<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the fiscal year ended December 31, 1995.
Commission File No. 0-13787
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
INTERMET CORPORATION
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(Exact name of Registrant as specified in its charter)
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GEORGIA
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(State or other jurisdiction of incorporation or organization)
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58-1563873
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(I.R.S. Employer Identification No.)
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SUITE 200, 5445 CORPORATE DRIVE, TROY, MICHIGAN 48098
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (810) 952-2500
Name of each exchange on which registered: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.10
par value
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 10K. ___.
Aggregate market value of the voting stock held by non affiliates of the
Registrant as of February 26, 1996 was $265,487,722 based on the closing sale
price of the Common Stock as quoted on The Nasdaq Stock Market, $13.125. See
Item 12.
At February 26, 1996 there were 25,050,374 shares of Common Stock, $0.10 par
value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1995 are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the 1996 Annual
Meeting of Shareholders, filed with the Commission, are incorporated by
reference into Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
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The Registrant is a leading independent manufacturer of precision ductile
and gray iron and aluminum castings, with production facilities in North
America and Germany. The Registrant's castings are used primarily in
passenger cars and light trucks, as well as in heavy trucks. The castings
also have railroad, municipal, marine and construction applications. The
Registrant specializes in safety-related parts critical to vehicle control
that meet its customers' exacting metallurgical, dimensional and quality
control standards. Products manufactured for the automotive, light truck and
heavy truck industries include brake parts, steering components, differential
cases, camshafts and crankshafts. The Registrant provides castings used by
over 20 automobile manufacturers throughout the world, including Ford,
Chrysler, General Motors, Volkswagen, BMW and Mercedes-Benz.
As used herein, the term "Registrant" refers collectively to Intermet
Corporation and its subsidiaries, and their respective predecessors, except
where otherwise indicated by context.
RECENT DEVELOPMENTS
-------------------
On November 15, 1995, the Registrant purchased substantially all of the
assets used in the conduct of an aluminum castings business by two affiliated
companies located in Alexander City, Alabama. The aggregate consideration
paid by the Registrant was $2.7 million in cash, including post-closing
adjustments, and 300,000 shares of the Registrant's Common Stock, valued at
$3.6 million (based upon the last trade in The Nasdaq Stock Market on the date
preceding issuance). The cash consideration was derived from internally
generated funds. In connection with the acquisition, the Registrant entered
into, among other agreements, a Registration Rights and Lockup Agreement
pursuant to which the Registrant agreed to register the shares of the Common
Stock under certain circumstances.
In October 1995, the Registrant's subsidiary, InterMotive Technologies,
Inc. sold substantially all of its assets to Ricardo-North America Detroit,
Inc. and Ricardo Group plc for $4.4 million in cash. Also in October 1995 the
Registrant's wholly-owned subsidiary, PBM Industries, Inc., sold substantially
all of its assets to PBM Acquisition Limited ("Limited") in exchange for $5.3
million in cash, including post-closing adjustments, and a $2.5 million
Subordinated Promissory Note of Limited. The note bears interest at the rate
of one percentage point above the prime rate (as defined) and is repayable in
16 quarterly installments of principal, commencing on January 1, 1997. As
security for the note, Limited granted the Registrant a second priority
security interest in certain assets of Limited.
On October 6, 1995, the Registrant's Board of Directors declared a
dividend of one right ("Right") for each share of Common Stock of the
Registrant held as of the close of business on October 17, 1995. Each Right
will be issued pursuant to a Shareholder Protection Rights Agreement between
the Registrant and Trust Company Bank as Rights Agent.
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In September 1995, the Registrant moved its headquarters from Atlanta to
Detroit, Michigan. The Registrant believes that it is in its best interest to
locate near the headquarters of the U.S. auto manufacturers.
PRODUCTS, MARKETS AND SALES
---------------------------
The Registrant specializes in safety-related parts critical to vehicle
control, including brake parts and steering system components, as well as
differential cases, camshafts and crankshafts. Products for other industries
include brackets, valves and railroad adaptors.
The Registrant has had a longstanding quality assurance program and is
committed to maintaining its reputation for high quality products and timely
delivery. Most of the Registrant's facilities hold Ford's Q-1 quality award
and/or Chrysler's PENTASTAR award.
The Registrant markets its products exclusively through its own sales and
customer service staff, except in Europe where it also uses independent sales
representatives. The Registrant currently maintains sales offices in Michigan
and Germany. The Registrant produces principally to customer order and does
not maintain any significant inventory of finished goods not on order.
The Registrant provides extensive production and technical training to
its sales staff. This technical background enables the sales staff to act as
an effective liaison between customers and the Registrant's production
personnel and permits the Registrant to offer customer assistance at the
design stage of major casting programs. The Registrant also employs quality
assurance representatives and engineers who work with customers' manufacturing
personnel to detect and avoid potential problems and to develop new product
opportunities for the Registrant. In addition to working with customer
purchasing personnel, the Registrant's sales engineers confer with design
engineers and other technical staff.
During 1993, 1994 and 1995, direct sales to Ford accounted for 23%, 23%
and 18%, respectively, direct sales to Chrysler accounted for 23%, 23% and
20%, respectively: and direct sales to General Motors Corporation accounted
for 12%, 14% and 18%, respectively, of the Registrant's consolidated net
sales. The loss of any of these customers or a substantial reduction in their
purchases from the Registrant would have a material adverse effect on the
Registrant. The Registrant's six largest customers accounted for approximately
78%, 79% and 77% of the Registrant's consolidated net sales during 1993, 1994
and 1995, respectively.
The following table sets forth information regarding sales by the
Registrant to customers in these markets during 1993, 1994 and 1995.
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<TABLE>
<CAPTION>
1993 1994 1995
-------------- -------------- ---------------
Sales % Sales % Sales %
<S> <C> <C> <C>
North American passenger
cars and light trucks..... $327,900 74 $380,100 76 $413,600 76
North American industrial... 45,000 10 46,100 9 34,800 7
European passenger cars and
light trucks.............. 71,300 16 75,100 15 93,300 17
-------- -------- --------
Total Sales................. $444,200 $501,300 $541,700
======== ======== ========
</TABLE>
In 1995 reported sales included 445,000 tons of casting shipments,
compared to 419,000 tons in 1994. The Registrant's foundries operated at 89%
of average annual capacity during 1995, compared to 99% during 1994.
MANUFACTURING, MACHINING AND DESIGN
-----------------------------------
The Registrant produces ductile and gray iron castings, as well as
aluminum castings. Gray iron, the oldest and most widely used cast iron, is
readily cast into intricate shapes that are easily machinable and wear
resistant. Ductile iron has greater strength and elasticity than gray iron,
and its use as a higher strength substitute for gray iron and a lower-cost
substitute for steel has grown steadily, while aluminum brings a lower weight
alternative. For the years ended December 31, 1993, 1994 and 1995, sales of
ductile iron castings represented 87%, 89% and 92%, respectively, of the
Registrant's total sales of castings, the balance being gray iron in 1993 and
1994 and gray iron and aluminum castings in 1995. The Registrant's castings
range in size from small pieces weighing less than one pound to castings
weighing up to 100 pounds.
The cast iron manufacturing process involves melting steel scrap and pig
iron in cupola or electric furnaces, adding various alloys and pouring the
molten metal into molds made primarily of sand. The molten metal solidifies
and cools in the molds, and the molds are broken and removed. The aluminum
manufacturing process utilizes exact polystyrene foam replicas of the desired
castings which are embedded in sand. The foam is evaporated by the hot metal
and the casting is formed.
Customers usually specify the properties their castings are to embody,
such as hardness and strength, and the Registrant determines how best to meet
those specifications. Constant testing and monitoring of the manufacturing
process is necessary to maintain the quality and performance consistency of
the castings. Electronic testing and monitoring equipment, including x-ray,
cobalt x-ray, ultrasonic and magnetic-particle testing equipment, is used
extensively in grading scrap metal, analyzing molten metal and testing
castings. The Registrant also uses its testing equipment and procedures to
provide particular tests requested by a customer for its castings.
Many castings require machining (which may include drilling, threading or
cutting operations) before they can be put to their ultimate use. Most
customers machine their own castings or have them machined by third parties.
The Registrant operates a facility in Columbus, Georgia, where it machines
castings produced by it and by others. The Registrant also contracts with
other companies to machine castings it produces before shipment to customers.
The Registrant sold its machining facility in Chesterfield, Michigan in
October 1995. See "Item 1. Business - Recent Developments."
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The Registrant's design and engineering teams assist the customer, when
requested, in the initial stages of product creation and modification. Among
other computer-aided design techniques, the Registrant uses three-dimensional
solid modeling software in conjunction with rapid prototype equipment. This
equipment greatly enhances the Registrant's design flexibility and, depending
on the complexity of the product, can reduce the time required to produce
sample castings for customers by several weeks.
RESEARCH AND DEVELOPMENT
------------------------
The Registrant conducts process and product development programs,
principally at its separate research and development foundry located adjacent
to the Archer Creek facility in Lynchburg, Virginia, and to a lesser extent at
the laboratories in its other facilities. Current research and testing
projects encompass both new manufacturing processes and product development.
The research foundry has a self-contained melting and molding facility with
complete metallurgical, physical and chemical testing capabilities. The work
on new manufacturing processes is focused on ways to lower costs and improve
quality. Product development work includes projects to enhance existing iron
castings, such as austempering, which enhances the strength and elasticity of
iron, as well as projects to develop new products, such as the conversion of
forgings to castings. Amounts expensed for research and development totalled
$1.6 million, $1.5 million and $0.9 million in 1993, 1994 and 1995,
respectively.
COMPETITION
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The Registrant competes with many other foundries, both in the United
States and Europe. Some of these foundries are owned by major users of iron
castings, and a number of foundry operators have, or are subsidiaries of
companies which have, greater financial resources than the Registrant. For
example, the three largest domestic automobile manufacturers, which are among
the Registrant's largest customers, operate their own foundries. However,
they also purchase a significant amount of castings from the Registrant and
others, and there is a trend toward increased outsourcing by the domestic
original equipment manufacturers. Castings produced by the Registrant also
compete to some degree with malleable iron castings, other metal castings and
steel forgings.
The machining industry is highly fragmented and competitive. As in the
foundry industry, large purchasers of machined components often have
significant in-house capabilities to perform their own machining work.
The Registrant competes primarily on the basis of product quality,
engineering, service and price. The Registrant emphasizes its ability to
produce complex, precision-engineered products in order to compete for value-
added castings that generally provide a higher profit margin.
RAW MATERIALS
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The primary raw material used by the Registrant to manufacture iron
castings is steel scrap. The Registrant is not dependent on any single
supplier of scrap. The Registrant has no long-term contractual commitments
with any scrap supplier and does not anticipate any difficulties in obtaining
scrap because of the large number of suppliers and because of the Registrant's
position as a major purchaser. The cost of steel scrap is subject to
fluctuations, but the Registrant has implemented arrangements with most of its
customers for adjusting its castings prices to reflect those fluctuations.
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The Registrant has contractual arrangements, which expire at various
times through 1998, for the purchase of various materials, other than steel
scrap, used in or during the manufacturing process. While these contracts and
the Registrant's overall level of purchases provide some protection against
price increases, in most cases the Registrant does not have specific
arrangements in place to adjust its casting prices for fluctuations in the
prices of alloys and other materials.
CYCLICALITY AND SEASONALITY
---------------------------
Most of the Registrant's products are generally not affected by year-to-
year automotive style changes. However, the inherent cyclicality of the
automotive industry has affected the Registrant's sales and earnings during
periods of slow economic growth or recession. The Registrant's third and
fourth quarter sales are usually lower than first and second quarter sales due
to plant closings by automakers for vacations and model changeovers.
BACKLOG
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Most of the Registrant's business involves supplying all or a stated
portion of the customer's annual requirements, generally flexible in amount,
for a particular casting against blanket purchase orders. The lead time and
cost of commencing production of a particular casting tend to inhibit
transfers of production from one foundry to another. Customers typically
issue firm releases and shipping schedules on a monthly basis. The
Registrant's backlog at any given time therefore consists only of the orders
which have been released for shipment.
EMPLOYEES
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At January 31, 1996 the Registrant employed 4,023 persons, including
3,489 in the United States. Of the persons employed in the United States,
2,901 were hourly manufacturing personnel, and the remainder were clerical,
sales and management personnel. The Registrant employed 534 persons in
Germany, 447 of whom were hourly manufacturing personnel. Most of the
manufacturing personnel are represented by unions under collective bargaining
agreements expiring at various times through 1998. Two collective bargaining
agreements, covering an aggregate 517 employees, expired in 1995 and were
replaced. One domestic bargaining agreement covering approximately 422 hourly
workers was scheduled to expire in 1996 and has already been replaced.
The Registrant from time to time adjusts the size of its work force to
meet fluctuations in production demands at various facilities and for other
reasons. For example, the Registrant significantly reduced its salaried work
force during 1995. During the past ten years the Registrant has not
experienced any strike or work stoppage, other than a five-week strike by the
69 covered employees at the Hibbing, Minnesota plant during 1992. The
Registrant believes that its relationship with its employees is satisfactory.
ENVIRONMENTAL MATTERS
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The Registrant's operations are subject to various federal, state and
local laws and regulations relating to the protection of the environment.
These regulations, which are implemented principally by the United States
Environmental Protection Agency and corresponding state agencies, govern the
management of solid and hazardous waste, the discharge of pollutants into the
air and into surface and ground waters, and the manufacture, treatment and
disposal of chemical substances. The Registrant believes that current
operations of its facilities are in substantial compliance with applicable
environmental laws, regulations and government orders.
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The Registrant's Board of Directors oversees the Registrant's
environmental program. The Registrant has completed internal environmental
reviews of all of its facilities and is in the process of remedying non-
complying situations. In addition, the Registrant has environmental
compliance personnel on-site at most facilities, and the Registrant has
expanded its training programs to emphasize environmental matters.
The Registrant is currently in the process of attempting to resolve
certain environmental matters with various governmental agencies and third
parties. In addition to an issue raised by the Ohio Attorney General's Office
described in "Item 3 -- Legal Proceedings", these matters include the closure
of five former hazardous waste treatment units at the Archer Creek and Radford
Shell facilities and the remediation of soil and groundwater contamination at
the Lower Basin and Radford Shell facilities. In addition, the Registrant is
currently assessing the extent of soil and groundwater contamination at its
former Chesterfield, Michigan facility.
The Registrant sold substantially all of the assets of the Chesterfield,
Michigan facility (the "PBM Facility") in October 1995, a site which has been
designated a facility in need of remediation under former Michigan Act 307,
but the Registrant retains certain clean-up obligations at the Facility. As
part of the 1992 stock purchase agreement between the Company and the former
owners of the PBM Facility (the "Shareholders"), the Shareholders agreed to
indemnify the Registrant for the costs related to the environmental problems
at the PBM Facility, up to certain limits, which the Registrant does not
currently expect to exceed, although the costs of remediating the property
cannot be determined until further assessments of the site are completed.
One of the Shareholders recently brought suit against companies and
individuals who owned and/or operated the PBM Facility prior to 1988 (when the
Shareholders acquired PBM Industries), seeking reimbursement of the remedial
costs incurred by the Shareholders. PBM Industries, still a subsidiary of the
Company, has been named as a third-party defendant in that litigation. The
Registrant believes that the costs of PBM Industries' defense of that suit,
and any damages awarded against PBM Industries in the suit, should also be
fully reimbursable by the Shareholders under the 1992 stock purchase
agreement.
The Registrant believes that expenses to be incurred in resolving the
foregoing matters will not materially exceed reserves established for such
purposes or cause the Registrant to exceed its level of anticipated capital
expenditures. However, it is not possible to accurately predict such costs.
The 1990 amendments to the federal Clean Air Act are expected to have a
major impact on the compliance costs of many U.S. companies, including
foundries of the type owned by the Registrant. Until final regulations
implementing those amendments are adopted by the federal and state
governments, it is not possible to estimate such costs.
Over the years, the Registrant has landfilled wastes, such as baghouse
dust and foundry sand, on or near its foundry properties. The Registrant
believes its landfills and its other waste management units comply with all
existing regulations. However, it is not possible to predict whether, or to
what extent, future federal, state or local regulations will require the
Registrant to incur additional costs to monitor, close, remediate or otherwise
manage those units in ways not currently contemplated.
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Although the Registrant's practices had, in certain instances, been
deemed in non-compliance with environmental laws and regulations and in non-
material fines related thereto, the Registrant currently does not anticipate
any environmentally related costs that would have a material adverse effect on
its operations. However, it cannot be assured that the Registrant's
activities will not give rise to actions by governmental agencies or private
parties, which could cause the Registrant to incur fines, penalties,
operational shutdowns, damages, cleanup costs or other similar expenses.
Also, the Registrant's foundries' capacity levels or increases thereof are
dependent upon the Registrant's ability to maintain, or obtain increases in,
such levels in its permits for air emissions. It cannot be assured that the
Registrant will be able to maintain its current permits, or obtain appropriate
increases in capacity levels under such permits, so as to maintain its current
level of operations or increase capacity as it may desire in the future.
FOREIGN OPERATIONS
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Information as to revenues, operating profits and identifiable assets for
its foreign operations for 1995, 1994 and 1993 is contained in Note 11 of the
consolidated financial statements included in the Registrant's 1995 Annual
Report to Shareholders included as Exhibit 13 to this Report and is
incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
Executive officers are elected by the Board of Directors annually at
its meeting immediately following the Annual Meeting of Shareholders, and hold
office until the next Annual Meeting unless they sooner resign or are removed
from office by the Board of Directors.
The executive officers of the Registrant as of February 26, 1996 and
their ages and principal positions with the Registrant as of that date are as
follows:
Name (Age) Principal Position(s)
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John Doddridge (55) Chairman of the Board, Chief Executive Officer
and President Doretha J. Christoph (46)
C. Douglas Brown (49) Vice President - Sales and Marketing
John C. Engeswick (62) Vice President - Finance Vice President -
Technical
Daryl R. Marsh (57) Services Vice President - Machining
C. James Peterson (48) Services Vice President - Foundry Operations
James W. Rydel (51) Vice President - Administration and Secretary
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Mr. Doddridge became Chairman of the Board and Chief Executive Officer in
1994 and became President in February 1995. Mr. Doddridge was Vice Chairman
and Chief Executive Officer of Magna International, Inc., a supplier of motor
vehicle parts, from November 1992 until November 1994. From 1989 to 1992 he
served as President of North American Operations of Dana Corporation, a motor
vehicle parts manufacturer, and prior to that time he served as President of
Hayes-Dana Inc., a subsidiary of Dana Corporation.
Mr. Brown became Vice President - Sales and Marketing in February 1995.
Prior to that time he served as Vice President - Sales and Marketing of
Intermet Foundries, Inc. ("IFI"), commencing in February 1993. From February
1991 to February 1993 he was General Sales Manager of IFI. Prior to that time
he served as a Regional Sales Manager for IFI.
Ms. Christoph became Vice President - Finance in June 1995. Prior to
that time she served as Vice President and Director of Administration of LNP
Engineering Plastics, a worldwide supplier of engineered plastics across all
markets and a subsidiary of Kawasaki Steel Corporation, from November 1991
until May 1995. From 1989 to 1991, she served as Director of Finance for the
Engineering Plastics Americas operation of ICI, plc.
Mr. Engeswick became Vice President - Technical Services in February
1995. Prior to that time he served as Vice President -Quality Assurance for
IFI.
Mr. Marsh became Vice President - Machining Services of the Registrant in
February 1995. From 1993 to 1995, he served as Vice President - Machining.
From 1969 through 1993, Mr. Marsh was employed by Simpson Industries, Inc.,
most recently as Group Vice President, Transmission and Chassis Group.
Mr. Peterson became Vice President - Foundry Operations in February 1995.
He served as Director of Manufacturing of IFI from 1993 to 1995. Prior to
that time he served as General Manager of Columbus Foundries, Inc.
Mr. Rydel has served as Vice President - Administration and Secretary
since February 1995. He served as Vice President - Human Resources of the
Registrant from 1991 until February 1995. He served as Director of
Compensation and Benefits of the Registrant from 1986 until 1990, when he
became Director of Human Resources of the Registrant.
ITEM 2. PROPERTIES
The Registrant currently owns or operates or has an ownership interest in
seven operational ductile and gray iron foundries, one aluminum foundry and
one research foundry. Most castings can be produced at more than one of the
Registrant's foundries except that aluminum castings must be produced at
Alexander City Casting.
The following provides information about the location and type of
castings produced at each foundry, all of which are wholly-owned by the
Registrant:
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Name Location Type of Castings
- ------------------------- ----------------------- ----------------
Alexander City Casting Alexander City, Alabama Aluminum
Archer Creek Campbell County, Virginia Ductile iron
Ironton Iron Ironton, Ohio Ductile iron
Columbus Foundries Columbus, Georgia Ductile iron
Radford Shell Radford, Virginia Ductile and gray iron
Columbus Neunkirchen Neunkirchen, Germany Ductile iron
New River Radford, Virginia Ductile iron
Northern Castings Hibbing, Minnesota Ductile iron
The Registrant continually reviews the operation of its foundries and may
from time to time close one or more foundries on a permanent or temporary
basis due to its production needs and general business and economic
conditions. The Pennsylvania foundry has been idled since 1991. The Lower
Basin foundry stopped pouring iron in 1993 and was closed completely in 1994.
The research foundry is located in Virginia and is wholly-owned by the
Registrant. The Registrant also owns a machining facility in Georgia.
In addition, the Registrant owns or leases certain executive, sales, and
other management offices, located in Michigan, Georgia and Virginia. The
Registrant believes that all of its facilities are well maintained.
The only property of the Registrant which secures long-term indebtedness
is the German foundry, which secures indebtedness with an aggregate
outstanding principal balance at December 31, 1995 of $3,664,000. See Note 6
to the consolidated financial statements of the Registrant included in the
Registrant's 1995 Annual Report to Shareholders included as Exhibit 13 to this
Report for additional information on secured debt.
ITEM 3. LEGAL PROCEEDINGS
Except as set forth below, the Registrant is not aware of any material
pending or threatened legal proceedings to which the Registrant or any of its
subsidiaries is a party or of which any of their property is the subject.
On August 5, 1991 Lynchburg Foundry Company ("Lynchburg"), a wholly-owned
subsidiary of the Registrant, was served with a complaint (the "Complaint")
dated July 31, 1991 by the United States Environmental Protection Agency (the
"EPA"). The Complaint alleged certain violations by Lynchburg of the Resource
Conservation and Recovery Act ("RCRA"), the most significant of which related
to the treatment of certain hazardous waste at two of Lynchburg's foundry
sites. In November 1994 Lynchburg signed a consent order agreeing to pay a
penalty of $330,000, which the Registrant paid in September 1995.
The Registrant has entered into negotiations with the Office of the Ohio
Attorney General with respect to certain past violations by the Registrant's
Ironton, Ohio foundry of Ohio water pollution laws and regulations. The
Attorney General's Office advised the Registrant that the Registrant could
avoid litigation with respect to such violations by entering into a consent
order. In November 1995 the Registrant agreed to pay the State of Ohio a fine
of $285,000 to settle the water pollution matter. The parties have agreed to
the language of the consent decree, and the Registrant is waiting for the
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office of Attorney General to file the decree in Ohio State Court. On receipt
of the decree, the fee will be paid by the Registrant.
A complaint was filed on October 6, 1995 in the Superior Court of Fulton
County, Georgia by Brickell Partners, a Florida partnership, against the
Registrant and each director of the Registrant, except George W. Mathews, Jr.
This complaint was brought on behalf of the plaintiff, and, purportedly,
public stockholders of the Registrant, as a class. The complaint alleges that
the named directors breached their fiduciary duties by failing to properly
consider an offer for the Registrant by GWM, Inc. and Kelso & Company. The
complaint alleges that the named directors deprived the plaintiff and the
class of the receipt of maximum value for their shares. The plaintiff demands
that the named directors be ordered to carry out their fiduciary duties, that
damages in an unspecified amount be awarded to the plaintiff and the class and
that attorney's fees and costs be granted to the plaintiff. The Registrant is
scheduled to file an answer to the complaint in April 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Registrant
during the fourth quarter of the fiscal year covered by this Report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION AND DIVIDENDS
--------------------------------
The information contained in Note 12 to the consolidated financial
statements of the Registrant included in the Registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 1995, furnished to the
Commission as Exhibit 13 to this Report, is hereby incorporated herein by
reference.
The Registrant's Common Stock, $0.10 par value, is traded in the over-
the-counter market under the Nasdaq symbol "INMT." As of February 26, 1996,
there were approximately 666 holders of record of the Registrant's Common
Stock.
The Board of Directors of the Registrant suspended payment of the regular
quarterly dividend in 1993 pending improvement in the Registrant's operating
performance. Even if payment of dividends resumes, the payment is subject to
the discretion of the Board of Directors and will depend upon the results of
operations and financial condition of the Registrant and other factors the
Board of Directors deems relevant. The Registrant is also subject to
restrictions on the payment of dividends under certain loan agreements. As of
December 31, 1995, $87,870,000 of the Registrant's retained earnings were
restricted and unavailable for the payment of dividends under those
agreements.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data included in the Registrant's 1995 Annual Report
to Shareholders, portions of which are furnished to the Commission as Exhibit
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13 to this Report, under the headings "Statement of Operations Data," "Share
Data" and "Balance Sheet Data," are hereby incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The information included under the heading "Discussion of Financial
Information" in the Registrant's 1995 Annual Report to Shareholders, portions
of which are furnished to the Commission as Exhibit 13 to this Report, is
hereby incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and related notes of the Registrant
and the report of the independent auditors thereon included in the
Registrant's 1995 Annual Report to Shareholders, portions of which are
furnished to the Commission as Exhibit 13 to this Report, are hereby
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Within the 24-month period prior to the date of the Registrant's
financial statements for the fiscal year ended December 31, 1995, the
Registrant did not change auditors and had no disagreement with its auditors
on any matter of accounting principles or practices or financial statement
disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the heading "INFORMATION ABOUT NOMINEES
FOR DIRECTORS" in the definitive Proxy Statement used in connection with the
solicitation of proxies for the Registrant's Annual Meeting of Shareholders to
be held April 11, 1996, filed with the Commission, is hereby incorporated
herein by reference. Pursuant to Instruction 3 to Paragraph (b) of Item 401
of Regulation S-K, information relating to the executive officers of the
Registrant is included in Item 1 of this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the heading "EXECUTIVE COMPENSATION" in
the definitive Proxy Statement used in connection with the solicitation of
proxies for the Registrant's Annual Meeting of Shareholders to be held April
11, 1996, filed with the Commission, is hereby incorporated herein by
reference.
-12-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the heading "VOTING SECURITIES AND
PRINCIPAL HOLDERS" in the definitive Proxy Statement used in connection with
the solicitation of proxies for the Registrant's Annual Meeting of
Shareholders to be held April 11, 1996, filed with the Commission, is hereby
incorporated herein by reference.
For purposes of determining the aggregate market value of the
Registrant's voting stock held by nonaffiliates, shares held by all current
directors and executive officers of the Registrant have been excluded. The
exclusion of such shares is not intended to, and shall not, constitute a
determination as to which persons or entities may be "affiliates" of the
Registrant as defined by the Securities and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the heading "CERTAIN TRANSACTIONS" in the
definitive Proxy Statement used in connection with the solicitation of proxies
for the Registrant's Annual Meeting of Shareholders to be held April 11, 1996,
filed with the Commission, is hereby incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements and notes thereto of the
Registrant and its subsidiaries contained in the Registrant's 1995 Annual
Report to Shareholders are incorporated by reference in Item 8 of this Report:
Consolidated Balance Sheets at December 31, 1995 and 1994
Consolidated Statements of Operations for the Years Ended December 31,
1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years Ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Independent Auditors
-13-
<PAGE>
2. Financial Statement Schedules
The following consolidated financial statement schedule for the
Registrant is filed as Item 14(d) hereof, beginning on page F-1.
Report and Consent of Independent Auditors
Schedule II - Valuation and Qualifying Accounts
3. Exhibits
The following exhibits are required to be filed with this Report by Item
601 of Regulation S-K:
Exhibit
Number Description of Exhibit
- ----------- ----------------------------------------
3.1 and 4.1 Amended and Restated Articles of Incorporation of the Registrant
(included as Exhibit 4.1 to the Registrant's Form S-3 Registration
Statement, filed June 3, 1992, File No. 33-48304, previously filed
with the Commission and incorporated herein by reference).
3.2 and 4.2 By-Laws of the Registrant, as amended (included as Exhibit 3.1 and
4.1 to the Registrant's Form 10Q for the quarter ended October 1,
1995, previously filed with the Commission and incorporated herein
by reference).
4.3 Promissory Note of Lynchburg Foundry Company, dated December 1,
1973, payable to Industrial Development Authority of the City of
Lynchburg, Virginia in the original principal amount of
$4,400,000.*
4.4 Guaranty Agreement, dated December 1, 1973, by and between The Mead
Corporation and the Industrial Development Authority of the City of
Lynchburg, Virginia.*
4.5 Trust Indenture, dated December 1, 1973, by and among Industrial
Development Authority of the City of Lynchburg, Virginia, Lynchburg
Foundry Company and United Virginia Bank, as trustee.*
4.6 Promissory Notes of Lynchburg Foundry Company, dated June 1, 1976,
payable to Industrial Development Authority of the City of
Lynchburg, Virginia, in the original principal amounts of
$2,700,000, $1,000,000, $550,000 and $550,000, respectively.*
4.7 Guaranty Agreement, dated June 1, 1976, of The Mead Corporation in
favor of Industrial Development Authority of the City of Lynchburg,
Virginia.*
-14-
<PAGE>
4.8 Trust Indenture, dated June 1, 1976, by and among Industrial
Development Authority of the City of Lynchburg, Virginia, Lynchburg
Foundry Company and United Virginia Bank, as trustee, with respect
to Pollution Control Revenue Bonds (Mead-Lynchburg Foundry
Project), Series 1976, Series 1976A, Series 1976B and Series
1976C.*
4.9 Loan Contract, dated September 28, 1988, by and between Columbus
Neunkirchen Foundry GmbH and Saarlandische Investitionskreditbank,
relating to a loan in the original principal amount of DM 740,000.*
4.10 Loan Contract, dated October 11, 1988, by and between Columbus
Neunkirchen Foundry GmbH and the Landesbank Saar Girozentrale,
relating to a loan in the original principal amount of DM
1,550,000.*
4.11 Loan Contract, dated December 14, 1988, by and between Columbus
Neunkirchen Foundry GmbH and Saarlandische Investitionskreditbank,
relating to a loan in the principal amount of DM 3,833,500.*
4.12 Loan Contract, dated March 1, 1989, by and between Columbus
Neunkirchen Foundry GmbH and Saarlandische Investitionskreditbank,
relating to a loan in the principal amount of DM 2,000,000.*
4.13 Loan Contract, dated April 12, 1989, by and between Columbus
Neunkirchen Foundry GmbH and Landesbank Saar Girozentrale, relating
to a loan in the principal amount of DM 2,725,000.*
4.14 Second Amended and Restated Credit Agreement, dated February 23,
1996, by and among the Registrant, SunTrust Bank, Atlanta (formerly
known as Trust Company Bank) as lender and agent and the various
lenders named therein.
4.15 Note Agreement ("Prudential Note Agreement"), dated December 11,
1992, by and between the Registrant and The Prudential Insurance
Company of America, relating to $25,000,000 principal amount of
8.05% Senior Notes due December 11, 2002 and Related Promissory
Notes (included as Exhibit 4.19 to the Registrant's Form 10-K for
the year ended December 31, 1992, File No. 0-13787, previously
filed with the Commission and incorporated herein by reference).
-15-
<PAGE>
4.16 First Amendment to Prudential Note Agreement, dated March 24, 1993,
executed by The Prudential Insurance Company of America and the
Registrant (included as Exhibit 4.20 to the Registrant's Form 10-K
for the year ended December 31, 1992, File No. 0-13787, previously
filed with the Commission and incorporated herein by reference).
4.17 Second Amendment to Prudential Note Agreement, dated November 16,
1993, executed by the Prudential Insurance Company of America and
the Registrant (including form of promissory note entered into in
connection therewith) (included as Exhibit 4.22 to the Registrant's
Form 10-K for the year ended December 31, 1993, File No. 0-13787,
previously filed with the Commission and incorporated herein by
reference).
4.18 Amendment to Prudential Note Agreement, dated March 6, 1995,
executed by The Prudential Insurance Company of America and the
Registrant.
4.19 Amendment dated August 21, 1995 to Note Purchase Agreement, dated
December 11, 1992, by and between the Registrant and The Prudential
Insurance Company of America (included as Exhibit 10.3 to the
Registrant's Form 10-Q for the quarter ended October 1, 1995, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference).
4.20 Amended and Restated Note Agreement, dated as of March 21, 1996, by
and between Intermet Corporation and The Prudential Insurance
Company of America, relating to $25,000,000 principal amount of
8.05% Senior Notes due December 11, 2002 and related Promissory
Note.
4.21 Shareholder Protection Rights Agreement, dated as of October 6,
1995 between the Registrant and Trust Company Bank, as Rights Agent
(included as Exhibit 4 to the Registrant's Form 8-K, having an
event date of October 6, 1995, File No. 0-13787, previously filed
with the Commission and incorporated herein by reference).
10.1(a) Intermet Corporation Key Individual Stock Option Plan, adopted
April 25, 1984 (included as Exhibit 10.1 to the Registrant's
registration statement on Form S-14, File No. 2-90815, previously
filed with the Commission and incorporated herein by reference).**
10.1(b) Amendment No. 1 to the Intermet Corporation Key Individual Stock
Option Plan, dated as of August 4, 1988 (included as Exhibit 10.2
to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.1(c) Amendment No. 2 to the Intermet Corporation Key Individual Stock
Option Plan, dated October 27, 1988 (included as Exhibit 10.3 to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, File No. 0-13787, previously filed with
the Commission and incorporated herein by reference).**
10.2(a) Form of Intermet Corporation Directors Stock Option Agreement
(included as Exhibit 10.4 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1988, File No. 0-13787,
previously filed with the Commission and incorporated herein by
reference).**
-16-
<PAGE>
10.2(b) Intermet Corporation Directors Stock Option Plan (included as
Exhibit 10.6 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, File No. 0-13787, previously
filed with the Commission and incorporated herein by reference).**
10.3 Intermet Corporation Executive Stock Option and Incentive Award
Plan (included as Exhibit 4 to the Registrant's Form S-8, File No.
33-59011, previously filed with the Commission and incorporated
herein by reference)**
10.4 Stock Purchase Agreement, dated March 30, 1992, by and between the
Registrant, PBM Industries, Inc., Batten Design and Engineering
Services, Inc., Wind Point Partners II, L.P., The Prudential
Insurance Company of America, Pruco Life Insurance Company,
PruSupply Capital Assets, Inc., Ingersoll Engineers, Inc. and
certain individuals (included as Exhibit 2.1 to the Registrant's
Form 8-K dated March 31, 1992, File No. 0-13787, previously filed
with the Commission and incorporated herein by reference.)
10.5 Promissory Note, dated March 30, 1992, executed by Intermet
Machining, Inc. in favor of Wind Point Partners II, L.P., as
Shareholders' Representative, in the principal amount of
$438,754.58 (included as Exhibit 10.7 to the Registrant's Form 10-K
for the year ended December 31, 1992, File No. 0-13787, previously
filed with the Commission and incorporated herein by reference).
10.6 Promissory Note, dated March 30, 1992, executed by Intermet
Machining, Inc. in favor of Pruco Life Insurance Company, in the
principal amount of $12,673.31 (included as Exhibit 10.8 to the
Registrant's Form 10-K for the year ended December 31, 1992, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference)
10.7 Promissory Note, dated March 30, 1992, executed by Intermet
Machining, Inc. in favor of PruSupply Capital Assets, Inc., in the
principal amount of $114,059.79 (included as Exhibit 10.9 to the
Registrant's Form 10-K for the year ended December 31, 1992, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference).
10.8 Promissory Note, dated March 30, 1992, executed by Intermet
Machining, Inc. in favor of Wind Point Partners II, L.P., as
Shareholders' Representative, in the principal amount of $1,982,107
(included as Exhibit 10.10 to the Registrant's Form 10-K for the
year ended December 31, 1992, File No. 0-13787, previously filed
with the Commission and incorporated herein by reference).
10.9 Promissory Note, dated March 30, 1992, executed by Intermet
Machining, Inc. in favor of Pruco Life Insurance Company, in the
principal amount of $35,240.53 (included as Exhibit 10.11 to the
Registrant's Form 10-K for the year ended December 31, 1992, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference).
-17-
<PAGE>
10.10 Promissory Note, dated March 30, 1992, executed by Intermet
Machining, Inc. in favor of The Prudential Insurance Company of
America, in the principal amount of $317,164.79 (included as
Exhibit 10.12 to the Registrant's Form 10-K for the year ended
December 31, 1992, File No. 0-13787, previously filed with the
Commission and incorporated herein by reference).
10.11 Guaranty Agreement, dated March 30, 1992, by the Registrant in
favor of the shareholders named in the PBM Stock Purchase Agreement
(included as Exhibit 10.13 to the Registrant's Form 10-K for the
year ended December 31, 1992, File No. 0-13787, previously filed
with the Commission and incorporated herein by reference).
10.12 Asset Purchase Agreement among Intermet Corporation, Intermet
Machining, Inc., PBM Industries, Inc. and PBM Acquisition Limited,
dated September 6, 1995, as amended by Amendments 1, 2 and 3
thereto (included as an Exhibit to the Registrant's Form 8-K dated
October 6, 1995, File No. 0-13787, previously filed with the
Commission and incorporated herein by reference).
10.13 Asset Purchase Agreement by and among Ricardo North American
Detroit, Inc., Ricardo Group, plc., InterMotive Technologies, Inc.
and Intermet Corporation, dated October 12, 1995 (included as an
Exhibit to the Registrant's Form 8-K dated October 18, 1995, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference).
10.14(a) Agreement for Purchase and Sale of Assets of Bodine-Robinson, Inc.
among the Registrant, Alexander City Casting Company, Inc., Bodine-
Robinson, Inc., Joe Robinson and Robinson Foundry, Inc., dated
November 15, 1995 (included as Exhibit 2(a) to the Registrant's
Form 8-K dated November 15, 1995 (the "Robinson 8-K"), File No. 0-
13787, previously filed with the Commission and incorporated herein
by reference).
10.14(b) Agreement for Purchase and Sale of Certain Assets of Robinson
Foundry, Inc. among the Registrant, Alexander City Casting Company,
Inc., Bodine-Robinson Foundry, Inc., Joe Robinson and Robinson
Foundry, Inc., dated November 15, 1995 (included as Exhibit 2(b) to
the Robinson 8-K, File No. 0-13787, previously filed with the
Commission and incorporated herein by reference).
10.14(c) Management Agreement among Joe Robinson, the Registrant and
Alexander City Casting Company, Inc., dated November 15, 1995
(included as Exhibit 2(c) to the Robinson 8-K, File No. 0-13787,
previously filed with the Commission and incorporated herein by
reference).
10.14(d) Registration Rights Agreement between the Registrant and Robinson
Foundry, Inc., dated November 15, 1995 (included as Exhibit 2(d) to
the Robinson 8-K, File No. 0-13787, previously filed with the
Commission and incorporated herein by reference).
-18-
<PAGE>
10.15 Operating Committee 1995 Profit Sharing Plan**
10.16(a) Intermet Corporation Salaried Employees Severance Plan effective as
of October 1, 1993 (included as Exhibit 10.16(a) to the
Registrant's Form 10-K for the year ended December 31, 1993, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference).**
10.16(b) Amendment No. 1 to the Intermet Corporation Salaried Employees
Severance Plan, dated December 20, 1993 (included as Exhibit
10.16(b) to the Registrant's Form 10-K for the year ended December
31, 1993, File No. 0-13787, previously filed with the Commission
and incorporated herein by reference).**
10.17 Intermet Salary Continuation Plan (included as Exhibit 10.18 to the
Registrant's Form 10-K for the year ended December 31, 1992, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference).**
10.18 Employment Agreement, dated as of December 1, 1994, by and between
the Registrant and John Doddridge (included as Exhibit 10.16 to the
Registrant's Form 10-K for the year ended December 31, 1994, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference).**
10.19 Letter, dated as of December 19, 1994, related to George Mathews'
retirement. (included as Exhibit 10.17 to the Registrant's Form 10-
K for the year ended December 31, 1994, File No. 0-13787,
previously filed with the Commission and incorporated herein by
reference).**
10.20 Employment Agreement, dated July 15, 1993, by and between the
Registrant and Daryl R. Marsh (included as Exhibit 10.18 to the
Registrant's Form 10-K for the year ended December 31, 1994, File
No. 0-13787, previously filed with the Commission and incorporated
herein by reference).**
10.21 Form of employment agreement by and between the Registrant and the
executive officers of the Registrant, other than John Doddridge,
effective November 1, 1996.**
10.22 Employment Agreement, dated October 26, 1995, by and between the
Registrant and John E. Doddridge**
10.23 Employment Agreement, dated May 12, 1995, by and between the
Registrant and Doretha Christoph.**
11 Computation of Earnings per Common Share.
13 Annual Report to Shareholders. Certain portions of this Exhibit
which are incorporated by reference into this Report on Form 10-K
are filed herewith.
21 Subsidiaries of the Registrant
23 Report and Consent of Independent
Auditors (included herein on Page F-1).
-19-
<PAGE>
27 Financial Data Schedule.
99 Notice of Annual Meeting and Proxy Statement of the Registrant.
- -----------------
* This instrument defines the rights of holders of long-term debt of the
Registrant not being registered and the total amount of securities
authorized under the instrument does not exceed ten percent of the total
assets of the Registrant and its subsidiaries on a consolidated basis.
This instrument is not being filed, but the Registrant will furnish a
copy of this instrument to the Commission upon request.
** Management contract or compensatory plan or arrangement required to be
filed as an exhibit.
-20-
<PAGE>
(b) The following current reports on Form 8-K were filed during the
fourth quarter of the Registrant's 1995 fiscal year:
Two Forms 8-K of the Registrant, File No. 0-13787, both having an
event date of October 6, 1995.
Form 8-K of the Registrant, File No. 0-13787, having an event date
of October 18, 1995.
Form 8-K of the Registrant, File No. 0-13787, having an event date
of November 15, 1995, and related Form 8-K/A.
(c) The Registrant hereby files as exhibits to this Report the exhibits
set forth in Item 14(a)3 hereof.
(d) The Registrant hereby files as financial statement schedules to this
Report the financial statement schedules set forth in Item 14(a)2 hereof.
-21-
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
Item Page
---- ----
Report and Consent of Independent Auditors .................... F-1
Schedule II - Valuation and Qualifying Accounts ............... F-2
-22-
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Intermet Corporation of our report dated January 26, 1996, included in the
1995 Annual Report to Shareholders of Intermet Corporation.
Our audits also included the financial statement schedule of Intermet
Corporation listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8 Nos. 33-57665, 33-58354, 33-58352 and 33-59011)
pertaining to 50,000 shares of Intermet Corporation common stock, the Intermet
Corporation Directors Stock Option Plan and the Intermet Corporation Key
Individual Stock Option Plan and the Intermet Corporation Executive Stock
Option and Incentive Award Plan, respectively, of our report dated January 26,
1996, with respect to the consolidated financial statements incorporated
herein by reference, and our report included in the preceding paragraph with
respect to the financial statement schedule included in this Annual Report
(Form 10-K) of Intermet Corporation.
/s/ Ernst & Young LLP
March 26, 1996
F-1
<PAGE>
Intermet Corporation
(Consolidated)
Schedule II
Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSE OTHER PERIOD
- -------------------------------------------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C>
(In Thousands of Dollars)
Year ended December 31, 1995:
Allowance for returns and doubtful
accounts (a) $ 3,039 1,319 (b) 49 (c) $ 4,407
Supplies inventory reserve 4,361 (775) 198 (c) 3,784
Deferred tax asset valuation allowance 26,332 - - 26,332
Year ended December 31, 1994:
Allowance for returns and doubtful
accounts (a) 2,206 784 (b) 49 (c) 3,039
Supplies inventory reserve 3,694 435 232 (c) 4,361
Deferred tax asset valuation allowance 30,520 3,683 (7,871)(d) 26,332
Year ended December 31, 1993
Allowance for returns and doubtful
accounts (a) 1,821 407 (b) (22)(c) 2,206
Supplies inventory reserve 3,280 546 (132)(c) 3,694
Deferred tax asset valuation allowance 20,846 6,609 3,065 (d) 30,520
</TABLE>
(a) Reflected as reduction of trade accounts receivable on consolidated
balance sheet.
(b) Net effect of amounts charged to expense less actual returns and write
offs.
(c) Effect of foreign currency translation.
(d) Increase (decrease) in certain deferred tax assets, including effect of
U.S. rate change in 1993.
F-2
<PAGE>
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.
INTERMET CORPORATION
(Registrant)
By: /s/ John Doddridge
--------------------------------------
John Doddridge
Chairman of the Board of Directors and
Chief Executive Officer
Date: March 26, 1996
POWER OF ATTORNEY AND SIGNATURES
Know all men by these presents, that each person whose signature appears
below constitutes and appoints John Doddridge and Doretha J. Christoph, or
either of them, as attorney-in-fact, either with power of substitution, for
him in any and all capacities, to sign any amendments to this Report on Form
10-K, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below as of March 26, 1996 by the following persons on
behalf of the Registrant in the capacities indicated.
Signature Capacity
--------- --------
/s/ John Doddridge
----------------------- Chairman of the Board of Directors,
John Doddridge Chief Executive Officer and President
(Principal Executive Officer)
/s/ Vernon R. Alden Director
-----------------------
Vernon R. Alden
/s/ J. Frank Broyles Director
-----------------------
J. Frank Broyles
/s/ John P. Crecine Director
-----------------------
John P. Crecine
<PAGE>
/s/ Anton Dorfmueller, Jr. Director
---------------------------
Anton Dorfmueller, Jr.
/s/ John B. Ellis Director
---------------------------
John B. Ellis
/s/ Wilfred E. Gross, Jr. Director
---------------------------
Wilfred E. Gross, Jr.
/s/ A. Wayne Hardy Director
---------------------------
A. Wayne Hardy
/s/ George W. Mathews, Jr. Director
---------------------------
George W. Mathews, Jr.
/s/ Harold C. McKenzie, Jr. Director
---------------------------
Harold C. McKenzie, Jr.
/s/ J. Mason Reynolds Director
---------------------------
J. Mason Reynolds
Director
---------------------------
Curtis W. Tarr
/s/ Doretha J. Christoph
--------------------------- Vice President-- Finance
Doretha J. Christoph (Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
4.14 Second Amended and Restated Credit Agreement, dated February 23,
1996, by and among the Registrant, SunTrust Bank, Atlanta (formerly
known as Trust Company Bank) as lender and agent and the various
lenders named therein.
4.18 Amendment to Prudential Note Agreement, dated March 6, 1995,
executed by The Prudential Insurance Company of America and the
Registrant.
4.20 Amended and Restated Note Agreement, dated as of March 21, 1996, by
and between Intermet Corporation and The Prudential Insurance
Company of America, relating to $25,000,000 principal amount of
8.05% Senior Notes due December 11, 2002 and related Promissory
Note.
10.15 Operating Committee 1995 Profit Sharing Plan
10.21 Form of employment agreement by and between the Registrant and the
executive officers of the Registrant, other than John Doddridge,
effective November 1, 1996.
10.22 Employment Agreement, dated October 26, 1995, by and between
the Registrant and John E. Doddridge.
10.23 Employment Agreement, dated May 12, 1995, by and between the
Registrant and Doretha Christoph.
11 Computation of Earnings per Common Share.
13 Annual Report to Shareholders. Certain portions of this Exhibit
which are incorporated by reference into this Report on Form 10-K
are filed herewith.
21 Subsidiaries of the Registrant
23 Report and Consent of Independent Auditors (included herein on Page
F-1).
27 Financial Data Schedule.
99 Notice of Annual Meeting and Proxy Statement of the Registrant.
<PAGE>
EXHIBIT 4.14
================================================================================
SECOND
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of February 23, 1996
among
INTERMET CORPORATION,
THE LENDERS LISTED HEREIN,
and
SUNTRUST BANK, ATLANTA
as Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS; CONSTRUCTION............... 2
Section 1.01. Definitions............................. 2
Section 1.02. Accounting Terms and Determination...... 19
Section 1.03. Other Definitional Terms................ 20
Section 1.04. Exhibits and Schedules.................. 20
ARTICLE II. SYNDICATED LOANS, BID RATE LOANS AND
LETTERS OF CREDIT....................... 20
Section 2.01. Commitments; Use of Proceeds............ 20
Section 2.02. Notes; Repayment of Principal........... 21
Section 2.03. Voluntary Reduction of Commitments...... 21
Section 2.04. Letter of Credit Facility............... 22
Section 2.05. Notice of Issuance of Letter of Credit;
Agreement to Issue...................... 22
Section 2.06. Payment of Amounts Drawn Under Letters
of Credit............................... 23
Section 2.07. Payment to Lenders...................... 24
Section 2.08. Bid Rate Loans.......................... 25
ARTICLE III. GENERAL LOAN AND LETTER OF CREDIT TERMS. 27
Section 3.01. Funding Notices......................... 27
Section 3.02. Disbursement of Funds................... 29
Section 3.03. Interest................................ 30
Section 3.04. Interest Periods........................ 31
Section 3.05. Fees.................................... 32
Section 3.06. Voluntary Prepayments of Borrowings..... 33
Section 3.07. Payments, etc........................... 34
Section 3.08. Interest Rate Not Ascertainable, etc.... 36
Section 3.09. Illegality.............................. 36
Section 3.10. Increased Costs......................... 37
Section 3.11. Lending Offices......................... 40
Section 3.12. Funding Losses.......................... 40
Section 3.13. Assumptions Concerning Funding of
Eurodollar Advances..................... 41
Section 3.14. Apportionment of Payments............... 41
Section 3.15. Sharing of Payments, Etc................ 41
Section 3.16. Benefits to Guarantors.................. 42
-i-
<PAGE>
Section 3.17. Limitation on Certain Payment
Obligations............................. 42
Section 3.18. Letter of Credit Obligations Absolute... 43
Section 3.19. Failure to Maintain Minimum
Required Rating......................... 43
ARTICLE IV. CONDITIONS TO BORROWINGS................ 44
Section 4.01. Conditions Precedent to Initial Loans
and Letters of Credit................... 44
Section 4.02. Conditions to All Loans and Letters of
Credit.................................. 46
ARTICLE V. REPRESENTATIONS AND WARRANTIES.......... 48
Section 5.01. Corporate Existence; Compliance with
Law..................................... 48
Section 5.02. Corporate Power; Authorization.......... 48
Section 5.03. Enforceable Obligations................. 48
Section 5.04. No Legal Bar............................ 49
Section 5.05. No Material Litigation or Investigations 49
Section 5.06. Investment Company Act, Etc............. 49
Section 5.07. Margin Regulations...................... 49
Section 5.08. Compliance with Environmental Laws...... 49
Section 5.09. Insurance............................... 50
Section 5.10. No Default.............................. 50
Section 5.11. No Burdensome Restrictions.............. 51
Section 5.12. Taxes................................... 51
Section 5.13. Subsidiaries............................ 51
Section 5.14. Financial Statements.................... 51
Section 5.15. ERISA................................... 52
Section 5.16. Patents, Trademarks, Licenses, Etc...... 53
Section 5.17. Ownership of Property................... 54
Section 5.18. Financial Condition..................... 54
Section 5.19. Labor Matters........................... 54
Section 5.20. Payment or Dividend Restrictions........ 55
Section 5.21. Disclosure.............................. 55
ARTICLE VI. AFFIRMATIVE COVENANTS.................... 55
Section 6.01. Corporate Existence, Etc................ 55
Section 6.02. Compliance with Laws, Etc............... 56
Section 6.03. Payment of Taxes and Claims, Etc........ 56
Section 6.04. Keeping of Books........................ 56
Section 6.05. Visitation, Inspection, Etc............. 56
-ii-
<PAGE>
Section 6.06. Insurance; Maintenance of Properties.... 56
Section 6.07. Reporting Covenants..................... 57
Section 6.08. Financial Covenants..................... 61
Section 6.09. Notices Under Certain Other Indebtedness 62
Section 6.10. Additional Credit Parties and Collateral 62
Section 6.11. Delivery of Release Pledge Agreement,
Modifications to Note Purchase Agreement;
Intercreditor Agreement.................... 63
ARTICLE VII. NEGATIVE COVENANTS...................... 63
Section 7.01. Indebtedness............................ 63
Section 7.02. Liens................................... 64
Section 7.03. Mergers, Acquisitions, Divestitures..... 64
Section 7.04. Asset Sales............................. 65
Section 7.05. Dividends, Etc.......................... 66
Section 7.06. Investments, Loans, Etc................. 67
Section 7.07. Sale and Leaseback Transactions......... 68
Section 7.08. Transactions with Affiliates............ 68
Section 7.09. Prepayments of Subordinated Debt
in Violation Thereof.................... 69
Section 7.10. Changes in Business..................... 69
Section 7.11. Limitation on Payment Restrictions
Affecting Consolidated Companies........ 69
Section 7.12. Actions Under Certain Documents......... 69
ARTICLE VIII. EVENTS OF DEFAULT....................... 70
Section 8.01. Payments................................ 70
Section 8.02. Covenants Without Notice................ 70
Section 8.03. Other Covenants......................... 70
Section 8.04. Representations......................... 70
Section 8.05. Non-Payments of Other Indebtedness...... 70
Section 8.06. Defaults Under Other Agreements......... 71
Section 8.07. Bankruptcy.............................. 71
Section 8.08. ERISA................................... 72
Section 8.09. Money Judgment.......................... 72
Section 8.10. Ownership of Credit Parties
and Pledged Entities.................... 72
Section 8.11. Change in Control of Intermet........... 73
Section 8.12. Default Under Other Credit Documents.... 73
Section 8.13. Attachments............................. 73
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<PAGE>
ARTICLE IX. THE AGENT............................... 74
Section 9.01. Appointment of Agent.................... 74
Section 9.02. Authorization of Agent with Respect
to the Security Documents............... 75
Section 9.03. Nature of Duties of Agent............... 75
Section 9.04. Lack of Reliance on the Agent........... 76
Section 9.05. Certain Rights of the Agent............. 76
Section 9.06. Reliance by Agent....................... 77
Section 9.07. Indemnification of Agent................ 77
Section 9.08. The Agent in its Individual
Capacity................................ 77
Section 9.09. Holders of Notes........................ 78
Section 9.10. Successor Agent......................... 78
ARTICLE X. MISCELLANEOUS........................... 79
Section 10.01. Notices................................. 79
Section 10.02. Amendments, Etc......................... 79
Section 10.03. No Waiver; Remedies Cumulative.......... 80
Section 10.04. Payment of Expenses, Etc................ 80
Section 10.05. Right of Setoff......................... 82
Section 10.06. Benefit of Agreement.................... 83
Section 10.07. Governing Law; Submission to
Jurisdiction; Waiverof Jury Trial....... 86
Section 10.08. Independent Nature of Lenders' Rights... 86
Section 10.09. Counterparts............................ 87
Section 10.10. Effectiveness; Survival................. 87
Section 10.11. Severability............................ 87
Section 10.12. Independence of Covenants............... 87
Section 10.13. Change in Accounting Principles,
Fiscal Year or Tax Laws................. 87
Section 10.14. Headings Descriptive; Entire Agreement.. 88
Section 10.15. Pledge of Stock of Columbus
Neunkirchen............................. 88
-iv-
<PAGE>
SCHEDULES
---------
Schedule 4.01(n) UCC Search Locations
SCHEDULE 5.01 Organization and Ownership of Subsidiaries
SCHEDULE 5.05 Certain Pending and Threatened Litigation
SCHEDULE 5.08 Environmental Matters
SCHEDULE 5.11 Burdensome Restrictions
SCHEDULE 5.12 Tax Filings and Payments
SCHEDULE 5.15 Employee Benefit Matters
SCHEDULE 5.16 Patent, Trademark, License, and
Other Intellectual Property Matters
SCHEDULE 5.17 Ownership of Properties
SCHEDULE 5.20 Dividend Restrictions
SCHEDULE 5.21 Labor and Employment Matters
SCHEDULE 6.08 Financial Covenant Calculations
Third Quarter 1995
SCHEDULE 8.01 Existing Indebtedness
SCHEDULE 8.02 Existing Liens
EXHIBITS
--------
EXHIBIT A -- Form of Revolving Note
EXHIBIT B -- Form of Bid Facility Note
EXHIBIT C -- Form of Letter of Credit Application
EXHIBIT D -- Bid Request
EXHIBIT E -- Bid Request Invite
EXHIBIT F -- Bid Rate Bid
EXHIBIT G -- Bid Rate Acceptance/Rejection
EXHIBIT H -- Form of Amended and Restated Subsidiary Guaranty
EXHIBIT I -- Form of Closing Certificate
EXHIBIT J -- Form of Opinion of Kilpatrick & Cody
EXHIBIT K -- Form of Assignment and Acceptance Agreement
EXHIBIT L -- Form of Compliance Certificate
-v-
<PAGE>
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
----------------
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT made and entered
into as of February __, 1996, by and among INTERMET CORPORATION, a Georgia
corporation ("Intermet"), SUNTRUST BANK, ATLANTA (formerly known as Trust
Company Bank), a banking corporation organized under the laws of the State of
Georgia ("SunTrust"), the other banks and lending institutions listed on the
signature pages hereof, and any assignees of SunTrust, or such other banks and
lending institutions which become "Lenders" as provided herein (SunTrust, and
such other banks, lending institu tions, and assignees referred to collectively
herein as the "Lend ers"), SUNTRUST BANK, ATLANTA, in its capacity as agent for
the Lenders and each successor agent for such Lenders as may be appointed from
time to time pursuant to Article IX hereof (the "Agent");
----------
W I T N E S S E T H:
--------------------
WHEREAS, Intermet, the Agent, the Lenders and certain other financial
institutions entered into that certain Credit Agreement dated as of August 31,
1992, as amended and restated pursuant to that certain Amended and Restated
Credit Agreement dated as of August 21, 1995 (as amended up to the date hereof,
the "Prior Credit Agreement") providing certain credit facilities to Intermet;
WHEREAS, Intermet has requested, and the Agent and Lenders have
agreed, to extend certain of the credit facilities provided in the Prior Credit
Agreement, to amend the interest rate and certain other provisions thereof and
to make certain other amendments as set forth herein;
WHEREAS, the parties wish to amend and restate the Prior Credit
Agreement on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Intermet, the Lenders, and the Agent agree, upon the
terms and subject to the conditions set forth herein as follows:
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<PAGE>
ARTICLE I.
DEFINITIONS; CONSTRUCTION
-------------------------
SECTION 1.01. DEFINITIONS. In addition to the other terms defined
-----------
herein, the following terms used herein shall have the meanings herein specified
(to be equally applicable to both the singular and plural forms of the terms
defined):
"Acquisition" shall mean any transaction, or any series of related
-----------
transactions, by which Intermet and/or any of its Subsidiaries directly or
indirectly (a) acquires any ongoing business or all or substantially all of the
assets of any Person or division thereof, whether through purchase of assets,
merger or otherwise, (b) acquires (in one transaction or as the most recent
transaction in a series of transactions) control of at least a majority in
ordinary voting power of the securities of a Person which have ordinary voting
power for the election of directors or (c) otherwise acquires control of a 50%
or more ownership interest in any such Person.
"Adjusted LIBO Rate" shall mean, with respect to each Interest Period
------------------
for a Eurodollar Advance, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined pursuant to the following formula:
Adjusted LIBO Rate = LIBOR
-------------------------------
1.00 - LIBOR Reserve Percentage
As used herein, LIBOR Reserve Percentage shall mean, for any Interest Period for
a Eurodollar Advance, the reserve percentage (expressed as a decimal) equal to
the then stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or against any successor
category of liabilities as defined in Regulation D).
"Advance" shall mean any principal amount advanced and remaining
-------
outstanding at any time under (i) the Syndicated Loans, which Advances shall be
made or outstanding as Base Rate Advances,
-2-
<PAGE>
Overnight Rate Advances or Eurodollar Advances, as the case may be, and (ii) the
Bid Rate Loans, which Advances shall be made or outstanding as Bid Rate
Advances.
"Affiliate" of any Person means any other Person directly or
---------
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For 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.
"Agent" shall mean SunTrust Bank, Atlanta, formerly known as Trust
-----
Company Bank, a Georgia banking corporation and any successor agent appointed
pursuant to Section 9.10 hereof.
------------
"Agreement" shall mean this Second Amended and Restated Credit
---------
Agreement, as amended, modified, restated, or supplemented from time to time.
"Applicable Margin" shall mean, with respect to all outstanding
-----------------
Eurodollar Advances and Letter of Credit Obligations through March 31, 1996, one
half of one percent (0.50%) per annum, and with respect to all outstanding
Eurodollar Advances and Letter of Credit Obligations during each fiscal quarter
thereafter, the percentage determined for such fiscal quarter from the chart set
forth below based on Intermet's ratio of Funded Debt to Consolidated EBITDA and
Leverage Ratio determined as of the end of each fiscal quarter, with any change
to the Applicable Margin to be immediately effective on the first day of the
second fiscal quarter thereafter:
LEVERAGE RATIO
--------------
FUNDED DEBT TO LESS THAN
CONSOLIDATED OR EQUAL TO GREATER
EBITDA RATIO 60% THAN 60%
- ------------------ ----------- -------
Greater than
3.0:1.0 1.00% 1.50%
Less than or
Equal to 3.0:1.0
and Greater than
2.50:1.0 0.75% 1.125%
Less than or
Equal to 2.5:1.0
and Greater than
2.0:1.0 0.625% 1.00%
Less than or
Equal to 2.0:1.0 0.50% 0.75%
-3-
<PAGE>
provided, however, if Intermet fails to deliver its financial statements for
- -------- -------
such second preceding fiscal quarter pursuant to Section 6.07 prior to the first
------------
day of the then-current fiscal quarter, the Applicable Margin with respect to
Eurodollar Advances and Letter of Credit Obligations during such current fiscal
quarter shall be 1.50%. By way of example, as of the first day of the fourth
fiscal quarter of Intermet, the Applicable Margin with respect to Eurodollar
Advances and Letter of Credit Obligations outstanding hereunder shall be
calculated based upon the ratio of Funded Debt to Consolidated EBITDA and
Leverage Ratio of Intermet reported for the second fiscal quarter of such fiscal
year of Intermet.
"Asset Sale" shall mean any sale or other disposition (or a series of
----------
related sales or other dispositions), including without limitation, loss,
damage, destruction or taking, by any Consolidated Company to any Person other
than a Consolidated Company, of any property or asset (including capital stock
but excluding the issuance and sale by Intermet of its own capital stock) having
an aggregate Asset Value in excess of $500,000, other than sales or other
dispositions made in the ordinary course of business of any Consolidated
Company.
"Asset Value" shall mean, with respect to any property or asset of any
-----------
Consolidated Company as of any particular date, an amount equal to the greater
of (i) the then book value of such property or asset as established in
accordance with GAAP, and (ii) the then fair market value of such property or
asset as determined in good faith by the board of directors (or equivalent
governing body in the case of any Foreign Subsidiary) of such Consolidated
Company.
"Assignment and Acceptance" shall mean an assignment and acceptance
-------------------------
entered into by a Lender and an Eligible Assignee in accordance with the terms
of this Agreement and substantially in the form of Exhibit K.
---------
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as amended
---------------
and in effect from time to time (11 U.S.C. (S) 101 et seq.).
-- ----
"Base Rate" shall mean the higher of (with any change in the Base
---------
Rate to be effective as of the date of change of either of the following rates):
(a) the rate which the Agent publicly announces from time to time to
be its prime lending rate, as in effect from time to time, and
-4-
<PAGE>
(b) the Federal Funds Rate, as in effect from time to time, plus one-
----
half of one percent (0.50%) per annum.
The Agent's prime lending rate is a reference rate and does not necessarily
represent the lowest or best rate charged to customers; the Agent may make
commercial loans or other loans at rates of interest at, above or below the
Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance made or outstanding as (i) a
-----------------
Syndicated Loan bearing interest based on the Base Rate, or (ii) an Advance
bearing interest at the rate agreed upon between Intermet and the Lenders
pursuant to Section 3.08, Section 3.09 or Section 3.10.
------------ ------------ ------------
"Bid Accept/Reject Letter" shall mean a notification made by Intermet
------------------------
pursuant to Section 2.08 substantially in the form of Exhibit G.
------------ ---------
"Bid Facility Note" shall mean a promissory note of Intermet payable
-----------------
to the order of any Lender, in substantially the form of Exhibit B hereto,
---------
evidencing the maximum aggregate prin cipal indebtedness of Intermet to such
Lender with respect to outstanding Bid Rate Advances made by such Lender
pursuant to this Agreement, either as originally executed or as it may be from
time to time supplemented, modified, amended, renewed or extended.
"Bid Rate" shall mean, as to any Bid Rate Bid made by a Lender
--------
pursuant to Section 2.08, the fixed rate of interest per annum offered by the
------------
Lender making the Bid Rate Bid for the relevant Interest Period.
"Bid Rate Advance" shall mean an Advance made by a Lender to Intermet
----------------
pursuant to the bidding procedure described in Section 2.08.
------------
"Bid Rate Bid" shall mean an offer by a Lender to make a Bid Rate
------------
Loan pursuant to Section 2.08.
------------
"Bid Rate Loan" shall mean a Borrowing made up of Ad vances by all of
-------------
those Lenders whose Bid Rate Bids have been accepted by Intermet pursuant to the
same Bid Request under the bidding procedure described in Section 2.08 for the
------------
same Interest Period and interest rate (with the understanding that two Bid Rate
Loans may be made pursuant to a single Bid Request).
-5-
<PAGE>
"Bid Request" shall mean a request made by Intermet pursuant to
-----------
Section 2.08 substantially in the form of Exhibit D.
- ------------ ---------
"Borrowing" shall mean the incurrence by Intermet under any Facility
---------
of Advances of one Type concurrently having the same Interest Period or the
continuation or conversion of an existing Borrowing or Borrowings in whole or in
part.
"Business Day" shall mean:
------------
(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are required or authorized to close in Atlanta, Georgia or New
York, New York; and
(b) relative to the making, continuing, prepaying or repaying of any
Eurodollar Advances, any day on which trading is carried on by and between banks
in deposits of Dollars in the London interbank market.
"Change in Control Provision" shall mean any term or provision
---------------------------
contained in any indenture, debenture, note, or other agreement or document
evidencing or governing Indebtedness of Intermet evidencing debt or a commitment
to extend loans in excess of $5,000,000 which requires, or permits the holder(s)
of such Indebtedness of Intermet to require that such Indebtedness of Intermet
be redeemed, repurchased, defeased, prepaid or repaid, either in whole or in
part, or the maturity of such Indebtedness of Intermet to be accelerated in any
respect, as a result of a change in ownership of the capital stock of Intermet
or voting rights with respect thereto.
"Closing Date" shall mean the date on or before February 23, 1996 on
------------
which the initial Loans are made or deemed to have been made hereunder and the
conditions set forth in Section 4.01 are satisfied or waived in accordance with
------------
Section 10.02.
- --------------
"Columbus Neunkirchen" shall mean Columbus Neunkirchen Foundry, GmbH,
--------------------
a German company with limited liability and an indirect, wholly-owned Subsidiary
of Intermet.
"Commitment" shall mean, for any Lender at any time, the amount of
----------
such commitment set forth opposite such Lender's name on the signature pages
hereof, as the same may be increased or decreased from time to time as a result
of any reduction thereof pursuant to Section 2.03, any assignment thereof
------------
pursuant to Section 10.06, or any amendment thereof pursuant to Section 10.02.
------------- -------------
-6-
<PAGE>
"Consolidated Companies" shall mean, collectively, Intermet and all
----------------------
of its Subsidiaries.
"Consolidated EBIT" shall mean, for any fiscal period of Intermet, an
-----------------
amount equal to (A) the sum for such fiscal period of Consolidated Net Income
(Loss) and, to the extent deducted in determining such Consolidated Net Income
(Loss), provisions for (i) taxes based on income and (ii) Consolidated Interest
Expense, minus (B) any items of gain (or plus any items of loss) which were
----- ----
included in determining such Consolidated Net Income (Loss) and were (x) not
realized in the ordinary course of business (whether or not classified as
"ordinary" by GAAP), (y) the result of any sale of assets, or (z) resulting from
minority investments, together in the case of (x), (y) or (z), any related
provision for taxes included in Consolidated Net Income (Loss) with respect
thereto.
"Consolidated EBITDA" shall mean for any fiscal period of Intermet, an
-------------------
amount equal to the sum of Consolidated EBIT plus depreciation and amortization
----
expense to the extent deducted in determining Consolidated Net Income (Loss),
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITR" shall mean, for any fiscal period of Intermet, an
------------------
amount equal to the sum of Consolidated EBIT plus Consolidated Rental Expense
----
for such period.
"Consolidated Interest Expense" shall mean, for any fiscal period of
-----------------------------
Intermet, total interest expense of the Consolidated Companies (including
without limitation, interest expense attributable to capitalized leases in
accordance with GAAP, all commissions, discounts and other fees and charges owed
with respect to bankers acceptance financing, and total interest expense
(whether shown as interest expense or as loss and expenses on sale of
receivables) under a receivables purchase facility) determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any fiscal period of
------------------------------
Intermet, the net income (or loss) of the Consolidated Companies on a
consolidated basis for such period (taken as a single accounting period)
determined in conformity with GAAP, but excluding therefrom (to the extent
otherwise included therein) (i) any income or loss of any Person accrued prior
to the date such Person becomes a Subsidiary of Intermet or is merged into or
consolidated with any Consolidated Company or all or substantially all of such
Person's assets are acquired by any Consolidated Company, and (ii) the income of
any Consolidated Company to the extent that the declaration or payment of
-7-
<PAGE>
dividends or similar distributions by such Consolidated Company of that in come
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation.
"Consolidated Net Worth" shall mean, as of any date of determination,
----------------------
Shareholders' Equity of Intermet.
"Consolidated Rental Expense" shall mean, for any fiscal period of
---------------------------
Intermet, the operating lease expense of the Consolidated Companies determined
in accordance with GAAP for leases with a term greater than one year, as
disclosed in the notes to Intermet's consolidated financial statements of the
Consolidated Companies, determined on a consolidated basis in accordance with
GAAP.
"Contractual Obligation" of any Person shall mean any provision of any
----------------------
security issued by such Person or of any agreement, instrument or undertaking
under which such Person is obligated or by which it or any of the property owned
by it is bound.
"Credit Documents" shall mean, collectively, this Agreement, the
----------------
Notes, the Letters of Credit, the Guaranty Agreements, the Pledge Agreements,
and all other Security Documents, if any.
"Credit Parties" shall mean, collectively, each of Intermet, the
--------------
Guarantors, and every other Person who from time to time executes a Security
Document with respect to all or any portion of the Obligations.
"Default" shall mean any condition or event which, with notice or
-------
lapse of time or both, would constitute an Event of Default.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money
------ ----------- -
of the United States of America.
"Eligible Assignee" shall mean (i) a commercial bank organized under
-----------------
the laws of the United States, or any state thereof, having total assets in
excess of $1,000,000,000 or any commercial finance or asset based lending
Affiliate of any such commercial bank and (ii) any Lender, in each case, which
has the Minimum Required Rating, unless otherwise agreed by the Agent.
"Environmental Laws" shall mean all federal, state, local and foreign
------------------
statutes and codes or regulations, rules or ordinances issued, promulgated, or
-8-
<PAGE>
approved thereunder, now or hereafter in effect (including, without limitation,
those with respect to asbestos or asbestos containing material or exposure to
asbestos or asbestos containing material), relating to pollution or protection
of the environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous Substance,
petroleum including crude oil or any fraction thereof, any petroleum product or
other waste, chemicals or substances regulated by any Environmental Law into the
environment (including without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), or (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of any Hazardous Substance, petroleum including crude oil or any
fraction thereof, any petroleum product or other waste, chemicals or substances
regulated by any Environmental Law, and (iii) underground storage tanks and
related piping, and emissions, discharges and releases or threatened releases
therefrom, such Environmental Laws to include, without limitation (i) the Clean
Air Act (42 U.S.C. (S) 7401 et seq.), (ii) the Clean Water Act (33 U.S.C. (S)
-------
1251 et seq.), (iii) the Resource Conservation and Recovery Act (42 U.S.C. (S)
-------
6901 et seq.), (iv) the Toxic Substances Control Act (15 U.S.C. (S) 2601 et
------- --
seq.), (v) the Comprehensive Environmental Response Compensation and Liability
- ----
Act, as amended by the Superfund Amendments and Reauthorization Act (42 U.S.C.
(S) 9601 et seq.), and (vi) all applicable national and local laws or
------
regulations with respect to environmental control (including applicable laws of
the Federal Republic of Germany or any applicable international agreements).
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each trade
---------------
or business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
the regulations promulgated under Section 414 of the Tax Code.
"Eurodollar Advance" shall mean an Advance made or outstanding as a
------------------
Syndicated Loan bearing interest based on the Ad justed LIBO Rate.
"Event of Default" shall have the meaning provided in Article VIII.
---------------- ------------
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<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time, and any successor statute thereto.
"Executive Officer" shall mean with respect to any Person, the
-----------------
President, Chief Executive Officer, Vice Presidents, Chief Financial Officer,
Treasurer, Secretary and any Person holding comparable offices or duties.
"Facility" or "Facilities" shall mean the Commitments, or the Bid Rate
-------- ----------
subfacility or the Letter of Credit facility, as the context may indicate.
"Federal Funds Rate" shall mean for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of Atlanta, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"Fixed Charge Coverage Ratio" shall mean, as of the last day of any
---------------------------
fiscal quarter of Intermet, the ratio of (A) Consolidated EBITR to (B) the sum
of the amounts of (i) Consolidated Interest Expense, and (ii) Consolidated
Rental Expense, in each case, calculated with respect to the immediately
preceding four fiscal quarters ending on such date.
"Foreign Plan" shall mean any pension, profit sharing, deferred
------------
compensation, or other employee benefit plan, program or arrangement maintained
by any Foreign Subsidiary which, under applicable local law, is required to be
funded through a trust or other funding vehicle, but shall not include any
benefit provided by a foreign government or its agencies.
"Foreign Subsidiary" shall mean each Consolidated Company that is
------------------
organized under the laws of a jurisdiction other than the United States of
America or any State thereof.
"Funded Debt" shall mean all Indebtedness for money borrowed,
-----------
Indebtedness evidenced or secured by purchase money Liens, capitalized leases,
conditional sales contracts and similar title retention debt instruments,
whether designated as long term or current date under GAAP. The calculation of
Funded Debt shall include (i) all Funded Debt of the Consolidated Companies,
-10-
<PAGE>
plus (ii) all Funded Debt of other Persons to the extent guaranteed by a
- ----
Consolidated Company, to the extent supported by a letter of credit issued for
the account of a Consolidated Company, or as to which and to the extent which a
Consolidated Company or its assets otherwise have become liable for payment
thereof, plus (iii) the redemption amount with respect to the stock of any
----
Consolidated Company required to be redeemed during the next succeeding twelve
months.
"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 other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Guarantors" shall mean, collectively, Intermet Foundries, Inc.,
----------
Columbus Foundries, Inc., Lynchburg Foundry Company, Ironton Iron, Inc.,
Northern Castings Corporation, Intermet International, Inc., Intermet
Machining, Inc., Commercial and Precision Machining, Inc., New River Castings
Company, Alexander City Castings Company, Inc. and all other domestic
Subsidiaries formed or acquired after the Closing Date.
"Guaranty" shall mean any contractual obligation, contingent or
--------
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which guaranty is made or, if not so 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.
-11-
<PAGE>
"Guaranty Agreements" shall mean, collectively, the Amended and
-------------------
Restated Guaranty Agreement, dated as of even date herewith, executed by each of
the Guarantors in favor of the Lenders and the Agent, substantially in the form
of Exhibit H as the same may be amended, restated or supplemented from time to
time.
"Hazardous Substances" shall have the meaning assigned to that term in
--------------------
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Acts of 1986.
"Indebtedness" of any Person shall mean, without duplication (i) all
------------
obligations of such Person which in accordance with GAAP would be shown on the
balance sheet of such Person as a liability (including, without limitation,
obligations for borrowed money and for the deferred purchase price of property
or services, and obligations evidenced by bonds, debentures, notes or other
similar instruments); (ii) all rental obligations under leases required to be
capitalized under GAAP; (iii) all Guaranties of such Person (including
contingent reimbursement obligations under undrawn letters of credit); (iv)
Indebtedness of others secured by any Lien upon property owned by such Person,
whether or not assumed; and (v) obligations or other liabilities under currency
contracts, interest rate hedging contracts, or similar agreements or
combinations thereof to the extent required to be disclosed in accordance with
GAAP.
"Intercreditor Agreement" shall mean that certain Intercreditor
-----------------------
Agreement dated as of December 11, 1992 by and among the Lenders and The
Prudential Insurance Company of America, as amended by that certain First
Amendment to Intercreditor Agreement dated as of August 21, 1995, as further
amended by that certain Second Amendment to Intercreditor Agreement, dated as of
even date herewith or such later date as shall be agreed to by the parties, as
hereafter further amended, modified or supplemented.
"Interest Period" shall mean (i) as to any Eurodollar Advances, the
---------------
interest period selected by Intermet pursuant to Section 3.04(a) hereof, and
---------------
(ii) as to any Bid Rate Advances, the interest period requested by Intermet and
agreed to by the participating Lenders pursuant to Section 3.04(b) hereof.
---------------
"Intermet" shall mean Intermet Corporation, a Georgia corporation,
--------
its successors and permitted assigns.
"Investment" shall mean, when used with respect to any Person, any
----------
direct or indirect advance, loan or other extension of credit (other than the
creation of receivables in the ordinary
-12-
<PAGE>
course of business) or capital contribution by such Person (by means of
transfers of property to others or payments for property or services for the
account or use of others, or otherwise) to any Person, or any direct or indirect
purchase or other acquisition by such Person of, or of a beneficial interest in,
capital stock, partnership interests, bonds, notes, debentures or other
securities issued by any other Person, in each case, other than an Acquisition.
Each Investment shall be valued as of the date made; provided that any
Investment or portion of an Investment consisting of Debt shall be valued at the
outstanding principal balance thereof as of the date of determination.
"Lender" or "Lenders" shall mean SunTrust, the other banks and lending
------ -------
institutions listed on the signature pages hereof, and each assignee thereof, if
any, pursuant to Section 10.06(c).
----------------
"Lending Office" shall mean for each Lender the office such Lender may
--------------
designate in writing from time to time to Intermet and the Agent with respect to
each Type of Loan.
"Letter of Credit Fee" shall have the meaning set forth in Section
-------------------- -------
3.05(b).
- -------
"Letters of Credit" shall mean the letters of credit issued pursuant
-----------------
to Article II hereof by the Agent for the account of Intermet pursuant to the
----------
Commitments.
"Letter of Credit Obligations" shall mean, with respect to Letters of
----------------------------
Credit, as at any date of determination, the sum of (a) the maximum aggregate
amount which at such date of determination is available to be drawn by the
beneficiaries thereof (assuming the conditions for drawing thereunder have been
met) under all Letters of Credit then outstanding, plus (b) the aggregate amount
----
of all drawings under Letters of Credit honored by the Agent not theretofore
reimbursed by Intermet.
"Leverage Ratio" shall mean, as of any date of determination, the
--------------
ratio, expressed as a percentage, of Funded Debt to Total Capitalization for the
Consolidated Companies.
"LIBOR" shall mean, for any Interest Period, with respect to
-----
Eurodollar Advances under the Commitments, the offered rate for deposits in
Dollars, for a period comparable to the Interest Period and in an amount
comparable to the Agent's portion
-13-
<PAGE>
of such Advances, appearing on the Reuters Screen LIBO Page as of 11:00 AM
(London, England time) on the day that is two Business Days prior to the first
day of the Interest Period. If two or more of such rates appear on the Reuters
Screen LIBO Page, the rate shall be the arithmetic mean of such rates. If the
foregoing rate is unavailable from the Reuters Screen for any reason, then such
rate shall be determined by the Agent from Telerate Page 3750 or, if such rate
is also unavailable on such service, then on any other interest rate reporting
service of recognized standing designated in writing by the Agent to Intermet
and the other Lenders; in any such case rounded, if necessary, to the next
higher 1/16 of 1.0%, if the rate is not such a multiple.
"Lien" shall mean any mortgage, pledge, security interest, lien,
----
charge, hypothecation, assignment, deposit arrangement, title retention,
preferential property right, trust or other arrangement having the practical
effect of the foregoing and shall include the interest of a vendor or lessor
under any conditional sale agreement, capitalized lease or other title retention
agreement.
"Loans" shall mean, collectively, the Syndicated Loans and the Bid
-----
Rate Loans.
"Margin Regulations" shall mean Regulation G, Regulation T, Regulation
------------------
U and Regulation X of the Board of Governors of the Federal Reserve System, as
the same may be in effect from time to time.
"Materially Adverse Effect" shall mean any materially adverse change
-------------------------
in (i) the business, results of operations, financial condition, assets or
prospects of the Consolidated Companies, taken as a whole, (ii) the ability of
Intermet to perform its obligations under this Agreement, (iii) the ability of
the other Credit Parties (taken as a whole) to perform their respective
obligations under the Credit Documents, or (iv) the perfection or priority of
the Liens granted in favor of the Agent pursuant to the Security Documents.
"Maturity Date" shall mean the earlier of (i) February 23, 1999, and
-------------
(ii) the date on which all amounts outstanding under this Agreement have been
declared or have automatically become due and payable pursuant to the provisions
of Article VIII.
------------
"Minimum Required Rating" shall mean (i) from Moody's, a long-term
-----------------------
deposit rating of A1 or higher (or comparable rating in the event Moody's
hereafter modifies its rating system for long-term deposits of commercial
banks), and (ii) from S&P, a long-term deposit rating of A+ or higher (or
comparable rating in the event S&P hereafter modifies its rating system for
long-term deposits of commercial banks).
-14-
<PAGE>
"Moody's" shall mean Moody's Investors Service, Inc., and its
-------
successors and assigns.
"Multiemployer Plan" shall have the meaning set forth in Section
------------------
4001(a)(3) of ERISA.
"Net Fixed Assets" shall mean, as of any date of determination, the
----------------
net property, plant and equipment of the Consolidated Companies determined in
accordance with GAAP and as reflected on the balance sheet of Intermet.
"Note Purchase Agreement" shall mean that certain Note Purchase
-----------------------
Agreement dated as of December 11, 1992 by and between Intermet and The
Prudential Insurance Company of America, as amended, modified or supplemented.
"Notes" shall mean, collectively, the Revolving Credit Notes and the
-----
Bid Facility Notes.
"Notice of Borrowing" shall have the meaning provided in Section
------------------- -------
3.01(a)(i).
- ----------
"Notice of Continuation/Conversion" shall have the meaning provided
---------------------------------
in Section 3.01(b)(i).
------------------
"Obligations" shall mean all amounts owing to the Agent or any Lender
-----------
pursuant to the terms of this Agreement or any other Credit Document, including
without limitation, all Loans (including all principal and interest payments due
thereunder), all Letter of Credit Obligations, fees, expenses, indemnification
and reimbursement payments, indebtedness, liabilities, and obligations of the
Credit Parties, direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising, together with all renewals,
extensions, modifications or refinancings thereof.
"Overnight Advances" shall mean Advances hereunder bearing interest
------------------
based upon the Overnight Rate.
"Overnight Rate" shall mean the rate per annum determined by the Agent
--------------
in good faith as of 11:00 A.M. (local time for the Agent) on each Business Day
to be the rate at which overnight loans are made available to the Agent by the
Federal Reserve Bank of Atlanta, with such rate to remain in effect until
redetermined by the Agent on the next Business Day.
-15-
<PAGE>
"Payment Office" shall mean the office specified as the "Payment
--------------
Office" for the Agent on the signature page of the Agent, or such other location
as to which the Agent shall have given written notice to Intermet and the
Lenders.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
----
successor thereto.
"Permitted Liens" shall mean those Liens expressly permitted by
---------------
Section 7.02.
- ------------
"Person" shall mean any individual, partnership, firm, corporation,
------
association, joint venture, trust or other entity, or any government or
political subdivision or agency, department or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined in Section
----
3(3) of ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including post-
retirement medical), hospitalization, accident, sickness, disability, or life
insurance benefits, but shall exclude any Foreign Plan.
"Pledge Agreement" shall mean, collectively, (i) that certain Pledge
----------------
and Security Agreement executed in favor of the Agent in connection with the
Prior Credit Agreement providing for the grant of first-priority Liens on 66% of
the outstanding stock of Columbus Neunkirchen, and (ii) any other pledge
agreement providing for the grant of first priority Liens on the Pledged Stock.
"Pledged Stock" shall mean, collectively, 49% of the issued and
-------------
outstanding capital stock, together with all warrants, stock options, and other
purchase and conversion rights with respect to such capital stock, of all
Subsidiaries that are Foreign Subsidiaries directly owned by Intermet and/or
owned by one or more other Subsidiaries organized in the United States (other
than Columbus Neunkirchen following the release of the Lien on the stock of
Columbus Neunkirchen pursuant to Section 6.11).
"Prior Credit Agreement" shall have the meaning set forth in the
----------------------
recitals hereof.
"Pro Rata Share" shall mean, with respect to Commitments, each
--------------
Syndicated Loan and all Letters of Credit to be made by and each payment
-16-
<PAGE>
(including, without limitation, any payment of principal, interest or fees) to
be made to each Lender, the percentage designated as such Lender's Pro Rata
Share of such Commitments, set forth under the name of such Lender on the
respective signature page for such Lender, as such percentage may change based
upon amendments and assignments hereunder.
"Prudential" shall mean The Prudential Insurance Company of America.
----------
"Rating Agencies" shall mean, collectively, Moody's and S&P.
---------------
"Regulation D" shall mean Regulation D of the Board of Governors of
------------
the Federal Reserve System, as the same may be in effect from time to time.
"Required Lenders" shall mean at any time prior to the termination of
----------------
the Commitments, Lenders holding at least 66-2/3% of the then aggregate amount
of the Commitments, or, following the termination of the Commitments hereunder,
Lenders holding at least 66-2/3% of the sum of the aggregate outstanding Loans
and Letter of Credit Obligations.
"Requirement of Law" for any person shall mean the articles or
------------------
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other governmental authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
-17-
<PAGE>
"Reuters Screen" shall mean, when used in connection with any
--------------
designated page and LIBOR, the display page so designated on the Reuters Monitor
Money Rates Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to LIBOR).
"Revolving Credit Notes" shall mean, collectively, the promissory
----------------------
notes evidencing the Syndicated Loans in the form attached hereto as Exhibit A,
---------
either as originally executed or as hereafter amended, modified or substituted.
"Security Documents" shall mean, collectively, the Guaranty
------------------
Agreements, the Pledge Agreements, and each other guaranty agreement, mortgage,
deed of trust, security agreement, pledge agreement, or other security or
collateral document guaranteeing or securing the Obligations, as the same may be
amended, restated, or supplemented from time to time.
"Shareholders' Equity" shall mean, with respect to any Person as at
--------------------
any date of determination, shareholders' equity of such Person determined on a
consolidated basis in conformity with GAAP.
"Solvent" shall mean, as to Intermet or any Guarantor at any time,
-------
that (i) each of the fair value and the present fair saleable value of such
Person's assets (including any rights of subrogation or contribution to which
such Person is entitled, under any of the Loan Documents or otherwise) is
greater than such Person's debts and other liabilities (including contingent,
unma tured and unliquidated debts and liabilities) and the maximum estimated
amount required to pay such debts and liabilities as such debts and liabilities
mature or otherwise become payable; (ii) such Person is able and expects to be
able to pay its debts and other liabilities (including, without limitation,
contingent, unmatured and unliquidated debts and liabilities) as they mature;
and (iii) such Person does not have unreasonably small capital to carry on its
business as conducted and as proposed to be conducted.
"Subordinated Debt" shall mean other Indebtedness of Intermet
-----------------
subordinated to all obligations of Intermet or any other Credit Party arising
under this Agreement, the Notes, and the Guaranty Agreements on terms and
conditions satisfactory in all respects to the Agent and the Required Lenders,
including without limitation, with respect to interest rates, payment terms,
-18-
<PAGE>
maturities, amortization schedules, covenants, defaults, remedies, and
subordination provisions, as evidenced by the written approval of the Agent and
Required Lenders.
"Subsidiary" shall mean, with respect to any Person, any corporation
----------
or other entity (including, without limitation, partnerships, joint ventures,
and associations) regardless of its jurisdiction of organization or formation,
at least a majority of the total combined voting power of all classes of voting
stock or other ownership interests of which shall, at the time as of which any
determination is being made, be owned by such Person, either directly or
indirectly through one or more other Subsidiaries.
"Syndicated Loans" shall mean, collectively, all outstanding Loans
----------------
made to Intermet by the Lenders pursuant to Section 2.01 hereof.
------------
"Tangible Net Worth" shall mean, as of any date of determination,
------------------
Consolidated Net Worth minus intangible assets of the Consolidated Companies, as
-----
determined in accordance with GAAP as of the last day of the most recent fiscal
quarter of Intermet.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended
--------
and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
-----
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any designated
--------
page and LIBOR, the display page so designated on the Dow Jones Telerate Service
(or such other page as may replace that page on that service for the purpose of
displaying rates comparable to LIBOR).
"Total Assets" shall mean the total assets of the Consolidated
------------
Companies, determined in accordance with GAAP.
-19-
<PAGE>
"Total Capitalization" shall mean, as of any date of determination,
--------------------
the sum of Funded Debt and Consolidated Net Worth of the Consolidated Companies.
"Type" of Borrowing shall mean a Borrowing consisting of Base Rate
----
Advances, Overnight Rate Advances or Eurodollar Advances.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATION. Unless otherwise
----------------------------------
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared, and all financial records
shall be maintained in accordance with, GAAP, except that financial records of
Foreign Subsidiaries may be maintained in accordance with generally accepted
accounting principles in effect from time to time in the jurisdiction of
organization of such Foreign Subsidiary; provided, however, that compliance with
-------- -------
the financial covenants and calculations set forth in Section 6.08, Article VII,
------------ -----------
and elsewhere herein, and in the definitions used in such covenants and
calculations, shall be calculated, made and applied in accordance with GAAP and
such generally accepted accounting principles in such foreign jurisdictions, as
the case may be, as in effect on the date of this Agreement applied on a basis
consistent with the preparation of the financial statements referred to in
Section 5.14 unless and until Intermet and the Required Lenders enter into an
- ------------
agreement with respect thereto in accordance with Section 10.13.
-------------
SECTION 1.03. OTHER DEFINITIONAL TERMS. 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. Any of the terms defined in Section
-------
1.01 may, unless the context otherwise requires, be used in the singular or the
- ----
plural depending on the reference.
SECTION 1.04. EXHIBITS AND SCHEDULES. All Exhibits and Schedules
----------------------
attached hereto are by reference made a part hereof.
-20-
<PAGE>
ARTICLE II.
SYNDICATED LOANS, BID RATE LOANS AND LETTERS OF CREDIT
------------------------------------------------------
SECTION 2.01. COMMITMENTS; USE OF PROCEEDS.
----------------------------
(a) Subject to and upon the terms and conditions herein set forth,
each Lender severally agrees to make to Intermet from time to time on and after
the Closing Date, but prior to the Maturity Date, Syndicated Loans in an
aggregate amount outstanding at any time not to exceed such Lender's Commitment
minus such Lender's Pro Rata Share of the Letter of Credit Obligations, subject,
- -----
however, to the conditions that (i) at no time shall the sum of the (x) the
outstanding principal amount of all Syndicated Loans, plus (y) the outstanding
----
principal amount of all Bid Rate Loans, plus (z) the Letter of Credit
----
Obligations, exceed the sum of the Commitments, (ii) at no time shall the sum of
(x) the outstanding principal amount of all Bid Rate Loans plus (y) the
----
outstanding principal amount of Syndicated Loans comprised of Overnight Rate
Advances, exceed $30,000,000, and (iii) at all times shall the outstanding
principal amount of the Syndicated Loans of each Lender equal the product of
each Lender's Pro Rata Share of the Commitments multiplied by the aggregate
outstanding amount of the Syndicated Loans. Intermet shall be entitled to repay
and reborrow Syndicated Loans in accordance with the provisions hereof.
(b) Each Syndicated Loan shall, at the option of Intermet, be made or
continued as, or converted into, part of one or more Borrowings that shall
consist entirely of Base Rate Advances, Eurodollar Advances, or subject to the
limitation set forth in subsection (a) above, Overnight Rate Advances. The
aggregate principal amount of each Borrowing of Syndicated Loans shall be not
less than $3,000,000 or a greater integral multiple of $250,000, provided that
--------
each Borrowing of Syndicated Loans comprised of Base Rate Advances or Overnight
Rate Advances shall be not less than $1,000,000 or a greater integral multiple
of $100,000. At no time shall the number of outstanding Borrowings comprised of
Eurodollar Advances exceed twelve.
(c) The proceeds of Loans shall be used solely for the following
purposes:
-21-
<PAGE>
(i) On the Closing Date all amounts outstanding pursuant to the Prior
Credit Agreement and the letters of credit issued thereunder shall be deemed to
be outstanding hereunder and the Lenders shall make and receive such payments as
the Agent shall direct to pay out the exiting lenders under the Prior Credit
Agreement and to adjust the Pro Rata Shares of the Lenders to reflect the terms
of this Agreement; and
(ii) All other amounts shall be used as working capital and for other
general corporate purposes, including acquisitions, the repayment of
Indebtedness and capital expenditures of the Consolidated Companies.
SECTION 2.02. NOTES; REPAYMENT OF PRINCIPAL.
-----------------------------
(a) Intermet's obligations to pay the principal of, and interest on,
the Syndicated Loans to each Lender shall be evi denced by the records of the
Agent and such Lender and by the Revolving Credit Note payable to such Lender
(or the assignor of such Lender) completed in conformity with this Agreement.
(b) All outstanding principal amounts under the Commitments shall be
due and payable in full on the Maturity Date.
SECTION 2.03. VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least
----------------------------------
three (3) Business Days' prior telephonic notice (promptly confirmed in writing)
to the Agent, Intermet shall have the right, without premium or penalty, to
terminate the unutilized Commitments, in part or in whole, provided that (i) any
such termination shall apply to proportionately and permanently reduce the
Commitments of each of the Lenders, and (ii) any partial termination pursuant to
this Section 2.03 shall be in an amount of at least $1,000,000 and integral
------------
multiples of $100,000.
SECTION 2.04. LETTER OF CREDIT FACILITY. Subject to, and upon the
-------------------------
terms and conditions set forth herein, Intermet may request, in accordance with
the provisions of this Section 2.04 and Section 2.05 and the other terms of this
------------ ------------
Agreement, that on and after the Closing Date but prior to the Maturity Date,
the Agent issue a Letter or Letters of Credit for the account of Intermet;
provided that the application for such Letters of Credit issued by the Agent
- --------
shall be in the form substantially identical to Exhibit C attached hereto,
---------
provided further that (i) no Letter
- ----------------
-22-
<PAGE>
of Credit shall have an expiration date that is later than one year after the
date of issuance thereof (provided that a Letter of Credit may provide that it
is extendible for consecutive one year periods); (ii) except for the terms of
certain Letters of Credit described on Schedule 7.01 in no event shall any
-------------
Letter of Credit issued by the Agent have an expiration date (or be extended so
that it will expire) later than the Maturity Date; and (iii) Intermet shall not
request that the Agent issue any Letter of Credit, if, after giving effect to
such issuance, the sum of the aggregate Letter of Credit Obligations plus the
----
aggregate outstanding principal amount of the Syndicated Loans plus the
----
aggregate outstanding principal amount of the Bid Rate Loans would exceed the
Commitments.
SECTION 2.05. NOTICE OF ISSUANCE OF LETTER OF CREDIT; AGREEMENT TO
----------------------------------------------------
ISSUE.
- -----
(a) Whenever Intermet desires the issuance of a Letter of Credit, it
shall, in addition to any application and documentation procedures required by
the Agent for the issuance of such Letter of Credit, deliver to the Agent a
written notice no later than 11:00 AM (local time for the Agent) at least five
(5) days in advance of the proposed date of issuance and the Agent shall
promptly forward a copy of such notice to each of the Lenders. Each such notice
shall specify (i) the proposed date of issuance (which shall be a Business Day);
(ii) the face amount of the Letter of Credit; (iii) the expiration date of the
Letter of Credit; and (iv) the name and address of the beneficiary with respect
to such Letter of Credit and shall attach a precise description of the
documentation and a verbatim text of any certificate to be presented by the
beneficiary of such Letter of Credit which would require the Agent to make
payment under the Letter of Credit, provided that the Agent may require changes
--------
in any such documents and certificates in accordance with its customary letter
of credit practices, and provided further, that no Letter of Credit shall
-------- -------
require payment against a conforming draft to be made thereunder on the same
Business Day that such draft is presented if such presentation is made after
11:00 AM (Atlanta, Georgia time). In determining whether to pay any draft under
any Letter of Credit, the Agent shall be responsible only to determine that the
documents and certificate required to be delivered under its Letter of Credit
have been delivered, and that they comply on their face with the requirements of
the Letter of Credit. Promptly after receiving the notice of issuance of a
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<PAGE>
Letter of Credit, the Agent shall notify each Lender of such Lender's respective
participation therein, determined in accordance with its respective Pro Rata
Share of the Commitments.
(b) The Agent agrees, subject to the terms and conditions set forth in
this Agreement, to issue for the account of Intermet a Letter of Credit in a
face amount equal to the face amount requested under paragraph (a) above,
following its receipt of a notice required by Section 2.05(a). Immediately upon
---------------
the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby agrees to, have irrevocably purchased from the Agent a participation in
such Letter of Credit and any drawing thereunder in an amount equal to such
Lender's Pro Rata Share of the Commitments multiplied by the face amount of such
Letter of Credit. Upon issuance and amendment or extension of any Letter of
Credit, the Agent shall provide a copy of each such Letter of Credit issued,
amended or extended hereunder to each of the Lenders.
(c) As of the Closing Date, each of the Letters of Credit set forth
on Schedule 7.01 shall be deemed to have been issued by the Agent in accordance
-------------
with the terms hereof, each of the Lenders shall be deemed to have purchased a
participation in such Letters of Credit in an amount equal to such Lender's Pro
Rata Share of the Commitments multiplied by the face amount thereof, and such
Letters of Credit shall be governed by the terms hereof.
SECTION 2.06. PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
-------------------------------------------------
(a) In the event of any request for a drawing under any Letter of
Credit by the beneficiary thereof, the Agent shall notify Intermet and the
Lenders on or before the date on which the Agent intends to honor such drawing,
and Intermet shall reimburse the Agent on the day on which such drawing is
honored in an amount, in same day funds, equal to the amount of such drawing.
(b) Notwithstanding any provision of this Agreement to the contrary,
to the extent that any Letter of Credit or portion thereof remains outstanding
on the Maturity Date, for any reason whatsoever, the parties hereto hereby agree
that the beneficiary or beneficiaries thereof shall be deemed to have made a
drawing of all available amounts pursuant to such Letters of
-24-
<PAGE>
Credit on the Maturity Date which amount shall be held by the Agent as cash
collateral for its remaining obligations pursuant to such Letters of Credit.
(c) As between Intermet and the Agent, Intermet assumes
all risk of the acts and omissions of, or misuse of, the Letters of Credit
issued by the Agent, by the respective beneficiaries of such Letters of Credit,
other than losses resulting from the gross negligence and willful misconduct of
the Agent. In furtherance and not in limitation of the foregoing but subject to
the exception for the Agent's gross negligence or willful misconduct set forth
above, the Agent shall not be responsible (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect 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
insufficient, inaccurate, fraudulent or forged or otherwise invalid; (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 which 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 the 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, telecopy or otherwise; (v) for good faith errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit; and (viii) for
any consequences arising from causes beyond the control of the Agent.
SECTION 2.07. PAYMENT BY LENDERS. In the event that Intermet shall
------------------
fail to reimburse the Agent as provided in Section 2.06, the Agent shall
------------
promptly notify each Lender of the unreimbursed amount of such drawing and of
such Lender's respective participation therein. Each Lender shall make
available to the Agent an amount equal to its respective participation, in
Dollars and in immediately available funds, at the office of the Agent specified
in such notice not later than 1:00 P.M. (Atlanta, Georgia time) on the Business
Day after the date notified by the Agent. In the event that any such Lender
-25-
<PAGE>
fails to make available to the Agent the amount of such Lender's participation
in such Letter of Credit, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest as provided for in Section 3.02.
------------
The Agent shall distribute to each Lender which has paid all amounts payable
under this Section with respect to any Letter of Credit, such Lender's Pro Rata
Share of all payments received by the Agent from Intermet in reimbursement of
drawings honored by the Agent under such Letter of Credit when such payments are
received.
SECTION 2.08 BID RATE LOANS. Subject to the terms and conditions
--------------
hereof, Intermet may request, and each Lender, in its sole discretion, may agree
to make Bid Rate Advances in accordance with the following procedure; provided,
--------
that, (x) at no time shall the sum of the aggregate outstanding principal amount
- ----
of the Bid Rate Loans plus the aggregate outstanding amount of all Syndicated
----
Loans outstanding as Overnight Rate Advances, exceed $30,000,000, and (y) at no
time shall the sum of the outstanding principal amount of the Loans plus the
----
Letter of Credit Obligations exceed the sum of Commitments:
(a) In order to request Bid Rate Bids, Intermet shall telecopy to the
Agent a duly completed Bid Request in the form of Exhibit D attached hereto
---------
(which may request not more than two Bid Rate Bids), to be received by the Agent
not later than 11:00 a.m. (local time for the Agent) time, on the Business Day
of the proposed Bid Rate Loan or Loans; provided that, such Bid Request shall
-------- ----
not be deemed to have been received by the Agent in a timely manner unless
Intermet shall also have notified the Agent by telephone (excluding voice mail
notification) of such Bid Request by the time specified above. A Bid Request
that does not conform substantially to the format of Exhibit D may be rejected
---------
in the Agent's sole discretion, and the Agent shall notify Intermet of such
rejection by telecopy not later than 12:00 noon (Atlanta, Georgia time) on the
date of receipt. Such request shall in each case refer to this Agreement and
specify (i) the date of such Borrowing or Borrowings (which shall be a Business
Day) and (ii) the aggregate principal amount thereof which shall be in a minimum
principal amount of $1,000,000 and in an integral multiple of $100,000, and
(iii) the Interest Period with respect thereto. Promptly after its receipt of a
Bid Request that is not rejected as aforesaid, the Agent shall invite by
telecopy (substantially in the form set forth in Exhibit E attached hereto) the
---------
Lenders to bid, on the terms and conditions of this Agreement, to make Bid Rate
Advances pursuant to the Bid Request.
-26-
<PAGE>
(b) Each Lender may, in its sole discretion, make one or more Bid Rate
Bids (but not more than two) to Intermet responsive to a Bid Request. Each Bid
Rate Bid by a Lender must be received by the Agent via telecopy, substantially
in the form of Exhibit F attached hereto, not later than 12:00 noon (local time
---------
for the Agent) on the Business Day of the proposed Bid Rate Loan. Multiple bids
(not to exceed two per Lender) will be accepted by the Agent. Bid Rate Bids
that do not conform substantially to the format of Exhibit F may be rejected by
---------
the Agent acting in consultation with Intermet, and the Agent shall notify the
Lender making such nonconforming bid of such rejection as soon as practicable.
Each Bid Rate Bid shall refer to this Agreement and specify (i) the principal
amount (which shall be in a minimum principal amount of $1,000,000 and in an
integral multiple of $100,000 and which may equal the entire principal amount
of the Bid Rate Loan requested by Intermet) of the Bid Rate Advance or Advances
that the Lender is willing to make to Intermet, (ii) the Bid Rate or Rates at
which the Lender is prepared to make the Bid Rate Advance or Advances, and (iii)
the Interest Period and the last day thereof. If any Lender shall elect not to
make a Bid Rate Bid, such Lender shall so notify the Agent via telecopy by the
time specified above for submitting a Bid Rate Bid; provided, however, that
-------- -------
failure by any Lender to give such notice shall not cause such Lender to be
obligated to make any Bid Rate Advance as part of such Bid Rate Loan. A Bid
Rate Bid submitted by a Lender pursuant to this paragraph (b) shall be
irrevocable (absent manifest error).
(c) The Agent shall promptly notify Intermet by telecopy of all the
Bid Rate Bids made, the Bid Rate and the principal amount of each Bid Rate
Advance in respect of which a Bid Rate Bid was made and the identity of the
Lender that made each bid. The Agent shall send a copy of all Bid Rate Bids to
Intermet for its records as soon as practicable after completion of the bidding
process set forth in this Section 2.08.
------------
(d) Intermet may, in its sole and absolute discre tion, subject only
to the provisions of this paragraph (d), accept or reject any Bid Rate Bid
referred to in paragraph (c) above. Intermet shall notify the Agent by
telephone, confirmed by telecopy in the form of a Bid Accept/Reject Letter,
whether and to what extent it has decided to accept or reject any of or all the
bids referred to in paragraph (c) above not later than 12:30 p.m. (local time
for the Agent) on the Business Day of the proposed Bid Loan; provided, however,
-------- -------
that (i) the failure by Intermet to give
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<PAGE>
such notice shall be deemed to be a rejection of all the bids referred to in
paragraph (c) above, (ii) Intermet shall not accept a bid made at a particular
Bid Rate if Intermet has decided to re ject a bid made at a lower Bid Rate,
(iii) the aggregate amount of the Bid Rate Bids accepted by Intermet shall not
exceed the principal amount specified in the Bid Request, (iv) if Intermet shall
accept a bid or bids made at a particular Bid Rate but the amount of such bid or
bids shall cause the total amount of bids to be accepted by Intermet to exceed
the amount specified in the Bid Request, then Intermet shall accept a portion of
such bid or bids in an amount equal to the amount specified in the Bid Request
less the amount of all other Bid Rate Bids accepted with respect to such Bid
Request, which acceptance, in the case of multiple bids at the same Bid Rate,
shall be made pro rata in accordance with the amount of each such bid at such
Bid Rate, and (v) except pursuant to clause (iv) above, no bid shall be accepted
for a Bid Rate Loan unless such Bid Rate Loan is in a minimum principal amount
of $1,000,000 and an integral multiple of $100,000; provided further, however,
-------- ------- -------
that if a Bid Loan must be in an amount less than $1,000,000 because of the
provisions of clause (iv) above, such Bid Loan may be for a minimum of $500,000
or any integral multiple thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular Bid Rate pursuant to
clause (iv) the amounts shall be rounded to integral multiples of $500,000 in a
manner which shall be in the discretion of Intermet. A notice given by Intermet
pursuant to this paragraph (d) shall be irrevocable.
(e) The Agent shall promptly notify each bidding Lender whether or not
its Bid Rate Bid has been accepted (and if so, in what amount and at what Bid
Rate) and shall notify each Lender as to the amount, Interest Period and Bid
Rate of each Bid Rate Bid accepted by Intermet by telecopy sent by the Agent,
and each successful bidder will thereupon become bound, subject to the other
applicable conditions hereof, to make the Bid Rate Loan in respect of which its
bid has been accepted.
(f) Intermet shall not submit a Bid Request more than twice in any
seven day period.
(g) If the Agent shall elect to submit a Bid Rate Bid in its capacity
as a Lender, it shall submit such bid directly to Intermet one half of an hour
earlier than the earliest time at which the other Lenders are required to submit
their bids to the Agent pursuant to paragraph (b) above.
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<PAGE>
(h) Each Lender participating in any Bid Rate Loan shall make its Bid
Rate Advance available to the Agent on the date specified in the Bid Request at
the time and in the manner and subject to the provisions specified in Section
-------
3.02.
- ----
(i) The Bid Rate Advances of each Lender shall be evidenced by its Bid
Facility Note and shall be due and payable in full on the Maturity Date unless
sooner accelerated pursuant to Article VIII hereof.
------------
ARTICLE III.
GENERAL LOAN AND LETTER OF CREDIT TERMS
---------------------------------------
SECTION 3.01. FUNDING NOTICES.
---------------
(a) (i) Whenever Intermet desires to obtain a Syndicated Loan with
respect to the Commitments (other than one resulting from a conversion or
continuation pursuant to Section 3.01(b)(i)), it shall give the Agent prior
------------------
written notice (or telephonic notice promptly confirmed in writing) of such
Borrowing (a "Notice of Borrowing"), such Notice of Borrowing to be given prior
-------------------
to 11:00 AM (local time for the Agent) at its Payment Office (x) three Business
Days prior to the requested date of such Borrowing in the case of Eurodollar
Advances, and (y) on the date of such Borrowing (which shall be a Business Day)
in the case of a Borrowing consisting of Overnight Rate Advances or Base Rate
Advances. Notices received after 11:00 AM shall be deemed received on the next
Business Day. Each Notice of Borrowing shall be irrevocable and shall specify
the aggregate principal amount of the Borrowing, the date of Borrowing (which
shall be a Business Day), and whether the Borrowing is to consist of Base Rate
Advances, Overnight Rate Advances or Eurodollar Advances and (in the case of
Eurodollar Advances) the Interest Period to be applicable thereto.
(ii) Whenever Intermet desires to obtain a Bid Rate Loan, it shall
notify the Agent in accordance with the procedure set forth in Section 2.08
------------
hereof.
(b) (i) Whenever Intermet desires to convert all or a portion of
an outstanding Borrowing under the Commitments, which Borrowing consists of Base
Rate Advances, Overnight Rate
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<PAGE>
Advances or Eurodollar Advances, into one or more Borrowings consisting of
Advances of another Type, or to continue outstanding a Borrowing consisting of
Eurodollar Advances for a new Interest Period, it shall give the Agent at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each such Borrowing to be converted into or continued
as Eurodollar Advances. Such notice (a "Notice of Conversion/Continuation")
---------------------------------
shall be given prior to 11:00 AM (local time for the Agent) on the date
specified at the Payment Office of the Agent. Each such Notice of
Conversion/Continuation shall be irrevocable and shall specify the aggregate
principal amount of the Advances to be converted or continued, the date of such
conversion or continuation, whether the Advances are being converted into or
continued Eurodollar Advances and, if so, the Interest Period applicable
thereto. If, upon the expiration of any Interest Period in respect of any
Borrowing, Intermet shall have failed to deliver the Notice of
Conversion/Continuation, Intermet shall be deemed to have elected to convert or
continue such Borrowing to a Borrowing consisting of Base Rate Advances. So
long as any Executive Officer of Intermet has knowledge that any Default or
Event of Default shall have occurred and be continuing, no Borrowing may be
converted into or continued as (upon expiration of the current Interest Period)
Eurodollar Advances unless the Agent and each of the Lenders shall have
otherwise consented in writing. No conversion of any Borrowing of Eurodollar
Advances shall be permitted except on the last day of the Interest Period in
respect thereof.
(ii) Upon the expiration of the applicable Interest Period with
respect to Bid Rate Loans, Intermet shall repay such Loan in full in accordance
with the terms hereof.
(c) Without in any way limiting Intermet's obligation to confirm in
writing any telephonic notice, the Agent may act without liability upon the
basis of telephonic notice believed by the Agent in good faith to be from
Intermet prior to receipt of written confirmation. In each such case, Intermet
hereby waives the right to dispute the Agent's record of the terms of such
telephonic notice.
(d) The Agent shall promptly give each Lender notice by telephone
(confirmed in writing) or by telex, telecopy or facsimile transmission of the
matters covered by the notices given to the Agent pursuant to this Section 3.01
------------
with respect to the Commitments.
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<PAGE>
SECTION 3.02. DISBURSEMENT OF FUNDS.
---------------------
(a) No later than 12:00 Noon (local time for the Agent) on the date of
each Syndicated Loan pursuant to the Commitments (other than one resulting from
a conversion or continuation pursuant to Section 3.01(b)(i)), each Lender will
------------------
make available its Pro Rata Share of such Syndicated Loan in immediately
available funds at the Payment Office of the Agent. The Agent will make
available to Intermet the aggregate of the amounts (if any) so made available by
the Lenders to the Agent in a timely manner by crediting such amounts to
Intermet's demand deposit account maintained with the Agent or at Intermet's
option, effecting a wire transfer of such amounts to an account specified by
Intermet, by the close of business on such Business Day. In the event that the
Lenders do not make such amounts available to the Agent by the time prescribed
above, but such amount is received later that day, such amount may be credited
to Intermet in the manner described in the preceding sentence on the next
Business Day (with interest on such amount to begin accruing hereunder on such
next Business Day).
(b) No later than 3:00 P.M. (local time for the Agent) on the date of
each Bid Rate Loan, the Lenders participating in such Bid Rate Loan will make
available the amount of its Bid Rate Advance in immediately available funds at
the Payment Office of the Agent on the date of such Bid Rate Loan.
(c) Unless the Agent shall have been notified by any Lender prior to
the date of a Borrowing that such Lender does not intend to make available to
the Agent such Lender's portion of the 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 and the Agent may make available to Intermet a corresponding amount.
If such corresponding amount is not in fact made available to the Agent by such
Lender on the date of Borrowing, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest at the
Federal Funds Rate. If such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify
Intermet, and Intermet shall immediately pay such corresponding amount to the
Agent together with interest at the rate specified for the Borrowing. Nothing
in this subsection shall be deemed to relieve any Lender from its obligation to
fund its Commitment or Bid Rate Loans hereunder or to prejudice any
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<PAGE>
rights which Intermet may have against any Lender as a result of any default by
such Lender hereunder.
(d) All Syndicated Loans under the Commitments shall be loaned by the
Lenders on the basis of their Pro Rata Share of the Commitments. All Bid Rate
Loans shall be loaned by the Lenders participating therein in accordance with
their respective pro rata shares thereof as determined in accordance with
Section 2.08 with respect to each Bid Loan. No Lender shall be responsible for
- ------------
any default by any other Lender in its obligations hereunder, and each Lender
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fund its Commitments or Bid
Rate Loans hereunder.
SECTION 3.03. INTEREST.
--------
(a) Intermet agrees to pay interest in respect of all unpaid principal
amounts of Syndicated Loans from the respective dates such principal amounts
were advanced to maturity (whether by acceleration, notice of prepayment or
otherwise) at rates per annum equal to the applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect from time to
time;
(ii) For Eurodollar Advances--The relevant Adjusted LIBO Rate plus
----
the Applicable Margin; or
(iii) For Overnight Rate Advances -- The relevant Overnight Rate plus
----
one and one-half of one percent (1.5%) per annum;
(b) Intermet agrees to pay interest in respect of all unpaid principal
amounts of the Bid Rate Loans made to Intermet from the respective dates such
principal amounts were advanced to maturity (whether by acceleration, notice of
prepayment or otherwise) at the Bid Rate established for such Loan pursuant to
Section 2.08;
- ------------
(c) Overdue principal and, to the extent not prohibited by applicable
law, overdue interest, in respect of the Loans, and all other overdue amounts
owing hereunder, shall bear interest from each date that such amounts are
overdue:
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<PAGE>
(i) in the case of overdue principal and interest with respect to all
Loans outstanding as Eurodollar Advances and Bid Rate Advances, at the rate
otherwise applicable for the then-current Interest Period plus an
additional two percent (2.0%) per annum; thereafter at the rate in effect
for Base Rate Advances plus an additional two percent (2.0%) per annum; and
----
(ii) in the case of overdue principal and interest with respect to all
other Loans outstanding as Base Rate Advances, and all other Obligations
hereunder (other than Loans), at a rate equal to the applicable Base Rate
plus an additional two percent (2.0%) per annum;
----
(d) Interest on each Loan shall accrue from and including the date of
such Loan to but excluding the date of any repayment thereof; provided that, if
-------- ----
a Loan is repaid on the same day made, one day's interest shall be paid on such
Loan. Interest on all Base Rate Advances and Overnight Rate Advances shall be
payable quarterly in arrears on the last calendar day of each calendar quarter
of Intermet in each year. Interest on all outstanding Eurodollar Advances and
Bid Rate Advances shall be payable on the last day of each Interest Period
applicable thereto, and, in the case of Interest Periods in excess of three
months (in the case of Eurodollar Advances and Bid Rate Advances), on each day
which occurs every 3 months, as the case may be, after the initial date of such
Interest Period. Interest on all Loans shall be payable on any conversion of
any Advances comprising such Loans into Advances of another Type, prepayment (on
the amount prepaid), at maturity (whether by acceleration, notice of prepayment
or otherwise) and, after maturity, on demand; and
(e) The Agent, upon determining the Adjusted LIBO Rate for any
Interest Period, shall promptly notify by telephone (confirmed in writing) or in
writing Intermet and the other Lenders. Any such determination shall, absent
manifest error, be final, conclusive and binding for all purposes.
SECTION 3.04. INTEREST PERIODS.
----------------
(a) In connection with the making or continuation of, or conversion
into, each Borrowing of Eurodollar Advances, Intermet shall select an Interest
Period to be applicable to such Eurodollar Advances, which Interest Period shall
be either a 1, 2, 3 or 6 month period.
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<PAGE>
(b) In connection with the making of each Bid Rate Loan, Intermet
shall request an Interest Period to be applicable thereto, which Interest Period
shall be for a minimum of seven (7) days and a maximum of ninety (90) days,
which request may be accepted or rejected by the Lenders as provided in Section
-------
2.08 hereof.
- ----
(c) Notwithstanding paragraphs (a) or (b) above:
(i) The initial Interest Period for any Borrowing of Eurodollar
Advances shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing consisting of Advances of another Type) and each
Interest Period occurring thereafter in respect of such Borrowing shall commence
on the day on which the next preceding Interest Period expires;
(ii) If any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day, provided that if any Interest Period in respect of Eurodollar
--------
Advances 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;
(iii) Any Interest Period in respect of Eurodollar Advances which
begins 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 part (iv)
below, expire on the last Business Day of such calendar month; and
(iv) No Interest Period with respect to the Loans shall extend beyond
the Maturity Date.
SECTION 3.05. FEES.
----
(a) Intermet shall pay to the Agent, for the account of and
distribution of the respective Pro Rata Share to each Lender (subject to the
last sentence hereof), a commitment fee (the "Commitment Fee") for the period
commencing on the Closing Date to and including the Maturity Date, computed at a
rate equal to one quarter of one percent (0.25%) per annum on the average daily
unused portion of the Commitments of the Lenders, such fee
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<PAGE>
being payable quarterly in arrears on the date which is five days following the
last day of each fiscal quarter of Intermet and on the Maturity Date; provided
--------
that, on any date that the Applicable Margin applicable to the Borrowings
- ----
comprised of Eurodollar Advances is less than 0.625% per annum, the Commitment
Fee payable pursuant to this subsection (a) shall be computed at a rate equal
to one-fifth of one percent (0.20%) per annum. For purposes of calculating the
Commitment Fee, Bid Rate Loans shall be considered a usage of the Commitments
only with respect to the Lenders participating therein and only to the extent of
such Lenders' actual participations.
(b) Intermet agrees to pay to the Agent, for the account of the
Lenders, a letter of credit fee equal to the Applicable Margin applicable to
Eurodollar Advances multiplied by the daily average amount of Letter of Credit
Obligations (the "Letter of Credit Fee"). The Letter of Credit Fee shall be
--------------------
payable by Intermet quarterly, in arrears, on the date which is five days
following the last day of each fiscal quarter of Intermet, and on the Maturity
Date.
(c) Intermet shall pay to the Agent such fees for its administrative
services in the respective amounts and on the dates as previously agreed in
writing by Intermet with the Agent.
SECTION 3.06. VOLUNTARY PREPAYMENTS OF BORROWINGS.
-----------------------------------
(a) Intermet may, at its option, prepay Borrowings consisting of Base
Rate Advances, Bid Rate Advances and Overnight Rate Advances at any time in
whole, or from time to time in part, in amounts aggregating $250,000 or any
greater integral multiple of $1,000, by paying the principal amount to be
prepaid together with interest accrued and unpaid thereon to the date of
prepayment, together with, in the case of Bid Rate Advances, all compensation
payments pursuant to Section 3.12 if such prepayment is made on a date other
------------
than the last day of the Interest Period applicable thereto. Those Borrowings
consisting of Eurodollar Advances may be prepaid, at Intermet's option, in
whole, or from time to time in part, in amounts aggregating $1,000,000 or any
greater integral multiple of $100,000, by paying the principal amount to be
prepaid, together with interest accrued and unpaid thereon to the date of
prepayment, and all compensation payments pursuant to Section 3.12 if such
------------
prepayment is made on a date other than the last day of an Interest Period
applicable thereto.
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<PAGE>
Each such optional prepayment shall be applied in accordance with Section
-------
3.06(c) below.
- -------
(b) Intermet shall give written notice (or telephonic notice confirmed
in writing) to the Agent of any intended prepayment of the Loans (i) prior to
12:00 Noon (local time for the Agent), on the date of any prepayment of Base
Rate Advances, Overnight Rate Advances and Bid Rate Advances and (ii) not less
than three Business Days prior to any prepayment of Eurodollar Advances. Such
notice, once given, shall be irrevocable. Upon receipt of such notice of
prepayment, the Agent shall promptly notify each Lender of the contents of such
notice and of such Lender's share of such prepayment (provided that notices of
prepayments of Bid Rate Loans shall only be given to the Lenders participating
therein).
(c) Intermet, when providing notice of prepayment pursuant to Section
-------
3.06(b), may designate the Types of Advances and the specific Borrowing or
- -------
Borrowings which are to be prepaid provided that each prepayment made pursuant
to a single Borrowing shall be applied pro rata among the Advances comprising
such Borrowing. In the absence of a designation by Intermet, the Agent shall,
subject to the foregoing, make such designation in its sole discretion. All
voluntary prepayments shall be applied to the payment of interest on the
Borrowings prepaid before application to principal.
SECTION 3.07. PAYMENTS, ETC.
--------------
(a) Except as otherwise specifically provided herein, all payments
under this Agreement and the other Credit Documents, other than the payments
specified in clause (ii) below, shall be made without defense, set-off or
counterclaim to the Agent not later than 1:00 PM (local time for the Agent) on
the date when due and shall be made in Dollars in immediately available funds at
its Payment Office.
(b) (i) All such payments shall be made free and clear of and
without deduction or withholding for any Taxes in respect of this Agreement, the
Notes or other Credit Documents, or any payments of principal, interest, fees or
other amounts payable hereunder or thereunder (but excluding, except as provided
in paragraph (iii) hereof, any Taxes imposed on the overall net income of the
Lenders pursuant to the laws of the jurisdiction in which the principal
executive office or appropriate Lending Office
-36-
<PAGE>
of such Lender is located). If any Taxes are so levied or imposed, Intermet
agrees (A) to pay the full amount of such Taxes, and such additional amounts as
may be necessary so that every net payment of all amounts due hereunder and
under the Notes and other Credit Documents, after withholding or deduction for
or on account of any such Taxes (including additional sums payable under this
Section 3.07), will not be less than the full amount provided for herein had no
- ------------
such deduction or withholding been required, (B) to make such withholding or
deduction and (C) to pay the full amount deducted to the relevant authority in
accordance with applicable law. Intermet will furnish to the Agent and each
Lender, within 30 days after the date the payment of any Taxes is due pursuant
to applicable law, certified copies of tax receipts evidencing such payment by
Intermet. Intermet will indemnify and hold harmless the Agent and each Lender
and reimburse the Agent and each Lender upon written request for the amount of
any Taxes so levied or imposed and paid by the Agent or Lender and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or illegally asserted.
A certificate as to the amount of such payment by such Lender or the Agent,
absent manifest error, shall be final, conclusive and binding for all purposes.
(ii) Each Lender that is organized under the laws of any jurisdiction
other than the United States of America or any State thereof (including the
District of Columbia) agrees to furnish to Intermet and the Agent, prior to the
time it becomes a Lender hereunder, two copies of either U.S. Internal Revenue
Service Form 4224 or U.S. Internal Revenue Service Form 1001 or any successor
forms thereto (wherein such Lender claims entitlement to complete exemption from
or reduced rate of U.S. Federal withholding tax on interest paid by Intermet
hereunder) and to provide to Intermet and the Agent a new Form 4224 or Form 1001
or any successor forms thereto if any previously delivered form is found to be
incomplete or incorrect in any material respect or upon the obsolescence of any
previously delivered form; provided, however, that no Lender shall be required
-------- -------
to furnish a form under this paragraph (ii) if it is not entitled to claim an
exemption from or a reduced rate of withholding under applicable law. A Lender
that is not entitled to claim an exemption from or a reduced rate of withholding
under applicable law, promptly upon written request of Intermet, shall so inform
Intermet in writing.
(iii) Intermet shall also reimburse the Agent and each Lender,
upon written request, for any Taxes imposed
-37-
<PAGE>
(including, without limitation, Taxes imposed on the overall net income of the
Agent or Lender or its applicable Lending Office pursuant to the laws of the
jurisdiction in which the principal executive office or the applicable Lending
Office of the Agent or Lender is located) as the Agent or Lender shall determine
are payable by the Agent or Lender in respect of amounts paid by or on behalf of
Intermet to or on behalf of the Agent or Lender pursuant to paragraph (i)
hereof.
(c) Subject to Section 3.04(ii), whenever any payment to be made
----------------
hereunder or under any Note 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 thereon shall
be payable at the applicable rate during such extension.
(d) All computations of interest and fees shall be made on the basis
of a year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable (to the extent computed on the basis of days elapsed), except that
interest on Base Rate Advances shall be computed on the basis of a year of
365/366 days for the actual number of days. Interest on Base Rate Advances
shall be calculated based on the Base Rate from and including the date of such
Loan to but excluding the date of the repayment or conversion thereof. Interest
on Eurodollar Advances and Bid Rate Advances shall be calculated as to each
Interest Period from and including the first day thereof to but excluding the
last day thereof. Each determination by the Agent of an interest rate or fee
hereunder shall be made in good faith and, except for manifest error, shall be
final, conclusive and binding for all purposes.
(e) Payment by Intermet to the Agent in accordance with the terms of
this Agreement shall, as to Intermet, constitute payment to the Lenders under
this Agreement.
SECTION 3.08. INTEREST RATE NOT ASCERTAINABLE, ETC. In the event
-------------------------------------
that the Agent shall have determined (which determination shall be made in good
faith and, absent manifest error, shall be final, conclusive and binding upon
all parties) that on any date for determining the Adjusted LIBO Rate for any
Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market, or the Agent's position in such
market, adequate and fair means do not
-38-
<PAGE>
exist for ascertaining the applicable interest rate on the basis provided for in
the definition of Adjusted LIBO Rate then, and in any such event, the Agent
shall forthwith give notice (by telephone confirmed in writing) to Intermet and
to the Lenders, of such determination and a summary of the basis for such
determination. Until the Agent notifies Intermet that the circumstances giving
rise to the suspension described herein no longer exist, the obligations of the
Lenders to make or permit portions of the Loans to remain outstanding past the
last day of the then current Interest Periods as Eurodollar Advances shall be
suspended, and such affected Advances shall bear the same interest at the Base
Rate (or at such other rate of interest per annum as Intermet and each of the
Agent and the Lenders shall have agreed to in writing).
SECTION 3.09. ILLEGALITY.
----------
(a) In the event that any Lender shall have determined (which
determination shall be made in good faith and, absent manifest error, shall be
final, conclusive and binding upon all parties) at any time that the making or
continuance of any Eurodollar Advance has become unlawful by compliance by such
Lender in good faith with any applicable law, governmental rule, regulation,
guideline or order (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful), then, in any such event, the
Lender shall give prompt notice (by telephone confirmed in writing) to Intermet
and to the Agent of such determination and a summary of the basis for such
determination (which notice the Agent shall promptly transmit to the other
Lenders).
(b) Upon the giving of the notice to Intermet referred to in
subsection (a) above, (i) Intermet's right to request and such Lender's
obligation to make Eurodollar Advances shall be immediately suspended, and such
Lender shall make an Advance as part of the requested Borrowing of Eurodollar
Advances, bearing interest at the Base Rate (or at such other rate of interest
per annum as Intermet and each of the Agent and the Lenders shall have agreed to
in writing), which Base Rate Advance shall, for all other purposes, be
considered part of such Borrowing, and (ii) if the affected Eurodollar Advance
or Advances are then outstanding, Intermet shall immediately, or if permitted by
applicable law, no later than the date permitted thereby, upon at least one
Business Day's written notice to the Agent and the affected Lender, convert each
such Advance into an Advance or
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<PAGE>
Advances of a different Type with an Interest Period ending on the date on which
the Interest Period applicable to the affected Eurodollar Advances expires,
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 3.09(b).
---------------
(c) Notwithstanding any other provision contained in this Agreement,
the Agent shall not be obligated to issue any Letter of Credit, nor shall any
Lender be obligated to purchase its participation in any Letter of Credit to be
issued hereunder, if the issuance of such Letter of Credit or purchase of such
participation shall have become unlawful or prohibited by compliance by Agent or
such Lender in good faith with any law, governmental rule, guideline, request,
order, injunction, judgment or decree (whether or not having the force of law);
provided that in the case of the obligation of a Lender to purchase such
- --------
participation, such Lender shall have notified the Agent to such effect at least
three (3) Business Days' prior to the issuance thereof by the Agent, which
notice shall relieve the Agent of its obligation to issue such Letter of Credit
pursuant to Section 2.04 and Section 2.05 hereof.
------------ ------------
SECTION 3.10. INCREASED COSTS.
---------------
(a) (i) If, by reason of (x) after the date hereof, the introduction
of or any change (including, without limitation, any change by way of imposition
or increase of reserve requirements) in or in the interpretation of any law or
regulation, or (y) the compliance with any guideline or request from any central
bank or other governmental authority or quasi-governmental authority exercising
control over banks or financial institutions generally (whether or not having
the force of law):
(1) any Lender (or its applicable Lending Office) shall be subject to
any tax, duty or other charge with respect to its Eurodollar Advances, Letter of
Credit Obligations or its obligation to make Eurodollar Advances or to issue
Letters of Credit, or the basis of taxation of payments to any Lender of the
principal of or interest on its Eurodollar Advances or its obligation to make
Eurodollar Advances or to issue Letters of Credit shall have changed (except for
changes in the tax on the overall net income of such Lender or its applicable
Lending Office imposed by the
-40-
<PAGE>
jurisdiction in which such Lender's principal executive office or applicable
Lending Office is located); or
(2) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender's applicable Lending Office shall be imposed or deemed
applicable or any other condition affecting its Eurodollar Advances, Letter of
Credit Obligations or its obligation to make Eurodollar Advances shall be
imposed on any Lender or its applicable Lending Office or the London interbank
market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Advances or
Letters of Credit (except to the extent already included in the determination of
the applicable Adjusted LIBO Rate), or there shall be a reduction in the amount
received or receivable by such Lender or its applicable Lending Office, then
Intermet shall from time to time (subject, in the case of certain Taxes, to the
applicable provisions of Section 3.07(b)), or
---------------
(ii) in the event that any Lender shall have determined that any
law,treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy not currently in effect or fully applicable as
of the Closing Date, or any change therein or in the interpretation or
application thereof after the Closing Date, or compliance by such Lender with
any re quest or directive regarding capital adequacy not currently in effect or
fully applicable as of the Closing Date (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) from a central
bank or governmental authority or body having jurisdiction, does or shall have
the ef fect of reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder to a level below that which such Lender
could have achieved but for such law, treaty, rule, regulation, guideline or
order, or such change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be mate rial;
then, in the case of (i) or (ii) above, upon written notice from and demand by
such Lender on Intermet (with a copy of such notice
-41-
<PAGE>
and demand to the Agent), Intermet shall pay to the Agent for the account of
such Lender within five Business Days after the date of such notice and demand,
additional amounts sufficient to indemnify such Lender against such increased
cost or reduced yield. A certificate as to the amount of such increased cost or
reduced yield submitted to Intermet and the Agent by such Lender in good faith
and accompanied by a statement prepared by such Lender describing in reasonable
detail the basis for and calculation of such increased cost, shall, except for
manifest error, be final, conclusive and binding for all purposes.
(b) If any Lender shall advise the Agent that at any time, because of
the circumstances described in clauses (x) or (y) in Section 3.10(a) or any
---------------
other circumstances beyond such Lender's reasonable control arising after the
date of this Agreement affecting such Lender or the London interbank market or
such Lender's position in such markets, the Adjusted LIBO Rate as determined by
the Agent, will not adequately and fairly reflect the cost to such Lender of
funding its Eurodollar Advances, then, and in any such event:
(i) the Agent shall forthwith give notice (by telephone confirmed in
writing) to Intermet and to the other Lenders of such advice;
(ii) Intermet's right to request and such Lender's obligation to make
or permit portions of the Loans to remain outstanding past the last day of the
then current Interest Periods as Eurodollar Advances shall be immediately
suspended; and
(iii) such Lender shall make an Advance as part of the requested
Borrowing of Eurodollar Advances, as the case may be, bearing interest at the
Base Rate (or at such other rate of interest per annum as Intermet and each of
the Agent and the Lenders shall have agreed to in writing), which Base Rate
Advance shall, for all other purposes, be considered part of such Borrowing.
SECTION 3.11. LENDING OFFICES.
---------------
(a) Each Lender agrees that, if requested by Intermet, it will use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate an alternate Lending Office with respect to any of its Eurodollar
Advances
-42-
<PAGE>
affected by the matters or circumstances described in Sections 3.07(b), 3.08,
---------------- ----
3.09 or 3.10 to reduce the liability of Intermet or avoid the results provided
- ---- ----
thereunder, so long as such designation is not disadvantageous to such Lender as
determined by such Lender, which determination if made in good faith, shall be
conclusive and binding on all parties hereto. Nothing in this Section 3.11
------------
shall affect or postpone any of the obligations of Intermet or any right of any
Lender provided hereunder.
(b) If any Lender that is organized under the laws of any jurisdiction
other than the United States of America or any State thereof (including the
District of Columbia) issues a public announcement with respect to the closing
of its lending offices in the United States such that any withholdings or
deductions and additional payments with respect to Taxes may be required to be
made by Intermet thereafter pursuant to Section 3.07(b), such Lender shall use
---------------
reasonable efforts to furnish Intermet notice thereof as soon as practicable
thereafter; provided, however, that no delay or failure to furnish such notice
-------- -------
shall in any event release or discharge Intermet from its obligations to such
Lender pursuant to Section 3.07(b) or otherwise result in any liability of such
---------------
Lender.
SECTION 3.12. FUNDING LOSSES. Intermet shall compensate each Lender,
--------------
upon its written request to Intermet (which request shall set forth the basis
for requesting such amounts in reasonable detail and which request shall be made
in good faith and, absent manifest error, shall be final, conclusive and binding
upon all of the parties hereto), for all 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 Eurodollar Advances or Bid Rate
Advances, in either case to the extent not recovered by such Lender in
connection with the re-employment of such funds and including loss of
anticipated profits), which the Lender may sustain: (i) if for any reason
(other than a default by such Lender) a borrowing of, or conversion to or
continuation of, Eurodollar Advances or Bid Rate Advances to Intermet does not
occur on the date specified therefor in a Notice of Borrowing, Bid Request or
Notice of Conversion/Continuation, (whether or not withdrawn), (ii) if any
repayment (including mandatory prepayments and any conversions pursuant to
Section 3.09(b)) of any Eurodollar Advances or Bid Rate Advances by Intermet
- ---------------
occurs on a date which is not the last day of an Interest Period applicable
thereto, or (iii) if,
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<PAGE>
for any reason, Intermet defaults in its obligation to repay its Eurodollar
Advances when required by the terms of this Agreement.
SECTION 3.13. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR ADVANCES.
-----------------------------------------------------
Calculation of all amounts payable to a Lender under this Article III shall be
-----------
made as though that Lender had actually funded its relevant Eurodollar Advances
through the purchase of deposits in the relevant market bearing interest at the
rate applicable to such Eurodollar Advances in an amount equal to the amount of
the Eurodollar Advances and having a maturity comparable to the relevant
Interest Period and through the transfer of such Eurodollar Advances from an
offshore office of that Lender to a domestic office of that Lender in the United
States of America; provided however, that each Lender may fund each of its
----------------
Eurodollar Advances in any manner it sees fit and the foregoing assumption shall
be used only for calculation of amounts payable under this Article III.
-----------
SECTION 3.14. APPORTIONMENT OF PAYMENTS. Aggregate principal and
-------------------------
interest payments in respect of Loans and payments in respect of Letter of
Credit Fees and Commitment Fees shall be apportioned among all outstanding
Commitments, Letter of Credit Obligations and and Loans to which such payments
relate, proportionately to the Lenders' respective pro rata portions of such
Commitments and outstanding Loans and Letter of Credit Obligations. The Agent
shall promptly distribute to each Lender at its Payment Office set forth beside
its name on the appropriate signature page hereof or such other address as any
Lender may re quest its share of all such payments received by the Agent.
SECTION 3.15. SHARING OF PAYMENTS, ETC. If any Lender shall obtain
-------------------------
any payment or reduction (including, without limitation, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code) of the Obligations (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) in excess of its pro rata portion of
payments or reductions on account of such obligations obtained by all the
Lenders (other than, prior to the termination of the Commitments, payments of
principal, interest and fees with respect to the Bid Rate Loans which are
payable solely to the Lenders participating therein), such Lender shall
forthwith (i) notify each of the other Lenders and Agent of such receipt, and
(ii) purchase from the other Lenders such participations in the affected
obligations as shall be necessary
-44-
<PAGE>
to cause such purchasing Lender to share the excess payment or reduction, net of
costs incurred in connection therewith, ratably with each of them, provided that
if all or any portion of such excess payment or reduction is thereafter
recovered from such purchasing Lender or additional costs are incurred, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery or such additional costs, but without interest unless the Lender
obligated to return such funds is required to pay interest on such funds.
Intermet agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.15 may, to the fullest extent permitted by
------------
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of Intermet in the amount of such participation.
SECTION 3.16. BENEFITS TO GUARANTORS. In consideration of the
----------------------
execution and delivery by the Guarantors of the Guaranty Agreement, Intermet
agrees, subject to the terms hereof, to make extensions of credit hereunder
available to the Guarantors.
SECTION 3.17. LIMITATION ON CERTAIN PAYMENT OBLIGA TIONS.
------------------------------------------
(a) Each Lender or Agent shall make written demand on Intermet for
indemnification or compensation pursuant to Section 3.07 no later than 90 days
------------
after the earlier of (i) the date on which such Lender or Agent makes payment of
such Taxes, and (ii) the date on which the relevant taxing authority or other
governmental authority makes written demand upon such Lender or Agent for
payment of such Taxes.
(b) Each Lender or Agent shall make written demand on Intermet for
indemnification or compensation pursuant to Sections 3.12 and 3.13 no later than
------------- ----
90 days after the event giving rise to the claim for indemnification or
compensation occurs.
(c) Each Lender or Agent shall make written demand on Intermet for
indemnification or compensation pursuant to Sections 3.09 no later than 90 days
-------------
after such Lender or Agent receives actual notice or obtains actual knowledge of
the promulgation of a law, rule, order or interpretation or occurrence of
another event giving rise to a claim pursuant to such sections.
-45-
<PAGE>
(d) In the event that the Lenders or Agent fail to give Intermet
notice within the time limitations prescribed in (a) or (b) above, Intermet
shall not have any obligation to pay such claim for compensation or
indemnification. In the event that any Lender or Agent fails to give Intermet
notice within the time limitation prescribed in (c) above, Intermet shall not
have any obligation to pay any amount with respect to claims accruing prior to
the ninetieth day preceding such written demand.
SECTION 3.18. LETTER OF CREDIT OBLIGATIONS ABSOLUTE. The obligation
-------------------------------------
of Intermet to reimburse the Agent for drawings made under Letters of Credit
issued for the account of Intermet and the Lenders' obligation to honor their
participations purchased therein 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:
(a) Any lack of validity or enforceability of any Letter of Credit;
(b) The existence of any claim, set-off, defense or other right which
Intermet or any Subsidiary or Affiliate of Intermet may have at any time against
a beneficiary or any transferee of any Letter of Credit (or any Persons or
entities for whom any such beneficiary or transferee may be acting), any Lender
or any other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including without limitation
any underlying transaction between Intermet or any of its Subsidiaries and
Affiliates and the beneficiary for which such Letter of Credit was procured);
provided that nothing in this Section shall affect the right of Intermet to seek
- --------
relief against any beneficiary, transferee, Lender or any other Person in any
action or proceeding or to bring a counterclaim in any suit involving such
Persons;
(c) Any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect;
(d) Payment by the Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
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<PAGE>
(e) Any other circumstance or happening whatsoever which is similar
to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall have
occurred and be continuing.
Nothing in this Section 3.18 shall prevent an action against the Agent for its
------------
gross negligence or willful misconduct in honoring drafts under the Letters of
Credit.
SECTION 3.19. FAILURE TO MAINTAIN MINIMUM REQUIRED RATING. If any
--------------------------------------------
Lender has either (a) had its long-term deposit rating reduced below the Minimum
Required Rating by either Rating Agency, or (b) in the case of a Lender that is
a party to this Agreement on the Closing Date and has, on such date, a long-term
deposit rating from the Rating Agencies below the applicable Minimum Required
Rating, such Lender has received from either Rating Agency a reduction in its
long-term deposit rating from the rating in effect on the Closing Date, such
Lender, will, upon the request of the Agent, assign its Commitment and all of
its right, title and interest in and to any Letters of Credit or Loans
outstanding thereunder, to an Eligible Assignee designated by the Agent and
acceptable to Intermet in accordance with the terms of this Agreement.
ARTICLE IV.
CONDITIONS TO BORROWINGS
------------------------
The obligations of each Lender to make Advances to Intermet and to
issue Letters of Credit for the account of Intermet hereunder is subject to the
satisfaction of the following conditions:
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTERS OF
----------------------------------------------------
CREDIT. On the Closing Date, all obligations of Intermet hereunder incurred
- ------
prior to such date (including, without limitation, Intermet's obligations to
reimburse the reasonable fees and expenses of counsel to the Agent and any fees
and expenses payable to the Agent and the Lenders as previously agreed with
Intermet), shall have been paid in full, and the Agent shall have received the
following, in form and substance reasonably satisfactory in all respects to the
Agent:
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<PAGE>
(a) the duly executed counterparts of this Agreement;
(b) the duly executed Revolving Credit Notes evidencing the
Commitments and the duly executed Bid Facility Notes;
(c) the duly executed Guaranty Agreement;
(d) certificate of Intermet in substantially the form of Exhibit I
---------
attached hereto and appropriately completed;
(e) certificates of the Secretary or Assistant Secretary of each of
the Credit Parties (or, in the case of any Foreign Subsidiary, a comparable
company officer) attaching and certifying copies of the resolutions of the
boards of directors (or, in the case of any Foreign Subsidiary, the comparable
governing body of such entity) of the Credit Parties, authorizing as applicable
(i) the execution, delivery and performance of the Credit Documents, and (ii)
the granting of the pledges and security interests granted pursuant to the
Pledge Agreements;
(f) certificates of the Secretary or an Assistant Secretary of each of
the Credit Parties (or, in the case of any Foreign Subsidiary, a comparable
company officer) certifying (i) the name, title and true signature of each
officer of such entities executing the Credit Documents, and (ii) the bylaws or
comparable governing documents of such entities;
(g) certified copies of the certificate or articles of incorporation
of each Credit Party (or comparable organizational document of each Foreign
Subsidiary) certified by the Secretary of State or the Secretary or Assistant
Secretary of such Credit Party, together with certificates of good standing or
existence, as may be available from the Secretary of State (or comparable office
or registry for each Foreign Subsidiary) of the jurisdiction of incorporation or
organization of such Credit Party;
(h) examination reports from the Uniform Commercial Code records of
those locations set forth on Schedule 4.01(h), showing no outstanding liens or
----------------
security interests granted by Intermet other than Liens permitted by Section
-------
7.02;
- ----
(i) copies of all documents and instruments, including all
consents, authorizations and filings, required or
-48-
<PAGE>
advisable under any Requirement of Law or by any material Contrac tual
Obligation of the Credit Parties, in connection with the execution, delivery,
performance, validity and enforceability of the Credit Documents and the other
documents to be executed and delivered hereunder, and such consents,
authorizations, filings and orders shall be in full force and effect and all
applicable waiting periods shall have expired;
(j) an internally prepared draft of Intermet's consolidated financial
statements for the fiscal period, ending December 31, 1995, certified by the
chief financial officer of Intermet;
(k) acknowledgments from Rupert M. Barkoff and Kilpatrick & Cody as to
its appointment as agent for service of process for the various Credit Parties;
(l) agreement by the exiting lenders pursuant to the Prior Credit
Agreement to accept payment in full of all obliga tions outstanding under the
Prior Credit Agreement and to release all Liens securing such obligations, and
the establishment of escrow or other arrangements for such repayment and release
of Liens acceptable to the Agent and the Lenders;
(m) certificates, reports and other information as the Agent may
reasonably request from any Consolidated Company in order to satisfy the Lenders
as to the absence of any material li abilities or obligations arising from
matters relating to employees of the Consolidated Companies, including employee
relations, collective bargaining agreements, Plans, Foreign Plans, and other
compensation and employee benefit plans;
(n) certificates, reports, environmental audits and investigations,
and other information as the Agent may reasonably request from any Consolidated
Company in order to satisfy the Lenders as to the absence of any material
liabilities or ob ligations arising from environmental and employee health and
safety exposures to which the Consolidated Companies may be subject, and the
plans of the Consolidated Companies with respect thereto;
(o) certificates, reports and other information as the Agent may
reasonably request from any Consolidated Company in order to satisfy the Lenders
as to the absence of any material li abilities or obligations arising from
litigation (including
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<PAGE>
without limitation, products liability and patent infringement claims) pending
or threatened against the Consolidated Companies;
(p) a summary, set forth in format and detail reasonably acceptable to
the Agent, of the types and amounts of insurance (property and liability)
maintained by the Consolidated Companies;
(q) the favorable opinion of Kilpatrick & Cody, United States counsel
to the Credit Parties, substantially in the form of Exhibit J addressed to the
---------
Agent and each of the Lenders;
(r) consent from Prudential to the execution and delivery of this
Agreement and an undertaking from such holders to comply with Section 6.11
hereof in form and substance satisfactory to the Agent and the Required Lenders;
and
(s) all corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and enforceability of the
Credit Documents shall be reasonably satisfactory in form and substance to the
Required Lenders.
SECTION 4.02. CONDITIONS TO ALL LOANS AND LETTERS OF CREDIT. At the
---------------------------------------------
time of the making of all Loans and the issuance of any Letter of Credit
(before as well as after giving effect to such Loans or Letters of Credit and to
the proposed use of the proceeds thereof), the following conditions shall have
been satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Intermet contained herein
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the date
of such Loans;
(c) since the date of the most recent financial statements of the
Consolidated Companies described in Section 5.14, there shall have been no
------------
change which has had or could reasonably be expected to have a Materially
Adverse Effect (whether or not any notice with respect to such change has been
furnished to the Lenders pursuant to Section 6.07);
------------
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<PAGE>
(d) there shall be no action or proceeding instituted or pending
before any court or other governmental authority or, to the knowledge of
Intermet, threatened (i) which reasonably could be expected to have a Materially
Adverse Effect, or (ii) seeking to prohibit or restrict one or more Credit
Party's ownership or operation of any portion of its business or assets, or to
compel one or more Credit Party to dispose of or hold separate all or any
portion of its businesses or assets, where such portion or portions of such
business(es) or assets, as the case may be, constitute a material portion of the
total businesses or assets of the Consolidated Companies;
(e) the Loans to be made and the use of proceeds thereof or the
Letters of Credit to be issued, as the case may be, shall not contravene,
violate or conflict with, or involve the Agent or any Lender in a violation of,
any law, rule, injunction, or regulation, or determination of any court of law
or other governmental authority applicable to Intermet; and
(f) the Agent shall have received such other docu ments or legal
opinions as the Agent or any Lender may reasonably request, all in form and
substance reasonably satisfactory to the Agent.
Each request for a Borrowing and the acceptance by Intermet of the
proceeds thereof and each request for the issuance of a Letter of Credit shall
constitute a representation and warranty by Intermet, as of the date of the
Loans comprising such Borrowing or the date of the issuance of such Letter of
Credit, that the applicable conditions specified in Sections 4.01 and 4.02 have
------------- ----
been satisfied.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
------------------------------
Intermet (as to itself and all other Consolidated Companies)
represents and warrants as follows:
SECTION 5.01. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the
----------------------------------------
Consolidated Companies (other than Columbus Neunkirchen) is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its
-51-
<PAGE>
incorporation. Columbus Neunkirchen is a German company with limited liability
duly organized, validly existing and in good standing under the laws of Germany.
Each of the Consolidated Companies (i) has the corporate power and authority
and the legal right to own and operate its property and to conduct its business,
(ii) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership of property or the conduct of its
business requires such qualification, and (iii) is in compliance with all
Requirements of Law, except where the failure to duly qualify or to comply with
applicable Requirements of Law would not have a Materially Adverse Effect. The
jurisdiction of incorporation or organization, and the ownership of all issued
and outstanding capital stock, for each Subsidiary as of the date of this
Agreement is accurately described on Schedule 5.01.
-------------
SECTION 5.02. CORPORATE POWER; AUTHORIZATION. Each of the Credit
------------------------------
Parties has the corporate power and authority to make, deliver and perform the
Credit Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of such Credit
Documents. No consent or authorization of, or filing with, any Person (includ
ing, without limitation, any governmental authority), is required in connection
with the execution, delivery or performance by any Credit Party, or the validity
or enforceability against any Credit Party, of the Credit Documents, other than
such consents, authorizations or filings which have been made or obtained (other
than routine filings with the Securities and Exchange Commission).
SECTION 5.03. ENFORCEABLE OBLIGATIONS. This Agreement has been duly
-----------------------
executed and delivered, and each other Credit Document will be duly executed and
delivered, by the respective Credit Parties, and this Agreement constitutes, and
each other Credit Document when executed and delivered will constitute, legal,
valid and binding obligations of the Credit Parties, respectively, enforceable
against the Credit Parties in accordance with their respective terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity.
SECTION 5.04. NO LEGAL BAR. The execution, delivery and performance
------------
by the Credit Parties of the Credit Documents will
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<PAGE>
not violate any Requirement of Law or cause a breach or default under any of
their respective Contractual Obligations.
SECTION 5.05. NO MATERIAL LITIGATION OR INVESTIGATIONS. Except as
----------------------------------------
set forth on Schedule 5.05 or in any notice furnished to the Lenders pursuant to
-------------
Section 6.07(g) at or prior to the respective times the representations and
- ---------------
warranties set forth in this Section 5.05 are made or deemed to be made
------------
hereunder, no litigation, investigations or proceedings of or before any courts,
tribunals, arbitrators or governmental authorities are pending or, to the
knowledge of Intermet, threatened by or against any of the Consolidated
Companies, or against any of their respective properties or revenues, existing
or future (a) with respect to any Credit Document, or any of the transactions
contemplated hereby or thereby, or (b) which, if adversely determined, would
reasonably be expected to have a Materially Adverse Effect.
SECTION 5.06. INVESTMENT COMPANY ACT, ETC. None of the Consolidated
---------------------------
Companies is an "investment company" or a company "controlled" by an "investment
company" (as each of the quoted terms is defined or used in the Investment
Company Act of 1940, as amended). None of the Consolidated Companies is subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any foreign, federal or local statute or regulation limiting its
ability to incur indebtedness for money borrowed, guarantee such indebtedness,
or pledge its assets to secure such indebtedness, as contemplated hereby or by
any other Credit Document.
SECTION 5.07. MARGIN REGULATIONS. No part of the proceeds of any of
------------------
the Loans will be used for any purpose which violates, or which would be
inconsistent or not in compliance with, the provisions of the applicable Margin
Regulations.
SECTION 5.08. COMPLIANCE WITH ENVIRONMENTAL LAWS.
----------------------------------
(a) Except as set forth on Schedule 5.08 attached hereto, the
-------------
Consolidated Companies have received no notices of claims or potential liability
under, and are in compliance with, all applicable Environmental Laws, where such
claims and liabilities under, and failures to comply with, such statutes,
regulations, rules, ordinances, laws or licenses, would reasonably be expected
to result in penalties, fines, claims or other
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<PAGE>
liabilities to the Consolidated Companies in amounts in excess of five percent
(5%) of Tangible Net Worth, either individually or in the aggregate.
(b) Except as set forth on Schedule 5.08 attached hereto, none of the
-------------
Consolidated Companies has received any notice of violation, or notice of any
action, either judicial or administrative, from any governmental authority
(whether United States or foreign) relating to the actual or alleged violation
of any Environmental Law, including, without limitation, any notice of any
actual or alleged spill, leak, or other release of any Hazardous Substance,
waste or hazardous waste by any Consolidated Company or its employees or agents,
or as to the existence of any contamination on any properties owned by any
Consolidated Company, where any such violation, spill, leak, release or
contamination would reasonably be expected to result in penalties, fines, claims
or other liabilities to the Consolidated Companies in amounts in excess of five
percent (5%) of Tangible Net Worth, either individually or in the aggregate.
(c) Except as set forth on Schedule 5.08 attached hereto, the
-------------
Consolidated Companies have obtained all necessary governmental permits,
licenses and approvals which are material to the operations conducted on their
respective properties, including without limitation, all required material
permits, licenses and approvals for (i) the emission of air pollutants or
contaminants, (ii) the treatment or pretreatment and discharge of waste water or
storm water, (iii) the treatment, storage, disposal or generation of hazardous
wastes, (iv) the withdrawal and usage of ground water or surface water, and (v)
the disposal of solid wastes.
SECTION 5.09. INSURANCE. The Consolidated Companies currently
---------
maintain insurance with respect to their respective properties and businesses,
with financially sound and reputable insurers, having coverages against losses
or damages of the kinds customarily insured against by reputable companies in
the same or similar businesses, such insurance being in amounts no less than
those amounts which are customary for such companies under similar
circumstances. The Consolidated Companies have paid all material amounts of
insurance premiums now due and owing with respect to such insurance policies and
coverages, and such policies and coverages are in full force and effect.
-54-
<PAGE>
SECTION 5.10. NO DEFAULT. None of the Consolidated Companies is in
----------
default under or with respect to any Contractual Obligation in any respect which
has had or is reasonably expected to have a Materially Adverse Effect.
SECTION 5.11. NO BURDENSOME RESTRICTIONS. Except as set forth on
--------------------------
Schedule 5.11 or in any notice furnished to the Lenders pursuant to Section 6.07
- ------------- ------------
at or prior to the respective times the representations and warranties set forth
in this Section 5.11 are made or deemed to be made hereunder, none of the
------------
Consolidated Companies is a party to or bound by any Contractual Obligation or
Requirement of Law which has had or would reasonably be expected to have a
Materially Adverse Effect.
SECTION 5.12. TAXES. Except as set forth on Schedule 5.12, each of
----- -------------
the Consolidated Companies has filed or caused to be filed all declarations,
reports and tax returns which are required to have been filed, and has paid all
taxes, custom duties, levies, charges and similar contributions ("taxes" in this
Section 5.12) shown to be due and payable on said returns or on any assessments
- ------------
made against it or its properties, and all other taxes, fees or other charges
imposed on it or any of its properties by any governmental authority (other than
those the amount or validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided in its books); and no tax liens have been filed and, to
the knowledge of Intermet, no claims are being asserted with respect to any such
taxes, fees or other charges.
SECTION 5.13. SUBSIDIARIES. Except as disclosed on Schedule 5.01 or
------------ -------------
in any notice given to the Lenders pursuant to Section 6.07 at or prior to the
------------
respective times this representative and warranty is made or deemed to be made
hereunder, Intermet has no Subsidiaries and neither Intermet nor any Subsidiary
is a joint venture partner or general partner in any partnership.
SECTION 5.14. FINANCIAL STATEMENTS. Intermet has furnished to the
--------------------
Agent and the Lenders (i) the audited consolidated balance sheet as of December
31, 1994 of Intermet and the related consolidated and consolidating statements
of income, shareholders' equity and cash flows for the fiscal year then ended,
including in each case the related schedules and notes,
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<PAGE>
(ii) the unaudited balance sheet of Intermet presented on a consolidated basis
as at the end of the third fiscal quarter of 1995, and the related unaudited
consolidated and consolidating statements of income, shareholders' equity and
cash flows presented on a consolidated basis for the year-to-date period then
ended, setting forth in each case in comparative form the figures for the
corresponding quarter of Intermet's previous fiscal year. The foregoing
financial statements fairly present in all material respects the consolidated
and consolidating financial condition of Intermet as at the dates thereof and
results of operations for such periods in conformity with GAAP consistently
applied (sub ject, in the case of the quarterly financial statements, to normal
year-end audit adjustments and the absence of certain footnotes). The
Consolidated Companies taken as a whole do not have any mate rial contingent
obligations, contingent liabilities, or material liabilities for known taxes,
long-term leases or unusual forward or long-term commitments not reflected in
the foregoing financial statements or the notes thereto. Since December 31,
1994, there have been no changes with respect to the Consolidated Companies
which has had or would reasonably be expected to have a Materially Adverse
Effect.
SECTION 5.15. ERISA. Except as disclosed on Schedule 5.15 or in any
----- -------------
notice furnished to the Lenders pursuant to Section 6.07 at or prior to the
------------
respective times the represen tations and warranties set forth in this Section
-------
5.15 are made or deemed to be made hereunder:
- ----
(a)(1) Identification of Plans. (A) None of the Consolidated
-----------------------
Companies nor any of their respective ERISA Affiliates maintains or contributes
to, or has during the past two years maintained or contributed to, any Plan that
is subject to Title IV of ERISA, and (B) none of the Consolidated Companies
maintains or contributes to any Foreign Plan;
(2) Compliance. Each Plan and each Foreign Plan maintained by the
----------
Consolidated Companies have at all times been maintained, by their terms and in
operation, in compliance with all applicable laws, and the Consolidated
Companies are subject to no tax or penalty with respect to any Plan of such
Consolidated Company or any ERISA Affiliate thereof, including without
limitation, any tax or penalty under Title I or Title IV of ERISA or under
Chapter 43 of the Tax Code, or any tax or penalty resulting from a loss of
deduction under Sections 404, or 419 of the Tax Code, where the failure to
comply with such laws, and such
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<PAGE>
taxes and penalties, together with all other liabilities referred to in this
Section 5.15 (taken as a whole), would in the aggregate have a Materially
- ------------
Adverse Effect;
(3) Liabilities. The Consolidated Companies are subject to no
-----------
liabilities (including withdrawal liabilities) with respect to any Plans or
Foreign Plans of such Consolidated Companies or any of their ERISA Affiliates,
including without limitation, any liabilities arising from Titles I or IV of
ERISA, other than obligations to fund benefits under an ongoing Plan and to pay
current contributions, expenses and premiums with respect to such Plans or
Foreign Plans, where such liabilities, together with all other liabilities
referred to in this Section 5.15 (taken as a whole), would in the aggregate have
------------
a Materially Adverse Effect;
(4) Funding. The Consolidated Companies and, with respect to any
-------
Plan which is subject to Title IV of ERISA, each of their respective ERISA
Affiliates, have made full and timely payment of all amounts (A) required to be
contributed under the terms of each Plan and applicable law, and (b) required to
be paid as expenses (including PBGC or other premiums) of each Plan, where the
failure to pay such amounts (when taken as a whole, including any penalties
attributable to such amounts) would have a Materially Adverse Effect. No Plan
subject to Title IV of ERISA has an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA, determined as if such Plan terminated
on any date on which this representation and warranty is deemed made, in any
amount which, together with all other liabilities referred to in this Section
-------
5.15 (taken as a whole), would have a Materially Adverse Effect if such amount
- ----
were then due and payable. The Consolidated Companies are subject to no
liabilities with respect to post-retirement medical benefits in any amounts
which, together with all other liabilities referred to in this Section 5.15
------------
(taken as a whole), would have a Materially Adverse Effect if such amounts were
then due and payable.
(b) With respect to any Foreign Plan, reasonable reserves have been
established in accordance with prudent business practice or where required by
ordinary accounting practices in the jurisdiction where the Foreign Subsidiary
maintains its principal place of business or in which the Foreign Plan is
maintained. The aggregate unfunded liabilities, after giving effect to any
reserves for such liabilities, with respect to such Foreign Plans, together with
all other liabilities referred to in this
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<PAGE>
Section 5.15 (taken as a whole), would not have a Materially Adverse Effect.
- ------------
SECTION 5.16. PATENTS, TRADEMARKS, LICENSES, ETC. Except as set
-----------------------------------
forth on Schedule 5.16 or in any notice furnished to the Lenders pursuant to
-------------
Section 6.07 at or prior to the respective times the representations and
- ------------
warranties set forth in this Section 5.16 are made or deemed to be made
------------
hereunder, (i) the Con solidated Companies have obtained and hold in full force
and ef fect all material patents, trademarks, service marks, trade names,
copyrights, licenses and other such rights, free from burdensome restrictions,
which are necessary for the operation of their re spective businesses as
presently conducted, and (ii) to the best of Intermet's knowledge, no product,
process, method, service or other item presently sold by or employed by any
Consolidated Company in connection with such business infringes any patents,
trademark, service mark, trade name, copyright, license or other right owned by
any other person and there is not presently pend ing, or to the knowledge of
Intermet, threatened, any claim or litigation against or affecting any
Consolidated Company con testing such Person's right to sell or use any such
product, pro cess, method, substance or other item where the result of such
failure to obtain and hold such benefits or such infringement would have a
Materially Adverse Effect.
SECTION 5.17. OWNERSHIP OF PROPERTY. Except as set forth on
---------------------
Schedule 5.17, (i) each Consolidated Company that is not a Foreign Subsidiary
- -------------
has good and marketable fee simple title to or a valid leasehold interest in all
of its real property and good title to, or a valid leasehold interest in, all of
its other property, and (ii) each Foreign Subsidiary owns or has a valid
leasehold interest in all of its real property and owns or has a valid leasehold
interest in, all of its other properties, in the case of clauses (i) and (ii) as
such properties are reflected in the consolidated balance sheet of the
Consolidated Companies as of December 31, 1994 referred to in Section 5.14,
------------
other than properties disposed of in the ordinary course of business since such
date or as otherwise permitted by the terms of this Agreement, subject to no
Lien or title defect of any kind, except Liens permitted hereby and title
defects not constituting material impairments in the intended use for such
properties. The Consolidated Companies enjoy peaceful and undisturbed
possession under all of their respective leases.
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<PAGE>
SECTION 5.18. FINANCIAL CONDITION. On the Closing Date and after
-------------------
giving effect to the transactions contemplated by this Agreement and the other
Credit Documents, including without limitation, the use of the proceeds of the
Loans as provided in Sections 2.01, each of the Credit Parties is solvent.
-------------
SECTION 5.19. LABOR MATTERS. Since December 31, 1992, the
-------------
Consolidated Companies have experienced no strikes, labor disputes, slow downs
or work stoppages due to labor disagreements which have had, or would reasonably
be expected to have, a Materially Adverse Effect, and, to the best knowledge of
Intermet, there are no such strikes, disputes, slow downs or work stoppages
threatened against any Consolidated Company which if they occurred, would
reasonably be expected to have a Materially Adverse Effect. Since December 31,
1992, the hours worked and payment made to employees of the Consolidated
Companies have not been in violation in any material respect of the Fair Labor
Standards Act (in the case of Consolidated Companies that are not Foreign
Subsidiaries) or any other applicable law dealing with such matters. All
payments due from the Consolidated Companies, or for which any claim may be made
against the Consolidated Companies, on account of wages and employee health and
welfare insurance and other benefits have been paid or accrued as liabilities on
the books of the Consolidated Companies in all jurisdictions where the failure
to pay or accrue such liabilities would reasonably be expected to exceed
$2,000,000 in the aggregate.
SECTION 5.20. PAYMENT OR DIVIDEND RESTRICTIONS. Except as set forth
--------------------------------
in Section 7.05 or described on Schedule 5.20 or as expressly permitted by the
------------ -------------
terms of this Agreement, none of the Consolidated Companies is party to or
subject to any agreement or understanding restricting or limiting the payment of
any dividends or other distributions by any such Consolidated Company.
SECTION 5.21. DISCLOSURE. No representation or warranty contained in
----------
this Agreement (including the Schedules attached hereto) or in any other
document furnished from time to time pursuant to the terms of this Agreement,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the statements herein or
therein not misleading in any material respect as of the date made or deemed to
be made. Except as may be set forth herein (including the Schedules attached
hereto) or
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<PAGE>
in any notice furnished to the Lenders pursuant to Section 6.07 at or prior to
------------
the respective times the representations and warranties set forth in this
Section 5.21 are made or deemed to be made hereunder, there is no fact known to
- ------------
Intermet which has had, or is reasonably expected to have, a Materially Adverse
Effect.
ARTICLE VI.
AFFIRMATIVE COVENANTS
---------------------
So long as any Commitment remains in effect hereunder or any Note
shall remain unpaid or any Letter of Credit shall remain outstanding, Intermet
will:
SECTION 6.01. CORPORATE EXISTENCE, ETC. Preserve and maintain, and
-------------------------
cause each of its Subsidiaries to preserve and maintain, its corporate existence
(except for mergers, divestitures and consolidations permitted pursuant to
Section 7.03), its material rights, franchises, and licenses, and its material
- ------------
patents and copyrights (for the scheduled duration thereof), trademarks, trade
names, and service marks, necessary or desirable in the normal conduct of its
business, and its qualification to do business as a foreign corporation in all
jurisdictions where it conducts business or other activities making such
qualification necessary, where the failure to be so qualified would reasonably
be expected to have a Materially Adverse Effect.
SECTION 6.02. COMPLIANCE WITH LAWS, ETC. Comply, and cause each of
--------------------------
its Subsidiaries to comply with all Requirements of Law (including, without
limitation, the Environmental Laws and Contractual Obligations applicable to or
binding on any of them where the failure to comply with such Requirements of Law
and Contractual Obligations would reasonably be expected to have a Materially
Adverse Effect (with the express understanding that with respect to
noncompliance with Requirements of Laws, liabilities from noncompliance
involving amounts equal to or in excess of five percent (5%) of Tangible Net
Worth in the aggregate shall be deemed to have a Materially Adverse Effect).
SECTION 6.03. PAYMENT OF TAXES AND CLAIMS, ETC. Pay, and cause each
---------------------------------
of its Subsidiaries to pay, (i) all taxes, assessments and governmental charges
imposed upon it or upon its
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<PAGE>
property, and (ii) all claims (including, without limitation, claims for labor,
materials, supplies or services) which might, if unpaid, become a Lien upon its
property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings and adequate reserves are
maintained with respect thereto.
SECTION 6.04. KEEPING OF BOOKS. Keep, and cause each of its
----------------
Subsidiaries to keep, proper books of record and account, containing complete
and accurate entries of all their respective financial and business
transactions.
SECTION 6.05. VISITATION, INSPECTION, ETC. Permit, and cause each of
----------------------------
its Subsidiaries to permit, any representative of the Agent or any Lender to
visit and inspect any of its property, to examine its books and records and to
make copies and take extracts therefrom, and to discuss its affairs, finances
and accounts with its officers, all at such reasonable times and as often as the
Agent or such Lender may reasonably request after reasonable prior notice to
Intermet; provided, however, that at any time following the occurrence and
-------- -------
during the continuance of a Default or an Event of Default, no prior notice to
Intermet shall be required.
SECTION 6.06. INSURANCE; MAINTENANCE OF PROPERTIES.
------------------------------------
(a) Maintain or cause to be maintained with financially sound and
reputable insurers, insurance with respect to its properties and business, and
the properties and business of its Subsidiaries, against loss or damage of the
kinds customarily insured against by reputable companies in the same or similar
businesses, such insurance to be of such types and in such amounts as are
customary for such companies under similar circumstances; provided, however,
-------- -------
that in any event Intermet shall use its best efforts to maintain, or cause to
be maintained, insurance in amounts and with coverages not materially less
favorable to any Consolidated Company as in effect on the date of this
Agreement, except where the costs of maintaining such insurance would, in the
judgment of both Intermet and the Agent, be excessive.
(b) Cause, and cause each of the Consolidated Companies to cause, all
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment
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<PAGE>
and will cause to be made all necessary repairs, renewals, replacements,
settlements and improvements thereof, all as in the judgment of Intermet may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
-------- -------
nothing in this Section 6.06 shall prevent Intermet from discontinuing the
------------
operation or maintenance of any such properties if such discontinuance is, in
the judgment of Intermet, desirable in the conduct of its business or the
business of any Consolidated Company.
SECTION 6.07. REPORTING COVENANTS. Furnish to each Lender:
-------------------
(a) Annual Financial Statements. As soon as available and in any
event within 90 days after the end of each fiscal year of Intermet, balance
sheets of the Consolidated Companies as at the end of such year, presented on a
consolidated basis, and the related statements of income, and cash flows of the
Consolidated Companies for such fiscal year, presented on a consolidated basis,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and accompanied by a report thereon of
Ernst & Young, L.L.P. or other independent public accountants of comparable
recognized national standing, which such report shall be unqualified as to going
concern and scope of audit and shall state that such financial statements
present fairly in all material respects the financial condition as at the end of
such fiscal year on a consolidated basis, and the results of operations and
statements of cash flows of the Consolidated Companies for such fiscal year in
accordance with GAAP and that the exami nation by such accountants in connection
with such consoli dated financial statements has been made in accordance with
generally accepted auditing standards;
(b) Quarterly Financial Statements. As soon as available and in any
event within 60 days after the end of each fiscal quarter of Intermet (other
than the fourth fiscal quarter), balance sheets of the Consolidated Companies as
at the end of such quarter presented on a consolidated basis and the related
statements of income, shareholders' equity, and cash flows of the Consolidated
Companies for such fiscal quarter and for the portion of Intermet's fiscal year
ended
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<PAGE>
at the end of such quarter, presented on a consolidated basis setting forth in
each case in comparative form the figures for the corresponding quarter and the
corresponding portion of Intermet's previous fiscal year, all in reasonable
detail and certified by the chief financial officer or principal accounting
officer of Intermet that such financial statements fairly present in all
material respects the financial condition of the Consolidated Companies as at
the end of such fiscal quarter on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies for such
fiscal quarter and such portion of Intermet's fiscal year, in accordance with
GAAP consistently applied (subject to normal year-end audit adjustments and the
absence of certain footnotes);
(c) No Default/Compliance Certificate. Together with the financial
---------------------------------
statements required pursuant to subsections (a) and (b) above, a certificate
substantially in the form of Exhibit attached hereto of the president, chief
--------
executive officer, chief financial officer or principal accounting officer of
Intermet (i) to the effect that, based upon a review of the activities of the
Consolidated Companies and such financial statements during the period covered
thereby, there exists no Event of Default and no Default under this Agreement,
or if there exists an Event of Default or a Default hereunder, specifying the
nature thereof and the proposed response thereto, and (ii) demonstrating in
reasonable detail compliance as at the end of such fiscal year or such fiscal
quarter with Section 6.08 and Sections 7.01 through 7.06;
------------ ------------- ----
(d) Auditor's No Default Certificate. Together with the financial
--------------------------------
statements required pursuant to subsection (a) above, a certificate of the
accountants who prepared the report referred to therein, to the effect that,
based upon their audit, there exists no Default or Event of Default under this
Agreement, or if there exists a Default or Event of Default hereunder,
specifying the nature thereof;
(e) Annual Budget. No later than 30 days prior to the beginning of
-------------
each fiscal year, an annual financial plan and forecasted balance sheets and
statements of income and cash flows for the current fiscal year for the
Consolidated Companies presented on a consolidated basis;
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<PAGE>
(f) Notice of Default. Promptly after any Executive Officer of
-----------------
Intermet has notice or knowledge of the occurrence of an Event of Default or a
Default, a certificate of the chief financial officer or principal accounting
officer of Intermet specifying the nature thereof and the proposed response
thereto;
(g) Litigation and Investigations. Promptly after (i) the occurrence
-----------------------------
thereof, notice of the institution of or any material adverse development in any
material action, suit or proceeding or any governmental investigation or any
arbitration, before any court or arbitrator or any governmental or
administrative body, agency or official, against any Consolidated Company, or
any material property of any thereof, or (ii) actual knowledge thereof, notice
of the threat of any such action, suit, proceeding, investigation or
arbitration;
(h) Environmental Notices. Promptly after receipt thereof, notice
---------------------
of any of any actual or alleged violation, or notice of any action, claim or
request for information, either judicial or administrative, from any
governmental authority relating to any actual or alleged claim, notice of
potential responsibility under or violation of any Environmental Law, or any
actual or alleged spill, leak, disposal or other release of any waste, petroleum
product, or hazardous waste or Hazardous Substance by any Consolidated Company
which could result in penalties, fines, claims or other liabilities to any
Consolidated Company in amounts in excess of $1,000,000;
(i) ERISA. (A)(i) Promptly after the occurrence thereof with respect
-----
to any Plan of any Consolidated Company or any ERISA Affiliate thereof, or any
trust established thereunder, notice of (A) a "reportable event" described in
Section 4043 of ERISA and the regulations issued from time to time thereunder
(other than a "reportable event" not subject to the provisions for 30-day notice
to the PBGC under such regulations), or (B) any other event which could subject
any Consolidated Company to any tax, penalty or liability under Title I or Title
IV of ERISA or Chapter 43 of the Tax Code, or any tax or penalty resulting from
a loss of deduction under Sections 404 or 419 of the Tax Code, or any tax,
penalty or liability under any Requirement of Law applicable to any Foreign
Plan, where any such taxes, penalties or
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<PAGE>
liabilities exceed or could exceed $1,000,000 in the aggregate;
(ii) Promptly after such notice must be provided to the PBGC, or
to a Plan participant, beneficiary or alternative payee, any notice required
under Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) of
ERISA or under Section 401(a)(29) or 412 of the Tax Code with respect to any
Plan of any Consolidated Company or any ERISA Affiliate thereof;
(iii) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning the intent of the
PBGC or any other governmental authority to terminate a Plan of such Company or
ERISA Affiliate thereof which is subject to Title IV of ERISA, to impose any
liability on such Company or ERISA Affiliate under Title IV of ERISA or Chapter
43 of the Tax Code;
(iv) Upon the request of the Agent, promptly upon the filing
thereof with the Internal Revenue Service ("IRS") or the Department of Labor
("DOL"), a copy of IRS Form 5500 or annual report for each Plan of any
Consolidated Company or ERISA Affiliate thereof which is subject to Title IV of
ERISA;
(v) Upon the request of the Agent, (A) true and complete copies of
any and all documents, government re ports and IRS determination or opinion
letters or rulings for any Plan of any Consolidated Company from the IRS, PBGC
or DOL, (B) any reports filed with the IRS, PBGC or DOL with respect to a Plan
of the Consolidated Companies or any ERISA Affiliate thereof, or (C) a current
statement of withdrawal liability for each Multiemployer Plan of any
Consolidated Company or any ERISA Affiliate thereof;
(B) Promptly upon any Consolidated Company becoming aware
thereof, notice that (i) any material contributions to any Foreign Plan have not
been made by the required due date for such contribution and such default cannot
immediately be remedied, (ii) any Foreign Plan is not funded to the extent
required by the law of the jurisdiction whose law governs such Foreign Plan
based on the actuarial assumptions reasonably used at any time, or (iii) a
material
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<PAGE>
change is anticipated to any Foreign Plan that may have a Materially Adverse
Effect.
(j) Liens. Promptly upon any Consolidated Company becoming aware
-----
thereof, notice of the filing of any federal statutory Lien, tax or other state
or local government Lien or any other Lien affecting their respective
properties, other than those Liens expressly permitted by Section 7.02;
------------
(k) Public Filings, Etc. Promptly upon the filing thereof or
-------------------
otherwise becoming available, copies of all financial statements, annual,
quarterly and special reports, proxy statements and notices sent or made
available generally by Intermet to its public security holders, of all regular
and periodic reports and all registration statements and prospectuses, if any,
filed by any of them with any securities exchange, and of all press releases and
other statements made available generally to the public containing material
developments in the business or financial condition of Intermet and the other
Consolidated Companies;
(l) Burdensome Restrictions, Etc. Promptly upon the existence or
----------------------------
occurrence thereof, notice of the existence or occurrence of (i) any Contractual
Obligation or Requirement of Law described in Section 5.11, (ii) failure of any
------------
Consolidated Company to hold in full force and effect those material trademarks,
service marks, patents, trade names, copyrights, licenses and similar rights
necessary in the normal conduct of its business, and (iii) any strike, labor
dispute, slow down or work stoppage as described in Section 5.19;
------------
(m) New Subsidiaries. Within 30 days after the formation or
----------------
acquisition of any Subsidiary, or any other event resulting in the creation of a
new Subsidiary, or the domestication of any Foreign Subsidiary, notice of the
formation or acquisition of such Subsidiary or such occurrence, including a
description of the assets of such entity, the activities in which it will be
engaged, and such other information as the Agent may request; and
(n) Other Information. With reasonable promptness, any other
-----------------
information provided under the Note Purchase Agreement and such other
information about the Consolidated
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<PAGE>
Companies as the Agent or any Lender may reasonably request from time to time.
SECTION 6.08. FINANCIAL COVENANTS.
-------------------
(a) Fixed Charge Coverage Ratio. Maintain as of the last day of each
---------------------------
fiscal quarter, a minimum Fixed Charge Coverage Ratio equal to or greater than
2.0:1.0.
(b) Leverage Ratio. Maintain as of the last day of each fiscal
--------------
quarter, a maximum Leverage Ratio of less than or equal to 65%.
(c) Funded Debt to Consolidated EBITDA. Maintain as of the last day
----------------------------------
of each fiscal quarter, a maximum ratio of Funded Debt to Consolidated EBITDA
calculated for the immediately preceding four fiscal quarters of less than or
equal to 3.5:1.0.
(d) Third Fiscal Quarter 1995 Calculations. Schedule 6.08 sets forth
-------------------------------------- -------------
the calculation of the financial covenant amounts, ratios, and percentages
required by paragraphs (a) through (c) of this Section 6.08 calculated as of
------------
September 30, 1995.
SECTION 6.09. NOTICES UNDER CERTAIN OTHER INDEBTEDNESS. Immediately
----------------------------------------
upon its receipt thereof, Intermet shall furnish the Agent a copy of any notice
received by it or any other Consolidated Company from the holder(s) of
Indebtedness of the Consolidated Companies (or from any trustee, agent,
attorney, or other party acting on behalf of such holder(s)) in an amount which,
in the aggregate, exceeds $5,000,000, where such notice states or claims (i) the
existence or occurrence of any default or event of default with respect to such
Indebtedness under the terms of any indenture, loan or credit agreement,
debenture, note, or other document evidencing or governing such Indebtedness, or
(ii) the existence or occurrence of any event or condition which requires or
permits holder(s) of any Indebtedness to exercise rights under any Change in
Control Provision.
SECTION 6.10. ADDITIONAL CREDIT PARTIES AND COLLATERAL. Promptly
----------------------------------------
after (i) the formation or acquisition (provided that nothing in this Section
shall be deemed to authorize the acquisition of any entity) of any Subsidiary
not listed on Schedule 5.01, (ii) the domestication of any Foreign
-------------
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<PAGE>
Subsidiary, or (iii) the occurrence of any other event creating a new
Subsidiary, Intermet shall execute and deliver, and cause to be executed and
delivered (x) in the case of Foreign Subsidiary, if, in the reasonable opinion
of Intermet's accountants, delivery of a Guaranty Agreement would cause Intermet
to be subject to tax on the undistributed earnings and profits of such
Subsidiary pursuant to Subpart F of Part III, Subchapter N of the Internal
Revenue Code, a Pledge Agreement with respect to 49% of the capital stock of
such Subsidiary if it is a Foreign Subsidiary directly owned by Intermet or a
Subsidiary that is not, and is not directly or indirectly controlled by, a
Foreign Subsidiary, and (y) a Guaranty Agreement from each such Subsidiary that
is not a Foreign Subsidiary whose stock has been pledged to the extent and in
accordance with subsection (x) hereof, together with related documents with
respect to such new Subsidiary (or the pledgor of its stock) of the kind
described in Section 4.01 (e), (f), (g), (h), (i) and (p), all in form and
------------ --- --- --- --- --- ---
substance satisfactory to the Agent and the Required Lenders.
SECTION 6.11. DELIVERY OF RELEASE PLEDGE AGREEMENT, MODIFICATIONS TO
------------------------------------------------------
NOTE PURCHASE AGREEMENT; INTERCREDITOR AGREEMENT. Promptly, and in any event
- ------------------------------------------------
within thirty (30) days after the Closing Date, deliver or cause to be delivered
to the Agent in form and substance satisfactory to the Agent and the Required
Lenders, (i) an amendment to the Note Purchase Agreement conforming the
covenants, events of default and financial definitions used therein to the terms
of this Agreement, (ii) release of the Lien of Prudential on the stock of
Columbus Neunkirchen and release of the accompanying UCC financing statement,
and (iii) a duly executed amendment to the Intercreditor Agreement evidencing
the modifications made herein. Upon receipt of the foregoing, the Agent and the
Lenders shall release the Lien on the stock of Columbus Neunkirchen.
ARTICLE VII.
NEGATIVE COVENANTS
------------------
So long as any Commitment remains in effect hereunder or any Note
shall remain unpaid or any Letter of Credit Obligation shall remain outstanding,
Intermet will not and will not permit any Subsidiary to:
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<PAGE>
SECTION 7.01. INDEBTEDNESS. Create, incur, assume or suffer to
------------
exist any Indebtedness, other than:
(a) Indebtedness under this Agreement and otherwise outstanding on
the Closing Date as set forth on Schedule 7.01 attached hereto;
-------------
(b) unsecured current liabilities (other than liabilities for
borrowed money or liabilities evidenced by promissory notes, bonds or similar
instruments) incurred in the ordinary course of business;
(c) Indebtedness of Intermet pursuant to the Note Purchase Agreement
and secured by Liens which are pari passu with the Liens in favor of the Lenders
----------
securing the Obligations hereunder and governed by the terms of the
Intercreditor Agreement (provided that Liens on the stock of Columbus
Neunkirchen shall be permitted only for a period of thirty days after the
Closing Date);
(d) Investments permitted by Sections 7.06(a) hereof;
(e) Subordinated Debt which is unsecured and approved as to terms and
conditions by the Agent and the Required Lenders;
(f) Indebtedness of a Person which is acquired by or consolidated
with a Consolidated Company as long as such Indebtedness is not obtained in
contemplation of such acquisition; and
(g) additional Indebtedness not to exceed $30,000,000 at any one time
outstanding.
SECTION 7.02. LIENS. Create, incur, assume or suffer to exist any
-----
Lien on any of its property now owned or hereafter acquired to secure any
Indebtedness other than:
(a) Liens existing on the Closing Date and disclosed on Schedule 7.02
-------------
and Liens in favor of the Agent and/or the Lenders to secure the Obligations;
(b) Liens for taxes not yet due, and Liens for taxes or Liens imposed
by ERISA which are being contested in good
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faith by appropriate proceedings and with respect to which adequate reserves are
being maintained;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
being maintained;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(e) Liens permitted by Section 7.01(c);
---------------
(f) Liens (other than those permitted by paragraphs (a) through (e)
of this Section 7.02) encumbering assets having an Asset Value not greater than
------------
fifteen percent (15%) of Tangible Net Worth of Intermet in the aggregate at any
one time.
SECTION 7.03. MERGERS, ACQUISITIONS, DIVESTITURES.
------------------------------------
(a) Merge or consolidate with any other Person, except that the
foregoing restrictions shall not be applicable to:
(i) mergers or consolidations of (x) any Subsidiary with any
other Subsidiary which is a Guarantor or (y) any Subsidiary with Intermet; or
(ii) mergers or consolidations which result in Acquisitions of
Persons engaged in businesses in which Intermet is engaged on the Closing Date
or substantially related thereto and as otherwise permitted by Section 7.10 of
------------
this Agreement;
provided that before and after giving effect to any such merger
- -------------
or consolidations, (w) Intermet is in compliance with Section 6.08 hereof; (x)
------------
no other Default or Event of Default exists hereunder;
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(y) in the event of such merger or consolidation, the surviving Person is a
Consolidated Company and complies with Section 6.10 hereof, if applicable, and
------------
(z) Intermet is the surviving corporation in connection with any merger or
consolidation to which it is a party;
(b) Sell or otherwise dispose of the capital stock of a Subsidiary of
Intermet except as permitted pursuant to Section 7.04(c); or
(c) make or permit any Acquisition other than an Acquisition of
Persons engaged in businesses in which Intermet is engaged on the Closing Date
or substantially related thereto and as otherwise permitted pursuant to Section
-------
7.10 of this Agreement; provided that Intermet meets the conditions of (w), (x),
- ---- -------- ----
(y) and (z) of paragraph (a) of this Section 7.03.
------------
SECTION 7.04. ASSET SALES.
-----------
Sell, lease or otherwise dispose of its accounts, property, stock of
its Subsidiaries or other assets; provided, however, that the foregoing
-------- -------
restrictions on Asset Sales shall not be applicable to:
(a) sales of inventory in the ordinary course of business;
(b) sales of equipment or other personal property being replaced by
other equipment or other personal property purchased as a capital expenditure
item; or
(c) Asset Sales comprised of stock of Subsidiaries or all or
substantially all of the assets of any Subsidiary where, on the date of
execution of a binding obligation to make such Asset Sale (provided that if the
Asset Sale is not consummated within six (6) months of such execution, then on
the date of consummation of such Asset Sale rather than on the date of execution
of such binding obligation):
(x) after giving effect to the proposed Asset Sale, the assets
which are the subject of the proposed Asset Sale, together with all other such
Asset Sales of the Consolidated Companies during the immediately preceding four
fiscal quarters of Intermet, did not
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generate twenty percent (20%) or more of Consolidated EBITDA during the then
most recently ended four fiscal quarters of Intermet; and
(y) after giving effect to the proposed Asset Sale, the aggregate
Asset Value of all such Asset Sales of the Consolidated Companies since the
Closing Date would not exceed thirty (30%) of the Net Fixed Assets of Intermet
as determined as of the last day of the most recently ended fiscal quarter of
Intermet; or
(d) Other Asset Sales (other than sales of capital stock of
Subsidiaries or all or substantially all of the assets of any Subsidiary),
where, on the date of execution of a binding obligation to make such Asset Sale
(provided that if the Asset Sale is not consummated within six (6) months of
such execution, then on the date of consummation of such Asset Sale rather than
on the date of execution of such binding obligation), after giving effect to the
proposed Asset Sale, the aggregate Asset Value of all Asset Sales made pursuant
to this subparagraph (d) by the Consolidated Companies since the Closing Date
would not exceed ten percent (10%) of Intermet's Net Fixed Assets as of the last
day of the most recently ended fiscal quarter of Intermet;
provided that notwithstanding the foregoing, no transaction pursuant to clauses
- -------- ----
(c) or (d) above shall be permitted if any Default or Event of Default exists at
the time of such transaction or would exist as a result of such transaction.
Upon the consummation of the sale of any capital stock of a
Subsidiary pursuant to subsection (c) above, which capital stock is pledged to
the Agent for the benefit of the Lenders, the Agent and the Lenders shall
release the Lien upon such stock upon the request of Intermet, and the Lenders
hereby authorize the Agent to do so.
SECTION 7.05. DIVIDENDS, ETC. Intermet shall not (a) declare or pay
---------------
any dividend on any class of its stock, or (b) make any payment to purchase,
redeem, retire or acquire any Subordinated Debt or stock or any option, warrant,
or other right to acquire such Subordinated Debt or stock (each, a "Restricted
Payment"), other than:
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(i) dividends payable solely in shares of any class of its
stock; and
(ii) cash dividends declared and paid, and all other Restricted
Payments made, after December 31, 1994 in an aggregate amount not to exceed
fifty percent (50%) of Consolidated Net Income earned during the period
commencing on January 1, 1995 and ending on the last day of the most recently
ended fiscal quarter of Intermet (such period to be treated as one accounting
period taking into account 100% of Consolidated Net Loss during such period);
provided, however, no such dividend or other Restricted Payment may be declared
- -------- -------
or paid pursuant to clause (ii) above unless no Default or Event of Default
exists at the time of such declaration or Restricted Payment, or would exist as
a result of such declaration or Restricted Payment.
SECTION 7.06. INVESTMENTS, LOANS, ETC. Make, permit or hold any
------------------------
Investments other than:
(a) Investments in Subsidiaries which are Guarantors under this
Agreement, whether such Subsidiaries are Guarantors on the Closing Date or
become Guarantors in accordance with Section 6.10 after the Closing Date;
------------
provided, however, nothing in this Section 7.06 shall be deemed to authorize an
------------
Investment pursuant to this subsection (a) in any entity that is not a Guarantor
prior to such Investment;
(b) Investments in the following securities:
(i) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency thereof,
in each case supported by the full faith and credit of the United States and
maturing within one year from the date of creation thereof;
(ii) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by a nationally recognized credit
rating agency;
(iii) time deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by, any office
located in the
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<PAGE>
United States of any bank or trust company which is organized under the laws of
the United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500,000,000, including without limitation, any
such deposits in Eurodollars issued by a foreign branch of any such bank or
trust company;
(iv) mid-term notes of corporations existing under the laws of the
United States rated in the highest grade by a nationally recognized credit
rating agency;
(v) municipal "lower floater" bonds rated A or better (or backed
by a letter of credit rated A or better) by a nationally recognized credit
rating agency;
(c) Investments made by Plans and Foreign Plans; and
(d) Investments (other than those permitted by paragraphs (a) through
(c) above), including loans to employees, officers and other Persons, in an
aggregate amount not to exceed ten percent (10%) of Tangible Net Worth at any
one time outstanding; provided that, Investments in Subsidiaries which are not
-------- ----
Guarantors are expressly prohibited by this Section 7.06.
------------
SECTION 7.07. SALE AND LEASEBACK TRANSACTIONS. Sell or transfer any
-------------------------------
property, real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which any Consolidated
Company intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
SECTION 7.08. TRANSACTIONS WITH AFFILIATES.
----------------------------
(a) Enter into any material transaction or series of related
transactions which in the aggregate would be material, whether or not in the
ordinary course of business, with any Affiliate of any Consolidated Company (but
excluding any Affiliate which is also a Consolidated Company), other than on
terms and conditions substantially as favorable to such Consolidated Company as
would be obtained by such Consolidated Company at the time in a comparable
arm's-length transaction with a Person other than an Affiliate.
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<PAGE>
(b) Convey or transfer to any other Person (including any other
Consolidated Company) any real property, buildings, or fixtures used in the
manufacturing or production operations of any Consolidated Company, or convey or
transfer to any other Consolidated Company any other assets (excluding
conveyances or transfers in the ordinary course of business) if at the time of
such conveyance or transfer any Default or Event of Default exists or would
exist as a result of such conveyance or transfer.
SECTION 7.09. PREPAYMENTS OF SUBORDINATED DEBT IN VIOLATION THEREOF.
-----------------------------------------------------
Directly or indirectly, prepay, purchase, redeem, retire, defease or otherwise
acquire, or make any optional payment on account of any principal of, interest
on, or premium payable in connection with any of its Subordinated Debt, in each
case, which is a violation of the subordination provisions of such Subordinated
Debt.
SECTION 7.10. CHANGES IN BUSINESS. Enter into any business which is
-------------------
substantially different from that presently conducted by the Consolidated
Companies taken as a whole (which includes iron and aluminum foundry operations
and machining); provided that, Intermet and the Consolidated Companies may make
-------- ----
Acquisitions of, and Investments in, (to the extent permitted by this Agreement)
Persons engaged in an unrelated business as long as the sum of (x) the amount
expended in connection with such Acquisitions since the Closing Date, and (y)
the aggregate outstanding Investments in such Persons (including any amount
committed by Intermet or a Consolidated Company to be loaned to or otherwise
invested in such Person) does not exceed five percent (5%) of Tangible Net Worth
on any date of determination.
SECTION 7.11. LIMITATION ON PAYMENT RESTRICTIONS AF FECTING
---------------------------------------------
CONSOLIDATED COMPANIES. Create or otherwise cause or suffer to exist or become
- ----------------------
effective, any consensual encumbrance or restriction on the ability of any
Consolidated Company to (i) pay dividends or make any other distributions on
such Consolidated Company's stock, or (ii) pay any indebtedness owed to Intermet
or any other Consolidated Company, or (iii) transfer any of its property or
assets to Intermet or any other Consolidated Company, except any consensual
encumbrance or restriction existing under the Credit Documents or the Pledge
Agreement (as defined in the Note Purchase Agreement) (as originally executed)
or as set forth on Schedule 5.20.
-------------
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<PAGE>
SECTION 7.12. ACTIONS UNDER CERTAIN DOCUMENTS.
-------------------------------
(a) Without the prior written consent of the Agent and the Required
Lenders, modify, amend or supplement the Note Purchase Agreement to (i) increase
the principal amount of the indebtedness thereunder, (ii) increase the interest
rate thereunder, (iii) modify any requirement of prepayment or repayment
thereunder which would shorten the final maturity or average life of the
indebtedness outstanding thereunder or make the requirement of prepayment more
onerous, or (iv) make any more onerous any other provision thereof.
(b) Without the prior written consent of the Agent and the Required
Lenders, modify, amend or supplement any agreement governing Subordinated Debt
to (i) increase the principal amount of the indebtedness thereunder, (ii)
increase the interest rate thereunder, (iii) modify any requirement of
prepayment or repayment thereunder which would shorten the final maturity or
average life of the indebtedness outstanding thereunder or make the requirement
of prepayment more onerous, (iv) make any more onerous any other provision
thereof, or (v) amend or modify the subordination provisions thereof.
ARTICLE VIII.
EVENTS OF DEFAULT
-----------------
Upon the occurrence and during the continuance of any of the
following specified events (each an "Event of Default"):
SECTION 8.01. PAYMENTS. Intermet shall fail to make promptly when
--------
due (including, without limitation, by mandatory prepayment) any principal
payment with respect to the Loans, or Intermet shall fail to make within five
(5) days after the due date thereof any payment of interest, fee or other amount
payable hereunder or any of the Obligations;
SECTION 8.02. COVENANTS WITHOUT NOTICE. Intermet shall fail to
------------------------
observe or perform any covenant or agreement contained in Sections 6.07(f),
----------------
6.08, 6.11, 7.01 through 7.07, 7.09 through 7.12;
- ---- ---- ---- ---- ----- -----
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<PAGE>
SECTION 8.03. OTHER COVENANTS. Intermet shall fail to observe or
---------------
perform any covenant or agreement contained in this Agreement, other than those
referred to in Sections 8.01 and 8.02, and, if capable of being remedied, such
------------- ----
failure shall remain unremedied for thirty (30) days after the earlier of (i)
Intermet's obtaining knowledge thereof, or (ii) written notice thereof shall
have been given to Intermet by Agent or any Lender;
SECTION 8.04. REPRESENTATIONS. Any representation or warranty made
---------------
or deemed to be made by Intermet or any other Credit Party or by any of its
officers under this Agreement or any other Credit Document (including the
Schedules attached thereto), or any certificate or other document submitted to
the Agent or the Lenders by any such Person pursuant to the terms of this
Agreement or any other Credit Document, shall be incorrect in any material
respect when made or deemed to be made or submitted;
SECTION 8.05. NON-PAYMENTS OF OTHER INDEBTEDNESS. Any Consolidated
----------------------------------
Company shall fail to make when due (whether at stated maturity, by
acceleration, on demand or otherwise, and after giving effect to any applicable
grace period) any payment of principal of or interest on any Indebtedness
(other than the Obligations) exceeding $5,000,000 in the aggregate;
SECTION 8.06. DEFAULTS UNDER OTHER AGREEMENTS. Any Consolidated
-------------------------------
Company shall fail to observe or perform within any applicable grace period any
covenants or agreements contained in any agreements or instruments relating to
any of its Indebtedness exceeding $5,000,000 in the aggregate, or any other
event shall occur if the effect of such failure or other event is to accelerate,
or to permit the holder of such Indebtedness or any other Person to accelerate,
the maturity of such Indebtedness; or any such Indebtedness shall be required to
be prepaid (other than by a regularly scheduled required prepayment) in whole or
in part prior to its stated maturity;
SECTION 8.07. BANKRUPTCY. Intermet or any other Consolidated Company
----------
shall commence a voluntary case concerning itself under the Bankruptcy Code or
applicable foreign bankruptcy laws; or an involuntary case for bankruptcy is
commenced against any Consolidated Company 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) or similar official
under applicable foreign
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bankruptcy laws is appointed for, or takes charge of, all or any substantial
part of the property of any Consolidated Company; or any Consolidated Company
commences proceedings of its own bankruptcy or to be granted a suspension of
payments or 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
any Consolidated Company or there is commenced against any Consolidated Company
any such proceeding which remains undismissed for a period of 60 days; or any
Consolidated Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or any
Consolidated Company 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 any Consolidated Company makes a general assignment for
the benefit of creditors; or any Consolidated Company shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or any Consolidated Company shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts; or any Consolidated Company shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate action is taken by any Consolidated Company for the purpose of
effecting any of the foregoing;
SECTION 8.08. ERISA. A Plan or Foreign Plan of a Consolidated
-----
Company or a Plan subject to Title IV of ERISA of any of its ERISA Affiliates
(i) shall fail to be funded in accordance with the minimum
funding standard required by applicable law, the terms of such Plan or Foreign
Plan, Section 412 of the Tax Code or Section 302 of ERISA for any plan year or a
waiver of such standard is sought or granted with respect to such Plan or
Foreign Plan under applicable law, the terms of such Plan or Foreign Plan or
Section 412 of the Tax Code or Section 303 of ERISA; or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable law or the terms of such Plan or
Foreign Plan; or
(iii) shall require a Consolidated Company to provide security
under applicable law, the terms of such Plan
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or Foreign Plan, Section 401 or 412 of the Tax Code or Section 306 or 307 of
ERISA; or
(iv) results for any reason, in a liability (including without
limitation, withdrawal liability) to a Consolidated Company under applicable
law, the terms of such Plan or Foreign Plan, or Title IV of ERISA;
and there shall result from any such failure, waiver, termination or other event
a liability to the PBGC (or any similar Person with respect to any Foreign
Plan), a Plan or any other Person that would have a Materially Adverse Effect.
SECTION 8.09. MONEY JUDGMENT. A judgment or order for the payment of
--------------
money in excess of $5,000,000 or otherwise having a Materially Adverse Effect
shall be rendered against Intermet or any other Consolidated Company and such
judgment or order shall continue unsatisfied (in the case of a money judgment)
and in effect for a period of 30 days during which execution shall not be
effectively stayed or deferred (whether by action of a court, by agreement or
otherwise);
SECTION 8.10. OWNERSHIP OF CREDIT PARTIES AND PLEDGED ENTITIES. If
------------------------------------------------
Intermet shall at any time fail to own and control one hundred percent (100%) of
the voting stock of any Credit Party or entity whose stock is pledged to the
Lenders, either directly or indirectly through a wholly-owned Subsidiary of
Intermet, except for (x) as a result of any Asset Sale permitted pursuant to
Section 7.04(c) hereof, and (y) with respect to any Credit Party or Foreign
- ------- -------
Subsidiary whose stock is pledged to the Lenders after the Closing Date where
Intermet shall, directly or indirectly, maintain ownership and control of the
percentage of voting stock owned and controlled as of the date such Person
became a Credit Party hereunder or a Foreign Subsidiary or such greater
percentage as shall thereafter be obtained, directly or indirectly by Intermet;
SECTION 8.11. CHANGE IN CONTROL OF INTERMET. (i) Any "person" or
-----------------------------
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
shall become the "beneficial owner(s)" (as defined in said Rule 13d-3) of more
than fifty percent (50%) of the shares of the outstanding common stock of
Intermet entitled to vote for members of Intermet's board of directors, (ii) any
event or condition shall occur or exist which,
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pursuant to the terms of any Change in Control Provision, requires or permits
the holder(s) of Indebtedness of any Consolidated Company to require that such
Indebtedness be redeemed, repurchased, defeased, prepaid or repaid, in whole or
in part, or the maturity of such Indebtedness to be accelerated in any respect,
or (iii) John Doddridge or another Person possessing substantially equivalent
qualifications, background, proven record of success in running a public company
and ability shall cease to hold the position and actively carry out the duties
of Chairman of the Board of Directors of Intermet.
SECTION 8.12. DEFAULT UNDER OTHER CREDIT DOCUMENTS. There shall
------------------------------------
exist or occur any "Event of Default" as provided under the terms of any other
Credit Document, or any Credit Document ceases to be in full force and effect or
the validity or enforceability thereof is disaffirmed by or on behalf of
Intermet or any other Credit Party, or at any time it is or becomes unlawful for
Intermet or any other Credit Party to perform or comply with its obligations
under any Credit Document, or the obligations of Intermet or any other Credit
Party under any Credit Document are not or cease to be legal, valid and binding
on Intermet or any such Credit Party or the Agent ceases to hold a perfected
lien on the Pledged Stock subject only to Liens permitted by the terms of this
Credit Agreement (and except for the release of the Lien on the Stock of
Columbus Neunkirchen pursuant to Section 6.11 hereof); or
------------
SECTION 8.13. ATTACHMENTS. An attachment or similar action shall be
-----------
made on or taken against any of the assets of any Consolidated Company with an
Asset Value exceeding $5,000,000 in aggregate and is not removed, suspended or
enjoined within 30 days of the same being made or any suspension or injunction
being lifted;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Agent may, with the consent of the Required
Lenders, and upon the written (including telecopied) or telex request of the
Required Lenders, shall, by written notice to Intermet, take any or all of the
following actions, without prejudice to the rights of the Agent, any Lender or
the holder of any Note to enforce its claims against Intermet or any other
Credit Party: (i) declare all Commitments terminated, whereupon the pro rata
Commitments of each Lender shall terminate immediately and any commitment fee
shall forthwith
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become due and payable without any other notice of any kind; and (ii) declare
the principal of and any accrued interest on the Loans, and all other
Obligations owing hereunder, including without limitation, an amount equal to
the maximum amount which would be available at any time to 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 or other documents required to draw under such Letter of
Credit), to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by Intermet; provided, that, if an Event of Default specified
--------
in Section 8.07 shall occur, the result which would occur upon the giving of
------------
written notice by the Agent to any Credit Party, as specified in clauses (i) and
(ii) above, shall occur automatically without the giving of any such notice; and
(iii) exercise any rights or remedies under the Security Documents. As long as
any Letter of Credit shall remain outstanding, any amounts described in clause
(ii) above with respect to Letters of Credit, when received by the Agent, shall
be deposited in a cash collateral account as cash collateral for the obligations
of Intermet under Article II of this Agreement in the event of any drawing under
----------
a Letter of Credit, and upon drawing under any outstanding Letter of Credit in
respect of which the Agent has deposited in the cash collateral account any
amounts described in clause (ii) above, the Agent shall pay such amounts to
itself to reimburse itself for the amount of such drawing.
ARTICLE IX.
THE AGENT
---------
SECTION 9.01. APPOINTMENT OF AGENT. Each Lender hereby designates
--------------------
SunTrust as Agent to administer all matters concerning the Loans and Letters of
Credit and to act as herein specified. Each Lender hereby irrevocably
authorizes, and each holder of any Note by the acceptance of a Note shall be
deemed irrevocably to authorize, the Agent to take such actions on its behalf
under the provisions of this Agreement, the other Credit Documents, and all
other instruments and agreements referred to herein or therein, and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such
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other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through their agents or employees.
SECTION 9.02. AUTHORIZATION OF AGENT WITH RESPECT TO THE SECURITY
---------------------------------------------------
DOCUMENTS.
- ---------
(a) Each Lender hereby authorizes the Agent to enter into each of the
Security Documents substantially in the form attached hereto, and to take all
action contemplated thereby. All rights and remedies under the Security
Documents may be exercised by the Agent for the benefit of the Agent and the
Lenders and the other beneficiaries thereof upon the terms thereof. The Lenders
further agree that the Agent may assign its rights and obligations under any of
the Security Documents to any affiliate of the Agent or to any trustee, if
necessary or appropriate under applicable law, which assignee in each such case
shall (subject to compliance with any requirements of applicable law governing
the assignment of such Security Documents) be entitled to all the rights of the
Agent under and with respect to the applicable Security Document.
(b) In each circumstance where, under any provision of any Security
Document, the Agent shall have the right to grant or withhold any consent,
exercise any remedy, make any determination or direct any action by the Agent
under such Security Document, the Agent shall act in respect of such consent,
exercise of remedies, determination or action, as the case may be, with the
consent of and at the direction of the Required Lenders; provided, however, that
-------- -------
no such consent of the Required Lenders shall be required with respect to any
consent, determination or other matter that is, in the Agent's judgment,
ministerial or administrative in nature. In each circumstance where any consent
of or direction from the Required Lenders is required, the Agent shall send to
the Lenders a notice setting forth a description in reasonable detail of the
matter as to which consent or direction is requested and the Agent's proposed
course of action with respect thereto. The Lenders shall endeavor to respond
promptly to such request but in the event the Agent shall not have received a
response from any Lender within five (5) Business Days after such Lender's
receipt of such notice, such Lender shall be deemed not to have agreed to the
course of action proposed by the Agent.
SECTION 9.03. NATURE OF DUTIES OF AGENT. The Agent shall have no
-------------------------
duties or responsibilities except those expressly
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set forth in this Agreement and the other Credit Documents. None of the Agent
nor any of its respective officers, directors, employees or agents shall be
liable for any action taken or omitted by it as such hereunder or in connection
herewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Agent shall be ministerial and administrative in nature; the
Agent shall not have by reason of this Agreement a fiduciary relationship in
respect of any Lender; and nothing in this Agreement, express or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
in respect of this Agreement or the other Credit Documents except as expressly
set forth herein.
SECTION 9.04. LACK OF RELIANCE ON THE AGENT.
-----------------------------
(a) Independently and without reliance upon the Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Credit
Parties in connection with the taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the creditworthiness of the Credit
Parties, and, except as expressly provided in this Agreement, 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 Loans or at any time
or times thereafter.
(b) The Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes, the
Guaranty Agreements, the Pledge Agreement, or any other documents contemplated
hereby or thereby, or the financial condition of the Credit Parties, or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement, the Notes, the
Guaranty Agreements, the Pledge Agreements or the other documents contemplated
hereby or thereby, or the financial condition of the Credit Parties, or the
existence or possible existence of any Default or Event of Default; provided,
--------
however, to the extent that the Agent has been advised that a Lender has not
- -------
received any information formally delivered to the Agent
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pursuant to Section 6.07, the Agent shall deliver or cause to be delivered such
------------
information to such Lender.
SECTION 9.05. CERTAIN RIGHTS OF THE AGENT. If the Agent shall
---------------------------
request instructions from the Required Lenders with respect to any action or
actions (including the failure to act) in connection with this Agreement, the
Agent shall be entitled to refrain from such act or taking such act, unless and
until the Agent shall have received instructions from the Required Lenders; and
the Agent shall not incur liability in any Person by reason of so refraining.
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 in accordance with the instructions of the Required Lenders.
SECTION 9.06. RELIANCE BY AGENT. The Agent shall be entitled to
-----------------
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cable gram, radiogram, order or other documentary, teletransmission or
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person. The Agent may consult with legal
counsel (including counsel for any Credit Party), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
SECTION 9.07. INDEMNIFICATION OF AGENT. To the extent the Agent is
------------------------
not reimbursed and indemnified by the Credit Parties, each Lender will reimburse
and indemnify the Agent, ratably according to the respective amounts of the
Loans outstanding under all Facilities (or if no amounts are outstanding,
ratably in accordance with the aggregate Commitments), in either case, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in performing its duties
hereunder, in any way relating to or arising out of this Agreement or the other
Credit Documents; provided that no Lender shall be liable to the Agent for any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or
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disbursements resulting from the Agent's gross negligence or willful misconduct.
SECTION 9.08. THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to
------------------------------------
its obligation to lend under this Agreement, the Loans made by it and the Notes
issued to it, the Agent shall have the same rights and powers hereunder as any
other Lender or holder of a Note and may exercise the same as though it were not
performing the duties specified herein; and the terms "Lenders", "Required
Lenders", "holders of Notes", or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust, financial advisory or other business with the Consolidated
Companies or any affiliate of the Consolidated Companies as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Consolidated Companies for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
SECTION 9.09. HOLDERS OF NOTES. The Agent may deem and treat the
----------------
payee 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 filed
with the Agent. Any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is the holder
of any Note shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Note or of any Note or Notes issued in exchange therefor.
SECTION 9.10. SUCCESSOR AGENT.
---------------
(a) The Agent may resign at any time by giving written notice thereof
to the Lenders and Intermet and may be removed at any time with or without cause
by the Required Lenders; provided, however, the Agent may not resign or be
-------- -------
removed until a successor Agent has been appointed and shall have accepted such
appointment. Upon any such resignation or removal, the Required Lenders shall
have the right to appoint a successor Agent subject to Intermet's prior written
approval. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on
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behalf of the Lenders, appoint a successor Agent subject to Intermet's prior
written approval, which shall be a bank which maintains an office in the United
States, or a commercial bank organized under the laws of the United States of
America or any State thereof, or any Affiliate of such bank, having a combined
capital and surplus of at least $100,000,000.
(b) Upon the acceptance of any appointment as the Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article IX shall inure to its benefit as to any
----------
actions taken or omitted to be taken by it while it was an Agent under this
Agreement.
ARTICLE X.
MISCELLANEOUS
-------------
SECTION 10.01. NOTICES. All notices, requests and other
-------
communications to any party hereunder shall be in writing (including bank wire,
telex, telecopy or similar teletransmission or writing) and shall be given to
such party at its address or applicable teletransmission number set forth on the
signature pages hereof, or such other address or applicable teletransmission
number as such party may hereafter specify by notice to the Agent and Intermet.
Each such notice, request or other communication shall be effective (i) if given
by telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, (iii) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate confirmation is received, or (iv) if given by any other means
(including, without limitation, by air courier), when delivered or received at
the address specified in this Section; provided that notices to the Agent shall
--------
not be effective until received.
SECTION 10.02. AMENDMENTS, ETC. No amendment or waiver of any
----------------
provision of this Agreement or the other Credit
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Documents, nor consent to any departure by any Credit Party therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Required Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that no
--------
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders do any of the following: (i) waive any of the conditions specified in
Section 4.01 or 4.02, (ii) increase the Commitments or other contractual
- ------------- -----
obligations to Intermet under this Agreement, (iii) reduce the principal of, or
interest on, the Notes or any fees hereunder, (iv) postpone any date fixed for
the payment in respect of principal of, or interest on, the Notes or any fees
hereunder, (v) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number or identity of Lenders which
shall be required for the Lenders or any of them to take any action hereunder,
(vi) agree to release any of the Pledged Stock from the Lien of the Security
Documents to the extent securing the Obligations or to release any Guarantor
from its obligations under any Guaranty Agreement except in connection with an
Asset Sale permitted pursuant to Section 7.04(c) above where no consent of the
---------------
Lenders shall be required for such release, (vii) modify the definition of
"Required Lenders," or (viii) modify this Section 10.02. Notwithstanding the
-------------
foregoing, no amendment, waiver or consent shall, unless in writing and signed
by the Agent in addition to the Lenders required hereinabove to take such
action, affect the rights or duties of the Agent under this Agreement or under
any other Credit Document.
SECTION 10.03. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay
------------------------------
on the part of the Agent, any Lender or any holder of a Note in exercising any
right or remedy hereunder or under any other Credit Document, and no course of
dealing between any Credit Party and the Agent, any Lender or the holder of any
Note shall operate as a waiver thereof, nor shall any single or partial exercise
of any right or remedy hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right or remedy
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Agent, any
Lender or the holder of any Note would otherwise have. No notice to or demand
on any Credit Party not required hereunder or under any other Credit Document in
any case shall entitle any Credit Party to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
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Agent, the Lenders or the holder of any Note to any other or further action in
any circumstances without notice or demand.
SECTION 10.04. PAYMENT OF EXPENSES, ETC. Intermet shall:
-------------------------
(i) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of the Agent
in the administration (both before and after the execution hereof and including
reasonable expenses actually incurred relating to advice of counsel as to the
rights and duties of the Agent and the Lenders with respect thereto) of, and in
connection with the preparation, execution and delivery of, preservation of
rights under, enforcement of, and, after a Default or Event of Default,
refinancing, renegotiation or restructuring of, this Agreement and the other
Credit Documents and the documents and instruments referred to therein, and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees actually incurred and disbursements of counsel for the
Agent), and in the case of enforcement of this Agreement or any Credit Document
after an Event of Default, all such reasonable, out-of-pocket costs and expenses
(including, without limitation, the reasonable fees actually incurred and
disbursements of counsel), for any of the Lenders;
(ii) subject, in the case of certain Taxes, to the applicable
provisions of Section 3.07(b), pay and hold each of the Lenders harmless from
---------------
and against any and all present and future stamp, documentary, and other similar
Taxes with respect to this Agreement, the Notes and any other Credit Documents,
any collateral described therein, or any payments due thereunder, and save each
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such Taxes; and
(iii) indemnify the Agent and each Lender, and their respective
officers, directors, employees, representatives and agents from, and hold each
of them harmless against, any and all costs, losses, liabilities, claims,
damages or expenses incurred by any of them (whether or not any of them is
designated a party thereto) (an "Indemnitee") arising out of or by reason of any
investigation, litigation or other proceeding related to any
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actual or proposed use of the proceeds of any of the Loans or any Credit Party's
entering into and performing of the Agreement, the Notes, or the other Credit
Documents, including, without limitation, the reasonable fees actually incurred
and disbursements of counsel (including foreign counsel) incurred in connection
with any such investigation, litigation or other proceeding; provided, however,
-------- -------
Intermet shall not be obligated to indemnify any Indemnitee for any of the
foregoing arising out of such Indemnitee's gross negligence or willful
misconduct;
(iv) In addition to amounts payable elsewhere provided
in this Agreement, without duplication, indemnify, pay and save the Agent
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and reasonable expenses (including reasonable attorney's
fees and disbursements) which the Agent may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit for
the account of Intermet, other than as a result of the gross negligence or
willful misconduct of the Agent; (ii) the failure of the Agent to honor a
drawing under any Letter of Credit due to any act or omission (whether rightful
or wrongful) of any present or future de jure or de facto government or
------- --------
governmental authority; or (iii) any confirmation of any Letter of Credit
obtained by the Agent with the consent of Intermet;
(v) without limiting the indemnities set forth above, indemnify
each Indemnitee for any and all expenses and costs (including without
limitation, remedial, removal, response, abatement, cleanup, investigative,
closure and monitoring costs), losses, claims (including claims for contribution
or indemnity and including the cost of investi gating or defending any claim and
whether or not such claim is ultimately defeated, and whether such claim arose
before, during or after any Credit Party's ownership, operation, pos session or
control of its business, property or facilities or before, on or after the date
hereof, and including also any amounts paid incidental to any compromise or
settlement by the Indemnitee or Indemnitees to the holders of any such claim),
lawsuits, liabilities, obligations, actions, judg ments, suits, disbursements,
encumbrances, liens, damages (including without limitation damages for
contamination or destruction of natural resources), penalties and fines of any
kind or nature whatsoever (including without limitation in
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all cases the reasonable fees actually incurred, other charges 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 existence or exercise of
any rights or remedies by any Indemnitee under this Agreement, any other Credit
Document or any related documents (but excluding those incurred, suffered or
sustained by any Indemnitee as a result of any action taken by or on behalf of
the Lenders with respect to any Subsidiary of Intermet (or the assets thereof)
owned or controlled by the Lenders, the Collateral Agent, or their nominees or
designees, as a result of their acquisition of Pledged Stock pursuant to
exercise of remedies under the Pledge Agreements).
If and to the extent that the obligations of Intermet under this Section 10.04
-------------
are unenforceable for any reason, Intermet hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
SECTION 10.05. RIGHT OF SETOFF. In addition to and not in limitation
---------------
of all rights of offset that any Lender or other holder of a Note may have under
applicable law, each Lender or other holder of a Note shall, upon the occurrence
of any Event of Default and whether or not such Lender or such holder has made
any demand or any Credit Party's obligations are matured, have the right to
appropriate and apply to the payment of any Credit Party's obligations hereunder
and under the other Credit Documents, all deposits of any Credit Party (general
or special, time or demand, provisional or final) then or thereafter held by and
other indebtedness or property then or thereafter owing by such Lender or other
holder to any Credit Party, whether or not related to this Agreement or any
transaction hereunder. Each Lender shall promptly notify Intermet of any offset
hereunder.
SECTION 10.06. BENEFIT OF AGREEMENT.
--------------------
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto, provided that Intermet may not assign or transfer any of its interest
hereunder without the prior written consent of the Lenders.
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(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender.
(c) Each Lender may assign all or a portion of its interests, rights
and obligations under this Agreement (including all or a portion of any of its
Commitments, Letter of Credit Obligations and the Loans at the time owing to it
and the Notes held by it) to any Eligible Assignee; provided, however, that (i)
-------- -------
the Agent and Intermet must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld) unless such assignment is to
an Affiliate of the assigning Lender, (ii) the amount of the Commitments or
Loans or Letter of Credit Obligations, of the assigning Lender subject to each
assignment (determined as of the date the assignment and ac ceptance with
respect to such assignment is delivered to the Agent) shall not be less than
$5,000,000, (iii) the parties to each such assignment shall execute and deliver
to the Agent an Assignment and Acceptance, together with a Note or Notes subject
to such assignment and, unless such assignment is to an Affiliate of such
Lender, a processing and recordation fee of $2500, and (iv) the assignee must
execute and deliver a confirmation of its acceptance of the terms and conditions
of the Intercreditor Agreement to the other parties to the Intercreditor
Agreement in accordance with Section 10(g) thereof. Intermet shall not be
responsible for such processing and recordation fee or any costs or expenses
incurred by any Lender or the Agent in connection with such assignment. From
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, the assignee thereunder shall be a party hereto and to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement. Notwithstanding the foregoing,
the assigning Lender must retain after the consummation of such Assignment and
Acceptance, a minimum aggregate amount of Commitments, the Loans and the Letter
of Credit Obligations, as the case may be, of $15,000,000; provided, however, no
-------- -------
such minimum amount shall be required with respect to any such assignment made
at any time there exists an Event of Default hereunder. Within five (5)
Business Days after receipt of the notice and the Assignment and Acceptance,
Intermet, at its own expense, shall execute and deliver to the Agent, in
exchange for the surrendered Note or Notes, a new Note or Notes to the order of
such assignee in a principal amount equal to the applicable Commitments assumed
by it pursuant to such Assignment
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and Acceptance and new Note or Notes to the assigning Lender in the amount of
its retained Commitment or Commitments. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the date of the surrendered Note or
Notes which they replace, and shall otherwise be in substantially the form
attached hereto.
(d) Each Lender may, without the consent of Intermet or the Agent,
sell participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments, the Letter of Credit Obligations and the Loans owing to it
and the Notes held by it), provided, however, that (i) no Lender may sell a
-------- -------
participation in its aggregate Commitments (after giving effect to any permitted
assignment hereof) in an amount in excess of fifty percent (50%) of such
aggregate Commitments, provided, however, sales of participations to an
-------- -------
Affiliate of such Lender shall not be included in such calculation; provided,
--------
however, no such maximum amount shall be applicable to any such participation
- -------
sold at any time there exists an Event of Default hereunder, (ii) such Lender's
obligations under this Agreement shall remain unchanged, (iii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and (iv) the participating bank or other entity shall not be
entitled to the benefit (except through its selling Lender) of the cost
protection provisions contained in Article III of this Agreement, and (v)
-----------
Intermet and the Agent and other Lenders shall continue to deal solely and
directly with each Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents, and such Lender
shall retain the sole right to enforce the obligations of Intermet relating to
the Loans and to approve any amendment, modification or waiver of any provisions
of this Agreement. Any Lender selling a participation hereunder shall provide
prompt written notice to Intermet of the name of such participant.
(e) Any Lender or participant may, in connection with the assignment
or participation or proposed assignment or participation, pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to Intermet or the other Consolidated
Companies furnished to such Lender by or on behalf of Intermet or any other
Consolidated Company. With respect to any disclosure of confidential, non-
public, proprietary information, such proposed
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assignee or participant shall agree to use the information only for the purpose
of making any necessary credit judgments with respect to this credit facility
and not to use the information in any manner prohibited by any law, including
without limitation, the securities laws of the United States. The proposed
participant or assignee shall agree not to disclose any of such information
except (i) to directors, employees, auditors or counsel to whom it is necessary
to show such information, each of whom shall be informed of the confidential
nature of the information, (ii) in any statement or testimony pursuant to a
subpoena or order by any court, governmental body or other agency asserting
jurisdiction over such entity, or as otherwise required by law (provided prior
notice is given to Intermet and the Agent unless otherwise prohibited by the
subpoena, order or law), and (iii) upon the request or demand of any regulatory
agency or authority with proper jurisdiction. The proposed participant or
assignee shall further agree to return all documents or other written material
and copies thereof received from any Lender, the Agent or Intermet relating to
such confidential information unless otherwise properly disposed of by such
entity.
(f) Any Lender may at any time assign all or any portion of its rights
in this Agreement and the Notes issued to it to a Federal Reserve Bank; provided
--------
that no such assignment shall release the Lender from any of its obligations
hereunder.
(g) If (i) any Taxes referred to in Section 3.07(b) have been levied
----------------
or imposed so as to require withholdings or deductions by Intermet and payment
by Intermet of additional amounts to any Lender as a result thereof, (ii) any
Lender shall make demand for payment of increased costs or reduced rate of
return pursuant to Section 3.10 or any Lender determines that LIBOR is
------------
unascertainable or illegal pursuant to Section 3.08 or Section 3.09, or any
------------ ------------
Lender makes a claim for increased costs or determines that its participation in
any Letter of Credit is illegal pursuant to Section 3.09, or (iii) any Lender
------------
shall decline to consent to a modification or waiver of the terms of this
Agreement or the other Credit Documents requested by Intermet, then and in such
event, upon request from Intermet delivered to such Lender and the Agent, such
Lender shall assign, in accordance with the provisions of Section 10.06(c), all
----------------
of its rights and obligations under this Agreement and the other Credit
Documents to another Lender or an Eligible Assignee selected by Intermet, in
consideration for the payment by such assignee to the Lender of the principal
of, and interest on, the outstanding Loans
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accrued to the date of such assignment, and the assumption of such Lender's
Commitment hereunder, together with any and all other amounts owing to such
Lender under any provisions of this Agreement or the other Credit Documents
accrued to the date of such assignment; provided, however, Lenders subject to
-------- -------
this shall be treated in a substantially identical manner.
SECTION 10.07. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
----------------------------------------------------
JURY TRIAL.
- ----------
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF) OF THE STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT,
THE NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE SUPERIOR COURT OF
FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, INTERMET HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY,
AND INTERMET HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) INTERMET HEREBY IRREVOCABLY DESIGNATES RUPERT M. BARKOFF AND
KILPATRICK & CODY, AS ITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR
AND ON BEHALF OF INTERMET, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS
IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES OR
ANY DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS
SERVED ON SUCH LOCAL AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY
THE SERVER OF SUCH PROCESS BY MAIL TO INTERMET AT ITS ADDRESS SET FORTH OPPOSITE
ITS SIGNATURE BELOW, BUT THE FAILURE OF INTERMET TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. INTERMET FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE
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MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
INTERMET AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING.
(d) Nothing herein shall affect the right of the Agent, any Lender,
any holder of a Note or any Credit Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
Intermet in any other jurisdiction.
SECTION 10.08. INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts
-------------------------------------
payable at any time hereunder to each Lender shall be a separate and independent
debt, and each Lender shall be entitled to protect and enforce its rights
pursuant to this Agreement and its Notes, and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
SECTION 10.10. EFFECTIVENESS; SURVIVAL.
-----------------------
(a) This Agreement shall become effective on the date (the "Effective
Date") on which all of the parties hereto shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent pursuant to Section 10.01 or, in the case of the Lenders, shall have given
-------------
to the Agent written or telex notice (actually received) that the same has been
signed and mailed to them.
(b) The obligations of Intermet under Sections 3.07(b), 3.12, 3.10,
------------- ----
3.13, 10.04 and 10.15 hereof shall survive the payment in full of the Notes and
- ---- ----- -----
all other Obligations after the Maturity Date. All representations and
warranties made herein, in the certificates, reports, notices, and other
documents delivered pursuant to this Agreement shall survive the execution and
delivery of this Agreement, the other Credit Documents, and such other
agreements and documents, the making of the Loans hereunder, and the execution
and delivery of the Notes.
-95-
<PAGE>
SECTION 10.11. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 10.12. INDEPENDENCE OF COVENANTS. All covenants hereunder
-------------------------
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitation of, another covenant,
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
SECTION 10.13. CHANGE IN ACCOUNTING PRINCIPLES, FISCAL YEAR OR TAX
---------------------------------------------------
LAWS. If (i) any preparation of the financial statements referred to in Section
- ---- -------
6.07 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 Accounts (or
successors thereto or agencies with similar functions) (other than changes
mandated by FASB 106) result in a material change in the method of calculation
of financial covenants, standards or terms found in this Agreement, (ii) there
is any change in Intermet's fiscal quarter or fiscal year, or (iii) there is a
material change in federal tax laws which materially affects any of the
Consolidated Companies' ability to comply with the financial covenants,
standards or terms found in this Agreement, Intermet and the Required Lenders
agree to enter into negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that the criteria for
evaluating any of the Consolidated Companies' financial condition shall be the
same after such changes as if such changes had not been made. Unless and until
such provisions have been so amended, the provisions of this Agreement shall
govern.
SECTION 10.14. HEADINGS DESCRIPTIVE; ENTIRE AGREEMENT. The headings
--------------------------------------
of the several sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement. This Agreement, the other Credit Documents,
and the agreements and documents required to be delivered pursuant to the
-96-
<PAGE>
terms of this Agreement constitute the entire agreement among the parties hereto
and thereto regarding the subject matters hereof and thereof and supersede all
prior agreements, representations and understandings related to such subject
matters.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and to be delivered in Atlanta, Georgia, by their duly
authorized officers as of the day and year first above written.
Address for Notices: INTERMET CORPORATION
- -------------------
By: /s/ Doretha J. Christoph
------------------------------
5445 Corporate Drive Doretha J. Christoph
Suite 200 Vice President, Finance
Troy, Michigan 48098
Attn: Doretha J. Christoph
Attest: /s/ James W. Rydel
--------------------------
Telephone: (810) 952-2500 James W. Rydel
Telecopy: (810) 952-2501 Secretary
[CORPORATE SEAL]
-97-
<PAGE>
Address for Notices: SUNTRUST BANK, ATLANTA,
- ------------------- AS AGENT
One Park Place, N.E. By: /s/ H.T. Harvin, III
Atlanta, Georgia 30303 -------------------------
Attention: H. T. Harvin, III H.T. Harvin, III
Corporate Banking Officer
Telex No.: 542210
Answerback: TRUSCO INT ATL
Telecopy No.: 404/588-8833 By: /s/ R. Michael Dunlap
-------------------------
Name: R. Michael Dunlap
------------------
Title: Vice President
-----------------
Payment Office:
- --------------
One Park Place, N.E.
Atlanta, Georgia 30303
-98-
<PAGE>
Address for Notices: SUNTRUST BANK, ATLANTA
- -------------------
One Park Place, N.E. By: /s/ H.T. Harvin, III
Atlanta, Georgia 30303 --------------------------
Attention: H.T. Harvin, III H.T. Harvin, III
Corporate Banking Officer
Telex No.: 542210
Answerback: TRUSCO INT ATL
Telecopy No.: 404/588-8833 By: /s/ R. Michael Dunlap
--------------------------
Name: R. Michael Dunlap
------------------
Title: Vice President
-----------------
Lending Office and Payment Office:
- ---------------------------------
One Park Place, N.E.
Atlanta, Georgia 30303
COMMITMENT: $28,000,000
PRO RATA SHARE OF
COMMITMENTS: 28%
-99-
<PAGE>
Address for Notices: LANDESBANK SAAR GIROZENTRALE
- -------------------
Ursulinenstrasse 2 By: /s/ Dr. Georg Grasel
D-66111 Saarbrucken -------------------------
Germany Dr. Georg Grasel
Attention: Dr. Georg Grasel/ Vorstandsmitglied
Dr. Ingrid Walter
By: /s/ Dr. Ingrid Walter
Telex No.: 4 421 442 -------------------------
Answerback: gz sb d Dr. Ingrid Walter
Bankdirektorin
Telecopy No.: 681-3006-295
Lending Office and Payment Office:
- ---------------------------------
For Eurodollar Advances:
Ursulinenstrasse 2
D-66111 Saarbrucken
Germany
For Base Rate and
Overnight Rate Advances:
Lending Office: Ursulinenstrabe 2, 66111 Saarbrucken, Germany
- -------------------------------------------------------------
Payment Office: Account of Landesbunk Saar Girozentrale with
Bayerische Landesbank, New York, Account No: 10 23 27 0001
- --------------------------------------------------------------------------
COMMITMENT: $6,000,000
PRO RATA SHARE OF
COMMITMENTS: 6%
-100-
<PAGE>
Address for Notices: NBD BANK
- -------------------
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Kelly T. Cotton By: /s/ William C. Goodhue
-------------------------
Name: William C. Goodhue
------------------
Title: Vice President
-----------------
Telex No.: 164177
Answerback: NATIONSBANK DET
Telecopy No.: (313) 225-2290
Lending Office and Payment Office:
- ---------------------------------
611 Woodward Avenue
Detroit, Michigan 48226
COMMITMENT: $23,000,000
PRO RATA SHARE OF
COMMITMENTS: 23%
-101-
<PAGE>
Address for Notices: FIRST UNION NATIONAL
- ------------------- BANK OF NORTH CAROLINA
One First Union Center
TW-19
Charlotte, NC 28288-0745
Attn: Glen Edwards By: /s/ Mark M. Harden
-------------------------
Name: Mark M. Harden
------------------
Title: Vice President
-----------------
Telex No.:
Answerback:
Telecopy: (703) 374-2802
Lending Office and Payment Office:
- ---------------------------------
One First Union Center, TW19
Charlotte, NC 28288-0745
COMMITMENT: $23,000,000
PRO RATA SHARE OF
COMMITMENTS: 23%
-102-
<PAGE>
Address for Notices: COMERICA BANK
- -------------------
500 Woodward Avenue
Mail Code 3265
Detroit, Michigan 48226-3265 By: /s/ Mark B. Grover
-------------------------
Mark B. Grover
Vice President
Attention: Mark B. Grover
Telex Number: N/A
Answerback: N/A
Telecopy No.: (312) 222-3776
Lending Office and Payment Office:
- ---------------------------------
500 Woodward Avenue
Mail Code 3265
Detroit, Michigan 48226-3265
Attention: Susan Boyd
COMMITMENT: $20,000,000
PRO RATA SHARE OF
COMMITMENTS: 20%
-103-
<PAGE>
EXHIBIT 4.18
The Prudential Prudential Capital Group
Suite 2525
1230 Peachtree Street, N.E.
Atlanta, GA 30309
404 881-4400 Fax: 404 881-4407
March 6, 1995
Intermet Corporation
2859 Paces Ferry Road
Suite 1600
Atlanta, Georgia 30339
Ladies and Gentlemen:
Reference is made to the Note Agreement dated as of December
11, 1992, as amended (the "Agreement) between Intermet
Corporation and The Prudential Insurance Company of America
("Prudential"). Unless otherwise defined herein, capitalized
terms used herein have the meanings ascribed to such terms in the
Agreement.
1. Subject to the terms and conditions set forth herein,
Prudential hereby agrees that (1) paragraph 6B(2)(2) is hereby
amended and restated as of December 31, 1994 as follows:
(2) as of the last day of each fiscal quarter, Senior
Debt to exceed the following percentage of Total
Capitalization as at each fiscal quarter ending during the
stated periods:
Period Ratio
------ -----
Fourth Fiscal Quarter End 1994 51%
First Fiscal Quarter End 1995 49%
Second Fiscal Quarter End 1995 48%
Third Fiscal Quarter End 1995
and thereafter 45%
and (ii) the items set forth on Exhibit A attached hereto and
incorporated herein by reference were not incurred in the
ordinary course of business and are therefore properly added to
Consolidated Net Income (Loss) of the Company for the fourth
fiscal quarter of 1994 in determining Consolidated EBITDAR;
provided, however, that the nature of the items listed on Exhibit
A shall not be dispositive of an appropriate determination of
whether any future gain or loss is incurred in the ordinary
course of business of the Company.<PAGE>
<PAGE>
Intermet Corporation
March 6, 1995
Page 2
2. This Amendment and Agreement shall be effective as of the
date above written upon receipt of (i) executed counterparts
hereof and (ii) a copy of a waiver and agreement to the Credit
Agreement in the form attached hereto as Exhibit B.
3. Except as expressly set forth herein, this Amendment and
Agreement shall not be deemed to be a waiver or modification of
any provisions of the Agreement and shall not preclude the future
exercise of any right, power or privilege available to any holder
of a Note.
4. This Amendment and Agreement may be signed in any number of
counterparts each of which shall be an original and all of which
together shall constitute one and same instrument.
If you are in agreement with the foregoing, please sign each
copy of this Amendment and Agreement and return two of them to
Prudential, together with the documentation described in
paragraph 2(ii) above.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ [UNREADABLE]
-------------------------------
Vice President
Agree to and accepted
this March 10, 1995
INTERMET CORPORATION
By: /s/ John D. Ernst
--------------------
title: V/P Finance
<PAGE>
EXHIBIT 4.20
INTERMET CORPORATION
5445 Corporate Drive
Troy, Michigan 48098
As of March 21, 1996
The Prudential Insurance Company of America
c/o The Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Ladies and Gentlemen:
The undersigned, Intermet Corporation, a Georgia corporation, and its
successors and permitted assigns (herein called the "COMPANY"), hereby agrees
with you as follows:
1. BACKGROUND. The Company authorized the issue of, and issued to
you on December 11, 1992, its senior promissory note in the original principal
amount of $25,000,000 (the "EXISTING NOTE") pursuant to, and in accordance with
the terms of, that certain Note Agreement (as amended up to, but excluding, the
Effective Date, the "ORIGINAL NOTE AGREEMENT"), dated as of December 11, 1992,
between the Company and you. Each of the Company and the Guarantors has
requested the amendment and restatement in its entirety of the Original Note
Agreement and Existing Note as provided for in this Agreement.
2. AMENDMENT AND RESTATEMENT OF ORIGINAL NOTE AGREEMENT AND EXISTING
NOTE AND AMENDMENT OF RELATED AGREEMENTS. (i) The parties hereto agree that (a)
the Original Note Agreement is hereby amended and restated in its entirety as
set forth herein, (b) the form of the Existing Note issued by the Company is
hereby amended and restated in its entirety as set forth in Exhibit A to this
Agreement and (c) each of the other Related Agreements is hereby amended by
substituting this Agreement for each reference to the Original Note Agreement
contained therein.
(ii) The Company will execute and deliver to you a note, in the form
of Exhibit A hereto, in the aggregate principal amount of $25,000,000, to be
dated the last day on which interest was paid on the Existing Note, to mature
December 11, 2002, to bear interest on the unpaid balance thereof at a rate per
annum of 8.05% and on overdue principal, premium or interest at the rate
specified therein.
<PAGE>
The term "NOTE" as used herein shall include the Note delivered pursuant to this
provision and each senior promissory note delivered in substitution or exchange
for any such Note pursuant to any provision of this Agreement.
3. CONDITIONS OF EFFECTIVENESS. The amendment and restatement of the
Original Note Agreement and the Existing Note and the other amendments as
provided in paragraph 2 hereof shall become effective on the date hereof (the
"Effective Date"), subject to satisfaction of all of the following conditions
precedent:
3A. RELATED DOCUMENTS. You shall have received each of the following
documents, in form and substance satisfactory to you, duly executed and
delivered by the parties thereto:
(i) the amended and restated Existing Note, as required by clause (ii)
of paragraph 2;
(ii) a Cancellation Agreement, executed by SunTrust Bank, Atlanta, as
agent under the Bank Agreement and the Required Lenders (as defined in the Bank
Agreement), terminating the Pledge Agreement delivered pursuant to the "Prior
Bank Agreement" (as defined in the Bank Agreement);
(iii) a UCC-3 executed by SunTrust Bank, Atlanta, as agent under the
Bank Agreement with respect to the Uniform Commercial Code financing statements
filed with respect to the stock of Columbus Neunkirchen;
(iv) Amendment No. 2 to the Intercreditor Agreement; and
(v) to the extent not previously delivered, a Subsidiary Guaranty
Agreement or Pledge Agreement (and related Contribution Agreement) from any
Subsidiary that has delivered a Bank Guaranty Agreement or Pledge Agreement
under the Bank Agreement.
3B. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations
and warranties contained in Article V of the Bank Agreement shall be true on and
as of the Effective Date; there shall exist on the Effective Date no Event of
Default or Default; and the Company shall have delivered to you an Officer's
Certificate, dated the Effective Date, to both such effects and further
certifying that (i) the execution and delivery by the Company of this Agreement,
the Note and each of the other documents identified in the preceding paragraph
3A have been duly authorized by all necessary corporate action on the part of
the Company, have been duly executed and delivered by the Company and are the
valid and binding obligation of the Company, enforceable in accordance with its
terms and (ii) each of the Related Documents, except as amended hereby, remains
in full force and effect.
-2-
<PAGE>
3C. AUTHORIZATION OF TRANSACTIONS. The Company shall have
authorized, by all necessary corporate action, the execution and delivery of
this Agreement and each of the documents executed and delivered in connection
herewith and the performance and satisfaction of all closing conditions
contained in this paragraph 3, and the consummation of all transactions
contemplated by this Agreement.
3D. CERTIFIED COPIES OF BANK AGREEMENT AND OTHER DOCUMENTS. You
shall have received a true, correct and duly executed copy of the Bank
Agreement, including all Schedules and Exhibits thereto and side letters, if
any, affecting the terms thereof or otherwise delivered in connection therewith,
together with all amendments and waivers thereto and any documents, instruments
or certificates executed in connection therewith, accompanied by an Officer's
Certificate dated the Effective Date to such effect.
3E. BANK APPROVAL. You shall have received, in form and substance
satisfactory to you, the written approval of SunTrust Bank, Atlanta, as agent
under the Bank Agreement and the Required Lenders (as defined in the Bank
Agreement) to the delivery by the Company of this Agreement, the Note and the
amendments to the other Related Documents and the transactions contemplated
hereby and thereby and confirming that the conditions contained in Section 6.11
of the Bank Agreement have each been fully satisfied.
3F. GUARANTORS APPROVAL. You shall have received, in form and
substance satisfactory to you, the written approval of each of the Guarantors
with respect to this Agreement, the Note, the amendments to the other Related
Documents and the transactions contemplated hereby and thereby.
3G. OPINION OF COMPANY'S COUNSEL. You shall have received from
Kilpatrick & Cody, counsel for the Company and its Subsidiaries, a favorable
opinion satisfactory to you and substantially in the form of Exhibit B attached
hereto.
3H. AMENDMENT FEE. The Company shall have paid to you at the closing
of the execution and delivery of this Agreement an amendment fee in an amount
equal to $7,500, paid by wire transfer to your Account No. 050-54-526 at Morgan
Guaranty Trust Company of New York, 23 Wall Street, New York, New York 10015
(ABA No. 021-000-238).
-3-
<PAGE>
4. PREPAYMENTS. The Notes shall be subject to prepayment with
respect to the required prepayments specified in paragraph 4A and the optional
prepayments permitted by paragraph 4B.
4A. REQUIRED PREPAYMENTS. Until the Notes shall be paid in full, the
Company shall apply to the prepayment of the Notes, without premium, the sum of
$5,000,000 on December 11 in each of the years 1998 to 2001, inclusive, and such
principal amounts of the Notes, together with interest thereon to the prepayment
dates, shall become due on such prepayment dates. The remaining principal
amount of the Notes, together with interest accrued thereon, shall become due on
the maturity date of the Notes.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes
shall be subject to prepayment, in whole at any time or from time to time in
part (in multiples of $5,000,000), at the option of the Company, at 100% of the
principal amount so prepaid plus interest thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect to each Note. Any partial
prepayment of the Note pursuant to this paragraph 4B shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder
of each Note irrevocable written notice of any prepayment pursuant to paragraph
4B not less than 10 Business Days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment is to
be made pursuant to paragraph 4B. Notice of prepayment having been given as
aforesaid, the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the Yield-
Maintenance Amount, if any, with respect thereto, shall become due and payable
on such prepayment date. The Company shall, on or before the day on which it
gives written notice of any prepayment pursuant to paragraph 4B, give telephonic
notice of the principal amount of the Notes to be prepaid and the prepayment
date to each Significant Holder which shall have designated a recipient of such
notices in the Purchaser Schedule attached hereto or by notice in writing to the
Company.
4D. PARTIAL PAYMENTS PRO RATA. Upon any partial prepayment of the
Notes pursuant to paragraph 4A or 4B, the principal amount so prepaid shall be
allocated to all Notes at the time outstanding (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates other
than be prepayment pursuant to paragraph 4A or 4B) in proportion to the
respective outstanding principal amounts thereof.
-4-
<PAGE>
4E. RETIREMENT OF NOTES. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than by prepayment pursuant
to paragraph 4A or 4B upon acceleration of such final maturity pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes
held by any holder unless the Company or such Subsidiary or Affiliate shall have
offered to prepay or otherwise retire or purchase or otherwise acquire, as the
case may be, the same proportion of the aggregate principal amount of Notes held
by each other holder of Notes at the time outstanding upon the same terms and
conditions. Any Notes so prepaid or otherwise retired or purchased or otherwise
acquired by the Company or any of its Subsidiaries or Affiliates shall not be
deemed to be outstanding for any purpose under this Agreement, except as
provided in paragraph 4D.
5. AFFIRMATIVE COVENANTS.
5A. REPORTING REQUIREMENTS. The Company covenants that it will deliver
to each Significant Holder in quadruplicate:
(i) as soon as practicable and in any event within 60 days after the end
of each quarterly period (other than the last quarterly period) in each
fiscal year, consolidated statements of income, stockholders' equity and
cash flows of the Company and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such quarterly period,
and a consolidated balance sheet of the Company and its Subsidiaries as at
the end of such quarterly period, setting forth in each case in comparative
form figures for the corresponding period in the preceding fiscal year, all
in reasonable detail and satisfactory in form to the Required Holder(s) and
certified by an authorized financial officer of the Company, subject to
changes resulting from normal year-end adjustments; provided, however, that
delivery pursuant to clause (iii) below of copies of the Quarterly Report
on Form 10-Q of the Company for such quarterly period filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (i);
(ii) as soon as practicable and in any event within 90 days after the end
of each fiscal year, a consolidated statements of income and cash flows and
a consolidated statement of stockholders' equity of the Company and its
Subsidiaries for such year, and a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such year, setting forth in each case
in comparative form corresponding consolidated figures from the preceding
annual audit, all in reasonable detail and satisfactory in scope to the
-5-
<PAGE>
Required Holder(s) and, as to the consolidated statements, reported on by
independent public accountants of recognized standing selected by the
Company whose report shall be without limitation as to the scope of the
audit and satisfactory in substance to the Required Holder(s); provided,
--------
however, that delivery pursuant to clause (iii) below of copies of the
-------
Annual Report on Form 10-K of the Company for such fiscal year filed with
the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send to its
public stockholders and copies of all registration statements (without
exhibits) and all reports which it files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the functions
of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other report submitted
to the Company or any Subsidiary by independent accountants in connection
with any annual, interim or special audit made by them of the Company or
any Subsidiary;
(v) an annual financial plan and forecasted balance sheets and statements
of income, shareholders' equity, and cash flows for the current fiscal year
for the Consolidated Companies presented on a consolidated basis for any
fiscal year thereafter, no later than 30 days prior to the beginning of
such fiscal year;
(vi) any other information provided under the Bank Agreement to the agent
thereunder or the banks that are a party thereto; and
(vii) with reasonable promptness, such other financial data as such
Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each Significant Holder an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraphs 6A through
6F, inclusive, and stating that there exists no Event of Default or Default, or,
if any Event of Default or Default exists, specifying the nature and period of
existence thereof and what action the Company proposes to take with respect
thereto. Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver to each Significant Holder a certificate of
the accountants certifying such financial statements stating that, in making the
audit necessary for their report on such financial statements, they have
obtained no knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying the nature and
-6-
<PAGE>
period of existence thereof. Such accountants, however, shall not be liable to
anyone by reason of their failure to obtain knowledge of any Event of Default or
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards.
The Company also covenants that immediately after any Responsible
Officer of the Company obtains knowledge of:
(a) an Event of Default or Default;
(b) a material adverse change in the financial condition, business or
operations of the Company and its Subsidiaries, taken as a whole,
(c) the institution of legal proceedings against the Company and/or any
Subsidiary, which has a reasonable possibility of materially adversely
affecting the financial condition, business or operations of the
Company and its Subsidiaries, taken as a whole or which in any manner
draws into question the validity of or has a reasonable possibility of
impairing the ability of the Company to perform its obligations under
this Agreement or the Notes,
(d) receipt by the Company or any of its Subsidiaries from the holder(s)
of any Indebtedness of the Company or any of its Subsidiaries (or from
any trustee, agent, attorney or other party acting on behalf of such
holder(s)) in an amount which, in the aggregate, exceeds $5,000,000,
where such notice states or claims (i) the existence or occurrence of
any default or event of default with respect to such Indebtedness
under the terms of any indenture, loan or credit agreement, debenture,
notice or other document evidencing or governing such Indebtedness, or
(ii) the existence or occurrence of any event or condition which
requires or permits holder(s) of any Indebtedness to exercise right
under any Change in Control Provision;
(e) the occurrence of any other event that reasonably could impair the
ability of the Company to meet its obligations hereunder;
(f) any of the following, which, individually or in the aggregate, could
result in penalties, fines, claims or other liabilities in amounts in
excess of $1,000,000: (i) Environmental Liabilities, (ii) pending or
threatened Environmental Proceedings, (iii) Environmental Notices,
(iv) Environmental Judgments and Orders, or (v) Environmental Releases
at, on, in, under or in any way materially affecting the Properties;
or
(g) the institution of any legal proceedings under the Bank Guaranty
Agreement or a payment by any such Subsidiary or any Person on behalf
of any such Subsidiary under the Bank Guaranty Agreement,
-7-
<PAGE>
the Company will deliver to each Significant Holder an Officer's Certificate
specifying the nature and period of existence thereof and what action the
Company has taken, is taking or proposes to take with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as the Company is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act. For the purpose of this paragraph 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it will
permit any Person designated by any Significant Holder in writing, at such
Significant Holder's expense, to visit and inspect any of the properties of the
Company and its Subsidiaries, to examine the corporate books and financial
records of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company and its independent
public accountants, all at such reasonable times and as often as such
Significant Holder may reasonably request after reasonable notice.
5D. COVENANT TO SECURE NOTE EQUALLY. The Company covenants that, if
it or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6C (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to paragraph 11C), it will
make or cause to be made effective provision whereby the Notes will be secured
by such Lien equally and ratably with any and all other Indebtedness thereby
secured so long as any such other Indebtedness shall be so secured.
5E. GUARANTEED OBLIGATIONS. The Company covenants that if, at any
time, after the date hereof, it or any of its Subsidiaries incurs or permits to
exist any Indebtedness or other obligation (other than a performance bond or
like financial accommodation issued by a Subsidiary in the ordinary course or
business or letters of credit issued to support workers' compensation
liabilities) Guaranteed or collateralized in any other manner by any other
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Person, it will simultaneously cause such Person to execute and deliver to each
holder of any Note a guaranty agreement in form and substance reasonably
satisfactory to such holder guaranteeing payment of the principal amount of the
Notes and any premium and interest thereon, which bears the same ratio to the
total unpaid principal amount of the Notes as the amount of such other
obligation which is Guaranteed bears to the total unpaid principal amount of
such other obligation, or if such other obligation is collateralized, to
collateralize the Notes equally and ratably with such other obligation.
5F. MAINTENANCE OF INSURANCE. The Company covenants that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its properties and business against such casualties and contingencies
(including, but not limited to, public liability, larceny, embezzlement or other
criminal misappropriation) and in such amounts as is customary in the case of
similarly situated corporations engaged in the same or similar businesses.
5G. MAINTENANCE OF CORPORATE EXISTENCE/COMPLIANCE WITH
LAW/PRESERVATION OF PROPERTY. Except as allowed under paragraphs 6D and 6E, the
Company covenants that it and each Subsidiary will do or cause to be done all
things necessary to preserve, renew and keep in full force and effect the
corporate existence of the Company and its Subsidiaries (other than those
Subsidiaries not material to the financial condition, business or operations of
the Company and its Subsidiaries taken as a whole) and comply in all material
respects with all laws and regulations (including, without limitation, laws and
regulations relating to equal employment opportunity and employee safety)
applicable to it and its Subsidiaries, the failure with which to comply would
have a reasonable possibility of materially adversely affecting the business,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole, at all times maintain, preserve and protect all material intellectual
property of the Company and its Subsidiaries, and preserve all the remainder of
its material property used or useful in the conduct of its business and keep the
same in good repair, working order and condition.
5H. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company will, and will
cause each of its Subsidiaries to, comply in a timely fashion with, or operate
pursuant to valid waivers of the provisions of, all Environmental Requirements
including, without limitation, the emission of wastewater effluent, solid and
hazardous waste and air pollution, together with any other applicable
requirements for conducting, on a timely basis, periodic tests and monitoring
for contamination of ground water, surface water, air and land and for
biological toxicity of the aforesaid, and diligently comply with the regulations
(except to the extent such regulations are waived by appropriate governmental
authorities) of the Environmental Protection Agency or other relevant federal,
state or local governmental authority, except where the failure to do so would
not have a reasonable possibility of materially adversely affecting the
business, operations or financial condition of the Company and any of its
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Subsidiaries, taken as a whole. To the fullest extent permitted by applicable
law, the Company agrees to indemnify and hold you, your officers, agents and
employees harmless from any loss, liability, claim or expense that you may incur
or suffer as a result of a breach by the Company or its Subsidiaries, as the
case may be, of this covenant. The Company shall not be deemed to have breached
or violated this paragraph 5H if the Company or any Subsidiary of the Company is
challenging in good faith by appropriate proceedings diligently pursued the
application or enforcement of such Environmental Requirements for which adequate
reserves have been established in accordance with GAAP.
5I. NO INTEGRATION. The Company covenants that it has taken and will
continue to take all necessary steps so that the issuance of the Notes have not
and will not require registration under the Securities Act. The Company
covenants that no future offer and sale of debt securities of the Company of any
class will be made if, as a result of the doctrine of "integration", such offer
and sale would call into question the entitlement of the Notes to the exemption
from the registration requirements of the Securities Act.
5J. FINANCIAL REPORTS. The Company will keep, and will cause each
Subsidiary to keep, proper books of record and account in which full and correct
entries will be made of all dealings or transactions of or in relation to the
business and affairs of the Company or such Subsidiary in accordance with GAAP
consistently applied (except for changes disclosed in the financial statements
furnished to you pursuant to paragraph 5A and concurred in by the independent
public accountants referred to in paragraph 5A).
5K. ADDITIONAL GUARANTORS AND COLLATERAL. Promptly after (i) the
formation or acquisition (provided that nothing in this paragraph shall be
deemed to authorize the acquisition of any entity) of any Subsidiary not listed
on Schedule 5K, (ii) the domestication of any Foreign Subsidiary, or (iii) the
occurrence of any other event creating a new Subsidiary, the Company shall
execute and deliver, and cause to be executed and delivered (x) in the case of a
Foreign Subsidiary, if, in the reasonable opinion of the Company's accountants,
delivery of a Guaranty Agreement would cause the Company to be subject to tax on
the undistributed earnings and profits of such Subsidiary pursuant to Subpart F
of Part III, Subchapter N of the Internal Revenue Code, a Pledge Agreement with
respect to 49% of the capital stock of such Subsidiary if it is a Foreign
Subsidiary directly owned by the Company or a Subsidiary that is not, and is not
directly or indirectly controlled by, a Foreign Subsidiary, (y) a Guaranty
Agreement from each such Subsidiary that is not a Foreign Subsidiary whose stock
has been pledged to the extent and in accordance with subsection (x) hereof and
(z) a Contribution Agreement from each such Subsidiary, together with related
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documents with respect to such new Subsidiary (or the pledgor of its stock) of
the kind described in paragraphs 3C, 3G and 3H of the Original Note Agreement,
all in form and substance satisfactory to the Required Holder(s).
6. NEGATIVE COVENANTS.
6A. FINANCIAL COVENANTS. The Company covenants that it will not
permit, as of the last day of any fiscal quarter:
(i) the Fixed Charge Coverage Ratio to fall below 2.0:1.0;
(ii) the Leverage Ratio to exceed 65%; or
(iii) the ratio of Funded Debt to Consolidated EBITDA (calculated for the
immediately preceding four fiscal quarters ending on such date) to
exceed 3.5:1.0.
The Company further covenants that Schedule 6A hereto sets forth the calculation
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of the financial covenant amounts, ratios and percentages required by clauses
(i) through (iii) of this paragraph 6A, calculated as of September 30, 1995.
6B. INDEBTEDNESS. Subject to compliance with paragraph 6A, the
Company covenants that it will not and not permit any Subsidiary to create,
incur, assume or suffer to exist any Indebtedness, other than:
(a) the Notes,
(b) Indebtedness otherwise outstanding on the Effective Date as set forth
on Schedule 6B attached hereto;
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(b) unsecured current liabilities (other than liabilities for borrowed
money or liabilities evidenced by promissory notes, bonds or similar
instruments) incurred in the ordinary course of business;
(c) Indebtedness of the Company pursuant to the Bank Agreement and secured
by Liens which are pari passu with the Liens securing the Notes and
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the other Obligations hereunder and governed by the terms of the
Intercreditor Agreement;
(d) Investments permitted by paragraph 6G hereof;
(e) Subordinated Debt which is unsecured and approved as to terms and
conditions by the Required Holders;
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(f) Indebtedness of a Person which is acquired by or consolidated with a
Consolidated Company as long as such Indebtedness is not obtained in
contemplation of such acquisition; and
(g) additional Indebtedness not to exceed $30,000,000 at any one time
outstanding.
6C. LIENS. The Company covenants that it will not and not permit any
Subsidiary to create, incur, assume or suffer to exist any Lien on any of its
property now owned or hereafter acquired to secure any Indebtedness other than:
(a) Liens existing on the Effective Date and disclosed on Schedule 6C and
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Liens securing the Notes and other Obligations hereunder;
(b) Liens for taxes not yet due, and Liens for taxes or Liens imposed by
ERISA which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being
maintained;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law created in the
ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves are being maintained;
(d) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of
borrowed money);
(e) Liens permitted by clause (c) of paragraph 6B;
(f) Liens (other than those permitted by paragraphs (a) through (e) of
this paragraph 6C) encumbering assets having an Asset Value not
greater than fifteen percent (15%) of Tangible Net Worth of the
Company in the aggregate at any one time.
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6D. MERGERS. ACQUISITIONS. DIVESTITURES. The Company covenants that it
will not and not permit any Subsidiary to:
(a) merge or consolidate with any other Person, except that the foregoing
restrictions shall not be applicable to:
(i) mergers or consolidations of (x) any Subsidiary
with any other Subsidiary which is a Guarantor or (y) any
Subsidiary with the Company; or
(ii) mergers or consolidations which result in
Acquisitions of Persons engaged in businesses in which the
Company is engaged on the Effective Date or substantially related
thereto and as otherwise permitted by paragraph 6K of this
Agreement;
PROVIDED, that, before and after giving effect to any such merger or
consolidations, (w) the Company is in compliance with paragraph 6A
hereof; (x) no other Default or Event of Default exists hereunder; (y)
in the event of such merger or consolidation, the surviving Person is
a Consolidated Company and complies with paragraph 5K hereof, if
applicable, and (z) the Company is the surviving corporation in
connection with any merger or consolidation to which it is a party;
(b) sell or otherwise dispose of the capital stock of a Subsidiary of the
Company except as permitted pursuant to clause (c) of paragraph 6E; or
(c) make or permit any Acquisition other than an Acquisition of Persons
engaged in businesses in which the Company is engaged on the Effective
Date or substantially related thereto and as otherwise permitted
pursuant to paragraph 6K of this Agreement; provided that the Company
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meets the conditions of (w), (x), (y) and (z) of clause (a)(ii) of
this paragraph 6D.
6E. ASSET SALES. The Company covenants that it will not and not
permit any Subsidiary to sell, lease or otherwise dispose of its accounts,
property, stock of its Subsidiaries or other assets; provided, however, that the
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foregoing restrictions on Asset Sales shall not be applicable to:
(a) sales of inventory in the ordinary course of business;
(b) sales of equipment or other personal property being replaced by other
equipment or other personal property purchased as a capital
expenditure item; or
(c) Asset Sales comprised of stock of Subsidiaries or all or substantially
all of the assets of any Subsidiary where, on the date of execution of
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a binding obligation to make such Asset Sale (provided that if the
Asset Sale is not consummated within six (6) months of such execution,
then on the date of consummation of such Asset Sale rather than on the
date of execution of such binding obligation):
(x) after giving effect to the proposed Asset Sale, the assets
which are the subject of the proposed Asset Sale, together with
all other such Asset Sales of the Consolidated Companies during
the immediately preceding four fiscal quarters of the Company,
did not generate twenty percent (20%) or more of Consolidated
EBITDA during the then most recently ended four fiscal quarters
of the Company; and
(y) after giving effect to the proposed Asset Sale, the aggregate
Asset Value of all such Asset Sales of the Consolidated Companies
since the Closing Date would not exceed thirty (30%) of the Net
Fixed Assets of the Company as determined as of the last day of
the most recently ended fiscal quarter of the Company; or
(d) other Asset Sales (other than sales of capital stock of Subsidiaries
or all or substantially all of the assets of any Subsidiary), where,
on the date of execution of a binding obligation to make such Asset
Sale (provided that if the Asset Sale is not consummated within six
(6) months of such execution, then on the date of consummation of such
Asset Sale rather than on the date of execution of such binding
obligation), after giving effect to the proposed Asset Sale, the
aggregate Asset Value of all Asset Sales made pursuant to this
subparagraph (d) by the Consolidated Companies since the Closing Date
would not exceed ten percent (10%) of the Company's Net Fixed Assets
as of the last day of the most recently ended fiscal quarter of the
Company;
provided that notwithstanding the foregoing, no transaction pursuant to
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clauses (c) or (d) above shall be permitted if any Default or Event of
Default exists at the time of such transaction or would exist as a result
of such transaction.
Upon the consummation of the sale of any capital stock of a
Subsidiary pursuant to subsection (c) above, which capital stock is pledged
to the holders of the Notes, the holders of the Notes shall release the
Lien upon such stock upon the request of the Company, subject to prior
confirmation that such Lien will be contemporaneously released by the agent
and banks under the Bank Agreement.
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6F. DIVIDENDS ETC. The Company shall not (a) declare or pay any
dividend on any class of its stock, or (b) make any payment to purchase, redeem,
retire or acquire any Subordinated Debt or stock or any option, warrant, or
other right to acquire such Subordinated Debt or stock (each, a "Restricted
Payment"), other than:
(i) dividends payable solely in shares of any class of
its stock; and
(ii) cash dividends declared and paid, and all other Restricted
Payments made, after December 31, 1994 in an aggregate
amount not to exceed fifty percent (50%) of Consolidated Net
Income earned during the period commencing on January 1,
1995 and ending on the last day of the most recently ended
fiscal quarter of the Company (such period to be treated as
one accounting period taking into account 100% of
Consolidated Net Loss during such period);
provided, however, no such dividend or other Restricted Payment may be
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declared or paid pursuant to clause (ii) above unless no Default or
Event of Default exists at the time of such declaration or Restricted
Payment, or would exist as a result of such declaration or Restricted
Payment.
6G. INVESTMENTS. LOANS ETC. The Company covenants that it will not and
not permit any Subsidiary to make, permit or hold any Investments other than:
(a) Investments in Subsidiaries which are Guarantors under this Agreement,
whether such Subsidiaries are Guarantors on the Closing Date or become
Guarantors in accordance with paragraph 5K after the Closing Date;
provided, however, nothing in this paragraph 6G shall be deemed to
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authorize an Investment pursuant to this subsection (a) in any entity that
is not a Guarantor prior to such Investment;
(b) Investments in the following securities:
(i) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in
each case supported by the full faith and credit of the United States
and maturing within one year from the date of creation thereof;
(ii) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by a nationally recognized
credit rating agency;
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(iii) time deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any office
located in the United States of any bank or trust company which is
organized under the laws of the United States or any state thereof and
has capital, surplus and undivided profits aggregating at least
$500,000,000, including without limitation, any such deposits in
Eurodollars issued by a foreign branch of any such bank or trust
company;
(iv) mid-term notes of corporations existing under the laws of the
United States rated in the highest grade by a nationally recognized
credit rating agency;
(v) municipal "lower floater" bonds rated A or better (or backed by a
letter of credit rated A or better) by a nationally recognized credit
rating agency;
(c) Investments made by Plans and Foreign Plans; and
(d) Investments (other than those permitted by paragraphs (a) through (c)
above), including loans to employees, officers and other Persons, in an
aggregate amount not to exceed ten percent (10%) of Tangible Net Worth at
any one time outstanding; provided that, Investments in Subsidiaries which
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are not Guarantors are expressly prohibited by this paragraph 6G.
6H. SALE AND LEASEBACK TRANSACTIONS. The Company covenants that it
will not and not permit any Subsidiary to sell or transfer any property, real or
personal, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property which any Consolidated Company intends to use
for substantially the same purpose or purposes as the property being sold or
transferred.
6I. TRANSACTIONS WITH AFFILIATES. The Company covenants that it will
not and not permit any Subsidiary to:
(a) Enter into any material transaction or series of related transactions
which in the aggregate would be material, whether or not in the
ordinary course of business, with any Affiliate of any Consolidated
Company (but excluding any Affiliate which is also a Consolidated
Company), other than on terms and conditions substantially as
favorable to such Consolidated Company as would be obtained by such
Consolidated Company at the time in a comparable arm's-length
transaction with a Person other than an Affiliate.
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<PAGE>
(b) Convey or transfer to any other Person (including any other
Consolidated Company) any real property, buildings, or fixtures used
in the manufacturing or production operations of any Consolidated
Company, or convey or transfer to any other Consolidated Company any
other assets (excluding conveyances or transfers in the ordinary
course of business) if at the time of such conveyance or transfer any
Default or Event of Default exists or would exist as a result of such
conveyance or transfer.
6J. PREPAYMENTS OF SUBORDINATED DEBT IN VIOLATION THEREOF. The
Company covenants that it will not and not permit any Subsidiary to, directly or
indirectly, prepay, purchase, redeem, retire, defease or otherwise acquire, or
make any optional payment on account of any principal of, interest on, or
premium payable in connection with any of its Subordinated Debt, in each case,
which is a violation of the subordination provisions of such Subordinated Debt.
6K. CHANGES IN BUSINESS. The Company covenants that it will not and
not permit any Subsidiary to enter into any business which is substantially
different from that presently conducted by the Consolidated Companies taken as a
whole (which includes iron and aluminum foundry operations and machining);
provided that, the Company and the Consolidated Companies may make Acquisitions
- -------------
of, and Investments in, (to the extent permitted by this Agreement) Persons
engaged in an unrelated business as long as the sum of (x) the amount expended
in connection with such Acquisitions since the Closing Date, and (y) the
aggregate outstanding Investments in such Persons (including any amount
committed by the Company or a Consolidated Company to be loaned to or otherwise
invested in such Person) does not exceed five percent (5%) of Tangible Net Worth
on any date of determination.
6L. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING CONSOLIDATED
COMPANIES. The Company covenants that it will not and not permit any Subsidiary
to create or otherwise cause or suffer to exist or become effective, any
consensual encumbrance or restriction on the ability of any Consolidated Company
to (i) pay dividends or make any other distributions on such Consolidated
Company's stock, or (ii) pay any indebtedness owed to the Company or any other
Consolidated Company, or (iii) transfer any of its property or assets to the
Company or any other Consolidated Company, except any consensual encumbrance or
restriction existing under the Related Documents or the "Credit Documents"
delivered under the Bank Agreement or as set forth on Schedule 6L.
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6M. ACTIONS UNDER CERTAIN DOCUMENTS. The Company covenants that it
will not and not permit any Subsidiary to:
(a) Without the prior written consent of the Required Holders, modify,
amend or supplement the Bank Agreement to (i) increase the interest
rate thereunder, (ii) modify any requirement of prepayment or
repayment thereunder which would make the requirement of prepayment
more onerous, or (iii) make any more onerous any other provision
thereof.
(b) Without the prior written consent of the Required Holders, modify,
amend or supplement any agreement governing Subordinated Debt to (i)
increase the principal amount of the indebtedness thereunder, (ii)
increase the interest rate thereunder, (iii) modify any requirement of
prepayment or repayment thereunder which would shorten the final
maturity or average life of the indebtedness outstanding thereunder or
make the requirement of prepayment more onerous, (iv) make any more
onerous any other provision thereof, or (v) amend or modify the
subordination provisions thereof.
6N. ERISA. The Company covenants that it will not, nor permit any
Subsidiary to:
(i) terminate or withdraw from any Plan so as to result in any
material liability to the Pension Benefit Guaranty Corporation;
(ii) engage in or permit any Person to engage in any prohibited
transaction (as defined in Section 4975 of the Code) involving any Plan
(other than a Multiemployer Plan) which would subject such Company or any
Subsidiary to any material tax, penalty or other liability;
(iii) incur or suffer to exist any material accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, involving any Plan (other than a
Multiemployer Plan); or
(iv) allow or suffer to exist any risk or condition, which
presents a material risk of incurring a material liability to the Pension
Benefit Guaranty Corporation.
6M. FED REGULATIONS, ETC. The Company covenants that it will not,
and shall not permit any Subsidiary or any agent acting on behalf of the Company
or any Subsidiary, to take any action which might cause this Agreement or the
Notes to violate or cause you to comply with Regulation G, Regulation T or any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.
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6O. ENVIRONMENTAL MATTERS. The Company covenants that it will not,
and will not permit any Third Party to, use, produce, manufacture, process,
generate, store, dispose of, manage at, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials used,
produced, released or managed in the ordinary course of business in compliance
with all applicable Environmental Requirements where the failure to do so would
not have a reasonable possibility of materially adversely affecting the
business, operations or financial condition of such Company or any Subsidiary
and except for Hazardous Materials released in amounts which do not require
remediation pursuant to applicable law or regulation, and which do not present
any potentially substantial danger to health, safety or the environment.
6P. ADDITIONAL NEGATIVE PLEDGES. The Company covenants that it will
not, and will not permit any Subsidiary to, create or otherwise cause or suffer
to exist or become effective, directly or indirectly, any prohibition or
restriction on the creation or existence of any Lien upon any asset of any
Consolidated Company, other than (i) under this Agreement or the Bank Agreement
and (ii) pursuant to any requirement of applicable law or any regulatory
authority having jurisdiction over any of the Consolidated Companies.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of or
Yield-Maintenance Amount payable with respect to any Note when the same
shall become due, either by the terms thereof or otherwise as herein
provided; or
(ii) the Company defaults in the payment of any interest on any
Note for more than 5 days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as primary
obligor or as guarantor or other surety) in any payment of principal of or
interest on any other obligation for money borrowed (or any Capitalized
Lease Obligation, any obligation under a conditional sale or other title
retention agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase money mortgage or
any obligation under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided with respect
thereto, or the Company or any Subsidiary fails to perform or observe any
other agreement, term or condition contained in any agreement under which
any such obligation is created (or if any other event thereunder or under
any such agreement shall occur and be continuing) and the effect of such
failure or other event is to cause, or to permit the holder or holders of
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such obligation (or a trustee on behalf of such holder or holders) to
cause, such obligation to become due (or to be repurchased by the Company
or any Subsidiary) prior to any stated maturity, provided that the
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aggregate amount of all obligations as to which such a payment default
shall occur and be continuing or such a failure or other event causing or
permitting acceleration (or resale to the Company or any Subsidiary) shall
occur and be continuing exceeds $5,000,000; provided further that
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notwithstanding the foregoing, the Bank Agreement shall be governed by
clause (xv) of this paragraph 7A; or
(iv) any representation or warranty made by the Company herein
or any other Related Document or by the Company or any of its officers in
any writing furnished in connection with or pursuant to this Agreement or
any other Related Document or made by a Guarantor in the Subsidiary
Guaranty Agreement shall be false in any material respect on the date as of
which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall not be
remedied within 30 days after any Responsible Officer obtains actual
knowledge thereof; or
(vii) the Company or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts
become due; or
(viii) any decree or order for relief in respect of the Company
or any Subsidiary is entered under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in effect (herein
called the "BANKRUPTCY LAW"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession by,
a trustee, receiver, custodian, liquidator or similar official of the
Company or any Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a Subsidiary)
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relating to the Company or any Subsidiary under the Bankruptcy Law of any
other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and the
Company or such Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such proceedings, and
such order, judgment or decree remains unstayed and in effect for more than
60 days; or
(xi) any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such
order, judgment or decree remains unstayed and in effect for more than 60
days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a split-up of
the Company or such Subsidiary which requires the divestiture of assets
representing a substantial part, or the divestiture of the stock of a
Subsidiary whose assets represent a substantial part, of the consolidated
assets of the Company and its Subsidiaries (determined in accordance with
GAAP) or which requires the divestiture of assets, or stock of a
Subsidiary, which shall have contributed a substantial part of the
consolidated net income of the Company and its Subsidiaries (determined in
accordance with GAAP) for any of the three fiscal years then most recently
ended, and such order, judgment or decree remains unstayed and in effect
for more than 60 days; or
(xiii) a final judgment or judgments, individually or in the
aggregate, in an amount in excess of $5,000,000 shall be rendered against
the Company or any Subsidiary and, within 60 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending appeal, or
within 60 days after the expiration of any such stay, such judgment is not
discharged;
(xiv) the Company or any ERISA Affiliate, in its capacity as an
employer under Multiemployer Plan, makes a complete or partial withdrawal
from such Multiemployer Plan resulting in the incurrence by such
withdrawing employer of a withdrawal liability in an amount exceeding
$1,000,000;
(xv) an (A) Event of Default shall occur under the Bank
Agreement or (B) (i) event which with the passage of time or giving of
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notice or both would constitute an Event of Default under the Bank
Agreement shall occur or a condition to the availability of the commitment
of the banks that are a party to the Bank Agreement to make loans has not
been satisfied (unless the satisfaction of such condition has been waived
or subsequently satisfied) and (ii) a majority of such banks shall fail to
advance funds under the Bank Agreement; or
(xvi) the Company or any Subsidiary shall fail to comply with
the terms of any Related Document to which it is a party beyond applicable
grace periods, if any, specified in such Related Documents; or
(xvii) the Company or any Subsidiary or any other Person shall
disavow or attempt to terminate the Subsidiary Guaranty Agreement or the
Subsidiary Guaranty Agreement shall cease to be in full force and effect in
whole or in part for any reason whatsoever; or
(xviii) the security interest granted pursuant to any Pledge
Agreement shall fail at any time to constitute a first priority security
interest in or assignment of the collateral described in such Pledge
Agreement subject only to Liens permitted thereunder, or any Pledge
Agreement shall cease to be in full force and effect in whole or in part
for any reason whatsoever except as specified therein; or
(xix) (a) Any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act) shall become the
"beneficial owner(s)" (as defined in said Rule 13d-3) of more than fifty
percent (50%) of the shares of the outstanding common stock of the Company
entitled to vote for members of the Company's board of directors, (b) any
event or condition shall occur or exist which, pursuant to the terms of any
Change in Control Provision, requires or permits the holder(s) of
Indebtedness of any Consolidated Company to require that such Indebtedness
be redeemed, repurchased, defeased, prepaid or repaid, in whole or in part,
or the maturity of such Indebtedness to be accelerated in any respect, or
(c) John Doddridge or another Person possessing substantially equivalent
qualifications, background, proven record of success in running a public
company and ability shall cease to hold the position and actively carry out
the duties of Chairman of the Board of Directors of the Company;
(xx) If the Company shall at any time fail to own and control one
hundred percent (100%) of the Voting Stock of any Credit Party or entity
whose stock is pledged to the holders of the Notes, either directly or
indirectly through a wholly-owned Subsidiary of the Company, except for (x)
as a result of any Asset Sale permitted pursuant to paragraph 6E hereof,
and (y) with respect to any Credit Party or Foreign Subsidiary whose stock
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is pledged to the holders of the Notes after the Effective Date where the
Company shall, directly or indirectly, maintain ownership and control of
the percentage of Voting Stock owned and controlled as of the date such
Person became a Credit Party hereunder or a Foreign Subsidiary or such
greater percentage as shall thereafter be obtained, directly or indirectly
by the Company;
then (a) if such event is an Event of Default specified in clause (i) or
----
(ii) of this paragraph 7A, the holder of any Note (other than the Company
or any of its Subsidiaries or Affiliates) may at its option, by notice in
writing to the Company, declare such Note to be, and such Note shall
thereupon be and become, immediately due and payable at par together with
interest accrued thereon, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default specified in any of clauses
(viii), (ix) or (x) of this paragraph 7A with respect to the Company, all
of the Notes at the time outstanding shall automatically become immediately
due and payable at par together with interest accrued thereon, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Company, and
(c) if such event is not an Event of Default specified in clause (viii),
(ix) or (x) of this paragraph 7A with respect to the Company, the Required
Holder(s) may at its or their option, by notice in writing to the Company,
declare all of the Notes to be, and all of the Notes shall thereupon be and
become, immediately due and payable together with interest accrued thereon
and together with the Yield-Maintenance Amount, if any, with respect to
each Note, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company.
provided that the Yield-Maintenance Amount, if any, with respect to each Note
shall be due and payable upon such declaration only if (x) such event is an
Event of Default specified in any of clause (i) to (vi), inclusive, or clause
(xi) to (xviii), inclusive, of this paragraph 7A, (y) the Required Holder(s)
shall have given to the Company, at least 10 Business Days before such
declaration, written notice stating its or their intention so to declare the
Notes to be immediately due and payable and identifying one or more such Events
of Default whose occurrences on or before the date of such notice permits such
declaration and (z) one or more of the Events of Default so identified shall be
continuing at the time of such declaration.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to paragraph
7A, the Required Holder(s) may, by notice in writing to the Company, rescind and
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annul such declaration and its consequences if (i) the Company shall have paid
all overdue interest on the Notes, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become due
otherwise than be reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at the rate
specified in the Notes, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement. No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur
and be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants that the representations, covenants and
warranties contained in the Original Note Agreement, as in effect on December
11, 1992, were true, correct and complete as of December 11, 1992.
9. REPRESENTATIONS OF THE PURCHASER. You represent as follows:
9A. NATURE OF PURCHASE. You are not acquiring the Notes to be
purchased by you hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of your property shall at all times be and remain within your
control.
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9B. SOURCE OF FUNDS. No part of the funds being used by you to pay
the purchase price of the Notes being purchased by you hereunder constitutes
assets allocated to any separate account maintained by you. For the purpose of
this paragraph 9B, the term "SEPARATE ACCOUNT" shall have the meaning specified
in section 3 of ERISA.
10. DEFINITIONS. For the purpose of this Agreement, the terms
defined in the introductory sentence and in paragraphs 1 and 2 shall have the
respective meanings specified therein, and the following terms shall have the
meanings specified with respect thereto below:
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the Y-M Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate (or such other display as may replace Page 678 on
the Telerate) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or if such yields shall not be reported as of such time or the
yields reported as of such time shall not be ascertainable, (ii) the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Y-M Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield shall be determined, if necessary, by (a) converting U.S.
Treasury Bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between yields reported for
various maturities.
"REMAINING-AVERAGE LIFE" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) each Remaining Scheduled Payment of
such Called Principal (but not of interest thereon) by (b) the number of years
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(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be used on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"TELERATE" shall mean Telerate Services, Inc. or such other service as
you may select as a substitute therefor.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
"Y-M BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
a day on which commercial banks in New York City are required or authorized to
be closed.
10B. OTHER TERMS.
"ACQUISITION" shall mean any transaction, or any series of related
transactions, by which the Company and/or any of its Subsidiaries directly or
indirectly (a) acquires any ongoing business or all or substantially all of the
assets of any Person or division thereof, whether through purchase of assets,
merger or otherwise, (b) acquires (in one transaction or as the most recent
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transaction in a series of transactions) control of at least a majority in
ordinary voting power of the securities of a Person which have ordinary voting
power for the election of directors or (c) otherwise acquires control of a 50%
or more ownership interest in any such Person.
"AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"ASSET SALE" shall mean any sale or other disposition (or a series of
related sales or other dispositions), including without limitation, loss,
damage, destruction or taking, by any Consolidated Company to any Person other
than a Consolidated Company, of any property or asset (including capital stock
but excluding the issuance and sale by the Company of its own capital stock)
having an aggregate Asset Value in excess of $500,000, other than sales or other
dispositions made in the ordinary course of business of any Consolidated
Company.
"ASSET VALUE" shall mean, with respect to any property or asset of any
Consolidated Company as of any particular date, an amount equal to the greater
of (i) the then book value of such property or asset as established in
accordance with GAAP, and (ii) the then fair market value of such property or
asset as determined in good faith by the board of directors (or equivalent
governing body in the case of any Foreign Subsidiary) of such Consolidated
Company.
"BANK AGREEMENT" shall mean that certain Second Amended and Restated
Credit Agreement dated as of February 23, 1996 among the Company, SunTrust Bank,
Atlanta, as Agent and the banks that are a party thereto, as it has been amended
as of the date hereof and as it may be further amended, modified or supplemented
from time to time in accordance with its terms.
"BANK GUARANTY AGREEMENT" shall mean that certain Amended and Restated
Subsidiary Guaranty Agreement dated as of February 23, 1996 among certain
Subsidiaries of the Company and SunTrust Bank, Atlanta, as Agent under the Bank
Agreement, as it may be amended, modified or supplemented from time to time in
accordance with its terms.
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.
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"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City or Atlanta, Georgia are required
or authorized to be closed.
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under GAAP, would be required to be capitalized on the books of the Company or
any Subsidiary, taken at the amount thereof accounted for as indebtedness (net
of interest expense) in accordance with such principles.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act.
"CERCLIS" shall mean the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"CHANGE IN CONTROL PROVISION" shall mean any term or provision
contained in any indenture, debenture, note, or other agreement or document
evidencing or governing Indebtedness of the Company evidencing debt or a
commitment to extend loans in excess of $5,000,000 which requires, or permits
the holder(s) of such Indebtedness of the Company to require that such
Indebtedness of the Company be redeemed, repurchased, defeased, prepaid or
repaid, either in whole or in part, or the maturity of such Indebtedness of the
Company to be accelerated in any respect, as a result of a change in ownership
of the capital stock of the Company or voting rights with respect thereto.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLUMBUS NEUNKIRCHEN" shall mean Columbus Neunkirchen Foundry, GmbH,
a German corporation and an indirect, wholly owned subsidiary of the Company.
"CONSOLIDATED COMPANIES" shall mean, collectively, the Company and all
of its Subsidiaries.
"CONSOLIDATED EBIT" shall mean, for any fiscal period of the Company,
an amount equal to (A) the sum for such fiscal period of Consolidated Net Income
(Loss) and, to the extent deducted in determining such Consolidated Net Income
(Loss), provisions for (i) taxes based on income and (ii) Consolidated Interest
Expense, minus (B) any items of gain (or plus any items of loss) which were
----- ----
included in determining such Consolidated Net Income (Loss) and were (x) not
realized in the ordinary course of business (whether or not classified as
"ordinary" by GAAP), (y) the result of any sale of assets, or (z) resulting from
minority investments, together in the case of (x), (y) or (z), any related
provision for taxes included in Consolidated Net Income (Loss) with respect
thereto.
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CONSOLIDATED EBITDA" shall mean for any fiscal period of the Company,
an amount equal to the sum of Consolidated EBIT plus depreciation and
----
amortization expense to the extent deducted in determining Consolidated Net
Income (Loss), determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED EBITR" shall mean, for any fiscal period of the Company,
an amount equal to the sum of Consolidated EBIT plus Consolidated Rental Expense
----
for such period.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any fiscal period of
the Company, total interest expense of the Consolidated Companies (including
without limitation, interest expense attributable to capitalized leases in
accordance with GAAP, all commissions, discounts and other fees and charges owed
with respect to bankers acceptance financing, and total interest expense
(whether shown as interest expense or as loss and expenses on sale of
receivables) under a receivables purchase facility) determined on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED NET INCOME (LOSS)" shall mean, for any fiscal period of
the Company, the net income (or loss) of the Consolidated Companies on a
consolidated basis for such period (taken as a single accounting period)
determined in conformity with GAAP, but excluding therefrom (to the extent
otherwise included therein) (i) any income or loss of any Person accrued prior
to the date such Person becomes a Subsidiary of the Company or is merged into or
consolidated with any Consolidated Company or all or substantially all of such
Person's assets are acquired by any Consolidated Company, and (ii) the income of
any Consolidated Company to the extent that the declaration or payment of
dividends or similar distributions by such Consolidated Company of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation.
"CONSOLIDATED NET WORTH" shall mean, as of any date of determination,
Shareholders' Equity of the Company.
"CONSOLIDATED RENTAL EXPENSE" shall mean, for any fiscal period of the
Company, the operating lease expense of the Consolidated Companies determined in
accordance with GAAP for leases with a term greater than one year, as disclosed
in the notes to the Company's consolidated financial statements of the
Consolidated Companies, determined on a consolidated basis in accordance with
GAAP.
"CONTRIBUTION AGREEMENT" shall mean the Contribution Agreement
executed by each of the Guarantors dated as of the date hereof, substantially in
the form of Exhibit D, as it may be amended, modified or supplemented from time
to time in accordance with its terms.
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"CREDIT PARTIES" shall mean, collectively, each of the Company, the
Guarantors, and every other Person who from time to time executes a Security
Document with respect to all or any portion of the Notes and the other
Obligations owed to the holders of the Notes hereunder.
"DOMESTIC SUBSIDIARY" shall mean any Subsidiary organized under the
laws of the United States or a State thereof or the District of Columbia and
conducting substantially all of its business and making substantially all of its
sales in the United States or Canada.
"EFFECTIVE DATE" shall have the meaning specified in paragraph 3.
"ENVIRONMENTAL AUTHORITY" shall mean any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"ENVIRONMENTAL JUDGMENTS AND ORDERS" shall mean all judgments, decrees
or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreement with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"ENVIRONMENTAL LIABILITIES" shall mean any liabilities, whether
accrued or contingent, arising from or relating in any way to any Environmental
Requirements.
"ENVIRONMENTAL NOTICES" shall mean any written communication from any
Environmental Authority stating possible or alleged noncompliance with or
possible or alleged liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any purported
violation of any Environmental Requirements. Environmental Notices also shall
mean (i) any written communication from any private Person threatening
litigation or administrative proceedings against or involving the Company
relating to alleged violation of any Environmental Requirements and (ii) any
complaint, petition or similar documents filed by any private Person commencing
similar documents filed by any private Person commencing litigation or
administrative proceedings against or involving the Company relating to alleged
violation of any Environmental Requirements.
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"ENVIRONMENTAL PROCEEDINGS" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"ENVIRONMENTAL RELEASES" shall mean releases (as defined in CERCLA or
under any applicable state or local environmental law or regulation) of
Hazardous Materials. Environmental Releases does not include releases for which
no remediation or reporting is required by applicable Environmental Requirements
and which do not present a danger to health, safety or the environment.
"ENVIRONMENTAL REQUIREMENTS" shall mean any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to health, safety or
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of Section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FASB 106" shall mean Financial Accounting Standards Board Statement
No. 106, as in effect on August 31, 1992, specifying applicable accounting
principles with respect to accrual of the expected cost of providing post
retirement benefits to employees or their dependents.
"FIXED CHARGE COVERAGE RATIO" shall mean, as of the last day of any
fiscal quarter of the Company, the ratio of (A) Consolidated EBITR to (B) the
sum of the amounts of (i) Consolidated Interest Expense, and (ii) Consolidated
Rental Expense, in each case, calculated with respect to the immediately
preceding four fiscal quarters ending on such date.
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"FOREIGN PLAN" shall mean any pension, profit sharing, deferred
compensation, or other employee benefit plan, program or arrangement maintained
by any Foreign Subsidiary which, under applicable local law, is required to be
funded through a trust or other funding vehicle, but shall not include any
benefit provided by a foreign government or its agencies.
"FOREIGN SUBSIDIARY" shall mean each Consolidated Company that is
organized under the laws of a jurisdiction other than the United States of
America or any State thereof or the District of Columbia.
"FUNDED DEBT" shall mean all Indebtedness for money borrowed,
Indebtedness evidenced or secured by purchase money Liens, capitalized leases,
conditional sales contracts and similar title retention debt instruments,
whether designated as long term or current debt under GAAP. The calculation of
Funded Debt shall include (i) all Funded Debt of the Consolidated Companies,
plus (ii) all Funded Debt of other Persons to the extent guaranteed by a
- ----
Consolidated Company, to the extent supported by a letter of credit issued for
the account of a Consolidated Company, or as to which and to the extent which a
Consolidated Company or its assets otherwise have become liable for payment
thereof, plus (iii) the redemption amount with respect to the stock of any
----
Consolidated Company required to be redeemed during the next succeeding twelve
months.
"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 other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"GUARANTEE" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or services regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
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provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the obligation
guaranteed or such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited.
"GUARANTORS" shall mean, collectively, Intermet Foundries, Inc.,
Columbus Foundries, Inc., Lynchburg Foundry Company, Ironton Iron, Inc.,
Northern Castings Corporation, Intermet International, Inc., Intermet Machining,
Inc., Commercial and Precision Machining, Inc., New River Castings Company,
Alexander City Casting Company, Inc. and all other Subsidiaries formed or
acquired after the Closing Date (other than those Foreign Subsidiaries permitted
to deliver Pledge Agreements pursuant to clause (x) of paragraph 5K), and their
respective successors and permitted assigns.
"HAZARDOUS MATERIALS" shall mean (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable federal,
state or local law or regulation, (b) hazardous substances, as defined in
CERCLA, or in any applicable state or local law or regulation, (c) gasoline, or
an other petroleum product or by-product, (d) toxic substances, as defined in
the Toxic Substances Control Act of 1976, or in any applicable federal, state or
local law or regulation or (e) insecticides, fungicides, or rodenticides, as
defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable federal, state or local law or regulations, as each such Act,
statute or regulation may be amended from time to time.
"INDEBTEDNESS" of any Person shall mean, without duplication (i) all
obligations of such Person which in accordance with GAAP would be shown on the
balance sheet of such Person as a liability (including, without limitation,
obligations for borrowed money and for the deferred purchase price of property
or services, and obligations evidenced by bonds, debentures, notes or other
similar instruments); (ii) all rental obligations under leases required to be
capitalized under GAAP; (iii) all Guaranties of such Person (including
contingent reimbursement obligations under undrawn letters of credit); (iv)
Indebtedness of others secured by any Lien upon property owned by such Person,
whether or not assumed; and (v) obligations or other liabilities under currency
contracts, interest rate hedging contracts, or similar agreements or
combinations thereof to the extent required to be disclosed in accordance with
GAAP.
"INTERCREDITOR AGREEMENT" shall mean that certain Intercreditor
Agreement dated as of December 11, 1992 by and among the agent and banks party
to the Bank Agreement and The Prudential Insurance Company of America, as
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amended by that certain First Amendment to Intercreditor Agreement dated as of
August 21, 1995, as further amended by that certain Second Amendment to
Intercreditor Agreement, dated as of even date herewith or such later date as
shall be agreed to by the parties, as hereafter further amended, modified or
supplemented.
"INVESTMENT" shall mean, when used with respect to any Person, any
direct or indirect advance, loan or other extension of credit (other than the
creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any Person, or any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in, capital stock,
partnership interests, bonds, notes, debentures or other securities issued by
any other Person, in each case, other than an Acquisition. Each Investment shall
be valued as of the date made; provided that any Investment or portion of an
Investment consisting of Debt shall be valued at the outstanding principal
balance thereof as of the date of determination.
"LEVERAGE RATIO" shall mean, as of any date of determination, the
ratio, expressed as a percentage, of Funded Debt to Total Capitalization for the
Consolidated Companies.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise), any common law right of setoff or
banker's lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction) or any other
type of preferential arrangement for the purpose, or having the effect, of
protecting a creditor against loss or securing the payment or performance of an
obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NET FIXED ASSETS" shall mean, as of any date of determination, the
net property, plant and equipment of the Consolidated Companies determined in
accordance with GAAP and as reflected on the balance sheet of the Company.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by its President, one of its Vice Presidents or its Treasurer.
"OBLIGATIONS" shall mean all amounts owing to the holders of the Notes
pursuant to the terms of this Agreement or any other Related Document, including
without limitation, all fees, expenses, indemnification and reimbursement
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<PAGE>
payments, indebtedness, liabilities, and obligations of the Credit Parties,
direct or indirect, absolute or contingent, liquidated or unliquidated, now
existing or hereafter arising, together with all renewals, extensions,
modifications or refinancings thereof.
"PERMITTED LIENS" shall mean those Liens expressly permitted by
paragraph 6C.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"PLAN" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA which is or has been established or maintained, or
to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"PLEDGE AGREEMENT" shall mean, collectively, (i) that certain Pledge
and Security Agreement executed in favor of the you in connection with the
Original Note Agreement providing for the grant of first-priority Liens on 66%
of the outstanding stock of Columbus Neunkirchen, and (ii) any other pledge
agreement providing for the grant of first priority Liens on the Pledged Stock.
"PLEDGED STOCK" shall mean, collectively, 49% of the issued and
outstanding capital stock, together with all warrants, stock options, and other
purchase and conversion rights with respect to such capital stock, of all
Subsidiaries that are Foreign Subsidiaries directly owned by the Company and/or
owned by one or more other Subsidiaries organized in the United States (other
than Columbus Neunkirchen).
"PROPERTIES" shall mean all real property owned, leased or otherwise
used or occupied by the Company or any Subsidiary, wherever located.
"RELATED DOCUMENTS" shall mean this Agreement, any Note, any Pledge
Agreement, the Subsidiary Guaranty Agreement, the Contribution Agreement, the
Intercreditor Agreement and any document or instrument executed in connection
with any of the foregoing.
"REQUIRED HOLDER(S)" shall mean the holder or holders of at least 66-
2/3% of the aggregate principal amount of the Notes from time to time
outstanding.
"RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of the
Company or any other officer of the Company involved principally in its
financial administration or its controllership function.
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<PAGE>
"SECURITY DOCUMENTS" shall mean, collectively, the Subsidiary Guaranty
Agreement, the Pledge Agreements, and each other guaranty agreement, mortgage,
deed of trust, security agreement, pledge agreement, or other security or
collateral document guaranteeing or securing the Notes and the other Obligations
owed to the holders of the Notes, as the same may be amended, restated, or
supplemented from time to time.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHAREHOLDERS' EQUITY" shall mean, with respect to any Person as at
any date of determination, shareholders' equity of such person plus charges
----
taken in conformity with FASB 106 prior to fiscal year-end 1993, determined on a
consolidated basis in conformity with GAAP.
"SIGNIFICANT HOLDER" shall mean (i) you, so long as you shall hold (or
be committed under this Agreement to purchase) any Note, or (ii) any other
holder of at least 20% of the aggregate principal amount of the Notes from time
to time outstanding.
"SUBORDINATED DEBT" shall mean other Indebtedness of the Company
subordinated to all Obligations of the Company or any other Credit Party arising
under this Agreement, the Notes, and the Security Documents on terms and
conditions satisfactory in all respects to the Required Holders, including
without limitation, with respect to interest rates, payment terms, maturities,
amortization schedules, covenants, defaults, remedies, and subordination
provisions, as evidenced by the written approval of the Required Holders.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation
or other entity (including, without limitation, partnerships, joint ventures,
and associations) regardless of its jurisdiction of organization or formation,
at least a majority of the total combined voting power of all classes of Voting
Stock or other ownership interests of which shall, at the time as of which any
determination is being made, be owned by such Person, either directly or
indirectly through one or more other Subsidiaries.
"SUBSIDIARY GUARANTY AGREEMENT" shall mean the Guaranty Agreement
executed by each of the Guarantors in your favor, substantially in the form of
Exhibit C as it may be amended, restated or supplemented from time to time in
accordance with its terms.
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<PAGE>
"TANGIBLE NET WORTH" shall mean, as of any date of determination,
Consolidated Net Worth minus intangible assets of the Consolidated Companies, as
-----
determined in accordance with GAAP as of the last day of the most recent fiscal
quarter of the Company.
"THIRD PARTY" shall mean all lessees, sublessees, licenses and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Company's business (consistent with its practices on December 11,
1992) and on a temporary basis.
"TOTAL ASSETS" shall mean the total assets of the Consolidated
Companies, determined in accordance with GAAP.
"TOTAL CAPITALIZATION" shall mean, as of any date of determination,
the sum of Funded Debt and Consolidated Net Worth of the Consolidated Companies.
"TRANSFEREE" shall mean any direct or indirect transferee of all or
any part of any Note purchased by you under this Agreement.
"VOTING STOCK" shall mean, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency.
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. Unless
otherwise defined or specified herein, all accounting terms shall be construed
herein, all accounting determinations hereunder shall be made, all financial
statements required to be delivered hereunder shall be prepared, and all
financial records shall be maintained in accordance with GAAP, except that
financial records of Foreign Subsidiaries may be maintained in accordance with
generally accepted accounting principles in effect from time to time in the
jurisdiction of organization of such Foreign Subsidiary; PROVIDED, HOWEVER, that
compliance with the financial covenants and calculations set forth in paragraph
6, and elsewhere herein, and in the definitions used in such covenants and
calculations, shall be calculated, made and applied in accordance with GAAP and
such generally accepted accounting principles in such foreign jurisdictions, as
the case may be, as in effect on the date of this Agreement applied on a basis
consistent with the preparation of the financial statements referred to in
clause (i) of paragraph 8B unless and until the Company and the Required
Holder(s) enter into an agreement with respect thereto in accordance with
paragraph 11M.
11. MISCELLANEOUS.
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<PAGE>
11A. NOTE PAYMENTS. The Company agrees that, so long as you shall
hold any Note, it will make payments of principal of, interest on and any Yield-
Maintenance Amount payable with respect to such Note, which comply with the
terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City time, on the date due) to your
account or accounts as specified in the Purchaser Schedule attached hereto, or
such other account or accounts in the United States as you may designate in
writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree that, before disposing of any Note,
you will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as you
have in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save you and any
Transferee harmless against liability for the payment of, all out-of-pocket
expenses (including without limitation legal fees) arising in connection with
such transactions, including (i) all expenses incurred by you and any Transferee
in connection with the negotiation, preparation, execution, delivery and
administration of this Agreement or any other Related Document, including
without limitation, all stamp, intangibles, recording and other taxes, if any,
payable by you and/or any Transferee with respect to this Agreement or any other
Related Document and any subsequent proposed modification or waiver of, or
proposed consent under, this Agreement, whether or not such proposed
modification or waiver shall be effected or proposed consent granted, and (ii)
the costs and expenses, including attorneys' fees, actually incurred by you or
such Transferee in connection with the restructuring, refinancing or "work out"
of this Agreement or any other Related Document or the transactions contemplated
hereby or thereby or in enforcing (or determining whether or how to enforce) any
rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the transactions contemplated hereby or by reason of your or
any Transferee's having acquired any Note, including without limitation costs
and expenses incurred in any bankruptcy case. The obligations of the Company
under this paragraph 11B shall survive the transfer of any Note or portion
thereof or interest therein by you or any Transferee and the payment of any
Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) except
that, without the written consent of the holder or holders of all Notes at the
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<PAGE>
time outstanding, no amendment to this Agreement shall change the maturity of
any Note, or change the principal of, or the rate or time of payment of interest
on or any Yield-Maintenance Amount payable to any Note, or affect the time,
amount or allocation of any prepayments, or change the proportion of the
principal amount of the Notes required with respect to any consent, amendment,
waiver or declaration. Each holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this paragraph 11C,
whether or not such Note shall have been marked to indicate such consent, but
any Notes issued thereafter may bear a notation referring to any such consent.
No course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein and in the
Notes, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
The Notes are issuable as registered notes without coupons in denominations of
at least $100,000, except as may be necessary to reflect any principal amount
not evenly divisible by $100,000. The Company shall keep at its principal
office a register in which the Company shall provide for the registration of
Notes and a record of transfers of the Notes. Upon surrender for registration
of transfer of any Note at the principal office of the Company, the Company
shall, at its expense, execute and deliver one or more new Notes of like tenor
and of a like aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any Note, such Note
may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Company. Whenever any Notes are
so surrendered for exchange, the Company shall, at its expense, execute and
deliver the Notes which the holder making the exchange is entitled to receive.
Every Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which were carried by
the Note so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of written notice
from the holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction, upon receipt
of such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note.
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<PAGE>
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company shall treat the Person in whose name
any Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note and for all other purposes whatsoever, whether
or not such Note shall be overdue, and the Company shall not be affected by
notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in such Note to any Person on
such terms and conditions as may be determined by such holder in its sole and
absolute discretion, provided that any such participation shall be in a
principal amount of at least $100,000 and any Yield-Maintenance Amount, unless
otherwise provided, shall be paid to the Registered Holder.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by you of any Note or
portion thereof or interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any investigation made at any time
by or on behalf of you or any Transferee. Subject to the preceding sentence,
this Agreement and the Notes embody the entire agreement and understanding
between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement and each Related Document contained by or on behalf of either of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto (including, without limitation, any
Transferee) whether so expressed or not; provided, however, no Transferee shall
have any rights hereunder unless such Transferee has complied with the terms of
Section 12(g) of the Intercreditor Agreement.
11H. DISCLOSURE TO OTHER PERSONS. The Company acknowledges that the
holder of any Note may deliver copies of any financial statements and other
documents delivered to such holder, and disclose any other information disclosed
to such holder, by or on behalf of the Company or any Subsidiary in connection
with or pursuant to this Agreement to (i) such holder's directors, officers,
employees, agents and professional consultants, (ii) any other holder of any
Note, (iii) any Person to which such holder offers to sell such Note or any part
thereof, (iv) any Person to which such holder sells or offers to sell a
participation in all or any part of such Note, (v) any Person from which such
holder offers to purchase any security Company, (vi) any federal or state
regulatory authority having jurisdiction over such holder, (vii) the National
Association of Insurance Commissioners or any similar organization or (viii) any
other Person to which such delivery or disclosure may be necessary or
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<PAGE>
appropriate (a) in compliance with any law, rule, regulation or order applicable
to such holder, (b) in response to any subpoena or other legal process or
informal investigative demand or (c) in connection with any litigation to which
such holder is a party.
11I. NOTICES. All written communications provided for hereunder
shall be sent by first class mail or nationwide overnight delivery (with charges
prepaid) and (i) if to you, addressed to you at the address specified for such
communications in the Purchaser Schedule attached hereto, or at such other
address as you shall have specified to the Company in writing, (ii) if to any
other holder of any Note, addressed to such other holder at such address as such
other holder shall have specified to the Company in writing or, if any such
other holder shall not have so specified an address to the Company, then
addressed to such other holder in care of the last holder of such Note which
shall have so specified an address to the Company, and (iii) if to the Company,
addressed to it at 5445 Corporate Drive, Troy, Michigan 48098, Telephone (810)
952-2500, Telecopy (810) 952-2501, Attention: Doretha Christoph, or at such
other address as the Company shall have specified to the holder of each Note in
writing; provided, however, that any such communication to the Company may also,
at the option of the holder of any Note, be delivered by any other shall mean
either the Company at its address specified above or to any officer of the
Company.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
interest on any Note that is due on a date other than a Business Day shall be
made on that next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation of
the interest payable on such Business Day.
11K. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to you or to the Required Holder(s), the
determination of such satisfaction shall be made by you or the Required
Holder(s), as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
11L. INDEPENDENCE OF COVENANTS. All covenants of the Companies or
any of them hereunder shall be of independent effect so that if a particular
action or condition is not permitted by any one of such covenants, the fact that
it would be permitted by an exception to, or otherwise be within the other
limitations of, another covenant, shall not avoid the occurrence of an Event of
Default of Default if such action is taken or condition exists.
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<PAGE>
11M. CHANGE IN ACCOUNTING PRINCIPLES, FISCAL YEAR OR TAX LAWS. If
any preparation of the financial statements referred to in paragraph 5A
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 Accounts (or successors thereto or
agencies with similar functions) result in a material change (other than changes
mandated by FASB 106) in the method of calculation of financial covenants,
standards or terms found in this Agreement, the Company and the Required
Holder(s) agree to enter into negotiations in order to amend such provisions so
as to equitably reflect such changes with the desired result that the criteria
for evaluating any of the Consolidated Companies' financial condition shall be
the same after such changes as if such changes had not been made. Unless and
until such provisions have been so amended, the provisions of this Agreement
shall govern.
11N. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11O. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and to not
constitute a part of this Agreement.
11P. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
11Q. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York. THE COMPANY HEREBY SUBMITS TO THE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND
THE UNITED STATED DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO THE SOLE AND ABSOLUTE ELECTION OF THE
REQUIRED HOLDER(S), ALL ACTIONS OR PROCEEDING RELATING TO THIS AGREEMENT OR THE
NOTES MAY BE LITIGATED IN SUCH COURTS, AND THE COMPANY WAIVES ANY OBJECTION
WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
OF ANY PROCEEDING IN ANY SUCH COURTS.
11R. BANK AGREEMENT REFERENCES. Each reference contained herein to a
Section of, Exhibit or Schedule to, the Bank Agreement shall be a reference to
such Section, Exhibit or Schedule as it existed on the Effective Date, without
giving effect to any deletion, amendment, waiver or other change thereto, unless
the Required Holders have consented in writing to such change.
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<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement between the
Company and you.
Very truly yours,
INTERMET CORPORATION
By: /s/ Doretha J. Christoph
---------------------------
Name: Doretha J. Christoph
Title: Vice President-Finance
The foregoing Agreement is
hereby accepted as of the date
first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Len Lillard
--------------------------
Title: Second Vice President
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<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE OFFERED OR SOLD IN VIOLATION OF SUCH ACT.
8.05% SENIOR NOTE DUE DECEMBER 11, 2002
No. R-3 March 11, 1996
$25,000,000
FOR VALUE RECEIVED, the undersigned, INTERMET CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the State
of Georgia, hereby promises to pay to The Prudential Insurance Company of
America, or registered assigns, the principal sum of TWENTY FIVE MILLION DOLLARS
on December 11, 2002, with interest (computed on the basis of a 360-day year--
30-day month) (a) on the unpaid principal balance thereof at the rate of 8.05%
per annum from the date hereof, payable quarterly on the 11th day of March,
June, September and December in each year, commencing with the March, June,
September or December next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Yield-Maintenance Amount (as defined in the Note
Agreement referred to below), payable quarterly as aforesaid (or, at the option
of the registered holder hereof, on demand), at a rate per annum from time to
time equal to the greater of (i) 10.05% or (ii) 2.0% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate.
Payments of principal or interest on, and any Yield-Maintenance Amount
payable with respect to, this Note are to be made at the main office of Morgan
Guaranty Trust Company of New York in New York City or at such other place as
the holder hereof shall designate to the Company in writing, in lawful money of
the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to an Amended and Restated Note Agreement, dated as of March 21,
1996 (herein called the "Agreement"), between the Company and The Prudential
Insurance Company of America, and is entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the
<PAGE>
purpose of receiving payment and for all other purposes, and the Company shall
not be affected by any notice to the contrary.
The Company agrees to make prepayments of principal on the dates and in the
amounts specified in the Agreement. This Note is also subject to optional
prepayment, in whole or from time to time in part, on the terms specified in the
Agreement.
In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
This Note is intended to be performed in the State of New York and shall be
construed and enforced in accordance with the law of such State. AS PROVIDED IN
PARAGRAPH 11Q OF THE AGREEMENT, THE COMPANY SUBMITS TO THE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN ANY
ACTION OR PROCEEDING RELATING TO THIS NOTE.
INTERMET CORPORATION
By: /s/ Doretha J. Christoph
---------------------------
Name: Doretha J. Christoph
Title: Vice President-Finance
2
<PAGE>
Exhibit 10.15
OPERATING COMMITTEE
1995 Proposed
Profit Sharing Plan
The purpose of this plan is to provide an incentive compensation system which
rewards the corporate operating management proportionally to the profitability
of the Corporation. It is intended that base salaries be held at about 75% of
industry peer group averages and a large portion of total compensation be
variable depending on corporate earning performance. Stock options should make
the third leg of the compensation plan so that the key operating management of
Intermet is rewarded only when the shareholders are rewarded.
The below percentages shall be the profit sharing of Intermet's audited annual
pretax earning before minority interest and corporate profit sharing. Profit
sharing to be paid not later than three (3) months after the end of the fiscal
year.
Doug Brown 0.2% (.0020)
John Engeswick 0.2% (.0020)
John Ernst 0.2% (.0020)
Dar Marsh 0.2% (.0020)
Jim Peterson 0.25% (.0025)
Jim Rydel 0.2% (.0020)
----
1.25%
Interim payouts may be made at the end of each fiscal quarter in an amount of up
to 75% of the annual profit sharing entitlement calculated as of the end of each
fiscal quarter.
<PAGE>
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
Between
INTERMET CORPORATION
And
----------------------
<PAGE>
THIS AGREEMENT, dated as of the 25th day of October, 1995 is made by and
between INTERMET CORPORATION, a Georgia corporation having its principal place
of business in Detroit, Michigan (the "Company"), and __________________________
(the "Executive").
WHEREAS, the Company desires to continue the services of the Executive, and
the Executive is willing to continue to render such services; and
WHEREAS, in order to secure the continued services of the Executive, the
Company believes it should provide the Executive with an agreement for severance
payments.
NOW, THEREFORE, the Company and the Executive agree as follows:
Termination of Employment
-------------------------
1.1 Termination of Employment for Cause or Other Than for Good Reason.
-----------------------------------------------------------------
If, before the end of the Contract Term, the Company terminates the Executive's
employment for Cause or the Executive terminates employment other than for Good
Reason, then the Company shall pay to the Executive in a lump sum immediately
after the Date of Termination that portion of the Executive's then current
annual base salary which is accrued but unpaid as of such Date of Termination.
The Executive will not be entitled to receive any other compensation or benefits
under this Agreement.
1.2 Termination of Employment for Death or Disability. If, before the end
-------------------------------------------------
of the Contract Term, the Executive's employment terminates due to death or
Disability, the Company shall pay to the Executive (or to the executive's
estate), in accordance with Company policy following the Date of Termination:
(a) that portion of the Executive's annual base salary which is
accrued but unpaid as of the Date of Termination;
(b) the amount of any Annual Bonus applicable to any Annual Bonus
Period which ended prior to the Date of Termination, but which is
unpaid as of the Date of Termination;
(c) disability, life insurance, and other benefits as typically
provided to an executive under the Company's employee welfare benefit
plans as a result of such an executive's death or Disability; and
(d) a pro rata portion of the Annual Bonus applicable to the Annual
Bonus Period during which the Date of Termination occurs based upon
actual performance for the Annual bonus Period (such pro rata bonus
shall be based on the portion of such Annual bonus Period that expired
prior to the Date of Termination, shall be payable following such
Annual bonus Period in accordance with Company policy and shall be
determined
<PAGE>
without regard to any reduction in earnings on account of interest
paid on additional debt incurred by the Company in connection with any
Change in Control).
1.3 Termination of Employment by the Company Without Cause or By the
----------------------------------------------------------------
Executive for Good Reason. If, before the end of the Contract Term, the
- -------------------------
Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall receive the following:
(a) In a lump sum, that portion of the Executive's annual base salary
which is accrued but unpaid as of the Date of Termination and any
unpaid Annual Bonus applicable to any Annual Bonus Period which ended
prior to the Date of Termination;
(b) In monthly payments, the amount of the Executive's annual base
salary (not taking into account any reductions which would constitute
Good Reason) which would be payable for the period beginning on the
Date of Termination and ending on the last day of the Contract Term;
(c) Following the Annual Bonus Period during which the Date of
Termination occurs and in accordance with Company policy, a pro rata
portion of the Annual Bonus applicable to such Annual Bonus Period
based upon actual performance for the Annual Bonus Period (Such pro
rata bonus shall be based on the portion of such Annual Bonus Period
that expired prior to the Date of Termination, shall be payable
following such Annual Bonus Period in accordance with Company policy
and shall be determined without regard to any reduction in earnings on
account of interest paid on additional debt incurred by the Company in
connection with any Change in Control); and
(d) The benefits to which the Executive was entitled during the
Contract Term. (The amount of any benefits shall be reduced or
eliminated to the extent the Executive shall be entitled to
duplicative benefits by virtue of his/her subsequent employment after
the Date of Termination.)
1.4 Other Termination Benefits. In addition to any amounts or
--------------------------
benefits provided upon termination of employment hereunder and except as
otherwise provided herein, the Executive shall be entitled to any payments or
benefits explicitly provided under the terms of any plan, policy or program of
the Company or as otherwise required by applicable law.
Certain Definitions
-------------------
2.1 "Annual Bonus" means the annual cash bonus paid to the Executive
------------
pursuant to the Company's annual bonus plan. During the Contract Term, the
Company shall maintain an annual
<PAGE>
bonus plan that provides the Executive with benefits that are substantially
equivalent to the benefits provided under the Company's current annual bonus
plan.
2.2 "Annual Bonus Period" means the annual period on which the
-------------------
Executive's Annual Bonus is based.
2.3 "Contract Term" means the period commencing on November 1, 1995
-------------
and ending on April 30, 1997; provided, that, commencing May 1, 1996 the
-------- ----
Contract Term shall be automatically extended by one day on each day the
Executive remains employed.
2.4 "Date of Termination" means the date on which the Executive's
-------------------
employment with the Company terminates.
2.5 "Disability" means any medically determinable physical or mental
----------
impairment that can be expected to last for a continuous period of not less than
six (6) months, and that renders the Executive unable to perform the duties
required under this Agreement. The date of the determination of Disability is
the date on which the Executive is certified as having incurred a Disability by
a physician acceptable to the Company.
2.6 "Cause" means (a) the Executive's committing any felony or other
-----
crime involving dishonesty; (b) any serious misconduct in the course of the
Executive's employment; or (c) the Executive's habitual neglect of the
Executive's duties (other than on account of Disability), except that (d) Cause
shall not mean:
(1) bad judgement or negligence other than habitual neglect of
duty;
(2) any act or omission believed by the Executive in good faith to
have been in or not opposed to the interest of the Company (without intent of
the Executive to gain therefrom, directly or indirectly, a profit to which the
Executive was not legally entitled); or
(3) any act or omission with respect to which a determination could
properly have been made that the Executive met the applicable standard of
conduct for indemnification or reimbursement under the By-Laws of the Company,
any applicable indemnification agreement or the laws and regulations under which
the Company is governed, in each case in effect at the time of such act or
omission.
2.7 "Change in Control" means the occurrence of any of the following
-----------------
events:
(a) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30%
or more of the combined
<PAGE>
voting power of the Company's then outstanding securities eligible to
vote for the election of the Board of Directors of the Company (the
"Company Voting Securities") provided, however, that the event
-------- -------
described in this paragraph shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (i) by the
Company or, direct or indirect, majority-owned subsidiaries of the
Company, (ii) by any employee benefit plan sponsored or maintained by
the Company or any corporation controlled by the Company, (iii) by any
underwriter temporarily holding securities pursuant to an offering of
such securities, (iv) pursuant to a Non-Control Transaction (as
defined in paragraph (c)), (v) pursuant to any acquisition by the
Executive or any group of persons including the Executive, or (vi) in
which Company Voting Securities are acquired from the Company, if a
majority of the Board of Directors of the Company approves a
resolution providing expressly that the acquisition pursuant to this
clause (vi) does not constitute a Change in Control under this
paragraph (a);
(b) individuals who, on October 25, 1995, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority thereof, provided that (i) any
person becoming a director subsequent to October 25, 1995, whose
election, or nomination for election, by the Company's shareholders
was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such nomination)
shall be, for purposes of this paragraph (b), considered as though
such person were a member of the Incumbent Board; provided, however,
-------- -------
that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with
respect to directors or any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board
of Directors shall be deemed to be a member of the Incumbent Board;
(c) the consummation of a merger or consolidation or similar form of
corporate reorganization, or sale or other disposition of all or
substantially all of the assets, of the Company (a "Business
Combination") is consummated, unless immediately following such
Business Combination: (i) more than 50% of the total voting power of
the corporation resulting from such Business Combination (including,
without limitation, for purposes of making such 50% determination, any
shares owned through any entity which directly or indirectly has
beneficial ownership of the Company Voting Securities or all or
substantially all of the Company's
<PAGE>
assets) eligible to elect directors of such corporation is represented
by shares held by shareholders of the Company immediately prior to
such Business Combination (either by remaining outstanding or being
converted), (ii) no person (other than any holding company resulting
from such Business Combination, any employee benefit plan sponsored or
maintained by the Company (or the corporation resulting from such
Business Combination), or any person which beneficially owned,
immediately prior to such business Combination, directly or
indirectly, 30% or more of the Company Voting Securities) becomes the
beneficial owner, directly or indirectly of 30% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the corporation resulting from such Business Combination,
and (iii) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or action of the Board of Directors, providing for
such Business Combination (a "Non-Control Transaction"); or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any person acquires beneficial ownership of more than 30% of the
Company Voting Securities as a result of the acquisition of Company Voting
Securities by the Company which, by reducing the number of Company Voting
Securities outstanding, increases the percentage of shares beneficially owned by
such person; provided, that if a Change in Control would occur as a result of
-------- ----
such an acquisition by the Company (if not for the operation of this sentence),
and after the Company's acquisition such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, then a
Change in Control shall occur.
2.8 "Good Reason" means the occurrence of any one of the following
-----------
events:
(a) assignment to the Executive of any duties materially and adversely
inconsistent with the Executive's current position (or such other
position to which he/she may be promoted) (but excluding a diminution
of title which does not result in a diminution of status, offices, or
responsibilities), or any other action by the Company which results in
a material and adverse change in position, status, offices, titles or
responsibilities;
(b) the failure of the Company to assign this Agreement to a successor
to the Company,
<PAGE>
(c) any reduction in the Executive's annual base salary, or
(d) any material adverse change to the terms and conditions of the
Executive's employment under this Agreement,
if the Company fails to cure such event within thirty (30) days after written
notice from the Executive; provided, however, that if the event is intentional,
knowing or repeated, the Executive shall not be required to provide written
notice or an opportunity to cure.
Restrictive Covenants
---------------------
3.1 Trade Secrets, confidential and Proprietary Business Information
----------------------------------------------------------------
(a) The Company has advised the Executive and the Executive
acknowledges that it is the policy of the Company to maintain as
secret and confidential all Protected Information (as defined below),
and that Protected Information has been and will be developed at
substantial cost and effort to the Company. "Protected Information"
means trade secrets, confidential and proprietary business information
of the Company, any information of the Company other than information
which has entered the public domain (unless such information entered
the public domain through the efforts of or on account of the
Executive), and all valuable and unique information and techniques
acquired, developed or used by the Company relating to its business,
operations, employees and customers, which give the Company a
competitive advantage over those who do not know the information and
techniques and which are protected by the Company from unauthorized
disclosure, including by not limited to, customer lists (including
potential customers), sources of supply processes, plans, materials,
pricing information, internal memoranda, marketing plans, internal
policies, and products and services which may be developed from
<PAGE>
time to time by the Company and its agents or employees.
(b) The Executive acknowledges that the Executive will acquire
Protected Information with respect to the Company and its successors
in interest, which information is valuable, special and a unique asset
of the Company's business and operations and that disclosure of such
Protected Information would cause irreparable damage to the Company.
(c) The Executive shall not, directly or indirectly, divulge, furnish
or make accessible to any person, firm, corporation, association or
other entity (otherwise than as may be required in the regular course
of the Executive's employment) nor use in any manner, either during or
after termination of employment by the Company and Protected
Information or cause any such information of the Company to enter the
public domain.
3.2 Non-Competition.
---------------
(a) The Executive agrees that the Executive shall not during the
Executive's employment with the Company, and, if the Executive's
employment is terminated for any reason other than termination of
employment without Cause or for Good Reason, thereafter for a period
of one (1) year, directly or indirectly, in any capacity, engage or
participate in or become employed by or render advisory or consulting
or other services in connection with any Prohibited Business as
defined below.
(b) The Executive agrees that the Executive shall not during the
Executive's employment with the Company, and, if the Executive's
employment is terminated for any reason, thereafter for a period of
one (1) year, make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 7.02 shall, however,
restrict the Executive from making any investment in any Company whose
stock is listed on a national securities exchange or actively traded
in the over-the-counter market; provided that (i) such investment does
not give the Executive the right or ability to control or influence
the policy decisions of any Prohibited Business, and (ii) such
investment doe snot create a conflict of interest between the
Executive's duties hereunder and the Executive's interest in such
investment.
(c) "Prohibited Business" shall be defined as any business and any
branch, office or operation thereof, which is a direct and material
competitor of the company wherever the Company does business, in the
United States or abroad, and which has established or
<PAGE>
seeks to establish contact, in whatever form (including but not
limited to solicitation of sales, or the receipt or submission of
bids) with any entity who is at any time a client, customer or
supplier of the Company (including but not limited to all subdivisions
of the federal government).
(d) Notwithstanding any other provisions in this Section 3.2, this
Section 3.2 shall not apply if the Executive's employment with the
Company terminates for any reason during the one-year period following
a Change in Control.
3.3 Undertaking Regarding Employees. From the date hereof until two
-------------------------------
years after the Executive's Date of Termination, the Executive shall not,
directly or indirectly, (a) encourage any employee of the Company or its
successors in interest to leave their employment with the Company or its
successors in interest; or (b) employ, hire, solicit or, cause to be employed or
hired or solicited (other than by the Company or its successors in interest), or
establish a business with, or encourage others to hire, any person who within
two (2) years prior thereto was employed by the Company or its successors in
interest, to leave their employment with the Company or its successors in
interest.
3.4 Disclosure of Employee-Created Trade Secrets, Confidential and
--------------------------------------------------------------
Proprietary Business Information. The Executive agrees to promptly disclose to
- --------------------------------
the Company all Protected Information developed in whole or in part by the
Executive during the Executive's employment with the Company and which relate to
the Company's business. Such Protected Information is, and shall remain, the
exclusive property of the Company. All writings created during the Executive's
employment with the Company (excluding writings unrelated to the Company's
business) are considered to be "works-for-hire" for the benefit of the Company
and the Company shall own all rights in such writings.
Successors
----------
4.1 The Company shall cause this Agreement to be binding on any
successor to the Company.
INTERMET CORPORATION
/s/ John Doddridge
------------------------
By: JOHN DODDRIDGE
------------------------
By:
<PAGE>
Exhibit 10.22
REVISED OCTOBER 25, 1995
=====================================================
EMPLOYMENT AGREEMENT
Between
INTERMET CORPORATION
And
JOHN E. DODDRIDGE
=================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Duties
1.01 Duties ............................................. 1
1.02 Other Activities ................................... 1
ARTICLE II
Term of Agreement
2.01 Term ............................................... 2
ARTICLE III
Compensation
3.01 Base Salary ........................................ 2
3.02 Bonus .............................................. 2
ARTICLE IV
Other Benefits
4.01 Incentive, Savings and Retirement Plans ........... 3
4.02 Welfare Benefits .................................. 3
4.03 Fringe Benefits ................................... 3
4.04 Expenses.... ............................. 3
4.05 Automobile......................................... 4
4.06 Office and Support Staff........................... 4
4.07 Vacation........................................... 4
ARTICLE V
Termination of Employment
5.01 Termination of Employment for Cause
or Other Than for Good Reason.................... 4
5.02 Termination of Employment for Death or
Disability....................................... 5
5.03 Termination of Employment By the Company
Without Cause Or By the Executive for
Good Reason...................................... 6
-i-
<PAGE>
Page
----
5.04 Other Termination Benefits ......................... 7
5.05 Gross-up of Excise Taxes ........................... 7
ARTICLE VI
Certain Definitions
6.01 "Disability"....................................... 8
6.02 "Cause"............................................ 8
6.03 "Change in Control"................................ 9
6.04 "Good Reason"...................................... 11
6.05 "Date of Termination".............................. 12
ARTICLE VII
Restrictive Covenants
7.01 Trade Secrets, Confidential and Proprietary
Business Information.......................... 12
7.02 Non-Competition.................................. 13
7.03 Undertaking Regarding Employees.................. 14
7.04 Disclosure of Employee-Created Trade
Secrets, Confidential and Proprietary
Business Information.......................... 14
7.05 Survival of Undertakings and Injunctive
Relief........................................ 15
ARTICLE VIII
Miscellaneous
8.01 Expenses........................................... 15
8.02 Full Settlement.................................... 16
8.03 Successors......................................... 16
8.04 Beneficiary........................................ 16
8.05 Nonalienation of Benefits.......................... 16
8.06 Severability....................................... 17
8.07 Amendment and Waiver............................... 17
8.08 Notices............................................ 17
8.09 Counterpart Originals.............................. 18
8.10 Entire Agreement................................... 18
8.11 Effect on Other Agreements......................... 18
8.12 Applicable Law..................................... 18
-ii-
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT, dated as of the 25th day of October, 1995 amends and
supersedes the Employment Agreement dated as of the 1st day of December, 1994 by
and between INTERMET CORPORATION, a Georgia corporation having its principal
place of business in Detroit, Michigan (the "Company"), and JOHN E. DODDRIDGE, a
resident of Bloomfield Hills, Michigan (the "Executive").
The Company desires to continue the services of the Executive, and the
Executive is willing to render such services, in accordance with the terms
hereinafter set forth.
Accordingly, the Company and the Executive agree as follows:
ARTICLE I
Duties
1.01. Duties. The Executive shall be the Chief Executive Officer of the
------
Company, and both a member of and the Chairman of the Board of Directors of the
Company (the "Board"), and shall assume the duties and responsibilities
commensurate with those positions, it being contemplated that the shareholders
and Directors of the Company will elect and re-elect the Executive to those
offices throughout the Contract Term (as defined in Section 2.01). The
Executive will report solely to the Board. During the Contract Term, and
excluding any periods of vacation, sick leave or disability to which the
Executive is entitled, the Executive agrees to devote the Executive's full
attention and time to the business and affairs of the Company and to use the
Executive's best efforts to perform faithfully and efficiently the duties and
responsibilities of the Executive's positions as described herein.
1.02 Other Activities. During the Contract Term (as defined in
----------------
Section 2.01), it shall not be a violation of this Agreement for the Executive
to (a) serve on corporate, civic or charitable boards or committees, (b) deliver
lectures, fulfill speaking engagements to teach at educational institutions or
(c) manage personal investments, so long as such activities are consistent with
the policies of the Company as of the date hereof and do not significantly
interfere with the performance of the Executive's duties in accordance with this
Agreement.
-1-
<PAGE>
ARTICLE II
Term of Agreement
2.01. Term. Subject to the termination provisions hereinafter provided,
----
the term ("Contract Term") of this Agreement shall commence on October 27, 1994
and end on December 31, 1997; provided, however, that if written notice that
this Agreement is not being extended is not given by the Company or the
Executive on or before December 31, 1995, the Contract Term shall be
automatically extended each day commencing with December 31, 1995 for an
additional day such that commencing December 31, 1995, this Agreement shall
perpetually have an unexpired term of two (2) years until the date written
notice is provided by either the Company or the Executive that this Agreement is
not to be further extended.
ARTICLE III
Compensation
3.01 Base Salary. During the Contract Term, the Company shall pay or
-----------
cause to be paid to the Executive in cash, in accordance with the normal payroll
practices of the Company for peer executives, in installments not less
frequently than monthly, an annual base salary ("Annual Base Salary") equal to
$350,000 for each year of the Contract Term. The Company may from time to time
increase the Executive's Annual Base Salary, provided that it shall not be
reduced after any such increase, and the term Annual Base Salary as used in this
Agreement shall refer to the Annual Base Salary as so increased.
3.02 Bonus. The Company shall pay or cause to be paid to the
-----
Executive a bonus ("Annual Bonus") for each year of the Contract Term equal to
one-half of one percent (0.5%) of the Company's income for the fiscal year the
last day of which falls within the calendar year with respect to which the bonus
is payable, calculated in accordance with generally accepted accounting
principles consistently applied, prior to deduction for applicable federal,
state and local taxes, and prior to payment of executive bonuses and minority
interest payments with respect to subsidiaries and affiliates of the Company of
which the Company owns less than 100%; provided, however, that for fiscal years
ending on or before December 31, 1997 the Annual Bonus shall be not less than
$150,000 ("Guaranteed Annual bonus"); and further provided, that for the first
year of the Contract Term, the Annual Bonus shall be equal to a time-prorated
fraction of the amount described above.
-2-
<PAGE>
ARTICLE IV
Other Benefits
4.01 Incentive, Savings and Retirement Plans. In addition to Annual
---------------------------------------
Base Salary and Guaranteed Annual Bonus, the Executive shall be entitled to
participate during the Contract Term in all incentive savings and retirement
plans, practices, policies and programs applicable to other peer executives of
the Company, including, without limitation:
(a) Stock Options. The Company hereby agrees to grant to the
-------------
Executive, as of December 1, 1994, an option to purchase 100,000 shares of
the common stock of the Company, par value $0.10 per share pursuant to the
terms of the Intermet Corporation Key Individual Stock Option Plan, at an
exercise price of $5.75 per share. The option shall be immediately
exercisable in accordance with and subject to the terms of the Intermet
Corporation Special Stock Option Agreement which is attached hereto as
Exhibit A.
(b) Restricted Stock. The Company hereby agrees to grant to the
----------------
Executive, on December 1, 1994, an award of restricted stock of 50,000
shares of common stock of the Company ("Restricted Stock"). Subject to the
terms of the Intermet Corporation Restricted Stock Award Agreement attached
hereto as Exhibit B, of the Restricted Stock, 20,000 shares shall be fully
vested and nonforfeitable on the date of grant, and of the remaining 30,000
shares, 10,000 shall become fully vested and nonforfeitable on each of
December 1, 1995, December 1, 1996 and December 1, 1997.
4.02 Welfare Benefits. During the Contract Term, the Executive and/or the
----------------
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by the Company (including, and without limitation,
medical, prescription, dental, disability, salary continuance, employee life,
group life, dependent life, accidental death and travel accident insurance plans
and programs) and applicable to other peer executives of the Company.
4.03 Fringe Benefits. During the Contract Term, the Executive shall be
---------------
entitled to fringe benefits applicable to other peer executives of the Company.
4.04 Expenses. During the Contract Term, the Executive shall be entitled
--------
to receive prompt reimbursement
-3-
<PAGE>
for all reasonable employment-related expenses incurred by the Executive upon
the Company's receipt of accountings in accordance with practices, policies and
procedures applicable to peer executives of the Company.
4.05 Automobile. During the Contract Term and in accordance with its
----------
applicable policies, the Company shall furnish to the Executive an automobile of
his choice, which is an American luxury car equivalent to a Cadillac STS. The
Employer shall pay for all expenses associated with the use and enjoyment of the
automobile; and shall replace the automobile with a new one on a schedule not
less frequently than once every three years. The Company shall issue the
Executive a copy of IRS Form 1099 for tax purposes which reflects the value of
the Executive's personal use of the vehicle, and shall pay to the Executive an
amount in cash ("Tax Reimbursement Payment") which, after reducing such payment
by the amount of federal, state, city and other income and other taxes
applicable to the Tax Reimbursement Payment, will equal the amount of federal,
state, city and other income and other taxes which must be paid by the Executive
with respect to the value of the Executive's personal use of the vehicle.
4.06 Office and Support Staff. During the Contract Term, the Executive
------------------------
shall be entitled to an office or offices of a size and with furnishings and
other appointments, and to personal secretarial and other assistance provided
with respect to other peer executives of the Company, but which is consistent
with his positions as Chief Executive Officer and Chairman of the Board.
4.07 Vacation. During the Contract Term, the Executive shall be entitled to
--------
paid vacation time in accordance with the plans, practices, policies, and
programs applicable to other peer executives of the Company, but not less than
four weeks for each calendar year.
ARTICLE V
Termination of Employment
5.01 Termination of Employment for Cause or Other Than for Good Reason.
-----------------------------------------------------------------
If, before the end of the Contract Term, the Company terminates the Executive's
employment for Cause or the Executive terminates employment other than for Good
Reason, then the Company shall pay to the Executive in a lump sum immediately
after the Date of Termination that portion of the Executive's Annual Base Salary
which is accrued but unpaid as of such Date of Termination, but the Executive
will not be entitled to receive any other
-4-
<PAGE>
compensation or benefits under this Agreement. Notwithstanding the foregoing,
no termination of employment for cause shall be valid unless, no fewer than
seven (7) days prior to the Date of Termination, the Company provides the
Executive with written notice of its intent to consider termination of the
Executive's employment for Cause, including a detailed description of the
specific reasons which form the basis for such consideration. Thereafter, for a
period of not less than 14 days after the date notice of termination is
provided, the executive shall have the opportunity to appear before the Board,
with or without legal representation, at the Executive's election, to present
arguments on his own behalf. Following such presentation to the Board, the
Executive shall be terminated for Cause only if (a) three-quarters (3/4) of the
members of the Board determine that the actions of the Executive constituted
Cause and that the Executive's employment should accordingly be terminated for
Cause; and (b) the Board provides the Executive with a written determination
setting forth in full specificity the basis of such termination of employment.
5.02 Termination of Employment for Death or Disability. If, before the end
-------------------------------------------------
of the Contract Term, the Executive's employment terminates due to death or
Disability, the Company shall pay to the Executive (or to the Executive's
Beneficiary, as defined in Section 8.04) in a lump sum immediately after the
Date of Termination an amount which is equal to the sum of the amounts specified
in Sections 5.02(a), (b) and (c) and shall pay as provided in Section 5.02(d)
the amounts specified in Section 5.02(d):
(a) that portion of the Executive's Annual Base Salary which is
accrued but unpaid as of the Date of Termination, and
(b) the amount of any Annual Bonus accrued during any period which
ended during the Contract Term prior to the Date of Termination, but which
is unpaid as of the Date of Termination, and
(c) the Executive's prorata bonus ("Prorata Bonus") for any annual
bonus period that has not ended prior to the Date of Termination
("Termination Performance Period"), which shall be equal to the product of
the Annual Bonus (equal to the Executive's Annual Bonus for the fiscal year
immediately preceding the Date of Termination or, if the Date of
Termination occurs prior to the and of the first full fiscal year of the
Contract Term, equal to $150,000), multiplied by a fraction, the numerator
of which is the number of days in the Termination Performance Period which
-5-
<PAGE>
elapsed prior to the Date of Termination, and the denominator of which is
the total number of days in the Termination Performance Period, and
(d) an amount equal to the product of two times the Executive's Annual
Base Salary and Guaranteed Annual Bonus, payable in normal payroll period
installments.
5.03 Termination of Employment By the Company Without Cause Or By the
----------------------------------------------------------------
Executive for Good Reason. If, before the end of the Contract Term, the
- -------------------------
Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall receive, in a lump sum in cash
payable immediately after the date of Termination, an amount equal to the sum of
the following:
(a) that portion of the Executive's Annual Base Salary and any
Guaranteed Annual Bonus which is accrued but unpaid an of the Date of
Termination,
(b) the amount of the Executive's Annual Base Salary which would be
payable for the period beginning on the Date of Termination and ending on
the last day of the Contract Term,
(c) the amount of the Executive's Annual Bonus for the remainder of
the Contract Term, equal to the Executive's Annual Bonus for the fiscal
year immediately preceding the Date of Termination (or, if the Date of
Termination occurs prior to the end of the first full fiscal year of the
Contract Term, equal to $150,000), multiplied by a fraction the numerator
of which is the number of full years and portions of years between the
Termination Date and the last day of the Contract Term, and the denominator
of which is the total number of years in the Contract Term,
(d) the total amount (f any) of the Executive's unvested benefits
under any profit sharing plan, retirement plan, ESOP or any other plan
which are forfeited on account of the Executive's employment being
terminated,
(e) the benefits to which the Executive was entitled during the
Contract Term under Section 4.02 hereof. Notwithstanding the foregoing and
Section 8.02, the amount of any benefits provided under Section 4.02 shall
be reduced or eliminated to the extent the Executive becomes entitled to
duplicative benefits by virtue of his a subsequent employment after the
Date of Termination.
-6-
<PAGE>
Further, if the Executive's employment terminates pursuant to this Section
5.03, the restrictions applicable to the restricted stock granted pursuant to
Section 4.01(b) shall immediately lapse upon termination of employment and the
Executive shall be entitled to the benefits described in Section 4.05 for the
remainder of the Contract Term.
5.04 Other Termination Benefits. In addition to any amounts or benefits
--------------------------
payable upon termination of employment hereunder and except as otherwise
provided herein, the Executive shall be entitled to any payments or benefits
explicitly provided under the terms of any plan, policy or program of the
Company or as otherwise required by applicable law.
5.05 Gross-up of Excise Taxes. (a) Anything in this Agreement to the
------------------------
contrary notwithstanding, in the event it shall be determined that any payment
or distribution by the Company or its affiliated companies to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 5.05) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or imposed by any other
taxing authority, or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment (a
"Gross-Up payment"), no later than thirty (30) days prior to the due date
(without regard to any extensions thereof) for payment of the Excise Tax, in an
amount such that after payment by the Executive of all taxes (and any interest
and penalties imposed with respect thereto) including, without limitation, any
income and employment taxes and Excise Tax, imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise tax
imposed upon the Payments. All federal, state and local income tax calculations
shall be based upon the maximum marginal rates then in effect.
(b) In the event that the amount of the Excise Tax that the Executive paid
in connection with any Payments or Gross-up Payments is subsequently determined
to be greater than the amount of the Executive's actual Excise Tax liability,
the Executive shall repay to the Company at the time that the amount of the
actual Excise Tax liability is finally determined the amount of the Gross-Up
Payment attributable to such overpayment, plus interest on the amount of such
overpayment at the applicable federal rate (as defined in Section 1274(d) of the
Code). In the event
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<PAGE>
that the amount of Excise Tax that the Executive paid in connection with any
Payment or Gross-Up Payment is subsequently determined to be less than the
amount of the Executive's actual Excise Tax liability, the Company shall make an
additional Gross-Up Payment in respect of such underpayment (and in respect of
any interest and penalties payable by the Executive to the Internal Revenue
Service with respect to such underpayment) at the time that the amount of the
actual Excise Tax liability is finally determined.
(c) All determinations required to be made under this Section 5.05 shall be
made by the public accounting firm that is retained by the Company at the time
immediately prior to the Change in Control. Such accounting firm shall provide
its determinations to the Executive and such determinations shall be binding
upon the Company and the Executive.
(d) The Executive and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning
the existence or amount of liability for Excise Tax and the expenses of any such
proceedings shall be borne solely by the company.
ARTICLE VI
Certain Definitions
6.01 "Disability" means any medically determinable physical or mental
----------
impairment, that can be expected to last for a continuous period of not less
than six (6) months, and that renders the Executive unable to perform the duties
required under this Agreement. The date of the determination of Disability is
the date on which the Executive is certified as having incurred a Disability by
a physician acceptable to the Company.
6.02 "Cause" means (a) the Executive's committing any felony or other crime
-----
involving dishonesty; (b) any serious misconduct in the course of the
Executive's employment; or (c) the Executive's habitual neglect of the
Executive's duties (other than on account of Disability), except that (d) Cause
shall not mean:
(1) bad judgment or negligence other than habitual neglect of duty;
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<PAGE>
(2) any act or omission believed by the Executive in good faith to
have been in or not opposed to the interest of the Company (without intent
of the Executive to gain therefrom, directly or indirectly, a profit to
which the Executive was not legally entitled);
(3) any act or omission with respect to which a determination could
properly have been made by the Board that the Executive met the applicable
standard of conduct for indemnification or reimbursement under the By-Laws
of the Company, any applicable indemnification agreement or the laws and
regulations under which the Company is governed, in each case in effect at
the time of such act or omission; or
(4) any act or omission with respect to which notice of termination of
employment of the Executive is given more than twelve (12) months after the
earliest date on which any member of the Board who is not a party to the
act or omission, knew or should have known of such act or omission.
6.03 "Change in Control" means the occurrence of any of the following
-----------------
events:
(a) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board of Directors of
the Company (the "Company Voting Securities") provided, however, that the
--------- -------
event described in this paragraph shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (i) by the Company
or, direct or indirect, majority-owned subsidiaries of the Company, (ii) by
any employee benefit plan sponsored or maintained by the Company or any
corporation controlled by the Company, (iii) by any underwriter temporarily
holding securities pursuant to any offering of such securities, (iv)
pursuant to a Non-Control Transaction (as defined in paragraph (c)), (v)
pursuant to any acquisition by the Executive or any group of persons
including the Executive, or (vi) in which Company Voting Securities are
acquired from the Company, if a majority of the Board of Directors of the
Company approves a resolution providing expressly that the
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<PAGE>
acquisition pursuant to this clause(vi) does not constitute a Change in
Control under this paragraph (a);
(b) individual who, on October 25, 1995, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that (i) any person
becoming a director subsequent to October 25, 1995, whose election, or
nomination for election, by the Company's shareholders was approved by a
vote of at least three-quarters of the directors comprising the Incumbent
Board (either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for director,
without objection to such nomination) shall be, for purposes of this
paragraph (b), considered as though such person were a member of the
Incumbent Board; provided, however, that no individual initially elected or
-------- -------
nominated as a director of the Company as a result of an actual or
threatened election contest with respect to directors or any other actual
or threatened solicitation of proxies or consents by or on behalf of any
person other than the Board of Directors shall be deemed to be a member of
the Incumbent Board;
(c) the consummation of a merger or consolidation or similar form of
corporate reorganization, or sale or other disposition of all or
substantially all of the assets, of the Company (a "Business Combination")
is consummated, unless immediately following such Business Combination: (i)
more than 50% of the total voting power of the corporation resulting from
such Business Combination (including, without limitation, for purposes of
making such 50% determination, any shares owned through any entity which
directly or indirectly has beneficial ownership of the Company Voting
Securities or all or substantially all of the Company's assets) eligible to
elect directors of such corporation is represented by shares held by
shareholders of the Company immediately prior to such Business Combination
(either by remaining outstanding or being converted), (ii) no person (other
than any holding company resulting from such Business Combination, any
employee benefit plan sponsored or maintained by the Company (or the
corporation resulting from such Business Combination), or any person which
beneficially owned, immediately prior to such Business Combination,
directly or indirectly, 30% or more of the Company Voting Securities)
becomes the beneficial owner, directly or indirectly of 30% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the corporation
-10-
<PAGE>
resulting from such Business Combination, and (iii) at least a majority of
the members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or action of the Board of
Directors, providing for such Business Combination (a "Non-Control
Transaction"); or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any person acquires beneficial ownership of more than 30% of the
Company Voting Securities as a result of the acquisition of Company Voting
Securities by the Company which, by reducing the number of Company Voting
Securities outstanding, increases the percentage of shares beneficially owned by
such person; provided, that if a Change in Control would occur as a result of
-------- ----
such an acquisition by the Company (if not for the operation of this sentence),
and after the Company's acquisition such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, then a
Change in Control shall occur.
6.04 "Good Reason" means the occurrence of any one of the following
-----------
events:
(a) the failure of the shareholders and the Directors of the Company
to elect and re-elect the Executive Chief Executive Officer and a member of
the Board and Chairman of the Board,
(b) assignment to the Executive of any duties materially and adversely
inconsistent with the Executive's position as specified in Article I hereof
(or such other position to which he may be promoted), including status,
offices, or responsibilities as contemplated under Article I of this
Agreement (but excluding a diminution of title which does not result in a
diminution of status, offices or responsibilities), or any other action by
the Company which results in a material and adverse change in such
position, status, offices, titles or responsibilities,
(c) the failure of the Company to assign this Agreement to a successor
to the Company,
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<PAGE>
(d) any failure by the Company to comply with the provisions of
Article III of this Agreement,
(e) the Company's requiring, without the Executive's written consent,
the Executive to be based at any office or location more than 50 miles from
the Detroit office, or
(f) any material adverse change to the terms and conditions of the
Executive's employment under this Agreement;
if the company fails to cure such event without 30 days after written notice
from the Executive; provided, however, that if the event is intentional, knowing
or repeated, the Executive shall not be required to provide written notice or an
opportunity to cure.
Notwithstanding any other provision in this Section 6.04, the
Executive shall have Good Reason to termination employment with the Company for
any or no reason during the six-month period following the date on which a
Change in Control occurs.
6.05 "Date of Termination" means the date as of which the Executive's
-------------------
employment with the Company is terminated by the Company or by the Executive for
any reason including, but not limited to, death or Disability.
ARTICLE VII
Restrictive Covenants
7.01 Trade Secrets, Confidential and Proprietary Business Information.
----------------------------------------------------------------
(a) The Company has advised the Executive and the Executive
acknowledges that it is the policy of the Company to maintain as secret and
confidential all Protected Information (as defined below), and that
Protected Information has been and will be developed at substantial cost
and effort to the Company. "Protected Information" means trade secrets,
confidential and proprietary business information of the Company, any
information of the Company other than information which has entered the
public domain (unless such information entered the public domain through
the efforts of or on account of the Executive), and all valuable and unique
information and techniques acquired, developed or used by the Company
relating to its business, operations, employees and customers, which give
the Company a
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<PAGE>
competitive advantage over those who do not know the information and
techniques and which are protected by the Company from unauthorized
disclosure, including but not limited to, customer lists (including
potential customers), sources of supply, processes, plans, materials,
pricing information, internal memoranda, marketing plans, internal
policies, and products and services which may be developed from time to
time by the Company and its agents or employees.
(b) The Executive acknowledges that the Executive will acquire
Protected Information with respect to the Company and its successors in
interest, which information is a valuable, special and unique asset of the
Company's business and operations and that disclosure of such Protected
Information would cause irreparable damage to the Company.
(c) The Executive shall not, directly or indirectly, divulge, furnish
or make accessible to any person, firm corporation, association or other
entity (otherwise than as may be required in the regular course of the
Executive's employment) nor use in any manner, either during or after
termination of employment by the Company, any Protected Information, or
cause any such information of the Company to enter the public domain.
7.02 Non-Competition.
---------------
(a) The Executive agrees that the Executive shall not during the
Executive's employment with the Company, and, if the Executive's employment
is terminated for any reason other than termination of employment without
Cause or for Good Reason, thereafter for a period of one (1) year, directly
or indirectly, in any capacity, engage or participate in, or become
employed by or render advisory or consulting or other services in
connection with any Prohibited Business as defined in Section 7.02(c).
(b) The Executive agrees that the Executive shall not during the
Executive's employment with the Company, and, if the Executive's employment
is terminated for any reason, thereafter for a period of one (1) year, make
any financial investment, whether in the form of equity or debt, or own any
interest, directly or indirectly, in any Prohibited Business. Nothing in
this Section 7.02 shall, however, restrict the Executive from making any
investment in any company whose stock is listed on a national securities
exchange
-13-
<PAGE>
or actively traded in the over-the-counter market; provided that (i) such
investment does not give the Executive the right or ability to control or
influence the policy decisions of any Prohibited business, and (ii) such
investment does not create a conflict of interest between the Executive's
duties hereunder and the Executive's interest in such investment.
(c) For the purpose of this Section 7.02, "Prohibited business" shall
be defined as any business and any branch, office or operation thereof,
which is a direct and material competitor of the Company wherever the
Company does business, in the United States or abroad, and which has
established or seeks to establish contact, in whatever form (including but
not limited to solicitation of sales, or the receipt or submission of bids)
which any entity who is at any time a client, customer or supplier of the
Company (including but not limited to any subdivisions of the federal
government).
(d) Notwithstanding any other provision in this Section 7.02 or in
Section 7.05, this Section 7.02 shall not apply if the Executive's
employment with the Company terminates for any reason during the two-year
period following a Change in Control.
7.03 Undertaking Regarding Employees. From the date hereof until two
-------------------------------
years after the Executive's Date of Termination, the Executive shall not,
directly or indirectly (a) encourage any employee of the Company or its
successors in interest to leave their employment with the Company or its
successors in interest; or (b) employ, hire, solicit or cause to be employed or
hired or solicited (other than by the company or its successors in interest), or
establish a business with, or encourage others to hire, any person who within
two (2) years prior thereto was employed by the Company or its successors in
interest.
7.04 Disclosure of Employee-Created Trade Secrets, Confidential and
--------------------------------------------------------------
Proprietary Business Information. The Executive agrees to promptly disclose to
- --------------------------------
the Company all Protected Information developed in whole or in part by the
Executive during the Executive's employment with the Company and which relate to
the Company's business. Such Protected Information is, and shall remain, the
exclusive property of the Company. All writings created during the Executive's
employment with the Company (excluding writings unrelated to the Company's
business) are considered to be "works-for-hire" for the benefit of the Company
and the Company shall own all rights in such writings.
7.05 Survival of Undertakings and Injunctive Relief.
----------------------------------------------
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<PAGE>
(a) Except as provide herein, the provisions of Sections 7.01, 7.02,
7.03 and 7.04 shall survive the termination of the Executive's employment
with the Company irrespective of the reasons therefor.
(b) The Executive acknowledges and agrees that the restrictions
imposed upon the Executive by Sections 7.01, 7.02, 7.03 and 7.04 and the
purpose of such restrictions are reasonable and are designed to protect the
Protected Information and the continued success of the Company without
unduly restricting the Executive's future employment by others.
Furthermore, the Executive acknowledges that, in view of the Protected
Information which the Executive has or will acquire or has or will have
access to and in view of the necessity of the restrictions contained in
Sections 7.01, 7.02, 7.03 and 7.04, any violation of any provision of
Sections 7.01, 7.02, 7.03 and 7.04 hereof would cause irreparable injury to
the Company and its successors in interest with respect to the resulting
disruption in their operations. By reason of the foregoing, the Executive
consents and agrees that if the Executive violates any of the provisions of
Sections 7.01, 7.02, 7.03 or 7.04 of this Agreement, the Company and its
successors in interest as the case may be, shall be entitled, in addition
to any other remedies that they may have, including money damages, to an
injunction to be issued by a court of competent jurisdiction, restraining
the Executive from committing or continuing any violation of such Sections
of this Agreement.
In the event of any such violation of Sections 7.01, 7.02, 7.03 and
7.04 of this Agreement, the Executive further agrees that the time periods set
forth in such Sections shall be extended by the period of such violation.
ARTICLE VIII
Miscellaneous
8.01 Expenses.
--------
(a) If the Executive incurs legal or other fees and expenses in an
effort to establish entitlement to benefits under this Agreement, unless a court
of competent jurisdiction determines that such effort was brought without a
reasonable basis or was conducted in bad faith, the
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<PAGE>
Company shall reimburse the Executive for such fees and expenses.
(b) The Company shall provide reimbursement of fees and expenses, as
described in paragraph (a) above, to the Executive on a monthly basis upon the
Executive's written submission of a request for reimbursement together with
proof that the fees and expenses were incurred.
8.02 Full Settlement. The Company's obligation to make the payments
---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including without
limitation, set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others. If the
company fails to make any payment payable hereunder within 10 days after such
amounts are due, then the Executive shall be entitled to receive interest,
compounded monthly, on the unpaid amount, at a rate equal to the highest
interest rate applicable to the Company in its borrowing of funds from any third
party during the period of nonpayment, and if no such rate is determinable, or
if higher, at a rate equal to one percent above the prime commercial lending
rate announced by Trust Company Bank, N.A. in effect from time to time during
the period of such nonpayment. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement,
nor shall the amount of any payment hereunder be reduced, except as otherwise
specifically provided herein, by any compensation earned by the Executive as a
result of employment by another employer.
8.03 Successors. This Agreement shall be binding upon and inure to
----------
the benefit of the Executive and the Executive's estate and shall be binding on
the Company or any successor to the Company.
8.04 Beneficiary. If the Executive dies prior to receiving all of
-----------
the salary and bonus payable hereunder, such salary and bonus shall be paid in a
lump sum payment to the beneficiary designated in writing by the Executive
("Beneficiary") and if no such Beneficiary is designated, to the Executive's
estate.
8.05 Nonalienation of Benefits. Benefits payable under this
-------------------------
Agreement shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution or
levy of any kind, either voluntary or involuntary, prior to actually being
received by the Executive, and any such
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<PAGE>
attempt to dispose of any right to benefits payable hereunder shall be void.
8.06 Severability. If all or any part of this Agreement is declared
------------
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of this
Agreement not declared to be unlawful or invalid. Any paragraph or part of a
paragraph so declared to be unlawful or invalid shall, if possible, be construed
in a manner which will give effect to the terms of such paragraph or part of a
paragraph to the fullest extent possible while remaining lawful and valid.
8.07 Amendment and Waiver. This Agreement shall not be altered,
--------------------
amended or modified except by written instrument executed by the Company and
Executive. A waiver of any term, covenant, agreement or condition contained in
this Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition, and any waiver of any default in any such term,
covenant, agreement or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant, agreement or condition.
8.08 Notices. All notices and other communications hereunder shall
-------
be in writing and delivered by hand or by first class registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: Intermet Corporation
5445 Corporate Drive
Suite 200
Troy, Michigan 48098
Attn: General Counsel
and
If to the Executive: John E. Doddridge
347 Pine Ridge Drive
Bloomfield Hills, Michigan 48304
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<PAGE>
with a copy to: Roger C. Siske
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606-6404
Either party may from time to time designate a new address by notice given in
accordance with this Section. Notice and communications shall be effective when
actually received by the addressee.
8.09 Counterpart Originals. This Agreement may be executed in
---------------------
several counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
8.10 Entire Agreement. This Agreement forms the entire agreement
----------------
between the parties hereto with respect to any severance payment and with
respect to the subject matter contained in the Agreement.
8.11 Effect on Other Agreements. This Agreement shall supersede all
--------------------------
prior agreements, promises and representations regarding severance or other
payments contingent upon termination of employment, including the Employment
Agreement between the Executive and the Company, dated December 1, 1994.
8.12 Applicable Law. The provisions of this Agreement shall be
--------------
interpreted and construed in accordance with the laws of the State of Georgia,
without regard to its choice of law principles.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
INTERMET CORPORATION
/s/ Vernon R. Alden
------------------------
By:
/s/ John Doddridge
--------------------------------
JOHN E. DODDRIDGE
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<PAGE>
Exhibit 10.23 INTERMET CORPORATION
SUITE 1600
2859 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
PHONE: (404) 431-6000
TELEFAX: (404) 431-6001
INTERMET
May 12, 1995
JOHN DODDRIDGE
Chairman & CEO
Ms. Doretha Christoph
1102 Chrestover Road
Wilmington, DE 19803
Dear Doretha:
Congratulations! After an extensive and exhaustive search for a Vice President
of Finance, we believe you to be the best suited candidate for the job. We are
pleased to offer you the job as follows:
TITLE & POSITION: VICE PRESIDENT - FINANCE, Corporate Officer and
member of the Operating Committee
BASE SALARY: $175,000 per year
BONUS: A fiscal year annual bonus, payable by April of
the following year. The bonus will be 0.2%
(00.20) of Intermet's audited annual pretax
earnings before minority interest and profit
sharing. Further, we guarantee the above bonus
minimum at $75,000 per year for the first two
years. It will be paid pro-rata for partial
years.
SIGNING BONUS: 10,000 shares, restricted stock in your name held
in escrow for 18 months, with dividends, if any,
paid directly to you. At the end of 18 months,
these shares will become fully vested and non-
forfeitable. The Company will gross you up to
make the transaction tax-free to you.
<PAGE>
Also, at the time of your physical relocation, a
cash bonus of $5,000.
STOCK OPTIONS: 20,000 shares, priced on the first full day of
employment
EMPLOYMENT GUARANTEE: 18 months. After the first six months the
guarantee becomes a one year "evergreen", i.e.,
each additional day you are employed adds another
day to the guarantee. (The employment guarantee
is subject to the additional terms listed in
Attachment "A").
Not a guarantee on our part, but for your planning purposes: Assuming
satisfactory employment, within one year, we would expect to raise your base
salary to $200,000 annually and add the title Chief Financial Officer. Also,
along with other Operating Committee members you will be eligible for an
aggressive accumulation of additional stock options.
*RELOCATION COSTS: Per company policy (fairly inclusive and typical
of major industry move policies)
*COMPANY CAR: American-make: up to equivalent of Buick Park
Avenue Ultra
*VACATION TIME: Four weeks annually
*OTHER BENEFITS: Comprehensive health care; 401(k) with company
match of $.50 on the $1.00 up to the first 4% of
employee salary deferral; company paid ESOP,
equivalent to 3% of base; plus more
*Note: These and other benefits to be the same as provided all other Operating
Committee Members. Some of the above benefits have minimum employment time
requirements.
All of the above is subject to your immediate acceptance of the job and to-be-
agreed-to early starting date of full-time employment. Once you have
tentatively accepted, we will arrange for Jim Rydel, our Vice President -
Administration, to provide booklets and more detailed information about the
Company benefits listed above.
To accept this offer, please sign three copies, fax a signed copy, return two
copies and keep one for your files. We reserve the right to modify or withdraw
this offer at any time two days after you receive the offer, but have not
returned a signed copy.
<PAGE>
We hope all of the above is satisfactory to you. We are excited about you
starting a long relationship with Intermet.
Sincerely,
/s/ John Doddridge
Accepted:
/s/ Doretha Christoph 5-14-95
- --------------------------------
Name Date
<PAGE>
ATTACHMENT "A"
The following are additional terms and restrictions to the Employment Guarantee
Agreement:
Termination of Employment
-------------------------
1.1 TERMINATION OF EMPLOYMENT FOR CAUSE OR OTHER THAN FOR GOOD REASON.
If, before the end of the Contract Term, the Company terminates the Executive's
employment for Cause or the Executive terminates employment other than for Good
Reason, then the Company shall pay to the Executive in a lump sum immediately
after the Date of Termination that portion of the Executive's Annual Base Salary
which is accrued but unpaid as of such Date of Termination, but the Executive
will not be entitled to receive any other compensation or benefits or benefits
under this Agreement.
1.2 TERMINATION OF EMPLOYMENT FOR DEATH OR DISABILITY. If, before the end
of the Contract Term, the Executive's employment terminates due to death or
Disability, the Company shall pay to the Executive (or to the Executive's
Designated Beneficiary(s), in accordance to Company policy following the Date of
Termination:
(a) that portion of the Executive's Annual Base Salary which is accrued but
unpaid as of the Date of Termination, and
(b) the amount of any Annual Bonus accrued during any period which ended
during the Employment Guarantee Term prior to the Date of Termination, but
which is unpaid as of the Date of Termination.
(c) disability, life insurance, and other benefits as provided executives
for Company Benefits Plan.
1.3 TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE OR BY THE
EXECUTIVE FOR GOOD REASON. If, before the end of the Employment Agreement
Guarantee, the Executive's employment is terminated by the Company without Cause
or by the Executive for Good Reason, the Executive shall receive the following:
(a) In lump sum, that portion of the Executive's Annual Base Salary and any
Guaranteed Annual Bonus which is accrued but unpaid as of the Date of
Termination,
(b) In monthly payments, the amount of the Executive's Annual Base Salary
which would be payable for the period beginning on the Date of Termination and
ending on the last day of the Contract Term.
<PAGE>
(c) The prorata amount of the Executive's Annual Bonus for the remainder of
the Contract Term, payment(s) not later than April following each applicable
fiscal year.
(d) The benefits to which the Executive was entitled during the Contract
Term. The amount of any benefits shall be reduced or eliminated to the extent
the Executive becomes entitled to duplicative benefits by virtue of his/her
subsequent employment after the Date of Termination.
1.4 OTHER TERMINATION BENEFITS. In addition to any amounts or benefits
payable upon termination of employment thereunder and except as otherwise
provided herein, the Executive shall be entitled to any payments or benefits
explicitly provided under the terms of any plan, policy or program of the
Company or as otherwise required by applicable law.
CERTAIN DEFINITIONS
2.1 "CONTRACT TERM" means Employment Guarantee
2.2 "DISABILITY" means any medically determinable physical or mental
impairment, that can be expected to last for a continuous period of not less
than six (6) months, and the renders the Executive unable to perform the duties
required under this Agreement. The date of the determination of Disability is
the date on which the Executive is certified as having incurred a Disability by
a physician acceptable to the Company.
2.3 "CAUSE" means (a) the Executive's committing any felony or other crime
involving dishonesty; (b) any serious misconduct in the course of the
Executive's employment, or (c) the Executive's habitual neglect of the
Executive's duties (other than on account of Disability), except that (d) Cause
shall not mean:
(1) bad judgement or negligence other than habitual neglect of duty;
(2) any act or omission believed by the Executive in good faith to
have been in or not opposed to the interest of the Company (without intent of
the Executive to gain therefrom, directly or indirectly, a profit to which the
Executive was not legally entitled);
(3) any act or omission with respect to which a determination could
properly have been made that the Executive met the applicable standard of
conduct for indemnification or reimbursement under the By-Laws of the Company,
any applicable indemnification agreement or the laws and regulations under which
the Company is governed, in each case in effect at the time of such act or
omission.
<PAGE>
2.4 "GOOD REASON" means the occurrence of any one of the
following events:
(a) assignment to the Executive of any duties materially and adversely
inconsistent with the Executive's position as specified in the
Employment Guarantee (or such other position to which he/she may be
promoted), (but excluding a diminution of title which does not result
in a diminution of status, offices, or responsibilities), or any other
action by the Company which results in a material and adverse change
in such position, status, offices, titles or responsibilities,
(b) the failure of the Company to assign this Agreement to a successor
to the Company,
(c) any failure by the Company to comply with the Compensation
provisions of the Employment Guarantee
(d) any material adverse change to the terms and conditions of the
Executive's employment under this Agreement;
if the Company fails to cure such event within 30 days after written notice from
the Executive; provided, however, that if the event is intentional, knowing or
repeated, the Executive shall not be required to provide written notice or an
opportunity to cure.
2.5 "DATE OF TERMINATION" Means the date as of which the Executive's employment
with the Company is terminated by the Company or by the Executive for any reason
including, but not limited to, death or Disability.
RESTRICTIVE COVENANTS
3.1 TRADE SECRETS, CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION
(a) The Company has advised the Executive and the Executive acknowledges
that it is the policy of the Company to maintain as secret and confidential all
Protected Information (as defined below), and that Protected Information has
been and will be developed at substantial cost and effort to the Company.
"Protected Information" means trade secrets, confidential and proprietary
business information of the Company, any information of the Company other than
information which has entered the public domain (unless such information entered
the public domain through the efforts of or on account of the Executive), and
all valuable and unique information and techniques acquired, developed or used
by the Company relating to its business, operations, employees and customers,
which give the Company a competitive advantage over those who do not know the
information and techniques and which are protected by the Company from
<PAGE>
unauthorized disclosure, including by not limited to, customer lists (including
potential customers), sources of supply processes, plans, materials, pricing
information, internal memoranda, marketing plans, internal policies, and
products and services which may be developed from time to time by the Company
and its agents or employees.
(b) The Executive acknowledges that the Executive will acquire Protected
Information with respect to the Company and its successors in interest, which
information is valuable, special and unique asset of the Company's business and
operations and that disclosure of such Protected Information would cause
irreparable damage to the Company.
(c) The Executive shall not, directly or indirectly, divulge, furnish or
make accessible to any person, firm corporation, association or other entity
(otherwise than as may be required in the regular course of the Executive's
employment) nor use in any manner, either during or after termination of
employment by the Company and Protected Information or cause any such
information of the Company to enter the public domain.
3.2 NON-COMPETITION.
(a) The Executive agrees that the Executive shall not during the
Executive's employment with the Company, and, if the Executive's employment is
terminated for any reason other than termination of employment without Cause or
for Good Reason, thereafter for a period of one (1) year, directly or
indirectly, in any capacity, engage or participate in or become employed by or
render advisory or consulting or other services in connection with any
Prohibited Business as defined below.
(b) The Executive agrees that the Executive shall not during the
Executive's employment with the Company, and, if the Executive's employment is
terminated for any reason, thereafter for a period of one (1) year, make any
financial investment, whether in the form of equity or debt, or own any
interest, directly or indirectly, in any Prohibited Business. Nothing in this
Section 7.02 shall, however, restrict the Executive from making any investment
in any company whose stock is listed on a national securities exchange or
actively traded in the over-the-counter market; provided that (i) such
investment does not give the Executive the right or ability to control or
influence the policy decisions of any Prohibited Business, and (ii) such
investment does not create a conflict of interest between the Executive's duties
hereunder and the Executive's interest in such investment.
(c) "Prohibited Business" shall be defined as any business and any branch,
office or operation thereof, which is a direct and material competitor of the
Company wherever the Company does business, in the United States or abroad, and
which has established or seeks to establish contact, in whatever form
<PAGE>
(including but not limited to solicitation of sales, or the receipt or
submission of bids) with any entity who is at any time a client, customer or
supplier of the Company (including but not limited to all subdivisions of the
federal government.)
3.3 UNDERTAKING REGARDING EMPLOYEES. From the date hereof until two years
after the Executive's Date of Termination, the Executive shall not, directly or
indirectly (a) encourage any employee of the Company or its successors in
interest to leave their employment with the Company or its successors in
interest; or (b) employ, hire, solicit or cause to be employed or hired or
solicited (other than by the Company or its successors in interest), or
establish a business with, or encourage others to hire, any person who within
two (2) years prior thereto was employed by the Company or its successors in
interest to leave their employment with the Company or its successors in
interest.
3.4 DISCLOSURE OF EMPLOYEE-CREATED TRADE SECRETS, CONFIDENTIAL AND
PROPRIETARY BUSINESS INFORMATION. The Executive agrees to promptly disclose to
the Company all Protected Information developed in whole or in part by the
Executive during the Executive's employment with the Company and which relate to
the Company's business. Such Protected Information is, and shall remain, the
exclusive property of the Company. All writings created during the Executive's
employment with the Company (excluding writings unrelated to the Company's
business) are considered to be "works-for-hire" for the benefit of the Company
and the Company shall own all rights in such writings.
<PAGE>
EXHIBIT 11
Intermet Corporation
Computation of Earnings Per Common Share
<TABLE>
<CAPTION>
1995 1994 1993
------------------------------------------
<S> <C> <C> <C>
Net Income (loss) $25,395,000 $(10,985,000) $(20,504,000)
-----------------------------------------
Weighted average number of
shares outstanding 24,768,578 24,590,873 24,563,849
Add dilutive effect of outstanding
warrants and options 124,472 -- --
---------------------------------------
Weighted average number of shares
and equivalent shares outstanding 24,893,050 24,590,873 24,563,849
---------------------------------------
Net income (loss) per share $1.02 $(.45) $(.83)
---------------------------------
</TABLE>
The fully diluted earnings per share calculation has not been presented as the
- ------------------------------------------------------------------------------
resulting income (loss) per share does not differ from the above.
- ----------------------------------------------------------------
<PAGE>
EXHIBIT 13
DISCUSSION OF FINANCIAL INFORMATION
RESULTS OF OPERATIONS
1995 Compared to 1994
- ---------------------
Record sales in 1995 were $40.5 million (8%) higher than 1994 reflecting the
relatively strong economy in North America, the strengthening economy in Europe
and favorable exchange rate changes. The Company was able to utilize the
additional capacity gained earlier in the year by going to a three-shift foundry
operation as well as the new production line started up at the Company's New
River Castings plant in late 1994 to meet customer demand. This increase
occurred despite the decline in sales resulting from the sale of two businesses.
Sales actually increased 13% for plants operating in both years, although the
automotive market was weaker in 1995 compared to 1994. Sales in 1996 from
continuing businesses are expected to have modest growth in an automotive market
that is expected to be relatively flat compared to 1995.
Gross profit increased $42 million in 1995 over 1994. The consolidated gross
margin also improved substantially, rising to 15.6% of sales from 8.5% in 1994
(10.3% before fourth quarter 1994 adjustments of $8.9 million for equipment
write-downs and write-off of goodwill related to a 1992 acquisition). Margins
improved at all foundry operations in the Company, especially the Company's New
River Castings foundry in Virginia. This improvement stems from operational
improvements and focused cost reduction programs addressing yield rates,
scrappage, and procurement procedures.
Operating expenses were $31.6 million in 1995 compared to $40.7 million in 1994.
The majority of previously performed corporate functions were decentralized or
eliminated during 1995. Expenses were lowered $5.8 million from reduction in
staffing and targeted corporate cost reduction programs despite the one-time
expense of relocating the Corporate offices from Atlanta to Detroit. The
remaining decline in operating expense resulted from the fourth quarter 1994
charge of $7.3 million for retirement payments for the Company's former Chairman
and Vice-Chairman, severance pay and benefits per planned terminations due to a
reorganization, and a joint venture write-off.
As expected, operating profit improved to $52.8 million versus the 1994
operating profit of $1.7 million ($18 million before the adjustments described
above) despite the Company's purchasing and beginning operation of an aluminum
castings business in fourth quarter 1995 and the unexpected costs of handling
the G.W.M., Inc. and Kelso & Company, L.P acquisition proposal ($0.6 million).
Operating results are expected to improve in 1996 as the full year's impact of
the decentralization and cost reduction programs implemented in early 1995 are
realized. These expectations are based on the assumption that the automotive
market demand will continue near the same level as in 1996 as was experienced
during the last half of 1995.
<PAGE>
Interest expense for 1995 was $0.5 million less than in the prior year, due to a
lower level of borrowing and decreasing interest rates toward the end of the
current year. In addition, only $88 thousand of interest was capitalized for
1995 versus the $0.7 million in capitalized interest in 1994 related to the New
River Castings expansion.
The Company recorded a consolidated income tax provision of $20.1 million in
1995 which reflects a return to profitable domestic operations after three years
of reported losses. The consolidated tax rate is higher than the domestic
income tax rates due to the higher foreign tax rates on related earnings. No
U.S. federal income tax benefit related to consolidated domestic loss was
recognized in 1994. Management continues to believe that most of the Company's
deferred income tax assets will be realized. However, such assets continue to
be heavily reserved until a consistent record of profitability has been
established.
RESULTS OF OPERATIONS
1994 Compared to 1993
- ---------------------
Net sales in 1994 rose $57.1 million over 1993. This increase of nearly 13%
occurred despite the Company's operating with fewer plants during 1994 than in
1993. For those plants operating in both years, sales actually increased 22%.
This growth was the result of a significantly stronger automotive market in both
the U.S. and Europe in 1994 as compared to 1993.
Gross profit increased $7.1 million in 1994 over 1993 with the increased sales
volume. There was an overall slight improvement in margin from 8.0% to 8.5%
with the improved margins realized at most plants, particularly the Ironton,
Ohio foundry, being offset by the startup losses recorded in the fourth quarter
at the Company's New River Castings foundry in Virginia. The fourth quarter
adjustments affecting gross profit totaled $8.9 million, and were the result of
equipment write-downs and the write-off of goodwill related to a 1992
acquisition. Without these adjustments, the 1994 gross margin would have been
10.3% of 1994 sales.
Operating expenses were $40.7 million 1994, $5.8 million higher than in 1993.
However, the 1994 amount includes adjustments totaling $7.3 million. These
adjustments were for retirement payments to be made to the Company's former
Chairman and Vice Chairman; severance pay and benefits for planned terminations
due to a reorganization of the Company; and the write-off of an investment in a
joint venture. Without such adjustments,
operating expenses would have declined $1.5 million as a result of the reduced
work force resulting from the Lower Basin closing.
Operating profit was $1.7 million in 1994 compared to an operating loss of $23.5
million in 1993. The 1993 figure includes a restructuring charge of $24
million. Without the effect of this restructuring charge and the 1994
adjustments described above, operating profit would have been $18 million in
1994 and $0.5 million in 1993. While the operating profit was positive in 1994,
the reorganization of the Company was to allow better operating efficiencies and
lower cost structure.
<PAGE>
Interest expense for 1994 was $1.3 million higher than the prior year, due to
higher domestic borrowing levels and interest rates. Capitalized interest
related to the New River Castings foundry expansion was $0.7 million in 1994 and
$1.0 million in 1993.
The Company recorded a $5.9 million income tax provision despite reporting a
pretax loss of $5.1 million in 1994. This 1994 tax provision consists primarily
of state and foreign incomes taxes related to profitable subsidiaries. Due to
the U.S. losses reported in each of the last three years, management viewed as
inappropriate the recognition of a U.S. federal income tax benefit related to
the consolidated domestic loss. Management expects to realize most of the
Company's deferred income tax assets although there was a lack of available
objective evidence considered necessary to recognize such assets under generally
accepted accounting principles.
LIQUIDITY AND CAPITAL RESOURCES
Certain balance sheet date is summarized below (in thousands of dollars):
DECEMBER 31 1992 1993 1994 1995
- ---------------------- -------- -------- -------- -------
Funded Debt $ 76,751 $106,593 $107,385 $35,284
Shareholders' equity 101,054 75,532 67,971 98,028
Net working capital 30,406 31,161 29,086 11,874
Outstanding debt was reduced in 1995 by $72 million principally as a result of
improved operating results as well as a reduction in working capital. In
addition, the Company continued its liquidation of idle and non-strategic assets
by selling two businesses not aligned with its castings business. At the same
time the Company purchased an aluminum castings business using internally
generated funds. Capital expenditures for the Company were below the level of
depreciation as expected. All of the above allowed the Company to improve its
debt-to-capital ratio to 27% compared to 61% at December 31, 1994.
Shareholders' equity increased $30 million from $68 million at December 31, 1994
to $98 million at December 31, 1995, building back nearly to the level reported
in late 1992. Shareholders' equity had declined over $33 million since the end
of 1992, largely as a result of losses reported in the last three years.
However, over half of the cumulative losses before income taxes represented
noncash write-offs or revaluations of assets.
The 1995 activity in the restructuring reserve established in 1993 reduced the
Company's cash flows by $2 million, while $6 million was charged against the
reserve in 1994. These charges were funded by working capital previously used to
support Lower Basin operations. Most of the foundry equipment and supplies
inventory were removed and disposed of during 1995. Demolition of the foundry
was started and is expected to be completed in 1996. The Company expects to
have completed almost all of the above-mentioned restructuring, consisting
primarily of the demolition of the remaining buildings and severance in 1996.
<PAGE>
As noted previously, the Company recorded an accrual in 1994 for retirement pay
and severance costs related to additional planned terminations. Operations in
1995 funded approximately $2.4 million of the amount accrued in 1994. In
addition, the Company expects to fund $1.7 million accrued at December 31, 1995,
for the headquarters relocation out of cash generated in 1996 from operations.
At December 31, 1995 the Company and its subsidiaries had approximately $75
million of unused borrowing capacity under various revolving credit agreements.
The Environmental Protection Agency ("EPA") filed a complaint against one of the
Company's subsidiaries in August 1991. The complaint alleged various
violations, the most significant of which related to the treatment of certain
hazardous wastes at two foundries. The Company and the EPA reached agreement
for a reduced penalty of $330,000 which was paid in 1995.
In March 1994, the Company entered negotiations with the Ohio Attorney General's
office concerning past violations of Ohio water pollution laws and regulations
at the Ironton foundry. In November 1995, the Company agreed to pay the State
of Ohio a determined fine of $285,000 to settle this and all other water
discharge violations at Ironton. The Company has accrued this liability at
December 31, 1995 and expects to pay this in 1996 on receipt of the State
decree. In addition, the Company has submitted a plan to the Ohio EPA to bring
its facility into compliance with all applicable air emission requirements,
after that agency had advised management of several violations of air pollution
regulations. It is not known whether the agency will eventually demand the
payment of civil penalties for these past violations.
The Company also incurs recurring costs related to environmental concerns,
particularly the management and disposition of waste (principally nonhazardous
waste) generated as part of ongoing operations. In 1995 and 1994 such costs
totaled approximately $9 million and $12 million, respectively. Although the
Company continues to take various steps to control these costs, they are
expected to increase in the future. In addition, a portion of the Company's
capital expenditures are regularly incurred to limit or monitor pollution,
principally for ventilation and dust control equipment. Such expenditures were
approximately $2.0 million in 1995 and $4.5 million in 1994. The Company
expects to spend $5.1 million in capital in this area in 1996.
<PAGE>
Consolidated Financial Statements
Intermet Corporation
Years ended December 31, 1995, 1994 and 1993
--------------------------------------------
with Report of Independent Auditors
-----------------------------------
<PAGE>
Intermet Corporation
Consolidated Financial Statements
Years ended December 31, 1995, 1994 and 1993
CONTENTS
Report of Independent Auditors............................................ l
Consolidated Financial Statements
Consolidated Balance Sheets............................................... 2
Consolidated Statements of Operations..................................... 4
Consolidated Statements of Cash Flows..................................... 5
Consolidated Statements of Shareholders' Equity........................... 7
Notes to Consolidated Financial Statements................................ 8
F-2
<PAGE>
Report of Independent Auditors
The Board of Directors and Shareholders
Intermet Corporation
We have audited the accompanying consolidated balance sheets of Intermet
Corporation as of December 31, 1995 and 1994, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Intermet
Corporation at December 31, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
Detroit, Michigan
January 26, 1996
F-3
<PAGE>
Intermet Corporation
Consolidated Balance Sheets
DECEMBER 31,
1995 1994
------------------
(In Thousands of Dollars)
-------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 11,173 $ 13,718
Accounts receivable:
Trade, less allowance for doubtful accounts of
$1,267 in 1995 and $687 in 1994 49,814 65,851
Other 5,298 7,176
-----------------
55,112 73,027
Inventories:
Finished goods 5,616 4,350
Work in process 3,989 4,032
Raw materials 3,975 6,566
Supplies and patterns 15,575 17,678
-----------------
29,155 32,626
Other current assets 7,632 3,246
-----------------
Total current assets 103,072 122,617
Property, plant and equipment, at cost:
Land 3,585 3,699
Buildings and improvements 77,649 77,514
Machinery and equipment 254,140 253,518
Construction in progress 8,914 14,366
-----------------
344,288 349,097
Less:
Foreign industrial development grants, net of
amortization 5,469 5,280
Accumulated depreciation and amortization 189,625 177,934
------------------
Net property, plant and equipment 149,194 165,883
Other noncurrent assets 21,805 17,764
------------------
$274,071 $306,264
==================
F-4
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
-------------------------
<S> <C> <C>
(In Thousands of Dollars)
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 28,640 $ 39,034
Accrued wages, severance and benefits 19,432 19,577
Accrued restructuring costs 7,334 2,362
Income taxes payable 16,000 3,300
Other accrued liabilities 17,183 9,571
Notes payable 13 7,670
Long-term debt due within one year 2,596 12,017
--------------------
Total current liabilities 91,198 93,531
Noncurrent liabilities:
Long-term debt due after one year 32,675 87,698
Retirement benefits 43,621 43,906
Other noncurrent liabilities 5,712 10,321
--------------------
Total noncurrent liabilities 82,008 141,925
Minority interest 2,837 2,837
Shareholders' equity:
Preferred stock; 5,000,000 shares authorized;
none issued
Common stock, $.10 par value; 50,000,000 shares
authorized; 25,050,374 and 24,644,719 shares
issued in 1995 and 1994, respectively 2,505 2,464
Capital in excess of par value 56,431 52,150
Retained earnings 37,125 11,730
Accumulated translation adjustments 3,765 2,959
Minimum pension liability adjustment (1,636) (1,164)
Unearned restricted stock (162) (168)
---------------------
Total shareholders' equity 98,028 67,971
---------------------
$274,071 $306,264
=====================
</TABLE>
See accompanying notes.
- ----------------------
F-5
<PAGE>
Intermet Corporation
Consolidated Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993
-------------------------------
(In Thousands of Dollars, Except Per Share Data)
-----------------------------------------------
<S> <C> <C> <C>
Net sales $541,749 $501,269 $444,214
Cost of sales (Note 12) 457,337 458,823 408,835
---------------------------------
Gross profit 84,412 42,446 35,379
Operating expenses:
Selling 4,957 5,520 6,114
General and administrative (Note 12) 26,640 35,198 28,751
Restructuring charge (Note 3) - - 24,000
---------------------------------
Operating profit (loss) 52,815 1,728 (23,486)
Other income and expenses:
Interest income 382 149 135
Interest expense (6,461) (6,952) (5,625)
Other, net (1,216) (14 ) (159)
---------------------------------
(7,295) (6,817 ) (5,649)
---------------------------------
Income (loss) before income taxes,
and minority interest 45,520 (5,089) (29,135)
Provision (benefit) for income taxes 20,125 5,896 (8,512)
---------------------------------
Income (loss) before minority interest 25,395 (10,985) (20,623)
Minority interest in loss of
subsidiaries - - 119
---------------------------------
Net Income (loss) $ 25,395 $(10,985) $(20,504)
=================================
Income (loss) per common share $ 1.02 $ (.45) $ (.83)
=================================
</TABLE>
See accompanying notes.
- -----------------------
F-6
<PAGE>
Intermet Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
(In Thousands of Dollars)
-------------------------
OPERATING ACTIVITIES
Net income (loss) $ 25,395 $(10,985) $(20,504)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation and amortization 28,115 29,035 26,583
Restructuring charge - - 24,000
Loss on sale of subsidiaries 1,272 - -
Write down equipment and goodwill - 8,945 -
Write off investment in joint venture - 2,001 -
Loss on sale of assets 219 26 1,053
Deferred income taxes 3,234 (800) (4,640)
Minority interest in loss of subsidiaries - - (119)
Changes in operating assets and liabilities
excluding the effects of acquisitions
and dispositions:
Accounts receivable 13,474 (18,877) (9,221)
Inventories 1,533 5,204 (4,929)
Accounts payable and accrued liabilities (2,586) 12,521 5,358
Other assets and liabilities 12,615 565 183
-------- -------- --------
Cash provided by operating activities 83,271 27,635 17,764
INVESTING ACTIVITIES
Additions to property, plant and
equipment (24,442) (24,873) (41,018)
Purchase of Alexander City Castings (2,704) - -
Proceeds from sales of plant, property
& equipment 4,462 965 1,012
Proceeds from sale of subsidiaries 9,750 - -
Other, net (3,759) (833) (877)
-------- -------- --------
Cash used in investing activities (16,693) (24,741) (40,883)
</TABLE>
F-7
<PAGE>
Intermet Corporation
Consolidated Statements of Cash Flows (continued)
YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
1995 1994 1993
------------------------------
(Thousands of Dollars)
----------------------
<S> <C> <C> <C>
FINANCING ACTIVITIES
Increase in debt - 5,203 35,579
Reduction in long term debt (64,159) (5,197) (4,482)
Issuance of common stock 903 127 273
Dividends paid - - (2,947)
Net decrease in note payable (7,656) - -
Other, net - (30 ) (140)
------------------------------
Cash (used in) provided by financing
activities (70,912) 103 28,283
Effect of exchange rate changes on cash 1,789 (519) (21)
------------------------------
Net increase (decrease) in cash and cash
equivalents (2,545) 2,478 5,143
Cash and cash equivalents at beginning of year 13,718 11,240 6,097
------------------------------
Cash and cash equivalents at end of year $ 11,173 $13,718 $11,240
==============================
</TABLE>
See accompanying notes.
- -----------------------
F-8
<PAGE>
Intermet Corporation
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993
------------------------------
<S> <C> <C> <C>
(In Thousands of Dollars)
-------------------------
COMMON STOCK
Beginning balance $ 2,464 $ 2,457 $ 2,453
Exercise of options to purchase 124,500; 22,500 and 45,000
shares of common stock in 1995,1994 and 1993, respectively 12 2 4
Exercise of options purchased with common stock (2) - -
Issuance of 310,000 shares of common stock 31 - -
Issuance of 50,000 shares of common stock - 5 -
------------------------------
Ending balance 2,505 2,464 2,457
CAPITAL IN EXCESS OF PAR VALUE
Beginning balance 52,150 51,742 51,473
Exercise of options to purchase 124,500; 22,500 and 45,000
shares of common stock in 1995, 1994 and 1993, respectively 891 125 269
Exercise of options purchased with common stock (265) - -
Issuance of 310,000 shares of common stock 3,655 - -
Issuance of 50,000 shares of common stock - 283 -
------------------------------
Ending balance 56,431 52,150 51,742
RETAINED EARNINGS
Beginning balance 11,730 22,715 46,166
Net income (loss) 25,395 (10,985) (20,504)
Cash dividends ($.12 per share in 1993) - - (2,947)
------------------------------
Ending balance 37,125 11,730 22,715
ACCUMULATED TRANSLATION ADJUSTMENTS
Beginning balance 2,959 1,499 2,636
Translation adjustments 1,321 2,640 (1,779)
Related income tax effect (515) (1,180) 642
------------------------------
Ending balance 3,765 2,959 1,499
MINIMUM PENSION LIABILITY ADJUSTMENT
Beginning balance (1,164) (2,881) (1,674)
Adjustment (774) 2,815 (2,023)
Related income tax effect 302 (1,098) 816
------------------------------
Ending balance (1,636) (1,164 ) (2,881)
------------------------------
UNEARNED RESTRICTED STOCK
Beginning balance (168) - -
Issuance of 10,000 and 50,000 shares of common stock
in 1995 and 1994, respectively (86) (173) -
Amortization 92 5 -
------------------------------
Ending balance (162) (168) -
------------------------------
Total shareholders' equity $98,028 $ 67,971 $ 75,532
==============================
</TABLE>
See accompanying notes.
- -----------------------
F-9
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements
Years ended December 31, 1995, 1994, and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements, presented in conformity with
generally accepted accounting principles (GAAP), include the accounts of
Intermet Corporation ("Intermet") and its subsidiaries (collectively, the
"Company"). All significant intercompany transactions and balances have been
eliminated in consolidation.
USE OF ESTIMATES
The preparation of the financial statements in conformity with GAAP 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.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined on the
last-in, first-out (LIFO) method as to 17% and 14% of the December 31, 1995 and
1994 inventories, respectively. For other inventories, raw materials and
supplies are valued on a weighted average cost basis, while average production
cost is used for work in process and finished goods. The specific
identification method is used for patterns. If LIFO inventories were valued
using the same cost methods used for other inventories, their carrying values
would have increased by $1,504,000 and $ 1,257,000 at December 31, 1995 and
1994, respectively.
PROPERTY, PLANT AND EQUIPMENT
The provision for depreciation and amortization of property, plant and equipment
is determined on the basis of estimated useful lives using the straight-line
method. Certain industrial development grants provided by the Federal and state
governments of Germany are included as reductions of property, plant and
equipment and are being amortized over the period the related assets are being
depreciated.
INTANGIBLE ASSETS
Intangible assets consist principally of costs in excess of net assets acquired
which totaled $6,090,000 and $5,207,000 (net of accumulated amortization of
$1,372,000 and $1,619,000) at December 31, 1995 and 1994, respectively. Such
costs are being amortized using the straight-line method over periods ranging
from ten to forty years (see Note 12).
F-10
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the consolidated balance sheets for cash and
cash equivalents, accounts receivable, accounts payable and current portion of
long-term debt approximate fair values. The fair value of the Company's long-
term debt approximates the reported amounts in the accompanying 1995
consolidated balance sheet as their respective interest rates approximate the
December 31, 1995 market rates for similar debt instruments.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share amounts are based on the weighted average
number of shares outstanding during the period, after giving effect to the
exercise of options (see Note 7) and assuming the repurchase, at fair market
value, of shares using the proceeds from such exercise, unless the effect is
antidilutive.
STOCK-BASED COMPENSATION
The Company grants stock options for a fixed number of shares to employees and
directors with an exercise price equal to the fair value of the shares at the
date of grant. The Company accounts for stock option grants in accordance with
APB Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly,
recognizes no compensation expense for the stock option grants.
2. ACQUISITIONS AND DISPOSITIONS
In November 1995 the Company acquired certain operating assets and the aluminum
foundry businesses of Bodine Robinson and Robinson Foundry, Inc. The aggregate
purchase price of $6,304,000 was funded by a cash payment of $2,704,000 and
300,000 shares of Intermet common stock. These assets form the base of the
Company's wholly-owned subsidiary, Alexander City Castings, Inc. ("Alexander
City"). This transaction has been accounted for as a purchase. The consolidated
financial statements include the results of operations of Alexander City since
the date of acquisition.
F-11
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
2. ACQUISITIONS AND DISPOSITIONS (CONTINUED)
In September and October 1995 the Company sold substantially all the operating
assets of its subsidiaries, PBM Industries, Inc. ("PBM") and InterMotive
Technologies, Inc. ("InterMotive"), respectively, in exchange for an aggregate
of $9,750,000 in cash and a $2,500,000 note and recognized a pre-tax loss of
$1,432,000.
The following represents the (unaudited) pro forma consolidated results of
operations for the Company for the years ended December 31, 1995 and 1994,
assuming the acquisitions and dispositions described above occurred on January
1, 1994 (in thousands of dollars, except for per share data):
<TABLE>
<CAPTION>
1995 1994
---------------------
<S> <C> <C>
Net sales $537,644 $483,614
Net income (loss) 28,107 (3,769)
Net income (loss) per common share 1.13 (0.15)
</TABLE>
These pro forma results are presented for comparative purposes only. They are
not necessarily
indicative of what would have occurred had the acquisitions actually been made
on January 1, 1994, or of future results of operations.
3. RESTRUCTURING
In August 1993 the Company decided to close its oldest plant, the Lower Basin
foundry in Virginia. A number of factors led to this decision, including the
amount of capital expenditures that would have been required at the plant, its
location in a flood plain and the uncertain outlook for profitable operations.
The decision to close this foundry was the principal reason for recording a
$24,000,000 restructuring charge in the third quarter of 1993. The charge
included provisions totaling $8,000,000 for severance pay and employee benefits
(including adjustments to pension and postretirement benefit liabilities)
related to the termination of approximately 650 employees, write-down of Lower
Basin capital assets and inventories of $6,000,000, provisions for operating
losses until closing of $4,500,000, building demolition and remediation costs of
$3,300,000 and other items totaling $2,200,000.
The Lower Basin foundry incurred operating losses prior to its closing in 1994
of approximately $1,500,000 in 1993 and $3,700,000 in 1994 which were charged
against the accrual. Severance and benefit payments to date have totaled
approximately $3,775,000. While the operating losses incurred prior to closing
were higher than originally expected, it now appears the severance and benefit
costs will be less than expected by a similar amount. Most of the foundry
equipment and supplies inventories have been removed and disposed of during
1995. Demolition of the building has begun and is expected to be completed in
1996. The restructuring liabilities include $7,334,000 and $2,362,000 in
current liabilities at December 31, 1995 and 1994, respectively, and $6,330,000
was included in other noncurrent liabilities at December 31, 1994.
F-12
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
4. JOINT VENTURE AND MINORITY INTEREST
The Company and an Australian company had, through subsidiaries, formed a joint
venture, ICA Castings ("ICA"). ICA constructed a pilot casting line in Kentucky
for the manufacture of aluminum automotive castings. The Company accounted for
its 50% interest in ICA under the equity method which was written off in 1994
(see Note 12). During 1995 the Company transferred its interest in ICA to the
other partner in the joint venture in exchange for $750,000 in cash.
In 1988, the Company purchased all of the common stock of Ironton Iron, Inc.
("Ironton"), a foundry company in Ohio. As a part of the transaction, the
previous common stockholders of Ironton received an equivalent number of shares
of Ironton's new 5% cumulative preferred stock with an aggregated par value of
$2,337,000. The preferred shares are to be retired at par value from net income
of Ironton, if available. No shares have been retired and no dividends have
been paid to date since Ironton has incurred a cumulative net loss since 1988.
The preferred shares are included in minority interest in the consolidated
balance sheet.
F-13
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
5. CASH FLOW INFORMATION
All short-term investments with original maturities of less than 90 days are
deemed to be cash equivalents for purposes of the statements of cash flows.
There were no noncash investing and financing activities in 1994 or 1993. Such
activities in 1995 were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
<S> <C>
Fair value of assets acquired $3,625
Costs in excess of net assets acquired 2,736
Less:
Liabilities assumed 57
Common stock of the Company 3,600
-------
Net cash paid for acquisition $2,704
=======
</TABLE>
6. DEBT
Notes payable consist of the following (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
-----------------
<S> <C> <C>
Bank lines of credit $ - $7,230
Neunkirchen bank loans 13 440
-----------------
$ 13 $7,670
=================
</TABLE>
The Company has borrowings available under line of credit agreements with two
banks. The agreements provide for loans up to $15,000,000 bearing interest at
the prime rate or other specified rates. There were no borrowings outstanding at
December 31, 1995 . The availabilities of these lines, which are normally
renewed on an annual basis, are at the discretion of the banks. Borrowings are
payable on demand.
The Company's German subsidiary, Columbus Neunkirchen Foundry GMbH
("Neunkirchen") has various revolving credit agreements which permit borrowings
up to DM18,898,000 (approximately $13,200,000) at December 31, 1995. These
lines of credit are payable on demand. The revolving credit lines bear interest
at current market rates (7.6% as of December 31, 1995).
F-14
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
6. DEBT (CONTINUED)
Long-term debt consists of the following (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
------------------
<S> <C> <C>
Intermet:
Term loan with insurance company (a) $25,000 $25,000
Revolving credit bank loan (b) - 60,162
Subsidiaries:
Lynchburg revenue bonds (c) 5,700 6,350
Neunkirchen term notes (d) 3,664 6,252
IMI promissory notes (e) 907 1,951
-------------------
Total 35,271 99,715
Less long-term debt due within one year 2,596 12,017
-------------------
Long-term debt due after one year $32,675 $87,698
===================
</TABLE>
(a) The Company has a term loan agreement with The Prudential Insurance Company
of America. The loan bears interest at a base rate plus an additional lender
margin in certain circumstances, with interest payable in quarterly
installments. The interest rate at December 31, 1995 was 8.05%. Principal
amounts are to be repaid in five equal annual installments beginning in
December 1998. The term loan agreement requires the Company to maintain
certain financial ratios and imposes limitations on dividends and certain
activities of the Company.
F-15
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
6. DEBT (CONTINUED)
(b) The Company also has a revolving credit agreement with a bank consortium
which was refinanced in August 1995. The agreement, which expires in August
1998, provides for loans up to $70,000,000 and DM8,000,000 (approximately
$5,600,000) at December 31, 1995. The borrowing limit is reduced by
$5,000,000 in August 1996 and $10,000,000 in August 1997, and certain
standby letters of credit issued by the Company. At December 31, 1995 such
standby letters of credit totaled $8,666,000. Interest rates on both the
U.S. dollar and deutsche mark facilities are based on various market rates,
and in most cases, include additional lender margins. There were no
borrowings under this agreement as of December 31, 1995. The Company also
must pay a fee at an annual rate of .375% on any unused portion of the loan
commitment. The revolving credit agreement requires the Company to maintain
certain financial ratios and imposes limitations on dividends and certain
activities.
(c) Lynchburg Foundry Company ("Lynchburg"), a wholly-owned subsidiary of the
Company, issued $4,400,000 of 6 1/4% Pollution Control Revenue Bonds Series
1973 maturing in December 1998 and $4,800,000 of 7% Industrial Revenue Bonds
maturing in June 2006. Bonds in the aggregate amount of $3,480,000 are
subject to mandatory redemption prior to maturity in annual amounts ranging
from $175,000 to $745,000 in 1996 through 2005. The bonds are also subject
to optional redemption prior to maturity. Intermet has agreed to indemnify
Lynchburg's former owner for any liability that may be incurred with respect
to its guarantee of the bonds.
(d) The term notes bear interest at rates ranging from 5% to 7.3% and mature at
various times through March 2003. These borrowings are secured by property,
plant and equipment with net book values aggregating to $32,800,000 at
December 31, 1995.
F-16
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
6. DEBT (CONTINUED)
(e) Intermet Machining, Inc., a wholly-owned subsidiary of Intermet, issued
various promissory notes totaling $2,900,000 to the selling shareholders of
PBM and InterMotive. The notes bear interest at 8%. The balance currently
outstanding is payable on March 31, 1996. The principal amounts are subject
to adjustment for the outcome of certain contingencies. The amounts
outstanding at December 31, 1995 and 1994 reflect adjustments for certain
such items.
Maturities of long-term debt at December 31, 1995 are as follows (in thousands
of dollars):
<TABLE>
<CAPTION>
<S> <C>
1996 $2,596
1997 1,719
1998 6,758
1999 5,323
2000 5,323
Thereafter 13,552
-------
$35,271
=======
</TABLE>
Interest paid totaled $6,485,000, $7,693,000 and $6,654,000 in 1995, 1994 and
1993, respectively. Interest of $88,000, $668,000 and $1,032,000 was capitalized
in 1995, 1994 and 1993, respectively.
The Company is in compliance with the terms and restrictions of its various loan
and credit agreements. At December 31, 1995, approximately $87,870,000 of the
Company's retained earnings were restricted and unavailable for the payment of
dividends under these agreements.
F-17
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
7. SHAREHOLDERS' EQUITY
The Company has a Key Individual Stock Option Plan ("Individual Plan") and a
Directors Stock Option Plan ("Directors Plan"). The Company has also granted
options to purchase common stock to certain individuals that are not covered
under these two plans. The Individual Plan, which provided for the granting of
options for 1,440,000 shares of common stock, expired in 1994 except as to
options still outstanding. A new plan was approved April 27, 1995 which
provided for granting of options for 1,500,000 shares of common stock. The
Directors Plan provides for the granting of options to purchase 100,000 shares
of common stock. Information regarding stock options is as follows:
<TABLE>
<CAPTION>
PRICE PER SHARE NUMBER OF SHARES
--------------- ----------------
<S> <C> <C>
Outstanding at December 31, 1992 $ 5.69-12.62 806,000
Granted 10.75-11.83 304,000
Exercised 5.69 - 8.87 (45,000)
Canceled or expired 5.69-10.75 (82,000)
----------
Outstanding at December 31, 1993 5.69-12.62 983,000
Granted 5.75-10.11 426,000
Exercised 5.69 (22,500)
Canceled or expired 5.69-10.75 (137 ,500)
----------
Outstanding at December 31, 1994 5.69-12.62 1,249,000
Granted 8.56-9.00 391,000
Exercised 5.69-10.75 (124,500)
Canceled or expired 5.69-11.83 (323,000)
----------
Outstanding at December 31, 1995 5.69-12.62 1,192,500
==========
</TABLE>
Options granted under the Individual Plan vest over a four-year period. All
other options granted were exercisable at the grant date. At December 31, 1995
options for 602,500 shares were exercisable, while 1,134,000 shares were
available for future grants.
F-18
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
7. SHAREHOLDERS' EQUITY (CONTINUED)
The Company has an Employee Stock Ownership Plan ("ESOP") for certain of its
United States employees who are not covered by collective bargaining agreements.
The ESOP requires contributions by the Company equal to 3% of the annual
compensation of the ESOP participants. The Company may, at its discretion, make
additional contributions within specified limits. Contributions to the Plan of
$685,000, $719,000 and $786,000 were expensed in 1995, 1994 and 1993,
respectively.
On October 6, 1995 the Company's Board of Directors declared a dividend of one
Right for each share of Intermet Common Stock held of record at the close of
business on October 17, 1995, pursuant to a Shareholder Protection Rights
Agreement dated October 6, 1995. The Rights are generally not exercisable until
10 days after an announcement by the Company that a person, as defined
(excluding, with certain limitations, any current 10% or more shareholders who
do not acquire additional shares, any of the Company's ESOP's or benefit plans,
and the Company or any of its wholly-owned subsidiaries), has acquired 10% of
the Company's Common Stock or announces a tender offer which could result in the
ownership of 10% or more of the Company's Common Stock. Each Right, should it
become exercisable, will entitle the owner to buy 1/100th of a share of
Participating Preferred Stock, a new series of the Company's Preferred Stock, at
an exercise price of $40.
In the event the Rights become exercisable as a result of the acquisition of
shares, each Right will entitle the owner, other than the acquiring person, to
buy at the Rights' then current exercise price a number of shares of Common
Stock with a market value equal to twice the exercise price. In addition,
unless the acquiring person owns more than 50% of the outstanding shares of
Common Stock, the Board of Directors may elect to exchange all outstanding
Rights (other than those owned by such acquiring person or affiliates thereof)
at an exchange ratio of one share of Common Stock per Right. Unless the Company
merges with another company under certain conditions or redeems or exchanges the
Rights before October 6, 2005, the Rights will expire on such date.
F-19
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
8. COMMITMENTS AND CONTINGENCIES
Future minimum rental payments required under building and equipment operating
leases that have initial or remaining noncancelable lease terms in excess of one
year at December 31, 1995 are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
<S> <C>
1996 $2,322
1997 2,365
1998 1,540
1999 900
2000 717
Thereafter 1,852
------
$9,696
======
</TABLE>
Total rental expense under operating leases aggregated $2,671,000,
$2,938,000 and $2,847,000 in 1995, 1994 and 1993, respectively.
At December 31, 1995 the Company had commitments for the purchase of equipment
totaling approximately $7,500,000.
The Environmental Protection Agency ("EPA") filed a complaint against Lynchburg
in August 1991. The complaint alleged various violations, the most significant
of which related to the treatment of certain hazardous waste at two foundries.
The Company and the EPA reached an agreement for a reduced penalty of $330,000
which was paid in 1995.
In March, 1994, the Company entered negotiations with the Ohio Attorney
General's office concerning past violations of Ohio water pollution laws and
regulations at the Ironton foundry. In November 1995, the Company agreed to
pay the State of Ohio the determined fine of $285,000 to settle this and all
other water discharge violations at Ironton. The Company has accrued this
liability at December 31, 1995 and expects to pay this in 1996 on receipt of the
State decree. In addition, the Company has submitted a plan to the Ohio EPA to
bring its facility into compliance with all applicable air emission
requirements, after that agency had advised management of several violations of
air pollution regulations. It is not known whether the agency will eventually
demand the payment of civil penalties for these past violations.
The Company is also engaged in various legal proceedings and other matters
incidental to its normal business activities.
The Company does not believe any of these above-mentioned proceedings or matters
are material in relation to the Company's consolidated financial position or
results of operations.
F-20
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
9. RETIREMENT PLANS AND BENEFITS
The Company maintains several noncontributory defined benefit pension plans for
certain of its U.S. employees covered by collective bargaining agreements. The
benefits are based on years of service. The Company's policy is to fund amounts
as required under applicable laws and regulations.
Net pension expense included the following components (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994 1993
---------------------------
<S> <C> <C> <C>
Service cost $ 693 $ 685 $ 917
Interest cost on projected benefit obligations 1,709 1,554 1,253
Return on plan assets (2,842) (381) (1,227)
Net amortization and deferral 1,847 (409 ) 598
----------------------------
$ 1,407 $1,449 $ 1,541
============================
</TABLE>
The reconciliation of the plans' funded status to the amounts reported in the
Company's consolidated balance sheets at December 31, 1995 and 1994 is as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
-------------------
<S> <C> <C>
Actuarial present value of accumulated benefit
obligations:
Vested $22,668 $19,224
Nonvested 2,009 1,201
-------------------
Total accumulated benefit obligations $24,677 $20,425
===================
Projected benefit obligations $24,677 $20,425
Plan assets at fair value 17,895 14,102
-------------------
Excess of projected benefit obligations
over assets 6,782 6,323
Unrecognized prior service cost (1,382) (1,298)
Unrecognized net actuarial loss (2,682) (1,519)
Unrecognized transition obligation (328) (380)
Additional minimum liability 4,392 3,197
--------------------
Pension liabilities included in consolidated
balance sheets $ 6,782 $ 6,323
===================
</TABLE>
F-21
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
9. RETIREMENT PLANS AND BENEFITS (CONTINUED)
The above pension liabilities include $4,336,000 and $5,284,000 shown in
noncurrent liabilities in the Company's consolidated balance sheets at December
31, 1995 and 1994, respectively.
The discount rate used in determining the actuarial present value of the
projected benefit obligations was 7.5% in 1995 and 8.25% in 1994. The expected
long-term rate of return on assets used in determining net pension expense was
9% in 1995, 1994 and 1993. Plan assets consist of publicly traded stocks and
bonds, cash equivalents and insurance contracts.
The Company maintains several defined contribution plans for certain hourly
employees. Contributions to these plans are accrued based on hours worked by
each employee, and totaled $635,000, $597,000 and $520,000 in 1995, 1994 and
1993, respectively. Some of the plans allow participants to make contributions,
on a pretax basis, of up to 20% of their compensation.
The Company also maintains a defined contribution plan for domestic salaried
employees. The Company contributes a specified percentage of the annual
compensation of participants. Participants are also allowed to make
contributions to the plan, on a pretax basis, of up to 10% of their
compensation. The Company matches 50% of participant contributions, up to a
specified limit. The Company accrued contributions to the plan of $1,023,000,
$1,077,000 and $1,024,000 in 1995, 1994 and 1993, respectively.
In addition to providing pension benefits, the Company provides health care and
life insurance benefits to certain retired U.S. employees and their dependents.
Salaried employees can become eligible for retiree health care benefits at age
55 depending on years of service. Certain hourly employees currently can become
eligible for retiree health care benefits at age 60 depending on years of
service. Retirees receive substantially the same health care benefits as active
employees. The medical plans generally pay 80% of most medical expenses less
deductible amounts. Salaried employees also contribute to the cost of dependent
coverage. The salaried employee coverage converts to a Medicare supplement at
age 65, while most hourly employee coverage ceases at age 65.
F-22
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
9. RETIREMENT PLANS AND BENEFITS (CONTINUED)
Net postretirement benefit expense for 1995, 1994 and 1993 included the
following components (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994 1993
---------------------------
<S> <C> <C> <C>
Service cost $ 909 $1,151 $1,217
Interest cost on accumulated benefit
obligation 2,414 2,426 2,745
Amortization (715) 31 51
---------------------------
$2,608 $3,608 $4,013
===========================
</TABLE>
The reconciliation of the postretirement benefit plans' funded status to the
amounts reported in the Company's consolidated balance sheets at December 31,
1995 and 1994 is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
------------------
<S> <C> <C>
Present value of accumulated postretirement
benefit obligation:
Retirees $15,081 $11,977
Fully eligible active participants 2,373 3,891
Other active participants 16,291 17,158
------------------
33,745 33,026
Unrecognized net gain 5,540 5,596
------------------
Postretirement benefit liability included in
consolidated balance sheets $39,285 $38,622
==================
</TABLE>
The discount rate used in determining the present value of the accumulated
postretirement benefit obligation was 7.5 % at December 31, 1995 and 8.25% at
December 31, 1994. The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 11.5% in 1995, declining by
0.5% per year to an ultimate rate of 6% for all employees under age 65 and 7.75%
in 1995, declining by .25% per year to an ultimate rate of 6.0% for all
employees 65 years and older. If the assumed health care cost trend rate were
increased 1% in all future years, the accumulated postretirement benefit
obligation would increase by $2,435,000 and postretirement benefit expense would
increase by $274,000.
F-23
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. INCOME TAXES
The provision (benefit) for income taxes consists of the following (in thousands
of dollars).
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------------
<S> <C> <C> <C>
Current:
Federal $ 7,436 $ 651 $(6,609)
State 2,058 1,629 1,394
Foreign 7,397 4,416 1,343
-----------------------------
16,891 6,696 (3,872)
Deferred:
Federal 3,288 (651) (3,100)
State 96 - (1,241)
Foreign (150) ( 149 ) (299)
-----------------------------
3,234 (800) (4,640)
-----------------------------
$20,125 $ 5,896 $(8,512)
=============================
</TABLE>
Income taxes paid (refunded) were approximately $8,407,000; $3,067,000
and $(626,000) in 1995, 1994 and 1993, respectively.
F-24
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. INCOME TAXES (CONTINUED)
The provision (benefit) for income taxes differs from the amount computed by
applying statutory U.S. federal income tax rates to income before income taxes
for the following reasons (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994 1993
--------------------------
<S> <C> <C> <C>
Provision (benefit) for income taxes
at U.S. statutory rate $15,932 $(1,781) $(10,197)
Losses with no tax effect (Note 12) 2,517 3,683 -
Other charges with no tax effect 803 1,938 1,244
Difference between U.S. and
foreign tax rates 3,081 998 (85)
Utilization of NOL and credit
carryforwards (3,608) - -
State income taxes, net of federal
income tax benefits 1,400 1,059 99
Other - (1) 427
-----------------------------
$20,125 $ 5,896 $ (8,512)
=============================
</TABLE>
F-25
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. INCOME TAXES (CONTINUED)
The tax effects of the types of temporary differences and carryforwards which
give rise to deferred income tax assets (liabilities) at December 31, 1995 and
1994 are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
--------------------
<S> <C> <C>
Compensation and benefit items,
primarily related to SFAS 106 $ 21,653 $ 20,839
Operating loss, capital loss and AMT
credit carryforwards 13,269 16,877
Other temporary differences 4,901 10,413
--------------------
Gross deferred income tax assets 39,823 48,129
--------------------
Depreciation and related items (10,863) (14,963)
Other temporary differences (2,798) (3,161)
---------------------
Gross deferred income tax liabilities (13,661) (18,124)
Valuation allowance (26,332) (26,332)
---------------------
Net deferred income taxes $ (170) $ 3,673
=====================
</TABLE>
These amounts are included in the consolidated balance sheets as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
------------------
<S> <C> <C>
Other current assets $ 3,774 $ 2,579
Other noncurrent assets 1,260 5,813
Other noncurrent liabilities (5,204) (4,719)
-------------------
$ (170) $ 3,673
==================
</TABLE>
F-26
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
10. INCOME TAXES (CONTINUED)
The net change in the valuation allowance during 1994 was a decrease
of $4,188,000. This decrease was primarily the result of a decrease in net
deferred income tax assets during 1994.
There are certain limitations on the use of most of the tax loss carryforwards
noted above. Tax loss carryforwards with a value of approximately $11,248,000
expire in various amounts between 1997 and 2010, while others with a value of
approximately $2,021,000 may be used indefinitely.
Approximately $1,900,000 of the deferred income tax asset valuation allowance
will be allocated to costs in excess of net assets acquired if the related
future tax benefits are subsequently recognized.
F-27
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
11. GEOGRAPHIC AREA AND MAJOR CUSTOMER INFORMATION
The Company produces iron castings, principally for automotive manufacturers in
North America and Europe. All sales are to unaffiliated customers. Revenue and
income amounts for the three years ended December 31, 1995, and identifiable
assets at the end of each year, were as follows for U.S. and foreign operations
(in thousands of dollars):
<TABLE>
<CAPTION>
1995 1994 1993
--------------------------------
<S> <C> <C> <C>
Net sales:
U.S $448,447 $433,067 $383,182
Foreign 93,302 68,202 61,032
Operating profit (loss):
U.S 36,763 (9,051) (29,015)
Foreign 16,052 10,779 5,529
Income (loss) before income taxes,
minority interest, and cumulative
effect of accounting changes:
U.S. 30,394 (14,476) (32,524)
Foreign 15,126 9,387 3,389
Identifiable assets:
U.S. 220,548 250,498 261,195
Foreign 53,523 55,766 46,263
</TABLE>
Net sales to customers exceeding 10% of consolidated net sales were as follows
(as a percentage of consolidated net sales):
<TABLE>
<CAPTION>
CUSTOMER 1995 1994 1993
---------------------------------------------------
<S> <C> <C> <C>
Chrysler 20% 23% 23%
General Motors 18 14 12
Ford 18 23 23
</TABLE>
F-28
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
12. QUARTERLY DATA AND SHARE INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------------------------------------------
(In Thousands of Dollars, Except Per Share Data)
-----------------------------------------------
1995
<S> <C> <C> <C> <C>
Net sales $153,278 $149,035 $117,331 $122,105
Gross profit 21,650 27,460 12,727 22,575
Net income 6,520 9,537 3,377 5,961
Net income per common
share .26 .39 .14 .24
Share prices (NASDAQ):
High 8.125 9.75 12.625 14.125
Low 6.25 7.625 9.50 9.50
1994
Net sales $118,889 $124,582 $120,990 $136,808
Gross profit 13,587 15,174 10,742 2,943
Net income (loss) 1,710 2,439 373 (15,507)
Net income (loss) per common
share .07 .10 .02 (.63)
Share prices (NASDAQ):
High 10.5 9.5 8 7.5
Low 8.5 7.5 6.25 4.75
</TABLE>
Third and fourth quarter sales are usually lower than the first and second
quarter sales due to plant closings by automotive manufacturers for vacations
and model changeovers. The above share price information represents inter-
dealer transactions in The Nasdaq National Market without retail markup,
markdown or commission.
F-29
<PAGE>
Intermet Corporation
Notes to Consolidated Financial Statements (continued)
The Company's previous Chairman and Vice-Chairman retired in the fourth quarter
of 1994. The Company provided them with retirement pay and other benefits for
specified periods and accrued $1,700,000 related to these arrangements. The
Company also accrued $3,612,000 for severance pay and benefits for the planned
termination of salaried employees related to a reorganization of the Company.
The amount of this accrual was based on the terms of an existing severance plan
and employment agreement. Both of these amounts were included in general and
administrative expenses in the 1994 consolidated statement of operations.
In the fourth quarter of 1994 it became apparent certain idle equipment, most of
which the Company tried to sell, had a recoverable value below its then current
net book value. The Company also determined the net book value of certain other
equipment still in use could not be fully recovered over its remaining useful
life. The Company recorded a 1994 fourth quarter charge of $4,552,000 related
to these items. The Company also wrote off the remaining cost in excess of net
assets of PBM in the fourth quarter; resulting in a charge to earnings of
$4,393,000. The write-off was recorded largely as the result of the probable
loss of a significant production contract at PBM. Both this charge and the
write-down of equipment are included in cost of sales in the 1994 consolidated
statement of operations.
During the fourth quarter of 1994 the Company notified its Australian partner of
the Company's intention to withdraw from the aluminum joint venture described in
Note 4. As a result of this decision, the Company wrote off the remaining value
of its investment in the joint venture. The charge to earnings of $2,001,000 is
included in general and administrative expenses in the 1994 consolidated
statement of operations.
The adjustments described above resulted in a loss before income taxes for the
Company's domestic operations in 1994. In light of this loss and the losses
reported in the preceding two years, the Company did not consider it appropriate
to recognize the federal income tax benefit related to the 1994 loss. The
deferred income tax asset valuation reserve was therefore increased $3,683,000
to offset the net deferred income tax asset generated by the 1994 domestic loss.
The Company was granted a retroactive price increase on certain products in
December 1993. Had this price increase been in effect at the beginning of 1993,
first, second and third quarter net income (loss) would each have been favorably
affected by $.01 per share.
F-30
<PAGE>
EXHIBIT 21
INCORPORATION
OR PLACE OF
NAME OF SUBSIDIARY ORGANIZATION
- ------------------ -------------
Alexander City Casting Alabama
Company, Inc.
Intermet Engineering Michigan
Services, Inc. (f/k/a
InterMotive Technologies,
Inc.)
Columbus Foundries, Inc. Georgia
Columbus Neunkirchen Federal Republic
Foundry, GmbH of Germany
Commercial and Precision Georgia
Machining, Inc.
Intermet Aluminum, Georgia
Inc.
Intermet Foundries, Inc. Georgia
Intermet International, Inc. Georgia
Intermet Machining, Inc. Georgia
Ironton Iron, Inc. Ohio
Lower Basin, Inc. Delaware
Lynchburg Foundry Virginia
Company
New River Castings Delaware
Company
Northern Castings Georgia
Corporation
PBM Industries, Inc. Delaware
Pennsylvania Castings Georgia
Corporation
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Intermet Corporation of our report dated January 26, 1996, included in the
1995 Annual Report to Shareholders of Intermet Corporation.
Our audits also included the financial statement schedule of Intermet
Corporation listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-57665, 33-58354, 33-58352 and 33-59011) pertaining to 50,000
shares of Intermet Corporation common stock, the Intermet Corporation Directors
Stock Option Plan, the Intermet Corporation Key Individual Stock Option Plan and
the Intermet Corporation Executive Stock Option and Incentive Award Plan,
respectively, of our report dated January 26, 1996, with respect to the
consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of Intermet
Corporation.
/s/ Ernst & Young LLP
March 26, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<CASH> 11,173
<SECURITIES> 0
<RECEIVABLES> 51,081
<ALLOWANCES> 1,267
<INVENTORY> 29,155
<CURRENT-ASSETS> 103,072
<PP&E> 344,288
<DEPRECIATION> 189,625
<TOTAL-ASSETS> 274,071
<CURRENT-LIABILITIES> 91,198
<BONDS> 0
0
0
<COMMON> 2,505
<OTHER-SE> 95,523
<TOTAL-LIABILITY-AND-EQUITY> 274,071
<SALES> 541,749
<TOTAL-REVENUES> 541,749
<CGS> 457,337
<TOTAL-COSTS> 488,934
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,461
<INCOME-PRETAX> 45,520
<INCOME-TAX> 20,125
<INCOME-CONTINUING> 25,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,395
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
<PAGE>
EXHIBIT 99
[LOGO OF INTERMET CORPORATION APPEARS HERE]
INTERMET CORPORATION
SUITE 200
5445 CORPORATE DRIVE
TROY, MICHIGAN 48098
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 11, 1996
The annual meeting of shareholders of Intermet Corporation (the "Company")
will be held on Thursday, April 11, 1996, at 9:00 a.m. at Cobb Galleria
Centre, Two Galleria Parkway, Atlanta, Georgia, for the purpose of considering
and voting upon the following matters, all of which are described in the
attached Proxy Statement:
1. The election of twelve directors to constitute the Board of Directors
and to serve until the next Annual Meeting and until their successors
are elected and qualified.
2. The approval of the appointment of Ernst & Young LLP as the independent
auditors of the Company for 1996.
3. Such other matters as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on February 26, 1996,
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
A Proxy Statement and a Proxy solicited by the Board of Directors are
enclosed. Please sign, date and return the Proxy promptly in the enclosed
business reply envelope. If you attend the meeting, you may, if you wish,
withdraw your Proxy and vote in person.
Also enclosed is the Company's 1995 Annual Report to Shareholders, which
contains financial data and other information concerning the Company.
By Order of the Board of Directors,
James W. Rydel
Vice President -- Administration
and Secretary
March 1, 1996
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY SO THAT YOUR VOTE MAY
BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
<PAGE>
INTERMET CORPORATION
SUITE 200
5445 CORPORATE DRIVE
TROY, MICHIGAN 48098
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Intermet Corporation (the "Company") for
use at the annual meeting of shareholders of the Company (the "Annual
Meeting") to be held on April 11, 1996, and any adjournment thereof, for the
purposes set forth in the accompanying notice of the meeting.
The expense of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be paid by the Company. Copies of
solicitation materials may be furnished to banks, brokerage houses and other
custodians, nominees and fiduciaries for forwarding to beneficial owners of
shares of the Company's Common Stock, and normal handling charges may be paid
for the forwarding service. In addition to solicitations by mail, directors
and regular employees of the Company may solicit Proxies in person, or by
telephone or telegraph. It is anticipated that this Proxy Statement and the
accompanying Proxy will first be mailed to shareholders on or about March 1,
1996.
Any Proxy given pursuant to this solicitation may be revoked without
compliance with any other formalities by any shareholder who attends the
meeting and gives oral notice of his or her election to vote in person. In
addition, any Proxy given pursuant to this solicitation may be revoked prior
to the meeting by delivering to the Secretary of the Company a notice of
revocation or a duly executed Proxy for the same shares bearing a later date.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1995, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, TO ANY
RECORD OR BENEFICIAL OWNER OF ITS COMMON STOCK AS OF FEBRUARY 26, 1996 WHO
REQUESTS A COPY. ANY REQUEST FOR THE ANNUAL REPORT ON FORM 10-K SHOULD BE IN
WRITING ADDRESSED TO:
JAMES W. RYDEL, SECRETARY
INTERMET CORPORATION
SUITE 200, 5445 CORPORATE DRIVE
TROY, MICHIGAN 48098
IF THE PERSON REQUESTING THE REPORT WAS NOT A SHAREHOLDER OF RECORD ON
FEBRUARY 26, 1996, THE REQUEST MUST INCLUDE A REPRESENTATION THAT THE PERSON
WAS A BENEFICIAL OWNER OF COMMON STOCK ON THAT DATE. COPIES OF ANY EXHIBITS
TO THE ANNUAL REPORT ON FORM 10-K WILL ALSO BE FURNISHED TO SHAREHOLDERS ON
REQUEST AND UPON THE PAYMENT OF THE COMPANY'S EXPENSE IN FURNISHING THE
EXHIBITS.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The record of shareholders entitled to vote at the Annual Meeting was taken
as of the close of business on February 26, 1996. On that date the Company had
outstanding and entitled to vote 25,050,374 shares of Common Stock, par value
$0.10 per share, with each share entitled to one vote. All references in this
Proxy Statement to percentages of shares beneficially owned are based on
25,686,765 shares of Common Stock deemed outstanding (which includes options
exercisable at January 1, 1996 to purchase 323,000 shares of Common Stock held
by current directors and executive officers).
<PAGE>
The following table sets forth certain information concerning the only
"persons" (as that term is defined by the Securities and Exchange Commission
("SEC")) who are known to the Company to be the beneficial owners of more than
five percent (5%) of the Company's Common Stock, which is its only class of
voting securities, as of January 1, 1996, and the ownership of the Company's
Common Stock as of that date by the directors and each of the Named Officers
(as defined under "Executive Compensation" below), and by all current
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OWNER OWNED BENEFICIALLY PERCENT OF CLASS
----- ------------------ ----------------
<S> <C> <C>
The Prudential Insurance Company of
America 2,367,500(1) 9.2%
Prudential Plaza
Newark, NJ 07101
J.P. Morgan & Co. Incorporated 2,067,720(2) 8.0%
60 Wall Street
New York, NY 10260
David L. Babson & Company, Inc. 2,066,500(3) 8.0%
One Memorial Drive
Cambridge, MA 02142
SunTrust Bank, Atlanta (as Trustee for 1,268,106 4.9%
Intermet Corporation Employee Stock
Ownership Trust)
25 Park Place, N.E.
Atlanta, GA 30303
George W. Mathews, Jr. 4,272,516(4) 16.6%
212 Townsend Place
Atlanta, Georgia 30327
John Doddridge 165,553(5) *
Vernon R. Alden 21,500(6) *
J. Frank Broyles 77,100(6) *
John P. Crecine 8,217(7) *
Anton Dorfmueller, Jr. 18,000(8) *
John B. Ellis 22,000(6)(18) *
Wilfred E. Gross, Jr. 479,500(6) 1.9%
A. Wayne Hardy 92,378(6) *
Harold C. McKenzie, Jr. 42,300(6)(9) *
J. Mason Reynolds 20,000(10) *
Curtis W. Tarr 45,280(11) *
Claxton James Peterson 37,624(12) *
Daryl R. Marsh 18,406(13) *
James W. Rydel 42,280(14) *
Charles Douglas Brown 96,396(15) *
John C. Engeswick 38,306(16) *
Doretha Christoph 10,200 *
All Executive Officers and Directors as 5,507,556(17) 21.4%
a Group
(18 persons)
</TABLE>
- --------
*Less than one percent
(1) Includes 2,364,400 shares with respect to which The Prudential Insurance
Company of America ("Prudential") has sole voting and dispositive power,
as reported on Schedule 13G, dated as of December 31, 1995, filed with the
SEC.
2
<PAGE>
(2) Includes 802,020 shares with respect to which J.P. Morgan & Co.,
Incorporated ("Morgan") has no voting power and 1,265,701 shares with
respect to which Morgan has sole dispositive power, as reported on
Schedule 13G, dated as of December 31, 1995, filed with the SEC.
(3) Includes 2,066,500 shares with respect to which David L. Babson &
Company, Inc. ("Babson") has no voting power as reported on Schedule 13G,
dated as of December 31, 1995, filed with the SEC.
(4) Does not include 664,920 shares of Common Stock owned January 1, 1996 by
Mr. Mathews' wife, as trustee for their adult children, and 554,450
shares of Common Stock held January 1, 1996 by Mr. Mathews' adult
children. In October 1995 Mr. Mathews was granted power of attorney with
respect to those shares for purposes of a Schedule 13D filing.
(5) Includes presently exercisable options for 100,000 shares of Common
Stock.
(6) Includes presently exercisable options for 12,000 shares of Common Stock.
(7) Includes presently exercisable options for 4,000 shares of Common Stock.
(8) Includes presently exercisable options for 8,000 shares of Common Stock.
(9) Includes 30,300 shares of Common Stock held as co-trustee under the will
of Mr. McKenzie's father.
(10) Includes presently exercisable options for 10,000 shares of Common Stock.
(11) Includes presently exercisable options for 4,000 shares of Common Stock.
(12) Includes presently exercisable options for 30,000 shares of Common Stock.
(13) Includes presently exercisable options for 4,000 shares of Common Stock.
(14) Includes presently exercisable options for 30,500 shares of Common Stock.
(15) Includes presently exercisable options for 25,500 shares of Common Stock.
(16) Includes presently exercisable options for 35,000 shares of Common Stock.
(17) Includes exercisable options at January 1, 1996 for 323,000 shares of
Common Stock.
(18) Does not include 13,500 shares of Common Stock owned by a corporation of
which Mr. Ellis is a director and minority shareholder.
Ms. D. Christoph, V. P. Finance, was late in reporting in June 1995 on Form 3
on shares owned by her upon becoming an executive officer of the Company.
NOMINATION AND ELECTION OF DIRECTORS
(PROPOSAL 1)
The By-Laws of the Company provide that the Board of Directors shall consist
of twelve directors. The term of office for each director continues until the
next annual meeting and until his successor is elected and qualified.
Each Proxy executed and returned by a shareholder will be voted as specified
thereon by the shareholder. If no specification is made, the Proxy will be
voted for the election of the nominees named below to constitute the entire
Board of Directors. In the event that any nominee withdraws or for any reason
is not able to serve as a director, the Proxy will be voted for such other
person as may be designated by the Board of Directors as a substitute nominee,
but in no event will the Proxy be voted for more than twelve nominees.
Management of the Company has no reason to believe that any nominee will not
serve if elected. All of the nominees are currently directors of the Company.
Directors are elected by a plurality of the votes cast by the holders of the
shares entitled to vote in an election at a meeting at which a quorum is
present. A quorum is present when the holders of a majority of the shares
outstanding on the record date are present at a meeting in person or by proxy.
An abstention and a broker non-vote would be included in determining whether a
quorum is present at a meeting, but would not otherwise affect the outcome of
a vote.
3
<PAGE>
INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following information, as of January 1, 1996, has been furnished by the
respective nominees for director. Except as otherwise indicated, each nominee
has been or was engaged in his present or last principal employment, in the
same or a similar position, for more than five years.
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION ABOUT NOMINEE
---------- -------------------------
<C> <S>
John Doddridge (55)............ Chairman of the Board and Chief Executive
Officer since October 27, 1994. Mr. Doddridge
was Vice Chairman and Chief Executive Officer
of Magna International, Inc., a supplier of
motor vehicle parts, from November 1992 until
November 1994, where he also served as a
director. From mid-1989 to 1992 he served as
President of North American Operations of Dana
Corporation, a motor vehicle parts
manufacturer, and prior to mid-1989 he served
as President of Hayes-Dana Inc., a subsidiary
of Dana Corporation. Mr. Doddridge serves as a
director of Detroit Diesel Corporation and The
Standard Products Co.
Vernon R. Alden (72)........... Director of the Company since 1986. A director
and trustee of several organizations, Mr.
Alden was Chairman of the Board and Executive
Committee of The Boston Company, Inc., a
financial services company, from 1969 to 1978
and President of Ohio University from 1962 to
1969. He is also a director of Augat, Inc.,
Colgate-Palmolive Company, Digital Equipment
Corporation and Sonesta International Hotels
Corporation.
J. Frank Broyles (71).......... Director of the Company since 1986 and its
predecessor from 1977 to 1984. Mr. Broyles has
been Athletic Director of the University of
Arkansas since 1958.
John P. Crecine (56)........... Director of the Company since 1992. Mr.
Crecine has served as Chairman and Chief
Executive Officer of Integrated Digital
Systems, Inc. since mid-1994. He was President
of the Georgia Institute of Technology from
1987 to mid-1994. Previously he served as a
professor at the University of Michigan and
founding director of the Institute of Public
Policy Studies from 1965 to 1975. He became
Dean of the College of Humanities and Social
Sciences at Carnegie Mellon University in
1976, a position he held until 1983 when he
became the University's Senior Vice President
for Academic Affairs. He held that position
until his Georgia Tech appointment. Mr.
Crecine is a director of HBO and Co.
Anton Dorfmueller, Jr. (69).... Director of the Company since 1990. Mr.
Dorfmueller served as North American agent to
Red Rock International, a robotics
manufacturer, during 1994. From 1988 to 1994
he served as a consultant to Andersen
Consulting. Mr. Dorfmueller retired in 1988 as
a Group Vice President of Ashland Chemical
Company.
John B. Ellis (71)............. Director of the Company since 1989. A private
investor, Mr. Ellis retired in 1986 as Senior
Vice President--Finance and Treasurer of
Genuine Parts Co., an automotive parts
distributor, where he had been employed in
various capacities since 1974. Mr. Ellis is a
director of Flowers Industries, Inc., Hughes
Supply, Inc., Integrity, Inc., Oxford
Industries, Inc., UAP, Inc. and
Interstate/Johnson Lane, Inc.; and director
emeritus of Genuine Parts Co.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION ABOUT NOMINEE
---------- -------------------------
<C> <S>
Wilfred E. Gross, Jr. (67)..... Director of the Company and its predecessor
since 1971. Mr. Gross is Chief Executive
Officer of W.T. Harvey Lumber Company in
Columbus, Georgia.
A. Wayne Hardy (59)............ Director of the Company and its predecessor
since 1978. Mr. Hardy is a private investor
and consultant. He was Chairman and Chief
Executive Officer of Eastern Inter-Trans
Services, Inc. from 1986 to 1992. From 1975 to
1986 Mr. Hardy was a Vice President of the
Company and its predecessor.
George W. Mathews, Jr. (68).... Director of the Company and its predecessor
since 1971, Mr. Mathews is the founder of the
Company and was Chairman of the Board and
Chief Executive Officer from 1971 until 1994.
He retired from the Company in December 1994.
Mr. Mathews serves as a director of Metrotrans
Corporation and is President of George Mathews
& Assoc., Inc.
Harold C. McKenzie, Jr. (64)... Director of the Company and its predecessor
since 1971. Mr. McKenzie retired at the end of
1986 from Southern Electric International,
Inc., a subsidiary of The Southern Company,
with which he was affiliated for thirty years.
He had served as Executive Vice President of
Georgia Power Company and as President and CEO
of Southern Electric International, Inc. He
was Chairman and CEO of Machine Technologies,
Inc. of Martinsville, Virginia, from 1986
until 1989 and a commercial real estate broker
with Haas & Dodd Realty Co. in Atlanta,
Georgia from 1989 to 1991. Mr. McKenzie is
presently serving as Facilities Coordinator
for The Carter Center of Emory University.
J. Mason Reynolds (68)......... Director of the Company since 1990. From 1986
until his retirement in 1989, Mr. Reynolds was
Executive Vice President of Allied Signal
Corp. and President of its Automotive Sector,
which manufactures automobile parts.
Curtis W. Tarr (71)............ Director of the Company since 1984. Mr. Tarr
retired as Vice Chairman of the Board as of
December 31, 1994, a position he held since
1992. At that time he also retired as
President of Intermet International, Inc., a
position he held since 1991. He served as a
consultant to the Company from late 1989
through 1990. Mr. Tarr was a professor and
Dean of the Johnson School of Management at
Cornell University from 1984 through 1989 and
remained a professor there until 1990. He was
a Vice President of Deere & Co., a farm
equipment manufacturer, from 1973 to 1983. Mr.
Tarr was President of Lawrence University,
Appleton, Wisconsin, from 1963 to 1969 and an
Undersecretary of State from 1972 to 1973. He
is also a director of State Farm Insurance
Companies. He retired from the George Banta
Co., Inc., board in 1995.
</TABLE>
There are no family relationships among the executive officers and directors
of the Company.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation paid by
the Company and its subsidiaries to the Company's Chief Executive Officer and
to the four most highly compensated executive officers of the Company
(collectively, the "Named Officers") for services rendered to the Company
during 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-----------------------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND PRINCIPAL ----------------------------------- RESTRICTED OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY BONUS (2) OTHER STOCK AWARD (NO. OF SHARES) COMPENSATION
- ------------------ ---- -------- --------- -------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John Doddridge.......... 1995 $350,016 $232,130 $179,436(3) -- 100,000 $11,661(4)
Chairman of the Board
and 1994 29,168 127,500(5) 96,591 $165,000(3) 100,000 --
Chief Executive Officer
(1) 1993 -- -- -- -- -- --
Claxton James Peterson.. 1995 190,000 116,070 8,286 -- 40,000 11,661(4)
Vice President--Foundry 1994 170,016 50,000 15,592 -- 8,000 12,025
Operations 1993 108,204 -- -- -- 8,000 10,276
Daryl R. Marsh.......... 1995 183,503 92,850 1,519 -- 20,000 11,661(4)
Vice President--Machin-
ing 1994 177,840 60,000 -- -- 16,000 12,025
Services 1993 65,628 68,000 -- -- -- 381
James W. Rydel.......... 1995 170,016 92,850 9,540 -- 25,000 11,661(4)
Vice President-- 1994 170,016 -- 1,318 -- 14,000 12,025
Administration and Sec-
retary 1993 110,016 15,000 1,146 -- 12,000 10,276
Charles Douglas Brown... 1995 140,016 92,850 13,668 -- 20,000 11,661(4)
Vice President--Sales
and 1994 145,008 -- 6,800 -- 12,000 12,025
Marketing 1993 102,649 -- 2,884 -- 10,000 10,276
</TABLE>
- --------
(1) Mr. Doddridge was hired October 27, 1994, and the Company commenced paying
a salary and bonus to him on December 1, 1994.
(2) The Company has reported bonuses in this Proxy Statement in the year
earned, not in the year paid.
(3) In 1994 Mr. Doddridge owned 30,000 shares of restricted stock with a value
of $165,000 on the date of the grant. 10,000 shares of Mr. Doddridge's
restricted stock were earned as of December 1, 1995 (at which date the
stock was valued at $12.50 per share versus the $5.50 share price when
granted). The compensation earned above the price on date of grant of the
restricted stock was $70,000. Mr. Doddridge will receive any dividends
paid with respect to the restricted stock. (No other Named Officer owns
restricted stock.) The value of Mr. Doddridge's 20,000 shares of
restricted stock at December 31, 1995 was $210,000. The restricted stock
vests at the rate of 10,000 shares on each of December 1, 1996 and
December 1, 1997.
(4) Includes (i) premiums under the Life Insurance Program of $1,161; (ii) a
Company ESOP contribution of $4,500; and (iii) Company and Company
matching Profit Sharing Plan contribution in the aggregate amount of
$6000.
(5) Includes 20,000 shares of Company Common Stock with a value of $115,000 on
the date of award.
6
<PAGE>
OPTION GRANTS. Shown below is further information on grants of stock options
during 1995 to the Named Officers, which are reflected in the Summary
Compensation Table. No stock appreciation rights were granted during 1995, and
none of the Company's compensation plans currently provides for the grant of
stock appreciation rights.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NO. OF AT ASSUMED ANNUAL RATES
SECURITIES % OF TOTAL OF STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION
OPTION/ GRANTED TO FOR OPTION TERM (2)
SARS EMPLOYEES EXERCISE EXPIRATION --------------------------
NAME GRANTED IN 1995 PRICE DATE 0% 5% 10%
---- ---------- ------------ -------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
John Doddridge.......... 100,000(1) 25.5% $9.00 06-15-05 -- $566,005 $1,243,374
Claxton James Peterson.. 40,000(1) 10.2% 9.00 06-15-05 -- 226,402 497,350
Daryl R. Marsh.......... 20,000(1) 5.1% 9.00 06-15-05 -- 113,201 248,675
James W. Rydel.......... 25,000(1) 6.4% 9.00 06-15-05 -- 141,501 311,844
Charles Douglas Brown... 20,000(1) 5.1% 9.00 06-15-05 -- 113,201 248,675
</TABLE>
- --------
(1) 25% are exercisable on the first anniversary of the grant date, 50% are
exercisable on the second anniversary of the grant date, 75% are
exercisable on the third anniversary of the grant date and 100% are
exercisable on the fourth anniversary of the grant date.
(2) "Potential Realizable Value" is disclosed in response to Securities and
Exchange Commission regulations that require such disclosure for
illustration only. The values disclosed are not intended to be, and should
not be interpreted as, representations or projections of the future value
of the Company's Common Stock or of the stock price. To lend perspective
to the illustrative "Potential Realizable Value," if the Company's Common
Stock price increases 5% per year for 10 years from January 1, 1995
(disregarding any dividend payments and assuming for purposes of the
calculation a constant number of shares outstanding), the total increase
in value of all shares outstanding at January 1, 1995 would be
approximately $112,000,000, and if the stock price increases 10% per year
over such period, the increase in value would be approximately
$247,000,000.
FISCAL YEAR-END VALUES. Shown below is information with respect to
unexercised options to purchase the Company's Common Stock held by the Named
Officers at December 31, 1995. No options were exercised during 1995 by a
Named Officer.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NO. OF SHARES SUBJECT TO VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
HELD AT DECEMBER 31, 1995 AT DECEMBER 31, 1995
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John Doddridge.............. 100,000 100,000 $475,000 $150,000
Claxton James Peterson...... 30,000 52,000 72,600 66,860
Daryl R. Marsh.............. 4,000 32,000 5,240 45,720
James W. Rydel.............. 30,500 44,500 54,565 49,755
Charles Douglas Brown....... 25,500 36,500 50,780 40,540
</TABLE>
Compensation of Directors
STANDARD ARRANGEMENTS
Directors who are not current or retired officers of the Company receive a
retainer of $3,000 per quarter, $1,500 for each Board of Directors meeting
attended, and $1,000 for each committee meeting attended. Directors are
reimbursed for expenses incurred in attending Board of Directors and committee
meetings.
7
<PAGE>
The Director's Stock Option Plan authorized the Company to issue options for
not more than 100,000 shares of the Company's Common Stock to directors.
Options granted under the plan must have an exercise price of no less than the
fair market value of the Common Stock on the date of grant. No options may be
granted after April 26, 2000, and the term of each option may not exceed ten
years from the date of grant. Additionally, the Compensation Committee passed
a motion stipulating that a director may not receive more than 12,000 stock
options. In 1995, as seven board members held the maximum number of stock
options, three non-employee directors received a total of 6,000 stock options
(or 2,000 options per Director) for shares of the Company's Common Stock at an
exercise price of $9.00 per share.
OTHER ARRANGEMENTS
Mr. Mathews. In connection with Mr. Mathews' retirement as Chairman and
Chief Executive Officer on December 1, 1994, the Company agreed to pay Mr.
Mathews the sum of $350,000 per year for three years. If Mr. Mathews dies
during such three year period, the Company agreed to continue payments of his
salary to his spouse until December 1, 1997. For three years after Mr.
Mathews' retirement, the Company also agreed to provide Mr. Mathews and his
spouse with medical and dental insurance, to provide Mr. Mathews with an
automobile and office space and to pay the salary and benefits for an
assistant for Mr. Mathews. In 1995 Mr. Mathews' retirement agreement was
modified to provide a one-time, lump-sum payment for an automobile.
Mr. Tarr. In connection with Mr. Tarr's retirement as President of Intermet
International, Inc. as of December 31, 1994, the Company agreed to continue
his 1994 salary and to provide medical and dental insurance for Mr. Tarr and
his spouse for a period of one year.
Mr. Dorfmueller. In connection with Mr. Dorfmueller's consulting work
performed for the Company, he was paid $2,740 during 1995.
In 1995 the Board of Directors approved a donation of $350,000 payable over
eight (8) years ($35,000 paid in 1995) to Georgia Tech for the creation of the
George W. Mathews Heritage Center (a Sports Museum).
8
<PAGE>
INTERMET CORPORATION
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
MR. DODDRIDGE
Mr. Doddridge's employment agreement, which was entered into on October 27,
1994 with employment commencing December 1, 1994 and pursuant to which he
serves as Chairman of the Board and Chief Executive Officer, runs through
December 31, 1997. The contract term automatically extends on a daily basis
such that the remaining term is always two years. Either the Company or Mr.
Doddridge may terminate the automatic extension.
If the Company terminates Mr. Doddridge's employment "without cause" (as
defined in the employment agreement) or if he terminates employment for "good
reason" (as defined in the employment agreement) prior to the end of the
contract term, he is entitled to a lump-sum payment equal to the sum of (1)
his accrued but unpaid salary, earned bonus and other earned benefits through
the date of termination, plus, (2) an amount equal to his annual base salary
which would have been payable through the end of the contract term, plus, (3)
an amount equal to the annual bonus paid for the fiscal year immediately prior
to the date of termination multiplied by a fraction where the numerator is the
number of full years and portions of years between the termination date and
the end of the contract term , and the denominator is the total number of
years in the contract term, and (4) the amount (if any) of unvested benefits
under any profit sharing plan, retirement plan, ESOP or any other plan which
are forfeited on account of his employment being terminated.
In the event of a "Change of Control" (as defined in the employment
agreement), and if Mr. Doddridge is subsequently terminated by the Company (or
successor company) "without cause" or terminates his employment for "good
reason", he is entitled to the same payments and benefits as described in the
previous paragraph.
In the event Mr. Doddridge is terminated for "cause" (as defined in the
employment agreement) by the Company, he shall receive all accrued salary,
earned bonus compensation, vested long-term incentive compensation and other
benefits through the date of termination, but shall receive no other severance
benefits.
Mr. Doddridge's employment agreement contains restrictive covenants pursuant
to which Mr. Doddridge has agreed not to compete with the Company during the
period of his employment and following termination of his employment for a
period of one year, except in the event of termination "without cause" or for
"good reason" or termination for any reason during the two-year period
following a "Change of Control".
OTHER EXECUTIVES
The Company has entered into employment agreements with six other executive
officers, including the Named Officers. All current agreements were dated
October 25, 1995 and cover an eighteen month period from November 1, 1995
through April 30, 1997. Beginning on May 1, 1996, the contract term
automatically extends on a daily basis such that the remaining term is never
less than one year.
If the Company terminates an executive's employment "without cause" (as
defined in the employment agreement) or if the executive terminates employment
for "good reason" (as defined in the employment agreement) prior to the end of
the contract term, he or she is entitled to (1) in a lump-sum, an amount equal
to the executive's accrued but unpaid base salary as of the date of
termination and any unpaid annual bonus from the prior Annual Bonus Period (as
defined in the agreement); (2) in monthly payments, the executive's base
salary and benefits (if any) payable through the end of the contract term; and
(3) following the Annual Bonus Period during which the date of termination
occurs, a pro-rata portion of the Annual Bonus payable in accordance with
Company policy. An executive is entitled to these same payments if employment
is terminated "without cause" or for "good reason" following a "Change of
Control" (as defined in the employment agreement).
In the event an executive officer is terminated for "cause" (as defined in
the employment agreement), he or she shall receive all accrued salary, earned
bonus compensation, vested long-term incentive compensation and other benefits
through the date of termination, but shall receive no other severance
benefits.
The executive employment agreements contain non-compete covenants effective
during employment and following termination for a period of one year, except
in the event of termination "without cause" or for "good reason" or
termination for any reason during the two-year period following a "Change in
Control".
9
<PAGE>
INTERMET CORPORATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors, has
furnished the following report on executive compensation for the fiscal year
ending December 31, 1995.
COMMITTEE RESPONSIBILITIES
The Committee is comprised of three non-employee directors. Committee
responsibilities, with respect to the compensation of key executives,
including the Named Officers, of the Company and its subsidiaries, include
reviews and recommendations relative to the following compensation elements:
. Base salary levels of the key executive officers of the Company;
. All aspects of the Company's annual bonus compensation plan;
. The Company's stock-based compensation;
. All aspects of the Company's two retirement plans, namely the 401(k)
Savings and Investment Plan and the Employee Stock Ownership Plan Trust;
. All employment agreements and amendments thereof; and
. The process and substance of all other aspects of compensation.
The Committee monitors market practices and trends, and makes revisions as
necessary, to ensure that the Company's programs (1) are adequate to attract,
retain and motivate the best possible executive talent and (2) benefit the
long-term interests of the Company and its shareholders.
OVERALL COMPENSATION PHILOSOPHY
The Company's underlying compensation philosophy is to link key executive
compensation to corporate performance and returns to stockholders. To this
end, the Company has developed an overall compensation strategy and specific
compensation plans that tie a significant portion of executive compensation to
the Company's success in meeting specified performance goals and to
appreciation in the Company's Common Stock price. The three concepts, outlined
below, are the foundation of the Company's compensation philosophy:
Pay for Performance. In 1995, the Company based a greater portion of key
executive compensation on incentive pay, or pay for performance. The Company
emphasizes variable, at-risk compensation that is dependent upon the
employees' level of success in meeting specified Company goals.
Target Ownership and Equity Orientation. To properly align employee and
shareholder interests, equity-based plans represent a fundamental component of
the at-risk portion of total compensation. Consistent with this philosophy,
the Company strongly encourages its key executives to establish and maintain a
target ownership level equal to a minimum of two times their base salary level
in Company stock. Additionally, the key executives are strongly encouraged to
achieve this target ownership level as soon as possible. As the initial target
ownership levels are met, the Committee anticipates raising the minimum
ownership level to three times base salary. The emphasis on key executive
stock ownership will further align the interests of the Company's executives
and its shareholders.
Management Development. The Company's compensation opportunities are
structured to attract, retain and motivate those key executives who are
proficient in maximizing shareholder value.
The basic elements of the Company's executive compensation packages are base
salary, annual incentive compensation and long-term incentive compensation.
The Committee's policies with respect to each of these elements are discussed
below. In addition, while the elements of compensation described below are
considered separately, the Committee takes into account the total compensation
package afforded by Intermet to each individual, including pension benefits,
severance plans, insurance and other benefits.
10
<PAGE>
IRC (S) 162(M)
The Committee has considered Section 162(m) of the Internal Revenue Code of
1986, as amended, regarding qualifying compensation paid to the Company's
executive officers for deductibility in structuring compensation arrangements
for 1995. The Committee intends to make every effort to ensure that all
compensation awarded to the Company's executives is fully deductible. The
regulations implementing Section 162(m) have not required any changes in the
Company's current executive compensation program in order to maintain the
deductibility of executive compensation where the Company anticipates a
deduction.
BASE SALARIES
Individual salaries for specified executives are reviewed annually and
recommendations for adjustments are made to the Board by the Chief Executive
Officer based on individual responsibilities, performance over time and the
Committee's judgment of overall Company financial performance.
In 1995, the Company's approach to the base compensation for its key
executives, including the Chief Executive Officer, was to hold base
compensation levels slightly below industry peer group averages. Competitive
market average compensation levels were determined by independent third-party
studies, published survey sources and market studies of comparably sized
companies competing within the same markets as the Company. The combined
efforts of holding base salary levels below market levels and incorporating
lower merit increases going forward will enable the Company to control the
fixed portion of its compensation costs over time, while placing increased
emphasis on the "at-risk" components, or annual and long-term incentive
compensation, as discussed below.
ANNUAL INCENTIVE COMPENSATION
Every annual incentive payout to key executives depends on results, not
efforts.
1995 marked the first year of the Company's Profit Sharing Plan for key
executives on the Operating Committee. The purpose of this plan is to provide
an incentive compensation system which rewards corporate operating management
proportionately to the profitability of the Corporation. In 1995, participants
received a percentage of audited annual pre-tax earnings of the Company,
before minority interests and corporate profit sharing adjustments.
Similarly, an annual incentive plan was implemented at the Plant General
Manager level, as the performance of these individuals significantly impacts
Intermet's corporate results. The purpose of this plan is to provide
incentives that reward Plant General Managers proportionately to the plant
profitability, as measured by pre-tax profit. At the end of each year, the
incentive amount received by each participant is determined as follows:
(1) 90% of each participant's incentive payout, as measured by the pre-tax
profitability of their respective plant, is paid in cash and (2) 10% is
allocated to an incentive pool from which all domestic Plant General Managers
receive a pro-rata share of the total pool amount, which is also paid in cash.
LONG-TERM INCENTIVE COMPENSATION
The Company maintains, for key executives and management of the Company and
its subsidiaries, certain stock-based compensation plans, which allow the
Committee to award the individuals it selects stock awards, restricted stock
awards, incentive stock options and non-qualified stock options. Awards under
these stock-based compensation plans directly link potential participant
rewards to increases in shareholder value.
The Company historically has provided the majority of its stock-based
compensation in the form of stock options. Stock options are granted with an
exercise price equal to the market price of the Company's Common Stock on the
date of grant and become exercisable over a four year period. This approach is
designed to encourage the creation of stockholder value and the retention of
the executives over the long term, as this element of the compensation package
has value only to the extent that stock price appreciation occurs.
11
<PAGE>
The Director's Stock Option Plan authorizes the Company to issue options for
not more than 100,000 shares of the Company's Common Stock to directors.
Options granted under the plan must have an exercise price of no less than the
fair market value of the Common Stock on the date of grant. No options may be
granted after April 26, 2000, and the term of each option may not exceed ten
years from the date of grant. Additionally, the Compensation Committee passed
a motion stipulating that a director may not receive more than 12,000 stock
options. In 1995, as seven board members held the maximum number of stock
options, three non-employee directors received a total of 6,000 stock options
(or 2,000 options per Director) for shares of the Company's Common Stock at an
exercise price of $9.00 per share.
In 1995, the Company's shareholders ratified the Executive Stock Option and
Incentive Award Plan. The purpose of this plan is to reward key executives and
managers only when the shareholders are rewarded. This plan replaces the
Company's 1984 Key Individual Stock Option Plan and permits the grant of non-
qualified stock options, incentive stock options, restricted stock and stock
awards to key executives and managers of the Company. The total number of
shares available for grant under the Plan, is 1,500,000 shares. During 1995,
the Compensation Committee granted 10,000 shares of restricted stock, 259,000
incentive stock options and 126,000 non-qualified stock options under the plan
to 29 key executives and managers with exercise prices ranging from $8.5625 to
$9.00 per share.
CEO COMPENSATION
Mr. Doddridge's base salary for 1995 was $350,000, as established in his
employment agreement, and was based on competitive market data and the other
criteria discussed above under "Base Salaries" at the time the agreement was
made on October 27, 1994. Mr. Doddridge's employment agreement, pursuant to
which he serves as Chairman of the Board and Chief Executive Officer, has a 38
month term ending of December 31, 1997 but is automatically extended each day
after December 31, 1995 for an additional two years. Under his agreement, Mr.
Doddridge's base salary is subject to an increase at the discretion of the
Compensation Committee.
Mr. Doddridge's 1995 annual incentive award was $232,130 paid in cash, which
represents 66.3% of his 1995 base salary. This award was determined by the
same criteria discussed above under "Annual Incentive Compensation" and
rewarded Mr. Doddridge with a percentage of audited annual pre-tax earnings of
the Company, before minority interests and corporate profit sharing
adjustments.
Mr. Doddridge received a stock option grant to purchase 100,000 shares at
$9.00, the fair market value on the date of grant, June 15, 1995. Of these,
44,000 were incentive stock options and 56,000 were non-qualified stock
options. In determining the option grant level for Mr. Doddridge, the
Committee considered individual performance, current ownership level of
Intermet shares and target ownership goals, as described herein under "Overall
Compensation Philosophy". The Committee believes that Mr. Doddridge's stock
option grant continues to align his compensation more directly with the
interests of Intermet's shareholders.
BENEFITS
The Company provides benefits at no charge to each salaried employee,
including medical, dental, short and long-term disability, accidental death
and dismemberment, life insurance and dependent life insurance. The Company
also has a medical reimbursement plan available to the Named Officers and
other key employees that compensates them for certain medical expenses not
covered by the regular group insurance programs.
RETIREMENT PLANS
The Company has a two-part retirement program: the 401(k) Savings and
Investment Plan and the Employee Stock Ownership Plan Trust, which are
available to eligible salaried employees, including the Named Officers.
The 401(k) Savings and Investment Plan permits eligible salaried employees
to contribute up to 10% of their compensation subject to certain limitations,
and invest it in one or more of five investment funds offered through the
Plan. The Company matches an individual's contribution at a rate of fifty
cents for each dollar saved, up to 4% of pay. At the end of the year, the
Company makes an added contribution to the individual's account of an amount
equal to 2% of the individual's annual compensation.
12
<PAGE>
The Employee Stock Ownership Plan Trust purchases Common Stock of the
Company for its eligible salaried employees. The Company contributes an amount
equal to 3% of the individual's wages or salary.
OTHER AWARDS
The Company provides automobiles for certain key employees including sales
people. When these are used for personal rather than business needs, the
Company determines the cost of that use and includes that amount on the W-2
form sent to the Internal Revenue Services.
The Company has a salary continuation plan in the event of the death of
certain key executives. Salary is paid for one year following the death of the
Chairman or President of the Company, nine months for other executive officers
of the Company, and six months for certain executive officers of one of the
subsidiaries of the Company.
CONCLUSION
Through the programs described above, a significant portion of the Company's
executive compensation is linked directly to corporate performance and stock
price appreciation. The Committee intends to continue the policy of linking
executive compensation to corporate performance and returns to shareholders,
recognizing that the business cycle from time to time may result in an
imbalance for a particular period.
INTERMET CORPORATION COMPENSATION COMMITTEE
Vernon R. Alden
J. Frank Broyles
John P. Crecine
13
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the Russell 2000 Index and the cumulative total
return for a group of companies consisting of Arvin Industries, Inc., Chrysler
Corporation, Dana Corporation, Ford Motor Company, General Motors Corporation,
MascoTech, Inc. (formerly known as Masco Industries, Inc.), Simpson
Industries, Inc. and Standard Products Company, for the period of five years
commencing on December 31, 1990 and ended December 31, 1995.
INMT PEER GROUP RUSSELL 2000
12/90 100 100 100
12/91 154 98 146
12/92 212 147 173
12/93 199 241 206
12/94 145 202 203
12/95 226 240 260
CERTAIN TRANSACTIONS
The Prudential Insurance Company of America ("Prudential") is the record
owner of 2,367,500 shares (9.2%) of the outstanding Company Common Stock, with
respect to which Prudential had certain piggyback registration rights. These
registration rights expired December 31, 1995. On December 11, 1992, the
Company sold $25,000,000 principal amount of Senior Notes due December 11,
2002 to Prudential.
On March 31, 1992, a subsidiary of the Company acquired all of the common
and preferred stock of PBM Industries, Inc. ("PBM"). Prudential and two of its
affiliates were minority shareholders of PBM. As of December 31, 1995, the
Company owed approximately $151,769 in principal and interest to Prudential on
such notes.
On August 21, 1995 the Company entered into a Credit Agreement (the
"Agreement") with certain domestic and foreign lenders, relating to a
$70,000,000 and DM 8,000,000 revolving line of credit. On February 23, 1996,
the Agreement was amended and restated to provide the Company with a $100
million revolving credit facility pursuant to which SunTrust Bank, Atlanta
(formerly known as Trust Company Bank) is one of the
14
<PAGE>
lenders under the Credit Agreement and also acts as agent for the other
lenders. SunTrust Bank, Atlanta is the trustee of the Company's Employee Stock
Ownership Plan Trust and in such capacity owns of record 1,268,106 (4.9%) of
the Company's outstanding Common Stock.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during 1995. All of the directors
attended at least 75% of all meetings of the Board and of each committee of
the Board on which they served.
The Compensation Committee of the Board of Directors sets the compensation
for the Company's executive officers and key personnel. This Committee also
acts as the Nominating Committee. The Compensation Committee is currently
comprised of Messrs. Alden, Broyles and Crecine. The Compensation Committee
held four meetings during 1995.
The Audit Committee reviews financial controls and the methods of
preparation of the Company's financial statements, evaluates audit performance
and reports on such matters to the Board. The Audit Committee, which is
currently comprised of Messrs. Dorfmueller, Gross, and McKenzie, held two
meetings during 1995.
APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2)
The Board of Directors has appointed Ernst & Young LLP as the Company's
independent auditors for 1996, subject to approval of this appointment by the
shareholders of the Company at the Annual Meeting.
Ernst & Young LLP was the principal independent auditors for the Company for
1995. Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they
desire to do so and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL, AND
THE ENCLOSED PROXY WILL BE SO VOTED IN THAT MANNER UNLESS THE SHAREHOLDER
EXECUTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY OR ABSTAINS FROM VOTING
ON THIS PROPOSAL.
SHAREHOLDER PROPOSALS
In accordance with the provisions of Rule 14a-8(a)(-3)(i) of the Securities
and Exchange Commission, proposals of shareholders intended to be presented at
the Company's 1997 Annual Meeting must be received by November 1, 1996 in
order to be eligible for inclusion in the proxy statement and form of proxy
for that meeting.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Company knows of no matters other than those stated above
that are to be brought before the meeting. If any other matter is presented
for consideration and voting, the persons named as proxies in the enclosed
Proxy intend to vote the Proxy in accordance with their judgment of what is in
the best interest of the Company.
Dated: March 1, 1996
15
<PAGE>
COMMON STOCK OF INTERMET CORPORATION
DIRECTORS FOR VOTING STOCK ALLOCATED
TO A PARTICIPANT'S ACCOUNT PURSUANT TO THE
INTEMET CORPORATION EMPLOYEE STOCK OWNERSHIP TRUST
The undersigned participant in the Employee Stock Ownership Plan ("ESOP")
hereby diects SunTrust Bank as Trustee of the Intermet Corporation Employee
Stock Ownership Trust to vote those shares of Common Stock of Intermet
Corporation (the "Company") allocated to the undersigned's account in
connection with the Annual Meeting of Shareholders
of INTERMET CORPORATION to be held on April 11, 1996, and any
adjournment thereof:
1. Election of Directors
John Doddridge; Vernon R. Alden; J. Frank Broyles; John P. Crecine; Anton
Dorfmueller, Jr.; John B. Ellis; Wilfred E. Gross, Jr.; A. Wayne Hardy;
George W. Mathews, Jr.; Harold C. McKenzie, Jr.; J. Mason Reynolds; Curtis
W. Tarr.
[_] FOR all nominees for director listed above (except as marked to the
contrary).
[_] WITHHOLD AUTHORITY to vote for all nominees listed above.
[_] WITHHOLD AUTHORITY to vote for an individual nominee. Write name(s)
of nominee(s) below.
--------------------------------------------------------------------------
2. Appointment of Ernst & Young LLP as the independent auditors of the Company
for 1996.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In accordance with their best judgment with respect to any other matters
that may properly come before the meeting.
<PAGE>
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION AS DIRECTORS OF THE
PERSONS NAMED IN THE PROXY, AND "FOR" APPROVAL OF THE INDEPENDENT AUDITORS,
AND, UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED. THE TRUSTEE WILL VOTE THOSE SHARES ALLOCATED TO
ESOP PARTICIPANTS FOR WHICH IT DOES NOT RECEIVE TIMELY VOTING INSTRUCTIONS.
Please sign this Proxy exactly as
name appears on the Proxy.
-------------------------------------
Note: When signing as attorney,
trustee, administrator or guardian,
please give your title as such. In
the case of joint tenants, each
joint owner must sign.
Date:
-------------------------------
<PAGE>
COMMON STOCK
OF INTERMET CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 1996 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints John Doddridge and James W. Rydel, or either
of them with power of substitution to each, the proxies of the undersigned to
vote the Common Stock of the undersigned at the Annual Meeting of Shareholders
of INTERMET CORPORATION (the "Company") to be held on April 11, 1996, and any
adjournment thereof.
1. Election of Directors
John Doddridge; Vernon R. Alden; J. Frank Broyles; John P. Crecine; Anton
Dorfmueller, Jr.; John B. Ellis; Wilfred E. Gross, Jr.; A. Wayne Hardy;
George W. Mathews, Jr.; Harold C. McKenzie, Jr.; J. Mason Reynolds; Curtis
W. Tarr.
[_] FOR all nominees for director listed above (except as marked to the
contrary).
[_] WITHHOLD AUTHORITY to vote for all nominees listed above.
[_] WITHHOLD AUTHORITY to vote for an individual nominee. Write name(s)
below.
--------------------------------------------------------------------------
2. Appointment of Ernst & Young LLP as the independent auditors of the Company
for 1996.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In accordance with their best judgment with respect to any other matters
that may properly come before the meeting.
<PAGE>
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION AS DIRECTORS OF THE
PERSONS NAMED IN THE PROXY, AND "FOR" APPROVAL OF THE INDEPENDENT AUDITORS,
AND, UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED.
Please sign this Proxy exactly as
name appears on the Proxy.
-------------------------------------
Note: When signing as attorney,
trustee, administrator or guardian,
please give your title as such. In
the case of joint tenants, each
joint owner must sign.
Date:
-------------------------------
