
practices of the Company and its Subsidiaries or as otherwise
provided under this Agreement.
SECTION 7. EVENTS OF DEFAULT.
If any of the following conditions or events ("Events
of Default") shall occur and be continuing:
7.1 Failure To Make Payments When Due. (i) Failure
to pay any installment of principal of any Revolving Loan when
due, whether at stated maturity, by acceleration, by notice of
prepayment or otherwise; or failure to reimburse an Issuing
Lender for any drawing under any Letter of Credit pursuant to
Section 2.14 or (ii) failure to pay within five (5) days after
the due date any interest on any Revolving Loan or interest on
any reimbursement obligation with respect to any Letter of
Credit or any Fees or other amounts owing under this Agreement
or any of the other Loan Documents; or
7.2 Breach of Certain Covenants. Failure to observe
or perform any covenant or condition required to be kept or
performed by the Company pursuant to (i) Sections 5.4, 5.5,
5.6, 5.11 or 6 herein or (ii) Section 10 and such failure
continues for a period of five Business Days after receipt of
notice by the Company from the Agent, of such failure; or
7.3 Breach of Warranty. Any representation or
warranty made herein, in any other Loan Document (as defined
herein and in the Existing Credit Agreement) or any writing
delivered pursuant hereto or thereto or in connection herewith
or therewith shall prove to have been incorrect in any material
respect when made; or
7.4 Default in Other Agreements. An event of
default shall occur under the provisions of any instrument
evidencing outstanding indebtedness for borrowed money in a
principal amount in excess of $5,000,000, either direct or
indirect, of the Company or any of its Subsidiaries the holder
or holders of which are Persons other than the Company or any
of its Subsidiaries, but only in such cases where the effect of
such event of default is to permit the holder or holders of
such instrument, or a trustee or agent on behalf of such holder
or holders, to cause the outstanding indebtedness evidenced by
such instrument to become due prior to its stated maturity; or
any obligation of the Company or any Subsidiary for the payment
of such indebtedness shall become or be declared to be due and
payable prior to its stated maturity, or shall not be paid when
due; or
7.5 Judgments. A judgment or judgments for the
payment of money in excess of the sum of $5,000,000 in the
aggregate shall be entered against the Company or any of its
Subsidiaries, and such judgment or judgments shall remain
unsatisfied or unstayed for a period of 30 days; or
7.6 Other Defaults Under Agreement or Loan
Documents. The Company or the German Borrower shall default in
any material respect in the performance of or compliance with
any term contained in this Agreement or the other Loan
Documents other than those referred to above in Section 7.1 or
7.2 and such default shall not have been remedied or waived
within 30 days of such default; or
7.7 Bankruptcy; Appointment of Receiver,
Dissolution, etc. The Company or any of its Significant
Subsidiaries shall commence a voluntary case concerning itself
under the Bankruptcy Code; or an involuntary case is commenced
against the Company or any of its Significant Subsidiaries, and
the petition is not controverted within 10 days, or is not
dismissed within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for,
or takes charge of, all or substantially all of the property of
the Company or any of its Significant Subsidiaries; or the
Company or any of its Significant Subsidiaries commences any
other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency
or liquidation or similar law of any jurisdiction whether now
or hereafter in effect relating to the Company or any of its
Significant Subsidiaries; or there is commenced against the
Company or any of its Significant Subsidiaries any such
proceeding which remains undismissed for a period of 60 days;
or the Company or any of its Significant Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered;
or the Company or any of its Significant Subsidiaries suffers
any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Company or any of its
Subsidiaries makes a general assignment for the benefit of
creditors; or any corporate action is taken by the Company or
any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
7.8 Unfunded ERISA Liabilities. Any Plan shall fail
to maintain the minimum funding standard required for any plan
year or part thereof or a waiver of such standard or extension
of any amortization period is sought or granted under
Section 412 of the Code; any Plan having an Unfunded Current
Liability in excess of $5,000,000 is, shall have been or is
reasonably likely to be terminated or the subject of
termination proceedings under ERISA; or the Company or any
ERISA Affiliate has incurred or is likely to incur a liability
to or on account of a Plan or a Multiemployer Plan under
Section 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA, and
there shall result from any such event or events the imposition
of a Lien upon the assets of the Company or any ERISA
Affiliate, the granting of a security interest by the Company
or an ERISA Affiliate, or a liability or a material risk of
incurring a liability to the PBGC or the Internal Revenue
Service or a Plan or a penalty under Section 4971 of the Code,
which liability, in the opinion of the Requisite Lenders, will
have a Material Adverse Effect; or
7.9 Change in Control. Any person or group of
persons (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934, as amended) (but excluding any
Excluded Person (as defined in the next sentence)) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities Exchange Commission under such
Act) of issued and outstanding shares of capital stock of the
Company entitled (without regard to the occurrence of any
contingency) to vote for the election of members of the board
of directors of the Company having a then present right to
exercise 20% or more of the voting power for the election of
members of the board of directors of the Company attached to
all such outstanding shares of capital stock of the Company.
For purposes of this Section, "Excluded Persons" shall mean
(i) any employee stock ownership plan or other employee benefit
plan and (ii) each officer and director of the Company as of
the date of this Agreement and members of the extended families
of such officers and directors;
THEN (i) upon the occurrence of any Event of Default
described in the foregoing subsection 7.7, each of (x) the
unpaid principal amount of and accrued interest on the
Revolving Loans and (y) an amount equal to the maximum amount
which may at any time be drawn under all Letters of Credit then
outstanding (whether or not any beneficiary under any Letter of
Credit shall have presented, or shall be entitled at such time
to present, the drafts of other documents required to draw
under such Letter of Credit) shall automatically become
immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are
hereby expressly waived by the Company and the German Borrower,
and the obligation of each Lender to make any Revolving Loan
and the obligation of any Issuing Lender to issue any Letter of
Credit hereunder shall thereupon terminate, and (ii) upon the
occurrence of any other Event of Default, the Requisite Lenders
may, by written notice to the Company and the German Borrower,
declare all of the Revolving Loans and an amount equal to the
amounts described in clauses (x) and (y) above to be, and the
same shall forthwith become, due and payable, together with
accrued interest thereon, and the obligation of each Lender to
make any Revolving Loan and the obligation of any Issuing
Lender to issue any Letter of Credit hereunder shall thereupon
terminate; provided that the foregoing shall not affect in any
way the obligations of the Lenders to purchase from the Issuing
Lenders participations in the unreimbursed amount of any
drawings under any Letters of Credit as provided in Section
2.14(e). So long as any Letter of Credit shall remain
outstanding, any amounts described in clause (y) above with
respect to any such Letter of Credit, when received by the
Agent, shall be held by the Agent as cash collateral for the
obligation of the Company to reimburse the respective Issuing
Lender in the event of any drawing under such Letter of Credit,
and upon any drawing under any outstanding Letter of Credit in
respect of which the Agent holds any amounts described in
clause (y) above, the Agent shall apply such amounts held by
the Agent to reimburse the Issuing Lender for the amount of
such drawing. In the event any Letter of Credit in respect of
which the Agent holds any amounts described in clause (y) above
is cancelled or expires or in the event of any reduction in the
maximum amount available at any time for drawing under such
Letter of Credit ("Maximum Available Amount"), the Agent shall
apply the amount then so held designated to reimburse the
Issuing Lender for any drawings under such Letter of Credit
less the Maximum Available Amount immediately after such
cancellation, expiration or reduction, if any, first to the
cash collateralization of any outstanding Letter of Credit in
respect of which the Company has failed to pay all or a portion
of the amounts described in clause (y) above, as the case may
be, second, to the payment in full of the outstanding
Obligations, and third, to the extent of any excess, to the
Company. Nevertheless, if at any time within 60 days after
acceleration of the maturity of any Revolving Loan the Company
or the German Borrower shall pay all arrears of interest and
all payments on account of the principal which shall have
become due otherwise than by acceleration (with interest on
principal and, to the extent permitted by law, on overdue
interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Defaults (other than non-
payment of principal of and accrued interest on the Revolving
Loans and the Notes, and payments of amounts referred to in
clause (y) above, in each case due and payable solely by
virtue of acceleration) shall be remedied or waived pursuant to
Section 11.2, then the Requisite Lenders by written notice to
the Company and the German Borrower may rescind and annul the
acceleration and its consequences; and the Agent shall return
to the Company any amounts held by the Agent as cash collateral
in respect of amounts described in clause (y) above; but such
action shall not affect any subsequent Event of Default or
Default or impair any right consequent thereon.
SECTION 8. REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.
In order to induce the Lenders to enter into this
Agreement and to make the Revolving Loans and to issue the
Letters of Credit provided for herein, the Company makes the
following representations and warranties to, and covenants
with, the Lenders as of the Effective Date, all of which shall
survive the execution and delivery of this Agreement, the
making of the Revolving Loans and the issuance of Letters of
Credit:
8.1 Financial Information; Undisclosed Liabilities.
The Company has furnished to each Lender (i) a copy of its
Annual Report on Form 10-K for the fiscal year ended December
27, 1997 and a copy of its Quarterly Report on Form 10-Q for
the quarterly periods ended March 31, 1998, June 30, 1998 and
September 30, 1998 and (ii) its audited consolidated balance
sheet as at December 27, 1997 and its unaudited consolidated
balance sheet as at September 30, 1998, and the related
consolidated statement of earnings and statement of cash flows
of the Company and its Consolidated Subsidiaries, if any, for
the fiscal year or nine months period, as the case may be, then
ended, accompanied in the case of the audited consolidated
balance sheet as at December 27, 1997 by the report on
examination thereof by its independent auditors; said
statements fairly present the consolidated financial condition
of the Company and its Consolidated Subsidiaries and the
results of their operations for the respective periods then
ended.
8.2 Adverse Changes. Except as set forth in the
documents furnished pursuant to Section 8.1 herein, the net
changes in circumstances affecting the Company and/or the
German Borrower have not resulted in a cumulative effect since
December 27, 1997 that would reasonably be expected to result
in a Material Adverse Effect.
8.3 Litigation. There is no action, suit,
proceeding, litigation or governmental investigation pending
or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries which, in the
reasonable opinion of the Company, is expected to have a
Material Adverse Effect.
8.4 Authorization, etc.
(a) Authorization. The execution, delivery and
performance of this Agreement, the issuance, delivery and
payment of the Notes, the issuance of the Letters of Credit,
and the other transactions contemplated hereby or thereby or
related hereto or thereto have each been duly authorized by all
necessary corporate action by the Company and the German
Borrower, as the case may be.
(b) No Conflict. The execution, delivery and
performance by the Company and the German Borrower of this
Agreement, the issuance, delivery and performance of the Notes
by the Company and the German Borrower, the issuance of the
Letters of Credit, and the other transactions contemplated
hereby or thereby or related hereto or thereto do not and will
not (i) violate (x) any provision of law applicable to the
Company or the German Borrower, or (y) any order, judgment or
decree of any court or other agency of government binding, or
purporting to be binding, on the Company or the German Borrower
or being applicable to, or purporting to be applicable to, any
of its assets, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of either the Company or the
German Borrower, (iii) result in or require the creation or
imposition of any Lien upon any of their respective properties
or assets, or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual
Obligation of either the Company or the German Borrower, except
for (x) such approvals or consents that the absence of which,
singly or in the aggregate, would not have a Material Adverse
Effect or (y) such violations (other than any violation of the
Certificate of Incorporation or By-laws of the Company),
conflicts, breaches, Liens and defaults that would not have,
singly or in the aggregate, a Material Adverse Effect.
(c) Government Consents. The execution, delivery
and performance by the Company and the German Borrower of this
Agreement, the application of the proceeds of the Loans, the
issuance, delivery and performance by the Company and the
German Borrower of the Notes, the issuance of the Letters of
Credit and the other transactions contemplated hereby or
thereby or related hereto or thereto do not and will not
require any registration with, consent or approval of, any
Governmental Authority.
(d) Binding Obligation. This Agreement is, and the
Notes, when executed and delivered by the Company and the
German Borrower will be, the legally valid and binding
obligations of each of them, as the case may be, enforceable
against each of them, as the case may be, in accordance with
their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
8.5 Corporate Status. The Company and its
Subsidiaries and the German Borrower are each a duly organized
and validly existing corporation in good standing under the
laws of the jurisdiction where they are incorporated and are
licensed or qualified as a foreign corporation and in good
standing in all jurisdictions where the nature of its business
or the ownership or leasing of property makes such licensing or
qualification necessary, except where the absence of any such
license, qualification or good standing does not result in a
Material Adverse Effect.
8.6 Title; Insurance. (a) The Company and its
Subsidiaries (including the German Borrower) have good title to
their respective properties, subject only to the Liens
permitted by Section 6.1 hereof.
(b) Schedule 8.6(b) hereto sets forth in reasonable
detail the insurance program of the Company as of the Effective
Date, including limit, terms, conditions and deductibles and
types of insurance carried by the Company. All insurance
policies are outstanding and in force, and all premiums due
with respect to such policies have been paid.
8.7 Taxes, etc. All material taxes, assessments,
fees and other governmental charges (other than those presently
payable without penalty or interest) upon the Company and any
of its Subsidiaries (including the German Borrower) or upon any
property of any thereof, which are due and payable, have been
paid. Except as set forth in Schedule 8.3 hereto, no material
claims are being asserted in writing (in a Form 5701, 30 day
letter or other official written communications by the relevant
governmental entity) with respect to any past due taxes,
assessments, fees or other governmental charges against the
Company or any of its Subsidiaries (including the German
Borrower) (other than any such claims which are being contested
in good faith and for which an adequate reserve, in the
reasonable judgment of the Company, has been established on the
books of the Company and its Consolidated Subsidiaries).
8.8 ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Multiemployer Plan is insolvent
(within the meaning of Section 4245 of ERISA) or in
reorganization (under the meaning of Section 4241 of ERISA);
the present value of the accrued benefits under each Plan did
not as of the date of the most recently completed annual
actuarial valuation applicable thereto, exceed by more than
$500,000 the fair market value of the assets of such Plan,
determined in accordance with Section 412 of the Code; no Plan
has an accumulated or waived funding deficiency or permitted
decreases in its funding standard account within the meaning of
Section 412 of the Code; neither the Company nor any ERISA
Affiliate has incurred any material liability to or on account
of a Plan or a Multiemployer Plan pursuant to Section 515,
4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or expects to
incur any material liability under any of the foregoing
Sections on account of the termination of participation in or
contributions to any such Plan or Multiemployer Plan; no
proceedings have been instituted to terminate any Plan under
Section 4041(c) or Section 4042 of ERISA; no condition exists
that presents a material risk to the Company or any ERISA
Affiliate of incurring a liability to or on account of a Plan
or Multiemployer Plan pursuant to the foregoing provisions of
ERISA and the Code; no lien imposed under the Code or ERISA on
the assets of the Company or any ERISA Affiliate exists or is
likely to arise on account of any Plan; and the Company and its
ERISA Affiliates may terminate contributions to any other
employee benefit plans maintained by them without incurring any
material liability to any person interested therein, other than
liability for benefits then due and payable.
8.9 Margin Regulations. The proceeds of the
Revolving Loans made to the Company and the German Borrower may
be used for general corporate purposes, which may include the
purchasing or carrying of Margin Stock (provided that the
Company and the German Borrower give each of the Lenders prior
written or telephonic notice confirmed in writing of such
intended use); and no part of the proceeds of any such
Revolving Loans to the Company and the German Borrower will be
used to purchase or carry any Margin Stock in violation of
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System. Neither the Company nor the German
Borrower is 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 (within the meaning
of Regulation U of said Board of Governors). As of the date of
this Agreement, after utilizing the full amount of the Total
Revolving Loan Commitment to purchase Margin Stock on such
date, no more than 25% of the value of the assets of the
Company and its Subsidiaries that are subject to the provisions
of Section 6.1 or Section 6.9 or the German Borrower and its
Subsidiaries that are so subject would constitute Margin Stock.
8.10 Disclosure. The representations, warranties
and disclosures contained in this Agreement, or any other
document, certificate or written statement furnished to the
Lenders by or on behalf of any such Person for use in
connection with the transactions contemplated by this Agreement
and in the Company's filings made under the Securities Exchange
Act of 1934, as amended, taken as a whole and to the extent not
updated or superseded in later documents, certificates or
written statements furnished to the Lenders or in later filings
under the Securities Exchange Act of 1934, as amended, do not
contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
contained herein or therein not misleading at such time and in
light of the circumstances under which such information was
furnished.
8.11 Patents, Trademarks, etc. The Company and its
Significant Subsidiaries own, or are licensed or permitted to
use, all patents, trademarks, trade names, copyrights,
licenses, technology, know-how, processes, service marks and
rights with respect to any of the foregoing used in and
necessary or material to the conduct of their respective
businesses as currently conducted. To the best of the
Company's knowledge, the use of such patents, trademarks, trade
names, copyrights, licenses, technology, know-how, processes
and rights by the Company and its Significant Subsidiaries does
not infringe on the rights of any Person, except for such
infringement which would not reasonably be expected to result
in a Material Adverse Effect. The rights of the Company and
each of its Significant Subsidiaries to so sell, franchise or
license under such patents, trademarks, trade names,
copyrights, technology, know-how and processes owned by them
and then being used may be transferred in connection with any
sale of assets and goodwill or stock of the related business by
the Company or such Subsidiaries.
8.12 Environmental Matters. (a) The Company and
each of its Significant Subsidiaries have obtained all permits,
licenses and other authorizations relating to or used in
connection with the ownership and operation of its respective
business and its respective real properties that are required
under the Environmental Laws and are in compliance with all
terms and conditions of such required permits, licenses and
authorizations, except where failure to so obtain or to so
comply would not reasonably be expected to result in a Material
Adverse Effect.
(b) The Company and, to the knowledge of the
Company, each of its Significant Subsidiaries are in compliance
with all Environmental Laws, including, without limitation, all
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained
in the Environmental Laws except where non-compliance would not
reasonably be expected to result in a Material Adverse Effect.
(c) There is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation or
deficiency, investigation, proceeding, notice or demand letter
pending or, to the knowledge of the Company, threatened against
the Company or any of its Significant Subsidiaries under the
Environmental Laws which could reasonably be expected to result
in a fine, penalty or other cost or expense in excess of
$5,000,000.
(d) To the Company's knowledge, there are no past or
present events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with
or prevent compliance in all material respects by the Company
or any of its Significant Subsidiaries with the Environmental
Laws, or which may give rise to any common law or legal
liability, including, without limitation, liability under
CERCLA, or similar state, local or foreign laws, or otherwise
form the basis of any claim, action, demand, suit, proceeding,
hearing or notice of violation, study or investigation, based
on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling, or
the emission, discharge, release or threatened release into the
environment, of any Hazardous Material which could reasonably
be expected to result in a fine, penalty or other cost or
expense in excess of $5,000,000.
(e) To the Company's knowledge, there is no real
property ever owned, operated, used or controlled by the
Company or any of its Significant Subsidiaries listed or
proposed for listing on the National Priorities List or the
Comprehensive Environmental Response, Compensation, and
Liability Information System, both promulgated under CERCLA, or
on any comparable state or local list, and neither the Company
nor any of its Significant Subsidiaries has received any
notification of potential or actual liability or request for
information under CERCLA or any comparable state or local law
which could reasonably be expected to result in a fine, penalty
or other cost or expense in excess of $5,000,000.
(f) Except in compliance with the Environmental
Laws, (i) no real property ever owned, operated, used or
controlled by the Company or any of its Significant
Subsidiaries has been used for the handling, processing,
generation, treatment, storage or disposal of any Hazardous
Materials, and no underground storage tank or other underground
storage receptacle, or related piping, is located on such
properties; (ii) there have been no releases (i.e., any past or
present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) of Hazardous Materials by the Company or
any of its Significant Subsidiaries or any of their respective
predecessors in interest at, on, under, from or into any of the
real property owned, operated or controlled by them; and
(iii) there are no polychlorinated biphenyls or asbestos
located in, at, on or under any facility or real property
owned, operated or controlled by the Company or any of its
Significant Subsidiaries, in any case set forth in clauses (i)-
(iii) above, in such amounts, conditions or concentrations that
could reasonably be expected to require removal or remedial or
corrective action, or to result in liability under the
Environmental Laws in excess of $5,000,000.
8.13. Year 2000. Any reprogramming and/or
replacement of equipment required to permit the proper
functioning, in and following the year 2000, of (i) all
Information Systems and Equipment and (ii) equipment containing
embedded microchips (including systems and equipment supplied
by others or, to the extent practicable and commercially
reasonable, with which the systems of the Company and its
Subsidiaries interface) and the testing of all such systems and
equipment, as so reprogrammed, will be substantially completed
by September 30, 1999, except where failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
The cost to the Company and its Subsidiaries (including
reprogramming errors and the failure of others' systems or
equipment) will not result in Default or a Material Adverse
Effect. Except for such of the reprogramming and/or
replacement of equipment referred to in the two preceding
sentences as may be necessary, all Information Systems and
Equipment are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to
be, sufficient to permit the company to conduct its business
without a Material Adverse Effect.
SECTION 9. AGENT.
9.1 Appointment. The Lenders hereby appoint BTCo as
Agent hereunder and under the Loan Documents and each Lender
hereby authorizes the Agent to act as herein or therein
specified, and each Lender hereby irrevocably authorizes, and
each holder of any Note by the acceptance of such Note shall
be deemed irrevocably to authorize, the Agent to take such
action on its behalf under the provisions of this Agreement,
the Notes, and any other instruments, documents and agreements
referred to herein or therein and to exercise such powers
hereunder and thereunder as are specifically delegated to the
Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Agent may perform any
of its duties hereunder, or under the Loan Documents, by or
through its agents or employees.
9.2 Nature of Duties. The Agent shall not have any
duties or responsibilities except those expressly set forth in
this Agreement. The duties of the Agent shall be mechanical
and administrative in nature. The Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of
any Lender. Nothing in this Agreement or any of the Loan
Documents, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in
respect of this Agreement or any of the Loan Documents except
as expressly set forth herein or therein. Each Lender shall
make its own independent investigation of the financial
condition and affairs of the Company and its Subsidiaries as
well as that of the German Borrower in connection with the
making and the continuance of the Revolving Loans hereunder and
shall make its own appraisal of the creditworthiness of the
Company and its Subsidiaries as well as that of the German
Borrower; and the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect
thereto, whether coming into its possession before the making
of the Revolving Loans or at any time or times thereafter.
9.3 Rights, Exculpation, etc. The Agent and any of
the officers, directors, employees or agents of the Agent shall
not be liable to any Lender for any action taken or omitted by
them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, unless caused by its gross
negligence or willful misconduct. The Agent shall not be
responsible to any Lender for any recitals, statements,
representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the
other Loan Documents or the financial condition of the Company
and its Subsidiaries or of the German Borrower. The Agent
shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or
conditions of this Agreement or any of the other Loan
Documents or the financial condition of the Company or any of
its Subsidiaries or of the German Borrower, or the existence or
possible existence of any Default or Event of Default. The
Agent may at any time request instructions from the Lenders
with respect to any actions or approvals which by the terms of
this Agreement or any of the other Loan Documents the Agent is
permitted or required to take or to grant, and if such
instructions are requested, the Agent shall be absolutely
entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any
Person for refraining from any action or withholding any
approval under this Agreement or any of the other Loan
Documents until it shall have received such instructions from
the Requisite Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the
Agent as a result of the Agent acting or refraining from acting
hereunder or under any of the other Loan Documents in
accordance with the instructions of the Requisite Lenders.
9.4 Reliance. The Agent shall be entitled to rely
upon any written notice, statement, certificate, order or other
document or any telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper
Person, and, with respect to all legal matters pertaining to
this Agreement or any of the other Loan Documents and its
duties hereunder or thereunder, upon advice of counsel selected
by it.
9.5 Indemnification. To the extent that the Agent
is not reimbursed and indemnified by the Company or the German
Borrower, the Lenders will reimburse and indemnify the Agent
for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Agent, acting
pursuant hereto, in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action
taken or omitted by the Agent under this Agreement or any of
the other Loan Documents, in proportion to their respective
Commitments hereunder; provided, however, that no Lender shall
be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence
or willful misconduct of the Agent. The obligations of the
Lenders under this Section 9.5 shall survive the payment in
full of the Notes and the termination of this Agreement and any
other Loan Document.
9.6 The Agent, Individually. With respect to its
Commitment hereunder, the Revolving Loans made by it and any
Notes issued to or held by it, the Agent shall have and may
exercise the same rights and powers hereunder and is subject to
the same obligations and liabilities as and to the extent set
forth herein for any other Lender or holder of a Note. The
terms "Lenders", "Requisite Lenders" or "holders of Notes" or
any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity as a
Lender, one of the Requisite Lenders or a noteholder. The
Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the
Company or the German Borrower or any of their Subsidiaries as
if they were not acting pursuant hereto.
9.7 Holders of Notes. The Agent may deem and treat
the named payee (or any subsequent holder, transferee, assignee
or payee of which the Agent has received written notice) of any
Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof
shall have been received by the Agent. Any request, authority
or consent of any Person, who at the time of making such
request or of giving such authority or consent is the named
payee (or any subsequent holder, transferee, assignee or payee
of which such Agent has received written notice) of any Note,
shall be conclusive and binding on any subsequent holder,
transferee, assignee or payee of such Note or of any Note or
Notes issued in exchange therefor.
9.8 Resignation by the Agent. The Agent may resign
from the performance of all of its functions and duties
hereunder at any time by giving 15 Business Days' prior written
notice to the Company and the Lenders. Such resignation shall
take effect upon the expiration of such 15 Business Day period
or upon the earlier appointment of a successor. Upon any such
resignation, the Requisite Lenders shall appoint a successor
Agent who shall be satisfactory to the Company and shall be an
incorporated bank or trust company. In the event no such
successor shall have been so appointed, then any notification,
demand or other communication required or permitted to be given
by the Agent on behalf of the Lenders to the Company hereunder
shall be sufficiently given if given by the Requisite Lenders,
and any notification, demand, other communication, document,
statement or other paper or payment required to be made, given
or furnished by the Company to the Agent for distribution to
the Lenders shall be sufficiently made, given or furnished if
made, given or furnished by the Company directly to each Lender
entitled thereto and, in the case of payments, in the amount to
which each such Lender is entitled. All powers specifically
delegated to the Agent by the terms hereof may be exercised by
the Requisite Lenders.
9.9 Removal. The Agent may be removed from the
performance of all its functions and duties hereunder at any
time with or without cause by an instrument delivered in
writing to the Company and signed by the Requisite Lenders.
Upon any such removal, the Requisite Lenders shall appoint a
successor Agent who shall be satisfactory to the Company and
shall be an incorporated bank or trust company. In the event
no such successor shall have been so appointed, then any
notification, demand or other communication required or
permitted to be given by the Agent on behalf of the Lenders to
the Company hereunder shall be sufficiently given if given by
the Requisite Lenders, and any notification, demand, other
communication, document, statement or other paper or payment
required to be made, given or furnished by the Company to the
Agent for distribution to the Lenders shall be sufficiently
made, given or furnished if made, given or furnished by the
Company directly to each Lender entitled thereto and, in the
case of payments, in the amount to which each such Lender is
entitled. All powers specifically delegated to the Agent by
the terms hereof may be exercised by the Requisite Lenders.
SECTION 10. CONDITIONS PRECEDENT.
10.1 Conditions to Effectiveness. The effectiveness
of this Agreement is subject to the prior or concurrent
satisfaction of the following conditions by the Company and the
German Borrower, as the case may be:
(a) Closing Documents. The Company and the German
Borrower shall have delivered to the Lenders (or to the
Agent for the Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its
counsel) the following (each, unless otherwise noted,
dated the Closing Date):
1. Board Resolutions. Resolutions of the
Company's Board of Directors in form and substance
satisfactory to the Agent approving and authorizing
the execution, delivery and performance by it of the
Loan Documents and any other documents, instruments
and certificates as are contemplated hereby and
thereby, certified as of the Closing Date by an
appropriate respective corporate officer as being
true and complete and in full force and effect
without modification or amendment.
2. Signature and Incumbency Certificates.
(i) Signature and incumbency certificates of the
officers of the Company and (ii) a signature
certificate of the persons authorized by the German
Borrower to execute any of the Loan Documents.
3. By-Laws. Copies of the By-laws of the
Company.
4. German Corporate Documents. A recently
issued certified copy of the German Borrower's entry
in the commercial register of Emmendingen Lower
District Court.
5. Opinions. Originally executed copies of one
or more written opinions of (i) Cravath, Swaine &
Moore, counsel for the Company, in the form of
Exhibit C-1 hereto and, (ii) Wayne F. Taylor, general
counsel for the Company, in the form of Exhibit C-2
hereto, and (iii) from Hengeler Mueller Weitzel
Wirtz, special German counsel to the German Borrower,
in the form of Exhibit C-3 hereto, each of which
opinions shall be dated as of the Closing Date, and
shall cover such other matters and include such
changes as shall be reasonably requested or approved
by the Agent.
6. Opinion. Originally executed copies of the
favorably written opinion of Cahill Gordon & Reindel,
special counsel to the Agent and Lenders,
substantially in the form of Exhibit D.
7. Officers' Certificate. Originally executed
Officers' Certificate of the Company in the form of
Exhibit E hereto stating that all conditions set
forth in Sections 4.1(b)(i), 4.1(b)(ii) and
4.1(b)(iii), have been satisfied, in each case,
without taking into account whether any circumstance
or event which must be satisfactory to any Person
(other than the Company) is in fact satisfactory to
such Person.
8. Guarantee. On the Closing Date the Company
shall have duly authorized, executed and delivered a
guarantee agreement, dated as of the Effective Date,
pursuant to which the Company guarantees the
obligations of the German Borrower owing to the
Lenders, in substantially the form of Exhibit F
hereto (as modified, supplemented or amended from
time to time, the "Company Guarantee") in accordance
with the terms hereof and thereof.
(b) Corporate Proceedings. All corporate and other
proceedings taken or to be taken by the Company and the
German Borrower in connection with the transactions
contemplated by each of the Loan Documents on or prior to
the Effective Date and all documents incidental thereto
not previously found acceptable by the Requisite Lenders
shall be reasonably satisfactory in form and substance to
such Lenders, and such Lenders shall have received from
the Company and the German Borrower all such counterpart
originals or certified copies of such documents as such
Lenders may reasonably request.
SECTION 11. MISCELLANEOUS.
11.1 Exercise of Rights. Neither the failure nor
delay on the part of any of the Lenders or any holder of a Note
to exercise any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under this
Agreement preclude any other or further exercise thereof, or
the exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Lenders
and the holders of the Notes would otherwise have. No notice
to or demand on the Company or the German Borrower in any case
shall entitle either the Company or the German Borrower to any
other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the
Lenders and the holders of the Notes to any other or further
action in any circumstances without notice or demand.
11.2 Amendment and Waiver, etc. (a) Neither this
Agreement nor any other Loan Document nor any terms hereof or
thereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing
signed by the respective Borrowers party thereto and the
Requisite Lenders; provided that no such change, waiver,
discharge or termination shall, without the consent of each
Lender (other than a Defaulting Lender), (i) extend the final
scheduled maturity of any Loan or Note or extend the stated
expiration date of any Letter of Credit beyond the Final
Maturity Date, or reduce the rate or extend the time of payment
of interest or Fees thereon, or reduce the principal amount
thereof (except to the extent repaid in cash) (it being
understood that any amendment or modification to the financial
definitions in this Agreement shall not constitute a reduction
in the rate of interest or Fees for the purposes of this
clause (i)), (ii) release the Company Guarantee, (iii) amend,
modify or waive any provision of this Section 11.2, (iv) reduce
the percentage specified in the definition of Requisite Lenders
(it being understood that, with the consent of the Requisite
Lenders, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Requisite
Lenders on substantially the same basis as the Revolving Loan
Commitments are included on the Effective Date) or (v) consent
to the assignment or transfer by a Borrower of any of its
rights and obligations under this Agreement; provided, further,
that no such change, waiver, discharge or termination shall
(v) increase the Revolving Loan Commitment of any Lender over
the amount thereof then in effect without the consent of such
Lender (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction in the Total Revolving Loan
Commitment shall not constitute an increase of the Revolving
Loan Commitment of any Lender, and that an increase in the
available portion of any Revolving Loan Commitment of any
Lender shall not constitute an increase of the Revolving Loan
Commitment of such Lender), (x) without the consent of any
Issuing Lender, amend, modify or waive any provision of
Section 2 or alter its rights or obligations with respect to
Letters of Credit, or (y) without the consent of the Agent,
amend, modify or waive any provision of Section 9 or any other
provision as same relates to the rights or obligations of the
Agent.
(b) If, in connection with any proposed change,
waiver, discharge or termination to any of the provisions of
this Agreement as contemplated by clauses (i) through (v),
inclusive, of the first proviso to Section 11.2(a), the consent
of the Requisite Lenders is obtained but the consent of one or
more of such other Lenders whose consent is required is not
obtained, then the Borrower shall have the right, so long as
all non-consenting Lenders whose individual consent is required
are treated as described in either clauses (A) or (B) below, to
either (A) replace each such non-consenting Lender or Lenders
with one or more Replacement Lenders pursuant to Section 2.15
so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver,
discharge or termination or (B) terminate such non-consenting
Lender's Revolving Loan Commitment and/or repay the outstanding
Revolving Loans of such Lender and cash collateralize its
applicable Pro Rata share of the Letter of Credit Outstandings;
provided that, unless the Revolving Loan Commitment that is
terminated, and Revolving Loans repaid, pursuant to preceding
clause (B) are immediately replaced in full at such time
through the addition of new Banks or the increase of the
Revolving Loan Commitments and/or outstanding Revolving Loans
of existing Banks (who in each case must specifically consent
thereto), then in the case of any action pursuant to preceding
clause (B) the Requisite Lenders (determined after giving
effect to the proposed action) shall specifically consent
thereto; provided, further, that in any event a Borrower shall
not have the right to replace a Lender, terminate its Revolving
Loan Commitment or repay its Revolving Loans solely as a result
of the exercise of such Lender's rights (and the withholding of
any required consent by such Lender) pursuant to the second
proviso to Section 11.2(a).
11.3 Expenses and Indemnification. (a) The
Borrowers agree to pay all reasonable out-of-pocket expenses
(x) of the Agent incurred in connection with the development,
preparation, execution, delivery, enforcement, assignment,
participation and administration of this Agreement, and the
other Loan Documents and any and all amendments, supplements or
waivers hereto or thereto and the Notes and the making and
repayment of the Revolving Loans and the issuance of Letters of
Credit and the payment of interest, including, without
limitation, the reasonable fees and expenses of Cahill Gordon &
Reindel, special counsel for the Lenders and the Agent and of
Hasche Eschenlohr Peltzer Riesenkampff Fischotter, special
German counsel for the Lenders and the Agent in each case
reasonably promptly upon being furnished an invoice and (y) of
each Lender incurred in connection with the enforcement of any
of the foregoing, including, without limitation, the reasonable
fees and expenses of any counsel for any of the Lenders and the
Agent. In addition, the Company agrees to pay, and to save the
Agent and the Lenders harmless from all liability for, any
stamp or other documentary taxes that may be payable in
connection with the Company's or the German Borrower's
execution, delivery or performance of this Agreement, its
borrowings hereunder, or its issuance of the Notes or of any
other instruments or documents provided for herein or delivered
or to be delivered by either of them hereunder or any other
Loan Document or in connection herewith or thereunder. All
obligations provided for in this Section 11.3 shall survive any
termination of this Agreement. The Company agrees to
indemnify, defend and hold the Agent and each of the Lenders
harmless from and against any and all liability (including,
without limitation, excise tax, interest, penalties and all
reasonable attorneys' fees) to which the Agent or any of the
Lenders may become subject insofar as such excise tax or
liability arises out of or is based upon a suit or proceeding
or governmental action brought or taken in connection with the
use of the proceeds of the Revolving Loans made to the
Borrower, whether the Agent or such Lender is a party thereto
or is otherwise required to respond thereto; provided that the
Company shall not be liable hereunder with respect to claims
directly arising out of (i) any settlement made without its
consent, which consent will not unreasonably be withheld or
delayed, (ii) any proceeding brought against the Agent or such
Lender by a security holder of the Agent or such Lender based
upon rights afforded such security holder solely in its
capacity as such, and (iii) the gross negligence or willful
misconduct of the Agent or such Lender.
(b) The foregoing indemnity set forth in this
Section 11.3 shall include, without limitation, indemnification
by the Company to each Indemnitee for any and all expenses and
costs (including, without limitation, remedial, removal,
response, abatement, clean-up, investigative, closure and
monitoring costs), losses, claims (including claims for
contribution or indemnity and including the costs of
investigating or defending any claim and whether or not such
claim is ultimately defeated, and whether the conditions
creating such claim arose before, during or after ownership,
operation, possession or control of the business, property or
facilities of the Company or any of its Subsidiaries, or
before, on or after the date hereof, and including any amounts
paid incidental to any compromise or settlement by the
Indemnitees or any Indemnitee to the holders of any such
claim), lawsuits, liabilities, obligations, actions, judgments,
disbursements, encumbrances, liens, damages (including, without
limitation, damages for contamination or destruction of natural
resources), penalties and fines of any nature (including,
without limitation, in all cases the reasonable fees and
disbursements of counsel in connection therewith) incurred,
suffered or sustained by that Indemnitee based upon, arising
under or relating to Environmental Laws, based on, arising out
of or relating to, in whole or in part, the exercise and/or
enforcement of any rights or remedies by any Indemnitee under
this Agreement, any other Loan Document or any related
documents and including, but not limited to, taking title to,
owning, possessing, operating, controlling, managing or taking
any action in respect of any real property.
11.4 Successors and Assigns; Participations and
Assignments. (a) This Agreement shall be binding upon and
inure to the benefit of the Agent, the Company, the German
Borrower, the Lenders, and, to the extent permitted hereunder,
all future holders of the Notes and their respective successors
and assigns, except that neither the Company nor the German
Borrower may assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of each Lender.
(b) Any Lender may at any time sell to one or more
commercial banks, insurance companies, savings and loan
associations, savings banks or other financial institutions,
pension funds or mutual funds or other entities
("Participants") participating interests in its Revolving Loan
Commitment, Revolving Loans and Letters of Credit, or any other
interest of such Lender hereunder or thereunder (in respect of
any such Lender, its "Credit Exposure"); provided, however,
that such Lender shall remain fully liable for its entire
Credit Exposure without regard to any such participation and no
Participant shall be in privity with either the Company or the
German Borrower or acquire any right vis-a-vis either the
Company or the German Borrower except as expressly set forth in
this paragraph. The Borrowers agree that if amounts
outstanding under this Agreement or the Notes are due or
unpaid, or shall have been declared or shall have become due
and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under
this Agreement and any Note to the same extent as if the amount
of its participating interest were owing directly to it as a
Lender under this Agreement or any Note; provided that such
right of set-off shall be subject to the obligation of such
Participant to share with Lenders, and Lenders agree to share
with such Participant, as provided in Section 11.11 hereof.
The Company and the German Borrower each also agree that each
Participant shall be entitled to the benefits of Section 2.10
hereof with respect to its participation in the Revolving Loans
outstanding from time to time; provided that no Participant
shall be entitled to receive any greater payment under such
Section than the relevant Lender would have been entitled to
receive with respect to the relevant Revolving Loans. Each
Lender agrees that any agreement between such Lender and any
such Participant in respect of such participating interest
shall not restrict such Lender's right to agree to any
amendment, supplement or modification to this Agreement or any
of the Loan Documents except to extend the final maturity of
any Note other than in accordance with the definition of "Final
Maturity Date" as in effect on the date hereof or reduce the
rate or extend the time of payment of interest thereon or
reduce the principal amount thereof or reduce the fees payable
pursuant to Section 2.13 or clauses (1)(i) or (2) of Section
2.14(f).
(c) With the prior written consent of the Agent,
which consent shall not be unreasonably withheld, any Lender
("Assignor") may at any time assign to any Lender or any
affiliate thereof, and to one or more Eligible Assignees
("Assignees"), all or any part of its Credit Exposure pursuant
to a Assignment and Assumption Agreement substantially in the
form of Exhibit G hereto, executed by such Purchasing Lender,
such Assignor, the Agent and, in the event such assignment is
of an interest in a Letter of Credit Participation, the Issuing
Lender; provided that unless such assignment is to a Lender,
all such assignments shall be in aggregate minimum amounts of
$3,000,000 and shall be made only with the prior written
consent of the Company, such consent not to be unreasonably
withheld; and provided, further, that no Lender may assign any
Revolving Loan or Letter of Credit Participation without a
corresponding assignment of such Lender's Revolving Loan
Commitment. Upon (i) such execution of such Assignment and
Assumption Agreement, (ii) delivery of an executed copy thereof
to the Company and the German Borrower, (iii) payment by such
Assignee to such Assignor of an amount equal to the purchase
price agreed between such Assignor and such Assignee, and (iv)
payment by such Assignee or Assignor (as they shall mutually
agree) to the Agent of a non-refundable fee of $3,500 to cover
administrative and other expenses which may be incurred in
connection with such assignment, such Assignee shall for all
purposes be a Lender party to this Agreement and shall have all
the rights and obligations of a Lender under this Agreement to
the same extent as if it were an original party hereto and
thereto with the Pro Rata Share of the applicable Commitment(s)
set forth in such Assignment and Assumption Agreement or such
counterpart, and subject to the preceding sentence no further
consent or action by the Borrowers, Lenders or the Agent shall
be required. As used in this Section 11.4(c), "Eligible
Assignee" means (a) the Agent; (b) any Affiliate of any Lender
otherwise meeting the requirements of (c), (d), (e) or (f) of
this subclause (c); (c) a commercial bank, savings and loan
association or savings bank organized under the laws of the
United States, or any State thereof; (d) a commercial bank
organized under the laws of any other country that is a member
of the OECD or a political subdivision of any such country, so
long as such bank is acting through a branch or agency located
in the United States; (e) a finance company, pension fund,
mutual fund, insurance company, or other financial institution
(whether a corporation, partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in
commercial loans providing for revolving credit in the ordinary
course of its business and meets the definition of "accredited
investor" as defined in Regulation D under the Securities Act
of 1933, as amended; and (f) any other Person approved by the
Agent and the Company, such approval not to be unreasonably
withheld.
Such Assignment and Assumption Agreement or such
counterpart shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the
addition of such Assignee and the resulting adjustment of Pro
Rata Shares arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such
Assignor under this Agreement, the Commitments and the Notes.
Upon the consummation of any transfer to an Assignee pursuant
to this Section 11.4(c), the Assignor, the Agent, the Company
and the German Borrower shall make appropriate arrangements so
that, if required, a replacement Note is issued to such
Assignor and a new Note or, as appropriate, a replacement Note,
issued to such Assignee, in each case in principal amounts
reflecting their Pro Rata Shares or, as appropriate, their
outstanding Revolving Loans, as adjusted pursuant to such
Assignment and Assumption Agreement.
(d) The Company and the German Borrower authorize
each Lender to disclose to any Participant or Assignee (each, a
"Transferee") and any prospective Transferee any and all
financial information in such Lender's possession concerning
the Company and the German Borrower and any of their respective
Subsidiaries which has been delivered to such Lender by or on
behalf of the Company or the German Borrower pursuant to this
Agreement or which has been delivered to such Lender by the
Company or the German Borrower in connection with such Lender's
credit evaluation of the Company and the German Borrower prior
to entering into this Agreement; provided that if such
information is confidential information as contemplated by
Section 11.18, such Lender may so disclose such information
only if such Transferee or prospective Transferee previously
agrees in writing to be bound by the terms of Section 11.18.
(e) Except pursuant to an assignment but only to the
extent set forth in the Assignment and Assumption Agreement
related to such assignment, no Lender shall, as between the
Company and the German Borrower and the Lender, be relieved of
any of its obligations hereunder as a result of any sale,
transfer or negotiation of, or granting of participations in,
all or any part of its Credit Exposure.
(f) Each Eligible Assignee organized under the laws
of any jurisdiction other than the United States or any State
thereof (including the District of Columbia) shall make the
representations and certifications and provide the relevant
forms, as if it were a Lender, on or before the Settlement Date
(as defined in the Assignment and Assumption Agreement) and
thereafter as required by Section 11.14 with respect to such
assignment.
(g) Nothing in this Agreement shall prevent or
prohibit any Lender from pledging its Loans and Notes hereunder
to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank.
11.5 Notices, Requests, Demands. All notices,
requests, demands or other communications to or upon the
respective parties hereto shall be deemed to have been given or
made five days after deposit in the mails, postage prepaid, or,
in the case of telex or telegraphic notice, when delivered to
the telex or telegraph company, or in the case of telex or
telecopier notice sent over a telex or a telecopier machine
owned or operated by a party hereto, when sent, addressed to
the Company, the German Borrower, the Agent or the Lenders, as
the case may be, at their respective addresses shown opposite
their signatures hereto or at such other address as any of the
parties hereto may hereafter specify in writing to the others,
except that any communication with respect to a change of
address shall be deemed to be given or made when received by
the party to whom such communication was sent. No other method
of giving notice is hereby precluded.
11.6 Determination of Dollar Equivalent. For
purposes of this Agreement, the Dollar Equivalent of Deutsche
Mark Loans shall be calculated on the last Business Day of each
month. The Dollar Equivalent for Deutsche Mark Loans shall
remain in effect until the same is recalculated by BTCo as
provided above and notice of such recalculation is received by
the Company and the German Borrower, it being understood that
until such notice is received, the Dollar Equivalent shall be
that Dollar Equivalent as last reported to the Company and the
German Borrower by BTCo. BTCo shall promptly notify the
Company and the German Borrower and the Lenders of each
determination of the Dollar Equivalent for Deutsche Mark Loans.
11.7 Survival of Representations and Warranties.
All representations and warranties contained herein or
otherwise made in writing by the Company or the German Borrower
in connection herewith shall survive the execution and
delivery of this Agreement, the Notes and each of the Loan
Documents.
11.8 Governing Law. This Agreement and the rights
and obligations of the parties under this Agreement and under
the Notes shall be governed by and construed and interpreted in
accordance with the internal laws of the State of New York
without regard to principles of conflict of laws.
11.9 Counterparts. This Agreement may be executed
in any number of counterparts, and by the different parties
hereto on the same or separate counterparts, each of which
shall be deemed to be an original instrument but all such
counterparts taken together shall constitute but one and the
same instrument. Complete counterparts of this Agreement shall
be lodged with the Company and the Agent.
11.10 Set-Off. In addition to any rights now or
hereafter granted under applicable law (including, but not
limited to, Section 151 of the New York Debtor and Creditor
Law) and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is hereby
authorized at any time or from time to time, without notice to
the Company or to any other Person, any such notice being
hereby expressly waived, to set-off and to appropriate and
apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender to or for
the credit or the account of the Company against and on account
of the obligations and liabilities of the Company to such
Lender under this Agreement and the Notes, including, without
limitation, all claims of any nature or description arising out
of or connected with this Agreement and/or any of the Notes
and/or any of the other Loan Documents, irrespective of whether
or not such Lender shall have made any demand hereunder and
although said obligations, liabilities or claims, or any of
them, shall be contingent or unmatured and irrespective of the
currency in which such claims are made and further each Lender
is hereby authorized at any time or from time to time, without
notice to the Company or the German Borrower or to any other
Person, any such notice being hereby expressly waived, to
set-off and to appropriate and apply any and all deposits
(general or special) and any other indebtedness at any time
held or owing by such Lender to or for the credit or the
account of either the Company or the German Borrower against
and on account of the obligations and liabilities of the German
Borrower to such Lender under this Agreement and the Notes,
including, without limitation, all claims of any nature or
description arising out of or connected with this Agreement
and/or any of the Notes and/or any of the other Loan Documents,
irrespective of whether or not such Lender shall have made any
demand hereunder and although said obligations, liabilities or
claims, or any of them, shall be contingent or unmatured and
irrespective of the currency in which such claims are made.
Each Lender agrees to give either the Company or the German
Borrower or both, as the case may be, notice after the exercise
of its right of set-off as provided above; provided that the
failure to give such notice shall not result in any liability
on the part of any Lender or any such holder or otherwise limit
the rights of any Lender or any such holder under this
Section 11.10.
11.11 Proration of Excess Payments. The Lenders
agree among themselves that, with respect to all amounts
received by them that are applicable to the payment of
principal of or interest on the Notes, equitable adjustment
will be made so that, in effect, all such amounts will be
shared ratably among the Lenders on the basis of the amounts
then owed each of them in respect of such obligation, whether
received by voluntary payment, by realization upon security, by
the exercise of the right of set-off or bankers' lien, by
counterclaim or cross action, under or pursuant to this
Agreement, the Notes, any other Loan Document or otherwise.
Each Lender agrees that if it should receive any payment on its
Notes of a sum or sums in excess of its pro rata portion, then
it shall purchase for cash from the other Lenders an interest
in the Notes of such Lenders in such amount as shall result in
a ratable participation by each of the Lenders in the aggregate
unpaid amount of all outstanding Notes then held by all of the
Lenders. If all or any portion of such excess payment is
thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, but without interest.
11.12 Submission to Jurisdiction; Venue; Waiver of
Jury Trial. (a) Any legal action or proceeding against either
the Company or the German Borrower with respect to this
Agreement or any other Loan Document may be brought in the
courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery
of this Agreement, each of the Company and the German Borrower
hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each of the Company and the German
Borrower hereby irrevocably designates, appoints and empowers
CT Corporation System, with offices on the date hereof at 1633
Broadway, New York, New York 10019, as its designee, appointee
and agent to receive for and on their behalf, and in respect of
its property, service of any and all legal process, summons,
notices and documents that may be served in any such action or
proceeding. If for any reason such designee, appointee and
agent shall cease to be available to act as such, each of the
Company and the German Borrower agrees to designate a new
designee, appointee and agent in New York City on the terms and
for the purposes of this provision satisfactory to the Agent.
Each of the Company and the German Borrower further irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to the Company or the German Borrower, as the
case may be, at the address set forth opposite its respective
signatures below, such service to become effective 30 days
after such mailing. Nothing herein shall affect the right of
the Agent, any Lender or the holder of any Note to serve
process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against either the
Company or the German Borrower in any other jurisdiction.
(b) Each of the Company and the German Borrower
hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with
this Agreement or any other Loan Document brought in the courts
referred to in clause (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that
any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
(c) Each of the Company and the German Borrower and
each of the Lenders hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of
or related to any of the Loan Documents or the actions of any
Lender in the negotiation, administration, performance or
enforcement thereof.
11.13 Survival. All indemnities set forth herein
including, without limitation, in Sections 2.10, 2.11, 2.14,
9.5 and 11.3 shall survive the execution and delivery of this
Agreement and the Notes and each of the other Loan Documents
and the indemnities set forth in Sections 2.14, 9.5 and 11.3
shall survive the making and repayment of the Revolving Loans
and the issuance and expiration or termination of the Letters
of Credit.
11.14 Lender's Representation and Certain
Agreements. Each Lender represents that, as of the date
hereof, either (i) it is a corporation or other entity
organized in or under the laws of the United States or any
State thereof or (ii) (A) in the case of a Borrowing by the
Company it is entitled to complete exemption from United States
withholding tax imposed on or with respect to any payments,
including fees, to be made to it pursuant to any of the Loan
Documents (x) under an applicable provision of a tax convention
to which the United States is a party or (y) because it is
acting through a branch, agency or office in the United States
and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States or
(B) in the case of a Borrowing by the German Borrower, that it
is entitled to a full exemption from any Taxes in relation to
which additional payments may be required pursuant to
Section 3.5. Each Lender agrees to provide to the Company and
the Agent on the Effective Date (to the extent not previously
provided), in the case of each Lender that is an original
signatory hereto, and within 10 days of the date of the
assignment pursuant to which it became a Lender in the case of
any assignee Lender, and at such other times as required by
United States law or as the Company or the Agent shall
reasonably request, (i) if the Lender is a corporation or other
entity organized in or under the laws of the United States or
any State thereof it shall deliver a Form W-9 (or any successor
form thereof) and (ii) if the Lender is not a corporation or
other entity organized in or under the laws of the United
States or any State thereof it shall deliver two accurate and
complete original signed copies of either (x) Internal Revenue
Service Form 4224 (or successor form) certifying that all
payments to be made to it hereunder will be effectively
connected to a United States trade or business (the "Form 4224
Certification") or (y) Internal Revenue Service Form 1001 (or
successor form) certifying that it is entitled to the benefits
of a provision of a tax convention to which the United States
is a party which completely exempts from United States
withholding tax all payments to be made to it hereunder (the
"Form 1001 Certification"). In addition, each Lender agrees
that if it previously filed a Form 1001 Certification it will
deliver to the Company and the Agent a new Form 1001
Certification prior to the first payment date falling in the
third year following the previous filing of such certification;
and if it previously filed a Form 4224 Certification it will
deliver to the Company and the Agent a new Form 4224
Certification prior to the first payment date occurring in each
of its subsequent taxable years. Each Lender also agrees to
deliver to the Company and the Agent such other or supplemental
forms as may at any time be required as a result of changes in
applicable law or regulation in order to confirm or maintain in
effect its entitlement to exemption from United States
withholding tax on any payments hereunder; provided that the
circumstances of the Lender at the relevant time and applicable
laws permit it to do so. If a Lender determines, as a result
of any change in either (i) applicable law, regulation or
treaty, or in any official interpretation or application
thereof, or (ii) its circumstances that it is unable to submit
any form or certificate that it is obligated to submit pursuant
to this Section 11.14, or that it is required to withdraw or
cancel any such form or certificate previously submitted, it
shall promptly notify the Company and the Agent of such fact
and such Lender will not be considered to have failed to comply
with the provisions of this Section 11.14. If a Lender fails
to submit the Form W-9 (or successor form) (in the case of a
Lender organized under the laws of the United States or any
State thereof) or fails to submit either a Form 1001
Certification or a Form 4224 Certification (in the case of a
Lender organized under the laws of a jurisdiction outside the
United States) in each such case satisfactory to the Agent and
the Company indicating that all payments to be made to such
Lender hereunder are not subject to United States withholding
or backup withholding tax, the Company or the Agent shall
withhold taxes from such payments at the applicable statutory
rate. Each Lender agrees to indemnify and hold the Company,
the German Borrower and the Agent harmless from any United
States taxes, penalties, interest and other expenses, costs and
losses incurred or payable by them as a result of either
(i) its failure to submit any form or certificate that it is
required to provide pursuant to this Section 11.14 or
(ii) their reliance on any such form or certificate which it
has provided to them pursuant to this Section 11.14. However,
the Lender will not indemnify the Company, the German Borrower
and the Agent if it determines, as a result of any change in
either (i) applicable law, regulation or treaty, or in any
official interpretation or application thereof, or (ii) its
circumstances (but only those not within its control), that it
is unable to submit any form or certificate that it is
obligated to submit pursuant to this Section 11.14.
11.15 Headings. The descriptive headings of the
various provisions of this Agreement are inserted for
convenience of reference only and shall not be deemed to effect
the meaning or construction of any of the provisions hereof.
11.16 Change in Accounting Principles. If any
preparation of the financial statements referred to in Section
5.1 or 8.1 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the
Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a change in any
results, amounts, calculations, ratios, standards or terms
found in Section 2, 5 or 6 from those which would be derived or
be applicable absent such changes, the Company may reflect such
changes in the financial statements required to be delivered
pursuant to Section 5.1, but calculations of financial
covenants shall be made without giving effect to any such
changes. Upon the request of the Company or the Agent the
parties hereto agree to enter into negotiations in order to
amend the financial covenants and other terms of this Agreement
if there occur any changes in GAAP that have a material effect
on the financial statements of the Company, so as to equitably
reflect such changes with the desired result that the criteria
for evaluating the Company's financial condition and such other
terms shall be the same in all material respects after such
changes as if the changes had not been made.
11.17 Defaulting Lender. (a) Upon any Lender
becoming a Defaulting Lender, (i) the Agent or, in the case of
clause (iv) of the definition of "Defaulting Lender", the
Issuing Lender of any relevant Letter of Credit shall endeavor
to promptly notify each other Lender of the amount owed or
potentially owed, as the case may be, by such Defaulting Lender
and (ii) the Total Revolving Loan Commitment shall be reduced
by an amount equal to the unutilized portion of such Defaulting
Lender's Pro Rata Share thereof then in effect (the "Unutilized
Portion"); provided, however, that, with the prior written
consent of the Agent, the Company and the German Borrower may
request a non-defaulting Lender to, whereupon such
non-defaulting Lender may (in its sole discretion and without
the consent of any other Lender), by promptly notifying the
Company and the German Borrower and the Agent, increase its
Revolving Loan Commitment in an amount equal to the Unutilized
Portion, in which case, upon receipt by the Company and the
German Borrower and the Agent of such notice, (x) the Revolving
Loan Commitment of such non-defaulting Lender shall be so
increased and (y) the amount of the Total Revolving Loan
Commitment then in effect shall be equal to the amount of the
Total Revolving Loan Commitment in effect immediately prior to
the time such Defaulting Lender became a Defaulting Lender and
(iii) the Pro Rata Share of such Defaulting Lender shall be
reduced to zero.
(b) No Defaulting Lender shall be entitled to be an
Issuing Lender hereunder or to receive any fees accrued on and
after the date such Lender became a Defaulting Lender.
(c) Notwithstanding anything contained herein to the
contrary, no Defaulting Lender shall be entitled to receive any
payments hereunder on account of any Revolving Loans, Notes or
Letters of Credit until all amounts that are due and payable
with respect to any Revolving Loans or Letters of Credit as to
which such Defaulting Lender is not a Lender or a participant
shall have been paid in full.
(d) Nothing in this Section 11.17 shall be deemed to
release any Defaulting Lender from fulfilling its obligations
under this Agreement or otherwise or to prejudice the rights
which the Company or the German Borrower or any other Lender or
the Agent may have against any such Defaulting Lender. Each
non-defaulting Lender, upon funding any amount that would
otherwise have been funded or required to have been by a
Defaulting Lender, shall have a direct claim and right of
action against such Defaulting Lender for any and all such
amounts funded by such non-defaulting Lender and any expenses
(including reasonable fees and expenses of counsel and
allocated costs of internal counsel) arising out of or in
connection with any such funding or enforcing its rights under
this Section 11.17.
11.18 Confidentiality. Subject to Section 11.4(d),
Lenders shall hold all non-public information obtained pursuant
to the requirements of this Agreement which has been identified
as such by the Company in accordance with their customary
procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices and in
any event, subject to Section 11.4(d), may make disclosure in
connection with the contemplated transfer of all or any part of
their Credit Exposure or participation therein or as required
or requested by any Governmental Authority or representative
thereof or pursuant to legal process; provided that, unless
specifically prohibited by applicable law or court order, each
Lender shall endeavor to notify the Company of any request by
any governmental agency or representative thereof (other than
any such request in connection with an examination of the
financial condition of such Lender by such governmental agency)
for disclosure of any such non-public information prior to
disclosure of such information; and provided, further, that in
no event shall any Lender be obligated or required to return
any materials furnished by either the Company or the German
Borrower.
11.19 Judgment Currency. (a) The Borrowers'
obligations hereunder and under the other Loan Documents to
make payments in the Applicable Currency (the "Obligation
Currency") shall not be discharged or satisfied by any tender
or recovery pursuant to any judgment expressed in or converted
into any currency other than the Obligation Currency, except to
the extent that such tender or recovery results in the
effective receipt by the Agent or the respective Lender of the
full amount of the Obligation Currency expressed to be payable
to the Agent or such Lender under this Agreement or the other
Loan Documents. If for the purpose of obtaining or enforcing
judgment against either the Company or the German Borrower, as
the case may be, in any court or in any jurisdiction, it
becomes necessary to convert into or from any currency other
than the Obligation Currency (such other currency being
hereinafter referred to as the "Judgment Currency") an amount
due in the Obligation Currency, the conversion shall be made at
the Deutsche Mark Equivalent or the Dollar Equivalent thereof,
as the case may be, and, in the case of other currencies, the
rate of exchange (as quoted by the Agent or if the Agent does
not quote a rate of exchange on such currency, by a known
dealer in such currency designated by the Agent) determined, in
each case, as of the day immediately preceding the day on which
the judgment is given (such Business Day being hereinafter
referred to as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange
prevailing between the Judgment Currency Conversion Date and
the date of actual payment of the amount due, the Company and
the German Borrower covenant and agree to pay, or cause to be
paid, such additional amounts, if any (but in any event not a
lesser amount) as may be necessary to ensure that the amount
paid in the Judgment Currency, when converted at the rate of
exchange prevailing on the date of payment, will produce the
amount of the Obligation Currency which could have been
purchased with the amount of Judgment Currency stipulated in
the judgment or judicial award at the rate or exchange
prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the Deutsche Mark
Equivalent or the Dollar Equivalent or any other rate of
exchange for this Section, such amounts shall include any
premium and costs payable in connection with the purchase of
the Obligation Currency.
11.20 Register. The Borrowers hereby designate the
Agent to serve as the Borrowers' agent, solely for purposes of
this Section 11.20, to maintain a register (the "Register") on
which it will record the Revolving Loan Commitments from time
to time of each of the Lenders, the Revolving Loans made by
each of the Lenders and each repayment in respect of the
principal amount of the Revolving Loans of each Lender.
Failure to make any such recordation, or any error in such
recordation shall not affect the Borrowers' obligations in
respect of such Revolving Loans. With respect to any Lender,
the transfer of the Revolving Loan Commitment of such Lender
and the rights to the principal of, and interest on, any
Revolving Loan made pursuant to such Revolving Loan Commitment
shall not be effective until such transfer is recorded on the
Register maintained by the Agent with respect to ownership of
such Revolving Loan Commitment and Revolving Loans and prior to
such recordation all amounts owing to the transferor with
respect to such Revolving Loan Commitment and Revolving Loans
shall remain owing to the transferor. The registration of
assignment or transfer of all or part of any Revolving Loan
Commitments and Revolving Loans shall be recorded by the Agent
on the Register only upon the acceptance by the Agent of a
properly executed and delivered Assignment and Assumption
Agreement pursuant to Section 11.4. Coincident with the
delivery of such an Assignment Agreement to the Agent for
acceptance and registration of assignment or transfer of all or
part of a Revolving Loan, or as soon thereafter as practicable,
the assigning or transferor Lender shall surrender the Note (if
issued) evidencing such Revolving Loan, and thereupon, upon
written request, one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor
Lender and/or the new Lender. Each Borrower agrees to
indemnify the Agent from and against any and all losses,
claims, damages and liabilities of whatsoever nature which may
be imposed on, asserted against or incurred by the Agent in
performing its duties under this Section 11.20.
IN WITNESS WHEREOF, each of the parties hereto has
caused a counterpart of this Agreement to be duly executed and
delivered as of the date first above written.
MILACRON INC.
By: /s/ Robert P. Lienesch
Title: Vice President and Treasurer
Notice Address:
Milacron Inc.
4701 Marburg Avenue
Cincinnati, Ohio 45209
Attention: Treasurer
Telephone: (513) 841-8577
Telecopier: (513) 841-7166
MILACRON KUNSTSTOFF-MASCHINEN
EUROPA GmbH,
By: /s/ Robert P. Lienesch
on basis of Power of Attorney
dated as of December 15, 1998
Notice Address:
c/o Milacron Inc.
4701 Marburg Avenue
Cincinnati, Ohio 45209
Attention: Robert P. Lienesch
Telephone: (513) 841-8933
Telecopier: (513) 841-8000
BANKERS TRUST COMPANY,
as a Lender and as Agent
By: /s/ Anthony LoGrippo
Title: Vice President
Notice Address and Payment
Office:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Edward G. Benedict
Telephone: (212) 250-3708
Telecopier: (212) 250-7026
ABN AMRO BANK N.V., as a Lender
By: /s/ Patrick M. Pastore
Title: Vice President
By: /s/ Louis K. McLinden, Jr.
Title: Vice President
Notice Office and Payment
Office:
208 South LaSalle Street
Chicago, IL 60674
Attention: Loan Administration
Telephone: (312) 992-5151
Telecopier: (312) 992-5156
One PPG Place
Suite 2950
Pittsburgh, PA 15222
Attention: Pat Pastore
Telephone: (412) 566-2297
Telecopier: (412) 566-2266
COMERICA BANK, as a Lender
By: /s/ David C. Bird
Title: Vice President
Notice Office and Payment Office:
500 Woodward Avenue
Detroit, Michigan 48226
Attention: Lisa M. Kotula
Telephone: (313) 222-9644
Telecopier: (313) 222-9514
CREDIT LYONNAIS CHICAGO BRANCH,
as a Lender
By: /s/ Mary Ann Klemm
Title: Vice President
Notice Address and Payment Office:
KEYBANK NATIONAL ASSOCIATION, as
a Lender
By: /s/ Thomas J. Purcell
Title: Vice President
Notice Address and Payment Office:
MELLON BANK, N.A., as a Lender
By: /s/ Ryan F. Busch
Title: Assistant Vice President
Notice Address and Payment Office:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as a Lender
By: /s/ Robert Bottamedi
Title: Vice President
Notice Address and Payment Office:
NATIONSBANK N.A., as a Lender
By: /s/ Valerie C. Mills
Title: Sr. Vice President
Notice Address and Payment Office:
NBD BANK, N.A., as a Lender
By: /s/ Edward C. Hathaway
Title: First Vice President
Notice Address and Payment Office:
PNC BANK, OHIO, N.A., as a Lender
By: /s/ David F. Knuth
Title: Vice President
Notice Address and Payment Office:
STAR BANK, N.A., as a Lender
By: /s/ Thomas D. Gibbons
Title: Vice President
Notice Address and Payment Office:
Schedule 2.1
Lenders' Revolving Loan Commitment and Pro Rata Share
Revolving
Loan
Lender Commitment Pro Rata Share
Bankers Trust Company $37,051,282.00 9.88034%
ABN AMRO Bank N.V. 35,000,000.00 9.33333
Comerica Bank 37,051,281.60 9.88034
Credit Lyonnais Chicago 28,846,155.00 7.69230
Branch
Keybank National 37,051,281.60 9.88034
Association
Mellon Bank, N.A. 25,000,000.00 6.66666
Morgan Guaranty 35,000,000.00 9.33333
Trust Company of New York
NationsBank N.A. 37,051,281.60 9.88034
NBD Bank, N.A. 37,051,281.60 9.88034
PNC Bank, National 37,051,281.60 9.88034
Association
Star Bank, N.A. 28,846,155.00 7.69230
Total $375,000,000.00 100%
Exhibit 10.12
MILACRON
COMPENSATION DEFERRAL PLAN, As Amended
The purpose of the Milacron Compensation
Deferral Plan(the "Plan"), originally effective January 1, 1995
and revised and restated as of January 1, 1995, is to aid
Milacron Inc. (the "Company") and its subsidiaries in
attracting high quality executives and promoting in its
executives increased efficiency and an interest in the successful
operation of the Company by restoring some of the deferral
opportunities and employer-provided benefits that are lost under
certain other plans due to legislative limits. The benefits
provided under the Plan shall be provided in consideration for
services to be performed after the executive has become eligible
to participate in the Plan, but prior to the executives
retirement.
ARTICLE 1
Definitions
1.1 Account shall mean the notional account or
accounts established for record keeping purposes for a
Participant pursuant to Article 6 of the Plan.
1.2 Administrator shall mean the Personnel and
Compensation Committee of the Company's Board of Directors or its
delegate.
1.3 Annual Deferral shall mean the amount of
Compensation which the Participant actually defers during a Plan
Year. The Annual Deferral may differ from Plan Year to Plan
Year.
1.4 Annual Deferral Commitment shall mean the amount
of Compensation which the Participant elects to defer for a Plan
Year pursuant to Articles 2 and 3 of the Plan.
1.5 Base Salary shall mean the Participant's annual
basic rate of pay from the Company or its subsidiaries (excluding
EVA Awards, commissions, severance pay, and other non-regular
forms of compensation) before any reductions for pre-tax
deferrals, or deferrals under this Plan.
1.6 Basic Credit shall mean the Employer Basic
Contribution under the Savings Plan that is credited to the
Participant's Deferral Account as described in Article 4.
1.7 Beneficiary shall mean the person or persons or
entity designated as such in accordance with Article 16 of the
Plan.
1.8 Change in Control shall be deemed to have
occurred if and when (a) any person (as such term is defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended,
(the "Exchange Act")), corporation or other entity, which
theretofore beneficially owned securities representing less than
twenty percent of the voting power of the Company in the election
of directors, acquires, in a transaction or series of
transactions, outstanding securities of the Company when, added
to the voting power previously held, entitles such person to
exercise more than twenty percent of the total voting power of
the Company in the election of directors (the formation of a
syndicate or group of existing shareholders not being deemed to
constitute such an acquisition); (b) the Board of Directors (or,
if approval of the Board of Directors is not required as a matter
of law, the stockholders of the Company) shall approve (1) any
consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which
shares of Common Stock would be converted into cash, securities
or other property, other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (2) any sale, lease,
exchange, or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets
of the Company, or (3) the adoption of any plan or proposal for
the liquidation or dissolution of the Company; or (c) any person
(as such term is defined in Section 13(d) of the Exchange Act),
corporation or other entity other than the Company shall make a
tender or exchange offer to acquire any Common Stock or
securities convertible into Common Stock for cash, securities or
any other consideration if, after giving effect to the
acquisition of all Common Stock or securities sought pursuant to
such offer, such person, corporation or other entity would become
the Abeneficial owner@ (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of thirty
percent or more of the outstanding Common Stock (calculated as
provided in paragraph (d) of such Rule 13d-3 in the case of
rights to acquire Common Stock); provided, that at least 10% of
such Common Stock or securities sought pursuant to such offer is
acquired.
1.9 Compensation shall mean the sum of the
Participant's Base Salary and EVA Awards for a Plan Year before
reductions for deferrals under the Plan or the Savings Plan, or
other benefit plans sponsored by the Company or its subsidiaries.
1.10 Compensation Deferral Plan shall mean the
Milacron Compensation Deferral Plan.
1.11 Crediting Rate shall mean any notional gains or
losses equal to those generated as if the Account balances had
been invested in one or more of the investment portfolios
designated as available by the Administrator, less separate
account fees and less applicable investment management and
administrative charges determined annually by the Administrator,
or gains or losses as otherwise determined by the Administrator.
1.12 Deferral Account shall mean the notional account
established for record keeping purposes for a Participant's
Annual Deferrals, Matching Credits and Basic Credits pursuant to
Article 6 of the Plan.
1.13 Disability shall mean any long-term disability as
defined under the Company's or its subsidiaries, long-term
disability plan.
1.14 Discretionary Account shall mean the notional
account established for record keeping purposes for a
Participant's Discretionary Credits pursuant to Article 6 of the
Plan.
1.15 Discretionary Credit shall mean the Company's
credit to the Participant's Discretionary Account as described in
Article 5.
1.16 Early Retirement Date shall mean age 55 with ten
or more years of service with the Company or its subsidiaries.
1.17 Eligible Employee shall mean a key employee of
the Company or any of its subsidiaries who (i) is subject to U.S.
personal income taxes, (ii) is designated by the Administrator as
eligible to participate in all or a portion of the Plan (subject
to the restriction in Sections 11.2, 12.2.2 and 14.2 of the
Plan), and (iii) qualifies as a member of the "select group of
management or highly compensated employees" under ERISA.
1.18 ERISA shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.19 EVA Awards shall mean amounts paid in cash to the
Participant by the Company or its subsidiaries pursuant to the
Milacron Short Term Management Incentive Plan or such
other bonus plan or program designated by the Administrator,
before reductions for deferrals under the Plan or the Savings
Plan.
1.20 Financial Hardship shall mean an unexpected need
for cash arising from an illness, casualty loss, sudden financial
reversal, or other such unforeseeable occurrence as determined by
the Administrator. Cash needs arising from foreseeable events
such as the purchase of a residence or education expenses for
children shall not, alone, be considered a Financial Hardship.
1.21 Matching Credit shall mean the Employer Matching
Contribution or Salary Deferral Matching Contribution under the
Savings Plan that is credited to the Participant's Deferral
Account as described in Article 4.
1.22 Normal Retirement Date shall mean the date on
which a Participant attains age 65.
1.23 Participant shall mean an Eligible Employee who
has either elected to participate and has completed a
Participation Election pursuant to Article 2 of the Plan or is
eligible for Basic Credits pursuant to Article 4 of the Plan or
Discretionary Credits pursuant to Article 5 of the Plan.
1.24 Participation Election shall mean the
Participant's written election to participate in the Plan.
1.25 Plan Year shall mean the calendar year, with the
first Plan Year commencing January 1, 1995.
1.26 Retirement shall mean a termination of employment
following Normal or Early Retirement Date.
1.27 Retirement Plan shall mean the Milacron Retirement Plan.
1.28 Savings Plan shall mean the Milacron
Performance Dividend and Savings Plan and the Milacron
Retirement Savings Plan as they currently exist and as they may
subsequently be amended.
1.29 Scheduled Withdrawal shall mean a distribution of
all or a portion of the Participant's Deferral Account
attributable to Annual Deferrals as elected by the Participant
pursuant to the provisions of Article 12 of the Plan.
1.30 Termination of Employment shall mean the
Participant's employment with the Company or its subsidiaries
ceases for any reason whatsoever, whether voluntary or
involuntary, other than Retirement or death.
1.31 Unscheduled Withdrawal shall mean a distribution
of all or a portion of the vested amount credited to the
Participant's Deferral Account as requested by the Participant
pursuant to the provisions of Article 12 of the Plan.
1.32 Valuation Date shall mean the last business day
of the month in which Termination of Employment, Retirement,
death, Scheduled Withdrawal, or an Unscheduled Withdrawal request
occurs. For purposes of calculating installment payments, the
Valuation Date shall mean the November 30 of the year preceding
the Plan Year in which benefit payments are to be made.
ARTICLE 2
Participation - Employee Deferrals
2.1 Participation Election. An Eligible Employee
shall become a Participant in the Plan on the first day of the
Plan Year coincident with or next following the date the employee
becomes an Eligible Employee, provided such Eligible Employee has
submitted to the Administrator a Participation Election, or the
Eligible Employee has provided the Company with an election to
defer Compensation scheduled to be received after the effective
date of the Plan, so long as the election was made prior to the
calendar year in which services relating to such Compensation
were rendered. To be effective, the Eligible Employee must
submit the Participation Election to the Administrator prior to
the commencement of the period of service for which the
Participation Election is made and during the enrollment period
designated by the Administrator.
2.2 Annual Deferral Commitment. In the Participation
Election, and subject to the restrictions in Article 3, the
Eligible Employee shall designate the percentage rate of
Compensation as the Annual Deferral Commitment for the covered
Plan Year.
2.3 Continuation of Participation. An Eligible
Employee who has participated in the Plan by making an Annual
Deferral shall continue as a Participant in the Plan until such
employee's Termination of Employment or all benefits under the
Plan are paid. A Participant shall not be eligible to elect a
new Annual Deferral Commitment unless the Participant is an
Eligible Employee for the Plan Year for which the election is
made. In the event a Participant transfers to a subsidiary of
the Company and that subsidiary does not participate in the Plan,
the Participant's Annual Deferral shall cease and the
Participant's Deferral Account shall remain in effect until such
time as the benefits are distributed as originally elected by the
Participant in the Participation Election or until the
Participant experiences Termination of Employment.
ARTICLE 3
Employee Deferrals
3.1 Deferral Election. Employees designated as
eligible to participate in the Plan may elect an Annual Deferral
Commitment. Such election shall designate a specified percentage
of either Base Salary and/or EVA Awards to be deferred. Annual
Deferral Commitments under this Plan shall be irrevocable, except
as provided under Sections 2.3, 11.2, 12.2.2 and 14.2 of the
Plan.
3.2 Minimum Annual Deferral Commitment. The Annual
Deferral Commitment must equal or exceed an amount determined by
the Administrator.
3.3 Maximum Annual Deferral Commitment. The Annual
Deferral Commitment from Base Salary for a Plan Year may not
exceed seventy-five percent (75%) of Base Salary. The Annual
Deferral Commitment from EVA Awards for a Plan Year may be less
than or equal to one hundred percent (100%). Notwithstanding the
foregoing, a Participant may not reduce Base Salary after
deferrals to this Plan to an amount less than the OASDI Wage Base
under FICA.
3.4 Vesting. The Participant's right to receive
Compensation deferred under this Article 3 and earnings thereon
shall be one hundred percent (100%) vested at all times.
ARTICLE 4
Company Matching and Basic Credits
4.1 Amount. In the discretion of the Administrator,
in the event a deferral under this Plan or a non-discrimination
rule or limitation applicable to the Savings Plan causes a
Participant to lose a Matching Credit and/or Basic Credit under
the Savings Plan, the amount of the lost Matching Credit and/or
Basic Credit will be credited to the Participant's Deferral
Account under this Plan in such amounts as determined in
accordance with the rules and procedures established by the
Administrator.
4.2 Vesting. The Participant's right to receive
Matching and/or Basic Credits and earnings thereon earned in any
Plan Year shall be one hundred percent (100%) vested at all
times.
ARTICLE 5
Discretionary Credits
5.1 Eligibility and Amount. An Eligible Employee who
is set forth in the attached Schedule A shall become a
Participant in the Plan with respect to Discretionary Credits as
of the date set forth in Schedule A and shall have Discretionary
Credits credited to his Discretionary Account at such times and
in such amounts as set forth in Schedule A.
5.2 Vesting. The Participant's right to receive
Discretionary Credits under this Article 5 and earnings thereon
shall be subject to the vesting schedule set forth in Schedule A
that is applicable to such Participant.
ARTICLE 6
Accounts
6.1 Accounts. Solely for record keeping purposes,
the Company shall maintain a Deferral Account and a Discretionary
Account for each Participant, as applicable.
6.2 Timing of Credits -- Pre-Termination.
6.2.1 Annual Deferrals. The Company shall
credit to the Deferral Account the Annual Deferrals specified
under Article 3, or otherwise allowed as set forth in Article
2.1, at the time the deferrals would otherwise have been paid to
the Participant but for the Participation Election.
6.2.2 Matching and Basic Credits. Matching
and Basic Credits under Article 4 shall be credited to the
Deferral Account as of January 1 of the following Plan Year.
6.2.3 Discretionary Credits. Discretionary
Credits under Article 5 shall be credited to the Discretionary
Account as of January 1 of the following Plan Year, unless
otherwise provided in Schedule A.
6.2.4 Assets. The Company shall be under no
obligation to purchase any investments designated by the
Participant. The Company shall credit gains or losses to the
Accounts based on the Crediting Rate as of the date or dates
specified by the Administrator.
6.3 Statement of Accounts. The Administrator shall
provide periodically to each Participant a statement setting
forth the balance of the Accounts maintained for such
Participant.
ARTICLE 7
Retirement Benefits
7.1 Amount. Upon Retirement, the Company shall pay
to the Participant the amount of his vested Accounts in the form
provided in Section 7.2 of the Plan, based on the balance of the
vested Accounts as of the Valuation Date. If paid as a lump sum,
the retirement benefit shall be equal to such balance. If paid
in installments, the installments shall be paid in amounts that
will amortize such balance with interest credited at the
Crediting Rate over the period of time benefits are to be paid.
For purposes of calculating installments, the Account shall be
valued as of November 30 each year, and the subsequent
installments will be adjusted for the next Plan Year according to
procedures established by the Administrator.
7.2 Form of Retirement Benefits. The entire vested
Accounts shall be paid monthly over a period of one hundred
eighty (180) months or the number of whole months required to
result in a monthly benefit of three hundred dollars ($300.00),
if less. Notwithstanding anything herein to the contrary, the
Participant may elect one of the following alternative forms of
payment:
(i) In a lump sum, or
(ii) In installments paid monthly over a period
of sixty (60), one hundred twenty (120), or one hundred eighty
(180) months, or
(iii)In a lump sum of a portion of the vested
Accounts upon Retirement with the balance in installments paid
monthly over a period of sixty (60), one hundred twenty (120), or
one hundred eighty (180) months, or
(iv) In installments paid annually over a period
of five (5), ten (10), or fifteen (15) years, or
(v) In a lump sum of a portion of the vested
Accounts upon Retirement with the balance in installments paid
annually over a period of five (5), ten (10), or fifteen (15)
years.
A Participant's election of an alternative form of
payment must be made in the Participation Election or in such
other form as designated by the Administrator. A Participant may
make a separate election with respect to the Participant's
Deferral Account and Discretionary Account.
7.3 Commencement of Benefits. Payments will commence
within ninety (90) days following the last business day of the
month in which Retirement occurs, unless a later date is
otherwise elected by the Participant, which date shall not be
later than the earlier of five (5) years after the Plan Year in
which Retirement occurs or age seventy (70). Participants may
elect an alternative form and time of payment as available under
Section 7.2 or 7.3 by written election filed with the
Administrator; provided, however, that if the Participant files
the election less than thirteen (13) months prior to the date
benefit payments are to commence, that portion of the
Participant's vested Account that is subject to such election
shall be reduced by ten percent (10%).
7.4 Small Benefit Exception. Notwithstanding any of
the foregoing, if the sum of all vested benefits payable to the
Participant is less than or equal to ten thousand dollars
($10,000), the Company may, in its sole discretion, elect to pay
such benefits in a single lump sum.
ARTICLE 8
Termination Benefits
8.1 If Termination of Employment occurs prior to
Retirement, the Company shall pay to the Participant a
termination benefit equal to the balance of the vested Accounts
as of the Valuation Date. The Company shall pay the termination
benefits in a single lump sum within ninety (90) days following
the last business day of the month in which such Termination of
Employment occurs.
ARTICLE 9
Survivor Benefits
9.1 Pre-Retirement Survivor Benefit. If the
Participant dies prior to the date Retirement benefits commence,
the Company shall pay to the Participant's Beneficiary within
ninety (90) days after the last business day of the month in
which the Participant's death occurs, a benefit equal to the
balance of the Participant's vested Accounts as of the Valuation
Date.
9.2 Post-Retirement Survivor Benefit. If the
Participant dies after the time Retirement Benefits have
commenced, the Company shall pay to the Participant's Beneficiary
an amount equal to the remaining vested benefits payable to the
Participant under the Plan over the same period such benefits
would have been paid to the Participant, in which event the
Company shall credit interest on the unpaid balance of the vested
Accounts at the Crediting Rate in effect during such period.
9.3 Changing Form of Benefit. Beneficiaries may
petition the Company once, and only after the death of the
Participant, for a change in the form of Retirement Benefits.
The Company may, in its sole and absolute discretion, choose to
grant or deny such a petition, and in the case of installment
payments, reduce the period to the number of whole months
required to result in a monthly benefit of at least three hundred
dollars ($300.00).
9.4 Small Benefit Exception. Notwithstanding any of
the foregoing, in the event the sum of all vested benefits
payable to the Beneficiary is less than or equal to ten thousand
dollars ($10,000), the Company may, in its sole discretion, elect
to pay such benefits in a single lump sum.
ARTICLE 10
Disability
10.1 For purposes of the Plan, a Participant shall be
considered to have entered Retirement upon a determination by the
Administrator that the Participant has suffered a Disability, and
the Company shall pay the benefit described in Article 7.
ARTICLE 11
Change in Control
11.1 Election. At the time a Participant is
completing the initial Participation Election, the Participant
may elect that, if a Change in Control occurs, the Participant
(or after the Participant's death the Participant's Beneficiary)
shall receive a lump sum payment of the balance of the Accounts
within thirty (30) days after the Change of Control. Such
balance shall be determined as of the last business day of the
month thirty (30) days prior to the month in which the Change of
Control occurs.
11.2 Benefit Reduction on Withdrawal. If a
Participant has not made the election described in Section 11.1
above and, within two (2) years after a Change of Control, the
Participant (or Beneficiary) elects to receive a distribution of
the balance of the vested Accounts (determined as of the last
business day of the month in which such election is received by
the Administrator), the lump sum payment shall be reduced by an
amount equal to five percent (5%) of the total balance of the
vested Accounts (instead of the ten percent (10%) reduction
otherwise provided for in Section 12.2, which amounts shall be
forfeited to the Company) and shall be paid within ninety (90)
days following the last business day of the month in which such
election is received by the Administrator. If a Participant
elects such a withdrawal, any ongoing Annual Deferral shall
cease, and the Participant may not again be designated as an
Eligible Employee with respect to Annual Deferrals until one
entire Plan Year following the Plan Year in which such withdrawal
was made has elapsed.
ARTICLE 12
Scheduled and Unscheduled
Withdrawals of Employee Deferrals
12.1 Scheduled Withdrawals.
12.1.1 Election. A Participant may, when
making a Participation Election, elect to receive at a specified
year in the future, a distribution while employed of all or a
percentage of the Participant's Deferral Account attributable to
Annual Deferrals, excluding earnings, to be made in subsequent
Plan Years. The election of a Scheduled Withdrawal shall apply
only to prospective Annual Deferrals, excluding earnings, and
not to any previous Annual Deferrals or earnings thereon.
12.1.2 Timing and Form of Withdrawal. The year
specified for the Scheduled Withdrawal must be at least two (2)
entire Plan Years after the commencement of Annual Deferral
Commitments covered by the Participation Election. The Company
shall make a lump sum distribution of the amount elected in
February of the Plan Year specified.
12.1.3 Remaining Deferral Account. The
remainder, if any, of the Participant's Deferral Account shall
continue in effect and shall be distributed in the future
according to the terms of the Plan.
12.2 Unscheduled Withdrawals.
12.2.1 Election. A Participant (or Beneficiary
if the Participant is deceased) may request an Unscheduled
Withdrawal of all or a portion of the entire vested amount
credited to the Participant's Deferral Account, which shall be
paid in a single lump sum within ninety (90) days following the
last business day of the month in which such election is received
by the Administrator; provided, however, that (i) the minimum
withdrawal shall be twenty-five percent (25%) of the Deferral
Account balance, (ii) an election to withdraw seventy-five
percent (75%) or more of the balance shall be deemed to be an
election to withdraw the entire balance, (iii) such an election
may be made only once in a Plan Year, and (iv) such Deferral
Account shall be valued as of the last business day of the month
in which the request was received by the Administrator.
12.2.2 Withdrawal Penalty. There shall be a
forfeiture from the Deferral Account prior to an Unscheduled
Withdrawal equal to ten percent (10%) of the Unscheduled
Withdrawal (which amount shall be forfeited to the Company). If
a Participant elects such a withdrawal, any ongoing Annual
Deferrals shall cease, and the Participant may not again be
designated as an Eligible Employee with respect to Annual
Deferrals until one entire Plan Year following the Plan Year in
which such withdrawal was made has elapsed.
12.2.3 Small Benefit Exception. Notwith
standing any of the foregoing, if the sum of all benefits payable
to the Participant or Beneficiary who has requested the
Unscheduled Withdrawal is less than or equal to ten thousand
dollars ($10,000), the Company may, in its sole discretion, elect
to pay out the entire Deferral Account (reduced by the ten
percent (10%) penalty) in a single lump sum.
ARTICLE 13
Restoration of Benefits
13.1 Purpose. The purpose of this Article 13 is to
restore retirement benefits to certain Participants whose benefit
under the Retirement Plan is reduced due to participation in the
Plan. The benefits under this Article 13 shall be determined
without reference to Articles 2 through 12 and Article 16 unless
otherwise specifically referenced in this Article 13.
13.2 Eligibility. A Participant shall be eligible for
a benefit under this Article 13 if:
(i) The Participant is also a participant in the
Retirement Plan;
(ii) The Participant has made employee deferrals
under Articles 2 and 3; and
(iii) The Participant is not eligible to participate
in the Milacron Supplemental Pension
Plan, Milacron Supplemental
Retirement Plan or the Milacron
Supplemental Executive Retirement Plan.
13.3 Benefit. A Participant's vested benefit under
this Article 13 shall be a monthly amount equal to the amount
determined under the terms of the Retirement Plan as of the
Participant's or surviving spouse's "benefit commencement date"
(as defined in the Retirement Plan) in the form of payment as
elected or determined under the Retirement Plan, calculated using
the Participant's "highest average compensation" (as defined
under the Retirement Plan, except that "compensation" for a year
shall include employee deferrals made under Articles 2 and 3 of
the Plan with respect to that year) reduced by the monthly amount
determined as of the Participant's or surviving spouse's benefit
commencement date under the Retirement Plan, in the form of
payment as elected or determined under the Retirement Plan,
calculated without regard to this Article 13.
13.4 Benefit Commencement Date and Payment Options.
Benefits under this Article 13 shall commence at the same time
and in the same payment form as the Participant or surviving
spouse has elected under the Retirement Plan and shall cease at
the time benefits cease under the Retirement Plan.
Notwithstanding the foregoing, the Company may, in its sole
discretion, elect to pay such benefits in a single lump sum
determined using the actuarial assumptions used to calculate lump
sum amounts as set forth in the Retirement Plan.
13.5 Vesting. Unless forfeited pursuant to Sections
13.6 or 13.7, a Participant's benefit under this Article 13 shall
become vested at the same time the Participant's benefit under
the Retirement Plan becomes vested.
13.6 Fraud. In the event that a Participant shall at
any time be dismissed for, or convicted of a crime involving,
dishonesty or fraud on his part in his relationship with the
Company and its subsidiaries, all benefits which would otherwise
be payable to him under this Article 13 shall be forfeited.
13.7 Competition. By accepting payment of any benefit
under this Article 13, the Participant agrees not to be employed,
or consult, in any business which is, or is about to be, engaged
in a business of the same or substantially the same nature as the
businesses of the Company and its subsidiaries without prior
written consent of the Company, and breach of this agreement by
the Participant shall be cause for termination of payment of
benefits under this Article 13.
ARTICLE 14
Conditions Related to Benefits
14.1 Nonassignability. The benefits provided under
the Plan may not be alienated, assigned, transferred, pledged or
hypothecated by or to any person or entity, at any time or any
manner whatsoever. These benefits shall be exempt from the
claims of creditors of any Participant or other claimants and
from all orders, decrees, levies, garnishment or executions
against any Participant to the fullest extent allowed by law.
14.2 Financial Hardship Distribution. Upon a petition
from the Participant to the Administrator and a subsequent
finding by the Administrator that the Participant or the
Beneficiary has suffered a Financial Hardship, the Administrator
may in its sole discretion, permit the Participant to cease any
ongoing deferrals and accelerate distribution of the
Participant's Deferral Account under the Plan in the amount
reasonably necessary to alleviate such Financial Hardship with
such amount paid within ninety (90) days following the last
business day of the month in which the petition is received by
the Administrator. If a distribution is to be made to a
Participant on account of Financial Hardship, the Participant may
not make deferrals under the Plan until one entire Plan Year
following the Plan Year in which a distribution based on
Financial Hardship was made has elapsed.
14.3 No Right to Company Assets. The benefits paid
under the Plan shall be paid from the general funds of the
Company, and the Participant and any Beneficiary shall be no more
than unsecured general creditors of the Company with no special
or prior right to any assets of the Company for payment of any
obligations hereunder.
14.4 Protective Provisions. The Participant shall
cooperate with the Company by furnishing any and all information
requested by the Administrator, in order to facilitate the
payment of benefits hereunder, taking such physical examinations
as the Administrator may deem necessary and taking such other
actions as may be requested by the Administrator. If the
Participant refuses to cooperate, the Company shall have no
further obligation to the Participant under the Plan.
14.5 Withholding. The Participant or the Beneficiary
shall make appropriate arrangements with the Company for
satisfaction of any federal, state or local income tax
withholding requirements and Social Security or other employee
tax requirements applicable to the payment of benefits under the
Plan. If no other arrangements are made, the Company may
provide, at its discretion, for such withholding and tax payments
as may be required.
ARTICLE 15
Administration of Plan
15.1 The Administrator shall administer the Plan and
interpret, construe and apply its provisions in accordance with
its terms. The Administrator shall further establish, adopt or
revise such rules and regulations as it may deem necessary or
advisable for the administration of the Plan. All decisions of
the Administrator shall be final and binding. The individuals
serving on the Personnel and Compensation Committee of the
Company's Board of Directors, and their designees for purposes of
administering the Plan, shall, except as prohibited by law, be
indemnified and held harmless by the Company from any and all
liabilities, costs, and expenses (including legal fees), to the
extent not covered by liability insurance arising out of any
action taken by any member of the Committee with respect to the
Plan, unless such liability arises from the individual's own
gross negligence or willful misconduct.
ARTICLE 16
Beneficiary Designation
16.1 Designation. The Participant shall have the
right, at any time, to designate any person or persons as
Beneficiary (both primary and contingent) to whom payment under
the Plan shall be made in the event of the Participant's death.
The Beneficiary designation shall be effective when it is
submitted in writing to the Administrator during the
Participant's lifetime on a form prescribed by the Administrator,
16.2 Revocation. The submission of a new Beneficiary
designation shall cancel all prior Beneficiary designations. Any
finalized divorce or marriage of a Participant subsequent to the
date of a Beneficiary designation shall revoke such designation,
unless in the case of divorce the previous spouse was not
designated as Beneficiary and unless in the case of marriage the
Participant's new spouse has previously been designated as
Beneficiary. The spouse of a married Participant shall consent
to any designation of a Beneficiary other than the spouse.
16.3 Failure to Designate. If a Participant fails to
designate a Beneficiary as provided above, or if the Beneficiary
designation is revoked by marriage, divorce, or otherwise without
execution of a new designation, or if every person designated as
Beneficiary predeceases the Participant or dies prior to complete
distribution of the Participant's benefits, then the
Administrator shall direct the distribution of such benefits to
the Participant's estate.
ARTICLE 17
Amendment and Termination of Plan
17.1 Amendment of Plan. Subject to the terms of
Article 17.3, the Company may at any time amend the Plan in whole
or in part, provided, however, that such amendment (i) shall not
decrease the balance of the Participant's Account at the time of
such amendment and (ii) shall not retroactively decrease the
applicable Crediting Rates of the Plan prior to the time of such
amendment. The Company may amend the Crediting Rates of the Plan
prospectively, or the method used for the determination of
Crediting Rates, in which case the Company shall notify the
Participant of such amendment in writing within thirty (30) days
after such amendment.
17.2 Termination of Plan. Subject to the terms of
Article 17.3, the Company may at any time terminate the Plan. If
the Company terminates the Plan, the date of such termination
shall be treated as the date of Termination of Employment for the
purpose of calculating Plan benefits, and the Company shall pay
to the Participant the vested benefits the Participant is
entitled to receive under the Plan in either a lump sum within
ninety (90) days or in installments over three (3) years, as
determined by the Administrator.
17.3 Amendment or Termination After Change in Control.
Notwithstanding the foregoing, the Company shall not amend or
terminate the Plan without the prior written consent of affected
Participants for a period of two calendar years following a
Change in Control and shall not thereafter amend or terminate the
Plan in any manner which affects any Participant (or Beneficiary
of a deceased Participant) who commences receiving payment of
benefits under the Plan prior to the end of such two year period
following a Change in Control.
17.4 Company Action. Except as provided in Section
17.3, the Company's power to amend or terminate the Plan shall be
exercisable by the Company's Board of Directors or by the
Administrator.
17.5 Constructive Receipt Termination. In the event
the Administrator determines that amounts deferred under the Plan
have been constructively received by Participants and must be
recognized as income for federal income tax purposes, the Plan
shall terminate and distributions shall be made to Participants
in accordance with the provisions of Section 17.2 or as may be
determined by the Administrator. The determination of the
Administrator under this Section 17.5 shall be binding and
conclusive.
ARTICLE 18
Miscellaneous
18.1 Successors of the Company. The rights and
obligations of the Company under the Plan shall inure to the
benefit of, and shall be binding upon, the successors and assigns
of the Company.
18.2 ERISA Plan. The Plan is intended to be an
unfunded plan maintained primarily to provide deferred
compensation benefits for "a select group of management or highly
compensated employees" within the meaning of Sections 201, 301
and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4
of Title I of ERISA.
18.3 Trust. The Company shall be responsible for the
payment of all benefits under the Plan. At its discretion, the
Company may establish one or more grantor trusts for the purpose
of providing for payment of benefits under the Plan. Such trust
or trusts may be irrevocable, but the assets thereof shall be
subject to the claims of the Company's creditors. Benefits paid
to the Participant from any such trust shall be considered paid
by the Company for purposes of meeting the obligations of the
Company under the Plan.
18.4 Employment Not Guaranteed. Nothing contained in
the Plan nor any action taken hereunder shall be construed as a
contract of employment or as giving any Participant any right to
continued employment with the Company or its subsidiaries.
18.5 Gender, Singular and Plural. All pronouns and
variations thereof shall be deemed to refer to the masculine,
feminine, or neuter, as the identity of the person or persons may
require. As the context may require, the singular may be read as
the plural and the plural as the singular.
18.6 Captions. The captions of the articles and
paragraphs of the Plan are for convenience only and shall not
control or affect the meaning or construction of any of its
provisions.
18.7 Validity. If any provision of the Plan is held
invalid, void or unenforceable, the same shall not affect, in any
respect whatsoever, the validity of any other provisions of the
Plan.
18.8 Waiver of Breach. The waiver by the Company of
any breach of any provision of the Plan by the Participant shall
not operate or be construed as a waiver of any subsequent breach
by the Participant.
18.9 Applicable Law. The Plan shall be governed and
construed in accordance with the laws of Ohio except where the
laws of Ohio are preempted by ERISA.
18.10 Notice. Any notice or filing required or
permitted to be given to the Company under the Plan shall be
sufficient if in writing and hand-delivered, or sent by first
class mail to the principal office of the Company, directed to
the attention of the Administrator. Such notice shall be deemed
given as of the date of delivery, or, if delivery is made by
mail, as of the date shown on the postmark.
18.11 Incapacity. If a Participant entitled to receive
a benefit under this Plan is deemed by the Company or is adjudged
by a court of competent jurisdiction to be legally incapable of
giving valid receipt and discharge for such benefit, such benefit
shall be paid to such person or persons as the Co
