SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-9148
THE PITTSTON COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
VIRGINIA 54-1317776
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 120070
100 FIRST STAMFORD PLACE,
STAMFORD, CONNECTICUT 06912-0070
(Address of principal (Zip Code)
executive offices)
</TABLE>
(203) 978-5200
(Registrant's telephone number, including area code)
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 and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No ___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
41,583,785 shares of $1 par value Pittston Services Group Common
Stock and 8,323,058 shares of $1 par value Pittston Minerals Group
Common Stock as of May 6, 1994.
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars, except per share amounts)
<CAPTION>
Mar. 31, Dec. 31,
ASSETS 1994 1993
- - -------------------------------------------------------------------------------------
<S> <C> <C>
Current assets: (Unaudited)
Cash and cash equivalents $ 47,456 32,412
Short-term investments, at lower of cost or market 23,413 22,946
Accounts receivable (net of estimated amount
uncollectible: 1994 - $15,852; 1993 - $16,040) 311,265 296,543
Inventories, at lower of cost or market 37,267 24,155
Prepaid expenses 32,152 27,493
Deferred income taxes 55,889 53,642
- - -------------------------------------------------------------------------------------
Total current assets 507,442 457,191
Property, plant and equipment, at cost (net of
accumulated depreciation, depletion and amortization:
1994 - $363,161; 1993 - $412,533) 412,683 369,821
Intangibles, net of amortization 294,636 215,042
Deferred pension assets 116,482 117,066
Deferred income taxes 97,818 59,846
Coal supply contracts 100,884 35,462
Other assets 108,914 107,073
- - -------------------------------------------------------------------------------------
Total assets $1,638,859 1,361,501
=====================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 10,255 9,546
Current maturities of long-term debt 8,361 7,908
Accounts payable 228,027 182,276
Accrued liabilities 258,828 237,714
- - -------------------------------------------------------------------------------------
Total current liabilities 505,471 437,444
Long-term debt, less current maturities 155,804 58,388
Postretirement benefits other than pensions 215,516 212,218
Workers' compensation and other claims 147,375 127,545
Deferred income taxes 16,418 15,847
Other liabilities 232,082 156,547
Shareholders' equity:
Preferred stock, par value $10 per share:
Authorized: 2,000,000 shares
$31.25 Series C Cumulative Convertible Preferred Stock:
Issued: 1994 - 161,000 shares 1,610 -
Pittston Services Group common stock, par value $1
per share: Authorized: 100,000,000 shares
Issued: 1994 - 41,563,951 shares;
1993 - 41,429,455 shares 41,564 41,429
Pittston Minerals Group common stock, par value $1
per share: Authorized 20,000,000 shares
Issued: 1994 - 8,322,869 shares;
1993 - 8,280,619 shares 8,323 8,281
Capital in excess of par value 401,653 354,911
Retained earnings 30,815 98,290
Equity adjustment from foreign currency translation (18,281) (18,381)
Employee benefits trust, at market value (99,491) (131,018)
- - -------------------------------------------------------------------------------------
Total shareholders' equity 366,193 353,512
- - -------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,638,859 1,361,501
=====================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Quarter Ended
March 31
- - ----------------------------------------------------------------------------------
1994 1993
- - ----------------------------------------------------------------------------------
<S> <C> <C>
Net sales $176,742 167,991
Operating revenues 411,053 363,757
- - ----------------------------------------------------------------------------------
Net sales and operating revenues 587,795 531,748
- - ----------------------------------------------------------------------------------
Cost of sales 189,781 157,835
Operating expenses 346,244 309,437
Special and other charges 90,806 -
Selling, general and administrative 55,250 53,883
- - ----------------------------------------------------------------------------------
Total costs and expenses 682,081 521,155
- - ----------------------------------------------------------------------------------
Other operating income 5,001 5,016
- - ----------------------------------------------------------------------------------
Operating profit (loss) (89,285) 15,609
Interest income 656 780
Interest expense (2,565) (3,306)
Other income (expense), net (2,335) (137)
- - ----------------------------------------------------------------------------------
Income (loss) before income taxes (93,529) 12,946
Provision (credit) for income taxes (29,961) 4,790
- - ----------------------------------------------------------------------------------
Net income (loss) (63,568) 8,156
Preferred stock dividends (1,006) -
- - ----------------------------------------------------------------------------------
Net income (loss) attributed to common shares $(64,574) 8,156
==================================================================================
Pittston Services Group:
Net income attributed to common shares $ 10,511 5,414
==================================================================================
Net income per common share $ .28 .15
==================================================================================
Cash dividends per common share $ .0500 .0455
==================================================================================
Average common shares outstanding 37,662 36,558
==================================================================================
Pittston Minerals Group:
Net income (loss) attributed to common shares $(75,085) 2,742
==================================================================================
Net income (loss) per common share $ (9.96) .38
==================================================================================
Cash dividends per common share $ .1625 .1477
==================================================================================
Average common shares outstanding 7,541 7,312
==================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Quarter Ended
March 31
- - ----------------------------------------------------------------------------------------
1994 1993
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(63,568) 8,156
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Noncash charges and other write-offs 46,826 163
Depreciation, depletion and amortization 23,166 18,572
Provision (credit) for deferred income taxes (30,619) 1,036
Provision (credit) for pensions, noncurrent 593 (582)
Provision for uncollectible accounts receivable 532 902
Equity in earnings of unconsolidated affiliates, net
of dividends received (1,437) (1,672)
Other operating, net 138 506
Change in operating assets and liabilities net
of effects of acquisitions and dispositions:
Increase in accounts receivable (16,964) (738)
Increase in inventories (7,662) (2,359)
Increase in prepaid expenses (3,496) (3,842)
Increase in accounts payable and accrued liabilities 23,613 6,476
Decrease (increase) in other assets 3,594 (2,950)
Increase (decrease) in other liabilities 18,090 (1,510)
Increase (decrease) in workers' compensation and
other claims, noncurrent 15,196 (4,674)
Other, net (192) 308
- - ----------------------------------------------------------------------------------------
Net cash provided by operating activities 7,810 17,792
- - ----------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (19,420) (31,798)
Property, plant and equipment pending lease financing (640) (2,688)
Disposal of property, plant and equipment 443 825
Acquisitions and related contingent payments (157,308) (35)
Other, net 11,319 8,064
- - ----------------------------------------------------------------------------------------
Net cash used by investing activities (165,606) (25,632)
- - ----------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt 101,167 10,667
Reductions of debt (4,855) (1,959)
Repurchase of common stock of the Company (270) (1,105)
Proceeds from exercise of stock options 2,927 1,007
Proceeds from preferred stock issuance, net
of cash expenses 77,578 -
Cost of Services Stock Proposal (4) -
Proceeds from the sale of stock to SIP - 129
Dividends paid (3,703) (2,739)
- - ----------------------------------------------------------------------------------------
Net cash provided by financing activities 172,840 6,000
- - ----------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 15,044 (1,840)
Cash and cash equivalents at beginning of period 32,412 30,340
- - ----------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 47,456 28,500
========================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of dollars, except per share amounts)
(1) On July 26, 1993, the shareholders of The Pittston Company (the
"Company") approved the Services Stock Proposal, as described in
the Company's proxy statement dated June 24, 1993, resulting in
the reclassification of the Company's common stock into shares
of Pittston Services Group Common Stock ("Services Stock") on a
share-for-share basis. In addition, a second class of common
stock, designated as Pittston Minerals Group Common Stock
("Minerals Stock") was distributed on a basis of one-fifth of
one share of Minerals Stock for each share of the Company's
previous common stock. The Pittston Services Group (the
"Services Group") consists of the Burlington Air Express Inc.
("Burlington"), Brink's, Incorporated ("Brink's") and Brink's
Home Security, Inc. ("BHS") operations of the Company. The
Pittston Minerals Group (the "Minerals Group") consists of the
Coal and Mineral Ventures operations of the Company. The
approval of the Services Stock Proposal did not result in any
transfer of assets and liabilities of the Company or any of its
subsidiaries. The Company prepares separate financial
statements for the Minerals and Services Groups in addition to
consolidated financial information of the Company.
Due to the reclassification of the Company's common stock, all
stock and per share data in the accompanying financial
statements for the period prior to the reclassification have
been restated from amounts previously reported. The primary
impacts of this restatement are as follows:
* Net income per common share has been restated in the
Consolidated Statements of Operations to reflect the two
classes of stock, Services Stock and Minerals Stock, as if
they were outstanding for all periods presented. For the
purposes of computing net income per common share of
Services Stock and Minerals Stock, the number of shares of
Services Stock are assumed to be the same as the total
corresponding number of shares of the Company's common
stock. The number of shares of Minerals Stock are assumed
to be one-fifth of the shares of the Company's common stock.
* All financial impacts of purchases and issuances of the
Company's common stock prior to the effective date of the
Services Stock Proposal have been attributed to each Group
in relation of their respective common equity to the
Company's common stock. Dividends paid by the Company were
attributed to the Services and Minerals Groups in relation
to the initial dividends paid on the Services Stock and the
Minerals Stock.
For 1993, all stock activity (including dividends) prior to the
Services Stock Proposal has been attributed to the Services
Group and the Minerals Group based on the methods described
above.
(2) The amounts of depreciation, depletion and amortization of
property, plant and equipment in the first quarters of 1994 and
1993 were $17,356 and $15,237, respectively.
(3) Cash payments made for interest and income taxes (net of refunds
received) were as follows:
First Quarter
-----------------------------------------
1994 1993
-----------------------------------------
Interest $ 3,066 3,313
=========================================
Income taxes $ 6,947 9,233
=========================================
During the three months ended March 31, 1994, the Company
acquired one business for an aggregate purchase price of
$157,245. See Note 4.
During the three months ended March 31, 1994 and 1993, capital
lease obligations of $1,204 and $10, respectively, were incurred
for leases of property, plant and equipment.
(4) On January 14, 1994, a wholly owned indirect subsidiary of the
Company completed the acquisition of substantially all of the
coal mining operations and coal sales contracts of Addington
Resources, Inc. for $157,245. The acquisition has been
accounted for as a purchase; accordingly, the purchase price has
been allocated to the underlying assets and liabilities based on
their respective estimated fair values at the date of
acquisition. Based on preliminary estimates, subject to
finalization by year-end, the fair value of assets acquired was
$180,592 and liabilities assumed was $104,912. The excess of
the purchase price over the fair value of the assets acquired
and liabilities assumed was $81,565 and is being amortized over
a period of forty years. The results of operations of the
acquired company have been included in the Company's results of
operations since the date of acquisition.
The acquisition was financed by the issuance of $80.5 million of
a new series of the Company's preferred stock convertible, into
Minerals Stock, and additional debt under existing credit
facilities. This financing has been attributed to the Minerals
Group. In March 1994, the additional debt incurred for this
acquisition was refinanced with a five-year term loan.
The following pro forma results, however, assume that the
acquisition and related financing had occurred at the beginning
of the periods presented. The unaudited pro forma data below
are not necessarily indicative of results that would have
occurred if the transaction was in effect for the quarters ended
March 31, 1994 and 1993, nor are they indicative of the future
results of operations of the Company.
<TABLE>
<CAPTION>
Pro Forma
Quarter Ended
March 31
--------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------
<S> <C> <C>
Net sales and operating revenues $597,721 589,830
====================================================================
Net income (loss) $(63,144) 9,765
====================================================================
Pittston Services Group:
Net income attributed to common
shares $ 10,511 5,414
--------------------------------------------------------------------
Net income per common share $ .28 .15
--------------------------------------------------------------------
Average common shares outstanding 37,662 36,558
====================================================================
Pittston Minerals Group:
Net income (loss) attributed to
common shares $(74,913) 3,093
--------------------------------------------------------------------
Net income (loss) per common share $ (9.93) .42
--------------------------------------------------------------------
Average common shares outstanding 7,541 7,312
====================================================================
</TABLE>
(5) The Company has authority to issue up to 2,000,000 shares of
preferred stock, par value $10 per share. In January 1994, the
Company issued 161,000 shares of its $31.25 Series C Cumulative
Convertible Preferred Stock, par value $10 per share (the
"Convertible Preferred Stock"). The Convertible Preferred Stock
pays an annual cumulative dividend of $31.25 per share payable
quarterly, in cash, in arrears, out of all funds of the Company
legally available therefor, when, as and if declared by the
Board of Directors of the Company, and bears a liquidation
preference of $500 per share, plus an amount equal to accrued
and unpaid dividends thereon. Each share of the Convertible
Preferred Stock is convertible at the option of the holder at
any time after March 11, 1994, unless previously redeemed or,
under certain circumstances, called for redemption, into shares
of Minerals Stock at a conversion price of $32.175 per share of
Minerals Stock, subject to adjustment in certain circumstances.
Except under certain circumstances, the Convertible Preferred
Stock is not redeemable prior to February 1, 1997. On and after
such date, the Company may at its option, redeem the Convertible
Preferred Stock, in whole or in part, for cash initially at a
price of $521.875 per share, and thereafter at prices declining
ratably annually on each February 1 to an amount equal to
$500.00 per share on and after February 1, 2004, plus in each
case an amount equal to accrued and unpaid dividends on the date
of redemption. Except under certain circumstances or as
prescribed by Virginia law, shares of the Convertible Preferred
Stock are nonvoting. Other than the Convertible Preferred Stock
no shares of preferred stock are presently issued or
outstanding.
(6) During the 1994 first quarter, the Company incurred pre-tax
charges of $90.8 million ($58.1 million after-tax) for asset
writedowns and accruals for costs related to facilities which
are being closed including contractually or statutorily required
employee severance and other benefit costs.
(7) On April 15, 1994, the Company redeemed all of the $27,811 of
9.2% Convertible Subordinated Debentures due July 1, 2004, at a
premium of $767. The premium and other charges related to the
redemption have been included in the Consolidated Statement of
Operations as other expenses.
(8) As of January 1, 1992, BHS elected to capitalize categories of
costs not previously capitalized for home security
installations. The additional costs not previously capitalized
consisted of costs for installation labor and related benefits
for supervisory, installation scheduling, equipment testing and
other support personnel and costs incurred in maintaining
facilities and vehicles dedicated to the installation process.
The effect of this change in accounting principle was to
increase operating profit for the Company and the BHS segment
for the first three months of 1994 and 1993 by $1,120 and $874,
respectively. The effect of this change increased net income
per common share of the Services Group for the first three
months of 1994 and 1993 by $.02 and $.01, respectively.
(9) Certain prior period amounts have been reclassified to conform
to current period financial statement presentation.
(10) All adjustments have been made which are, in the opinion of
management, necessary to a fair presentation of results of
operations for the periods reported herein. All such
adjustments are of a normal recurring nature.
<TABLE>
THE PITTSTON COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
<CAPTION>
Quarter Ended
March 31
----------------------------------------------------------------------
1994 1993
----------------------------------------------------------------------
<S> <C> <C>
Revenues: (In thousands)
Burlington $ 261,484 230,885
Brink's 123,765 112,023
BHS 25,804 20,849
Coal 173,416 163,985
Mineral Ventures 3,326 4,006
----------------------------------------------------------------------
Consolidated revenues $ 587,795 531,748
======================================================================
Operating profit (loss):
Burlington $ 9,010 1,474
Brink's 6,133 6,419
BHS 7,566 6,369
Coal (107,839) 5,539
Mineral Ventures (246) 366
----------------------------------------------------------------------
Segment operating profit (loss) (85,376) 20,167
General corporate expense (3,909) (4,558)
----------------------------------------------------------------------
Consolidated operating profit (loss) (89,285) 15,609
Interest income 656 780
Interest expense (2,565) (3,306)
Other income (expense), net (2,335) (137)
----------------------------------------------------------------------
Income (loss) before income taxes (93,529) 12,946
Provision (credit) for income taxes (29,961) 4,790
----------------------------------------------------------------------
Net income (loss) $ (63,568) 8,156
======================================================================
</TABLE>
RESULTS OF OPERATIONS
- - ---------------------
In the first quarter of 1994, The Pittston Company (the "Company")
reported a net loss of $63.6 million compared with net income of $8.2
million in the first quarter of 1993. The decrease was attributable
to the Coal segment whose results included charges for asset
writedowns, accruals for costs related to facilities which are being
closed and operating losses incurred related to these facilities,
which in the aggregate reduced operating profit and net income by
$97.5 million and $63.4 million, respectively. Net income in the 1994
first quarter was positively impacted by improved operating results
for Burlington Air Express Inc. ("Burlington") and Brink's Home
Security, Inc. ("BHS"), lower general corporate expenses and decreased
net interest expense, partially offset by decreased operating results
for Brink's, Incorporated ("Brink's") and Mineral Ventures and higher
nonoperating expenses compared with the same period of last year. The
first quarter of 1993 was adversely affected by a one-time coal
litigation charge and a corporate charge related to the Company's then
proposed reclassification of its common stock into two classes.
Burlington
- - ----------
Burlington reported an operating profit of $9.0 million in the 1994
first quarter, a $7.5 million increase over the $1.5 million profit
reported in the first quarter of 1993. Worldwide revenues rose 13% to
$261.5 million in the current year quarter from $230.9 million in the
prior year first quarter. The $30.6 million increase in revenues
resulted principally from higher volume in both domestic and
international markets. Increased revenues from higher volumes were
partially offset by lower average yields (revenues per pound). Total
weight shipped worldwide increased 17% to 275.6 million pounds in the
1994 first quarter from 235.9 million pounds in the same period a year
earlier. Operating expenses and selling, general and administrative
expenses increased $22.2 million and $1.2 million, respectively, in
the 1994 first quarter compared with the prior year quarter. The
increase in operating expenses largely resulted from the increased
volume of business. The increase in operating profit, resulting from
increased revenues exceeding increased operating expenses, for the
comparable period is almost entirely attributable to increased
Americas' operating profit of $7.3 million. Foreign operating profit
increased $.2 million compared with the prior year first quarter.
Americas' operating profit benefitted from domestic volume increases
of which a significant portion was from increased auto and electronics
industry shipments. Although export volumes also increased, U.S.
exports have been impacted by competitors focus on international
freight with aggressive pricing on new business. Americas' operating
profit also benefitted from lower fuel costs, the use of more
efficient aircraft placed in service during the first half of 1993 and
increased capacity as a result of the fourth quarter 1993 expansion of
its airfreight hub in Toledo, Ohio, which assisted in achieving
greater efficiency. These operations achieved improved results
despite service interruptions and increased costs due to adverse
weather conditions. The severe winter weather caused airport
shutdowns as well as increased mechanical problems. Gains from
increased volume of business and efficiencies for Americas' operations
were partially offset by decreased average yields in the 1994 first
quarter. Average yields continue to reflect a highly competitive
pricing environment. While pricing stabilized during the 1994 first
quarter, such prices were at reduced levels from those attained in the
1993 first quarter.
Gross profit from Intra-America business increased $10.2 million (30%)
compared with the prior year quarter as a 7% decrease in average costs
per pound and a 23% increase in weight shipped was only partially
offset by a 3% decrease in average yields. Export gross profit
increased $.2 million (2%) as a 5% decrease in average costs per pound
and an 8% increase in weight shipped was partially offset by a 6%
decrease in average yields. Americas' operating profit also included
a $1.2 million increase in profit from imports and charter business
offset by $4.3 million higher station and corporate support group
costs.
Operating results of foreign operations in the current year quarter
increased $.2 million, also benefitting from increased volumes. The
impact of increased volumes was partially offset by lower yields,
increased airline costs where the market capacity is constrained as
well as additional costs incurred in connection with offering complete
global logistics services.
Brink's
- - -------
Brink's operating profit decreased $.3 million to $6.1 million in the
first quarter of 1994 from $6.4 million in the first quarter of 1993
with an increase in revenues of $11.7 million, offset by increases in
operating expenses and selling, general and administrative expenses of
$11.5 million and a decrease in other operating income of $.5 million.
North American operating profits increased by $1.1 million to $4.5
million for the 1994 first quarter compared with the same period last
year, despite the adverse impacts of the severe winter weather and the
southern California earthquake. Earnings from international
subsidiaries and affiliates decreased $1.4 million to $1.7 million for
the same comparative period.
The increase in revenues was almost entirely due to North American
operations and largely from armored car and ATM operations. The
increase in operating profit for North American operations, however,
was largely attributable to North American air courier operations,
which increased $.9 million resulting from strong volumes of currency
and precious metals shipments. Despite strong revenues, North
American armored car operating profits decreased compared with 1993
results due to adverse weather conditions, the California earthquake,
a low level of special shipments and increased insurance costs.
Results for Canadian operations continued to improve throughout the
1994 first quarter largely due to cost efficiencies, growth in the ATM
line of business and service area withdrawals by a competitor.
The decrease in operating earnings from international subsidiaries and
affiliates was primarily due to unfavorable results in Mexico and
Brazil. Equity in earnings of foreign affiliates, which is included
in other operating income, decreased $.3 million. Unfavorable
results from Brink's Mexican affiliate, in which Brink's has a 20%
equity interest, reflected the impact of the local economic recession,
restructuring costs which included employee severance costs, and
strengthening competition. Brink's Brazil, a wholly-owned subsidiary,
reported an operating loss of $.6 million compared with income of $.4
million in the prior year first quarter. The 1994 first quarter loss
reflected the costs of extra security measures made necessary by the
significant increase in armed robberies at Brink's and its competitors
as well as the industry-wide strike in Rio de Janeiro which was
intended to focus government attention on the security problem.
BHS
- - ---
Operating profit of BHS increased $1.2 million to $7.6 million in the
first quarter of 1994 from $6.4 million in the prior year quarter.
The operating profit increase was primarily due to a $1.8 million
increase in monitoring margin, only partially offset by a $.4 million
increase in installation expenses and a $.2 million increase in
account servicing and administrative costs. The increase in the
monitoring margin reflects 20% higher monitoring revenues and a 21%
higher average subscriber base in the first quarter of 1994 compared
with the prior year quarter. Net new subscribers totaled 16,300 in
the first quarter of 1994 compared with 9,900 in the first quarter of
1993. Subscribers at March 31, 1994 totaled 275,900.
Foreign Operations
- - ------------------
A portion of the Company's financial results is derived from
activities in several foreign countries, each with a local currency
other than the U.S. dollar. Because the financial results of the
Company are reported in U.S. dollars, they are affected by the changes
in the value of the various foreign currencies in relation to the U.S.
dollar. The Company's international activity is not concentrated in
any single currency, which limits the risks of foreign rate
fluctuations. In addition, foreign currency rate fluctuations may
adversely affect transactions which are denominated in currencies
other than the functional currency. The Company routinely enters into
such transactions in the normal course of its business. Although the
diversity of its foreign operations limits the risks associated with
such transactions, the Company uses foreign exchange forward contracts
to hedge the risks associated with certain transactions denominated in
currencies other than the functional currency. Realized and
unrealized gains and losses on these contracts are deferred and
recognized as part of the specific transaction hedged. In addition,
cumulative translation adjustments relating to operations in countries
with highly inflationary economies are included in net income, along
with all transaction gains or losses for the period. Brink's
subsidiaries in Brazil and Israel operate in such highly inflationary
economies.
Additionally, the Company is subject to other risks customarily
associated with doing business in foreign countries, including
economic conditions, controls on repatriation of earnings and capital,
nationalization, expropriation and other forms of restrictive action
by local governments. The future effects, if any, of such risks on
the Company cannot be predicted.
Coal
- - ----
Coal operations had an operating loss totaling $107.8 million in the
first quarter of 1994 compared with an operating profit of $5.5
million in the year earlier quarter. The 1994 first quarter coal
operating loss included $90.8 million of charges for asset writedowns
and accruals for costs related to facilities which are being closed
and $6.7 million of operating losses incurred during the first quarter
related to those facilities. Coal's ongoing operations incurred
losses of $10.3 million in the 1994 first quarter. The decrease
compared with prior year operating results reflected the adverse
impact of the severe winter weather which particularly hampered
surface mine production and river transportation. The 1994 first
quarter included the operating results from substantially all the coal
mining operations and coal sales contracts of Addington Resources,
Inc. ("Addington"), which acquisition was completed by the Minerals
Group on January 14, 1994.
Sales volume of 6.1 million tons for the 1994 first quarter was 13% or
.7 million tons greater than sales volume in the 1993 first quarter.
Coal produced and purchased totaled 6.3 million tons for the 1994
first quarter, an 18% or 1.0 million ton increase over the 1993 first
quarter. Coal sales and produced/purchased in the first quarter of
1994 attributable to Addington operations amounted to 1.4 million tons
and 1.6 million tons, respectively.
In the 1994 first quarter, 38% of total production was derived from
deep mines and 62% was derived from surface mines compared with 62%
and 38% of deep and surface mine production, respectively, in the
first quarter of 1993.
Both production and sales in the 1994 first quarter were impacted by
the extreme cold weather and above-normal precipitation. Production
was hampered not only by a large number of lost production days, but
also by the continuing interruptions which limited output efficiencies
during periods of performance. Sales suffered due to lost loading
days and were impeded by closed and restricted road accessibility.
Sales were further impacted by the lack of rail car availability and
the disruption of river barge service initially due to frozen
waterways and subsequently due to the heavy snow melt and rain, which
raised the rivers above operational levels. The severe weather also
reduced output from purchased coal suppliers, which hindered the
ability to meet customer shipments during the period. In addition to
weather related difficulties, operations in the 1994 first quarter
were affected by lost business due to a utility customer's plant
closure and production shortfalls due to withdrawal of contractors
from the market.
Average coal margin (realization less current production costs of coal
sold), which was a loss of $1.02 per ton for the current year quarter,
decreased $3.81 per ton from the prior year first quarter with a 3.8%
or $1.13 per ton decrease in average realization and a 10.0% or $2.68
per ton increase in average current production costs of coal sold.
The increase in average current production costs was primarily caused
by the previously mentioned adverse weather conditions, which
significantly reduced planned production, and unusually high costs
incurred at mines which are being closed.
The metallurgical coal markets continued their long-term decline with
price reductions of $3.85 per ton negotiated early in the year between
Canadian and Australian producers and Japanese steel mills. The Coal
Operations recently reached agreement with its major Japanese steel
customers for new three-year contracts for metallurgical coal
shipments. Such agreements replace sales contracts which expired on
March 31, 1994. Pricing under the new agreements for the coal year
beginning April 1, 1994 was impacted by the price reductions accepted
by foreign producers, but is largely offset by modifications in coal
quality specification which allows the Coal Operation flexibility in
sourcing and blending the coals. The net margin for coal sold under
such agreements is expected to decrease less than $1 a ton for the
current contract year. Negotiations continue with certain customers
in Europe and Brazil. Although the outcome of these negotiations is
uncertain they are expected to result in potential margin reductions
from no change up to $1 per ton. Sales of metallurgical coal are
expected to decrease.
As a result of the continuing long-term decline in the metallurgical
coal markets, which is evidenced by the recent severe price
reductions, the Coal Operation is accelerating its strategy of
decreasing its exposure to these markets by reducing its metallurgical
coal production and increasing its production and sales of lower cost
surface minable steam coal. After a review of the economic viability
of the remaining metallurgical coal assets, certain underground mines
are being closed resulting in significant economic impairment of the
related preparation plants. In addition, one surface steam coal mine,
the Heartland mine, is being closed due to rising costs caused by
unfavorable geological conditions. The $90.8 million in charges to
operating earnings in the 1994 first quarter included a reduction in
the carrying value of these assets and related accruals for mine
closure costs. These charges included asset writedowns of $46.5
million, mine closing costs, including reclamation expenses, estimated
at $23.1 million and contractually or statutorily required employee
severance and other benefit costs estimated at $21.2 million. Of the
total charges, liabilities which are expected to be paid within one
year total $16.8 million with the balance over the next several years.
Operating results for the remainder of 1994 and thereafter should
benefit from these measures, the continued integration of Addington
operations, the planned expansion of surface mine operations and cost
reductions resulting from personnel cutbacks and the realignment of
administrative duties which were put in place at the end of the 1994
first quarter.
The Coal Operation's principal labor agreement with the UMWA expires
on June 30, 1994. The Company expects a replacement contract will be
submitted for a ratification vote prior to expiration of the existing
contract.
Operating profit in the first quarter of 1993 was negatively impacted
by a $1.8 million charge to settle litigation related to the moisture
content of tonnage used to compute royalty payments to the UMWA
pension and benefit funds during the period ending February 1, 1988.
The effect of these costs were offset by strong production, good
productivity, a solid performance at certain surface mining operations
in Virginia and Kentucky and favorable labor related expenses during
the period.
Mineral Ventures
- - ----------------
Operating profit of Mineral Ventures decreased $.6 million in the 1994
first quarter to an operating loss of $.2 million, from an operating
profit of $.4 million in the prior year first quarter. The decrease
in operating profit principally reflects increased exploration costs
in Australia and Nevada as well as lower production at the Stawell
gold mine. The production shortfall at the Stawell mine was largely
due to an operator accident during the 1994 first quarter, which also
resulted in higher operating costs for the period. The Stawell gold
mine, in which Mineral Ventures has a 67% net equity interest,
produced 16,855 ounces in the 1994 first quarter compared with 18,765
ounces in the comparable 1993 period. A joint venture in which
Mineral Ventures also has a net 67% equity interest continued gold
exploration in Nevada and Australia during the 1994 first quarter.
Other Operating Income
- - ----------------------
Other operating income for the first quarter of 1994 remained
unchanged from the $5.0 million recognized in the year earlier
quarter. Other operating income principally includes the Company's
share of net income of unconsolidated affiliates, which are
substantially attributable to equity affiliates of Brink's, and
royalty income from coal and natural gas properties.
Corporate Expenses
- - ------------------
General corporate expenses decreased $.7 million to $3.9 million for
the 1994 first quarter from $4.6 million for the 1993 first quarter.
Expenses in the 1993 first quarter were greater than those in the
current year quarter due to costs incurred in the 1993 period related
to the Company's then proposed reclassification of its common stock
into two classes.
Interest Expense
- - ----------------
Interest expense for the first quarter of 1994 decreased by $.7
million to $2.6 million from $3.3 million in the first quarter of
1993. Interest expense in the first quarter of 1993 included interest
assessed on settlement of coal litigation related to the moisture
content of tonnage used to compute royalty payments to UMWA pension
and benefit funds. Interest expense for the 1994 first quarter was
also affected by increased expense due to higher average borrowings
under revolving credit facilities resulting from the Addington
acquisition offset by lower interest expense resulting from early
payment of a term loan which occurred during the 1993 second quarter.
Other Income (Expense), Net
- - ---------------------------
Other net expense for the first quarter of 1994 increased $2.2 million
to a net expense of $2.3 million from $.1 million in the first quarter
of 1993. This included expenses of $1.2 million recognized on the
Company's redemption of its 9.2% Convertible Subordinated Debentures.
FINANCIAL CONDITION
- - -------------------
Cash Provided by Operations
- - ---------------------------
Cash provided by operating activities during the first three months of
1994 totaled $7.8 million compared with $17.8 million in the first
three months of 1993. Operations provided less cash in the 1994
period due to the integration of operating activities of Addington
which required cash to finance working capital needs since
acquisition. Net income, noncash charges and changes in operating
assets and liabilities in the 1994 first quarter were significantly
affected by after-tax special and other charges of $58.1 million which
had no effect in the first quarter on cash generated by operations.
Of the total $90.8 million of 1994 first quarter pre-tax charges,
$46.5 million was for noncash writedowns of assets and the remainder
represents liabilities, of which $16.8 million are expected to be paid
within one year with the balance over the next several years.
Capital Expenditures
- - --------------------
Cash capital expenditures for the first three months of 1994 totaled
$19.4 million. Of that amount, $2.4 million was spent by Coal, $.3
million was spent by Mineral Ventures, $5.2 million was spent by
Burlington, $3.0 million was spent by Brink's and $8.5 million was
spent by BHS. Expenditures incurred by BHS in the 1994 first quarter
were primarily for customer installations, representing the expansion
in the subscriber base. For the full year 1994, capital expenditures
are estimated to approximate $95 million. The foregoing amounts
exclude equipment expenditures that have been or are expected to be
financed through capital and operating leases, and any acquisition
expenditures.
Other Investing Activities
- - --------------------------
All other investing activities in the 1994 first quarter used net cash
of $146.2 million. In January 1994, the Company paid approximately
$157 million in cash for the acquisition of substantially all the coal
mining operations and coal sales contracts of Addington. The purchase
price of the acquisition was financed through the issuance of $80.5
million of a new series of convertible preferred stock, which is
convertible into Pittston Minerals Group Common Stock, and additional
debt under revolving credit agreements.
Financing
- - ---------
The Company intends to fund its capital expenditure requirements
during the remainder of 1994 primarily with anticipated cash flows
from operating activities and through operating leases if the latter
are financially attractive. Shortfalls, if any, will be financed
through the Company's revolving credit agreements or short-term
borrowing arrangements. In March 1994, the Company entered into a
$350 million revolving credit agreement with a syndicate of banks (the
"New Facility"), replacing the Company's previously existing $250
million of revolving credit agreements. The New Facility includes a
$100 million five-year term loan, which matures in March 1999. The
New Facility also permits additional borrowings, repayments and
reborrowings of up to an aggregate of $250 million until March 1999.
As of March 31, 1994, borrowings of $100 million were outstanding
under the five-year term loan portion of the New Facility with no
additional borrowings outstanding under the remainder of the facility.
Debt
- - ----
Outstanding debt, including borrowings under revolving credit
agreements, aggregated $174.4 million at March 31, 1994, up from $75.8
million at year-end 1993. Cash generated from operating activities
and net cash proceeds from the issuance of preferred stock were not
sufficient to fund capital expenditures and the Addington acquisition,
resulting in additional borrowings under the Company's revolving
credit agreements.
On April 15, 1994, the Company redeemed all outstanding 9.2%
Convertible Subordinated Debentures due July 1, 2004. The principal
amount outstanding was $27.8 million and the premium paid to call the
debt totaled $.8 million. The Company used cash provided under its
revolving credit agreements to redeem the debentures. The premium
paid in addition to other charges related to the redemption were
accrued at March 31, 1994 and were included in the Company's
Consolidated Statement of Operations.
Capitalization
- - --------------
In January 1994, the Company issued $80.5 million (161,000 shares) of
a new series of preferred stock, convertible into Minerals Stock. The
convertible preferred stock pays an annual cumulative dividend of
$31.25 per share payable quarterly, in cash, in arrears, out of all
funds of the Company legally available therefor, when, as and if
declared by the Board of Directors of the Company, which commenced
March 1, 1994, and bears a liquidation preference of $500 per share,
plus an amount equal to accrued and unpaid dividends thereon.
As of March 31, 1994, debt as a percent of capitalization (total debt
and shareholders' equity) was 32%, compared with 18% at December 31,
1993. The increase since December 1993 is largely due to the
additional debt incurred under the New Facility to finance the
Addington acquisition. The increase in equity as a result of the
issuance of preferred stock was largely offset by the net loss
incurred for the quarter ended March 31, 1994.
The Board of Directors of the Company in 1993 authorized the
repurchase of up to 1,250,000 shares of Pittston Services Group Common
Stock ("Services Stock") and 250,000 shares of Pittston Minerals Group
Common Stock ("Minerals Stock"). As of March 31, 1994, a total of
22,600 shares of Services Stock and 31,500 shares of Minerals Stock
had been acquired pursuant to the authorization. Of those amounts,
22,600 shares of Services Stock and 12,700 shares of Minerals Stock
were repurchased in the first quarter of 1994 at an aggregate cost of
$.8 million, of which $.5 million was paid subsequent to the end of
the quarter.
Dividends
- - ---------
The Board of Directors intends to declare and pay dividends on
Services Stock and Minerals Stock based on earnings, financial
condition, cash flow and business requirements of the Services Group
and the Minerals Group, respectively. Since the Company remains
subject to Virginia law limitations on dividends and to dividend
restrictions in its public debt and bank credit agreements, losses by
one Group could affect the Company's ability to pay dividends in
respect of stock relating to the other Group. Dividends on Minerals
Stock are also limited by the Available Minerals Dividend Amount as
defined in the Company's Articles of Incorporation.
During the first quarter of 1994, the Board of Directors declared and
paid cash dividends of 5 cents per share of Services Stock and 16.25
cents per share of Minerals Stock. On an equivalent basis, during the
1993 first quarter the Company paid dividends of 4.6 cents per share
and 14.8 cents per share for Services Stock and Minerals Stock,
respectively. Dividends paid on the cumulative convertible preferred
stock in the 1994 first quarter totaled $.6 million.
<TABLE>
PITTSTON SERVICES GROUP
BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
Mar. 31, Dec. 31,
ASSETS 1994 1993
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Current assets: (Unaudited)
Cash and cash equivalents $ 45,383 30,271
Short-term investments, at lower of cost or market 2,173 1,881
Accounts receivable (net of estimated amount
uncollectible: 1994 - $13,556; 1993 - $13,745) 213,139 211,565
Receivable - Pittston Minerals Group 4,574 -
Inventories, at lower of cost or market 4,101 3,235
Prepaid expenses 17,359 19,258
Deferred income taxes 23,332 22,919
- - ---------------------------------------------------------------------------------
Total current assets 310,061 289,129
Property, plant and equipment, at cost (net of
accumulated depreciation and amortization:
1994 - $214,467; 1993 - $207,086) 194,560 188,076
Intangibles, net of amortization 212,084 213,634
Deferred pension assets 41,426 42,425
Deferred income taxes 1,274 839
Other assets 69,908 72,838
- - ---------------------------------------------------------------------------------
Total assets $829,313 806,941
=================================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term borrowings $ 10,255 9,546
Current maturities of long-term debt 8,057 7,878
Accounts payable 140,466 131,893
Payable - Pittston Minerals Group - 19,098
Accrued liabilities 113,143 113,293
- - ---------------------------------------------------------------------------------
Total current liabilities 271,921 281,708
Long-term debt, less current maturities 78,472 58,109
Postretirement benefits other than pensions 5,441 4,802
Workers' compensation and other claims 9,015 9,043
Deferred income taxes 34,557 33,727
Payable - Pittston Minerals Group 14,709 14,709
Other liabilities 26,609 26,474
Shareholder's equity 388,589 378,369
- - ---------------------------------------------------------------------------------
Total liabilities and shareholder's equity $829,313 806,941
=================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PITTSTON SERVICES GROUP
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Quarter Ended
March 31
- - -----------------------------------------------------------------------------
1994 1993
- - -----------------------------------------------------------------------------
<S> <C> <C>
Operating revenues $411,053 363,757
- - -----------------------------------------------------------------------------
Operating expenses 346,244 309,437
Selling, general and administrative expenses 46,363 44,865
- - -----------------------------------------------------------------------------
Total costs and expenses 392,607 354,302
- - -----------------------------------------------------------------------------
Other operating income 2,048 2,209
- - -----------------------------------------------------------------------------
Operating profit 20,494 11,664
Interest income 622 481
Interest expense (1,769) (2,328)
Other income (expense), net (2,116) (150)
- - -----------------------------------------------------------------------------
Income before income taxes 17,231 9,667
Provision for income taxes 6,720 4,253
- - -----------------------------------------------------------------------------
Net income $ 10,511 5,414
=============================================================================
Per Pittston Services Group Common Share:
Net income $ .28 .15
=============================================================================
Cash dividends $ .0500 .0455
=============================================================================
Average shares outstanding of Pittston Services Group
Common Stock 37,662 36,558
=============================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PITTSTON SERVICES GROUP
STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<CAPTION>
Quarter Ended
March 31
- - ----------------------------------------------------------------------------------------
1994 1993
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $10,511 5,414
Adjustments to reconcile net income to net cash provided
by operating activities:
Noncash charges and other write-offs 339 11
Depreciation and amortization 12,973 12,074
Provision for deferred income taxes 276 193
Provision for pensions, noncurrent 1,008 63
Provision for uncollectible accounts receivable 502 879
Equity in earnings of unconsolidated affiliates, net
of dividends received (1,530) (1,614)
Other operating, net 301 417
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable (2,076) 1,450
Increase in inventories (866) (410)
Increase in prepaid expenses (266) (3,112)
Increase (decrease) in accounts payable and accrued
liabilities 7,928 (7,338)
Decrease (increase) in other assets 3,231 (2,571)
Decrease in other liabilities (1,619) (15)
Other, net (114) 325
- - ----------------------------------------------------------------------------------------
Net cash provided by operating activities 30,598 5,766
- - ----------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (16,754) (20,015)
Property, plant and equipment pending lease financing 2,047 (730)
Disposal of property, plant and equipment 267 681
Acquisitions and related contingent payments (63) (16)
Other, net 2,079 (401)
- - ----------------------------------------------------------------------------------------
Net cash used by investing activities (12,424) (20,481)
- - ----------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt 24,601 10,667
Reductions of debt (4,327) (1,959)
Borrowings (repayments) - Minerals Group (23,672) 3,544
Repurchase of common stock - (921)
Proceeds from exercise of stock options 2,151 839
Proceeds from the sale of stock to SIP - 108
Proceeds from sale of stock to Minerals Group 74 -
Dividends paid (1,887) (1,660)
Cost of Services Stock Proposal (2) -
Net cash from the Company - 2,189
- - ----------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (3,062) 12,807
- - ----------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 15,112 (1,908)
Cash and cash equivalents at beginning of period 30,271 28,350
- - ----------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $45,383 26,442
========================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PITTSTON SERVICES GROUP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(In thousands of dollars, except per share amounts)
(1) The approval on July 26, 1993 (the "Effective Date"), by the
shareholders of The Pittston Company (the "Company") of the
Services Stock Proposal, as described in the Company's proxy
statement dated June 24, 1993, resulted in the reclassification
of the Company's common stock. The outstanding shares of Company
common stock were redesignated as Pittston Services Group Common
Stock ("Services Stock") on a share-for-share basis and a second
class of common stock, designated as Pittston Minerals Group
Common Stock ("Minerals Stock"), was distributed on the basis of
one-fifth of one share of Minerals Stock for each share of the
Company's previous common stock held by shareholders of record on
July 26, 1993. Minerals Stock and Services Stock provide
shareholders with separate securities reflecting the performance
of the Pittston Minerals Group (the "Minerals Group") and the
Pittston Services Group (the "Services Group") respectively,
without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting either
Group. Accordingly, all stock and per share data prior to the
reclassification have been restated to reflect the
reclassification. The primary impacts of this restatement are as
follows:
* Net income per common share has been included in the
Statements of Operations. For the purpose of
computing net income per common share of Services
Stock, the number of shares of Services Stock prior to
the Effective Date are assumed to be the same as the
total number of shares of the Company's common stock.
* All financial impacts of purchases and issuances of
the Company's common stock have been attributed to
each Group in relation of their respective common
equity to the Company's common stock. Dividends paid
by the Company were attributed to the Services and
Minerals Groups in relation to the initial dividends
paid on the Services Stock and the Minerals Stock.
The Company, at any time, has the right to exchange each
outstanding share of Minerals Stock for shares of Services Stock
having a fair market value equal to 115% of the fair market value
of one share of Minerals Stock. In addition, upon the sale,
transfer, assignment or other disposition, whether by merger,
consolidation, sale or contribution of assets or stock or
otherwise, of all or substantially all of the properties and
assets of the Minerals Group to any person, entity or group (with
certain exceptions), the Company is required to exchange each
outstanding share of Minerals Stock for shares of Services Stock
having a fair market value equal to 115% of the fair market value
of one share of Minerals Stock. Shares of Services Stock are not
subject to either optional or mandatory exchange.
Holders of Services Stock have one vote per share. Holders of
Minerals Stock have one vote per share subject to adjustment on
January 1, 1996, and on each January 1 every two years thereafter
based upon the relative fair market values of one share of
Minerals Stock and one share of Services Stock on each such date.
Accordingly, beginning on January 1, 1996, each share of Minerals
Stock may have more than, less than or continue to have exactly
one vote. Holders of Services Stock and Minerals Stock vote
together as a single voting group on all matters as to which all
common shareholders are entitled to vote. In addition, as
prescribed by Virginia law, certain amendments to the Company's
Restated Articles of Incorporation affecting, among other things,
the designation, rights, preferences or limitations of one class
of common stock, or any merger or statutory share exchange, must
be approved by the holders of such class of common stock, voting
as a separate voting group, and, in certain circumstances, may
also have to be approved by the holders of the other class of
common stock, voting as a separate voting group.
In the event of a dissolution, liquidation or winding up of the
Company, the holders of Services Stock and Minerals Stock will
receive the funds remaining for distribution, if any, to the
common shareholders on a per share basis in proportion to the
total number of shares of Services Stock and Minerals Stock,
respectively, then outstanding to the total number of shares of
both classes of common stock then outstanding.
The financial statements of the Services Group include the
balance sheets, results of operations and cash flows of the
Burlington Air Express Inc. ("Burlington"), Brink's, Incorporated
("Brink's") and Brink's Home Security, Inc. ("BHS") operations of
the Company, and a portion of the Company's corporate assets and
liabilities and related transactions which are not separately
identified with operations of a specific segment. The Services
Group's financial statements are prepared using the amounts
included in the Company's consolidated financial statements.
Corporate allocations reflected in these financial statements are
determined based upon methods which management believes to be an
equitable allocation of such expenses and credits.
The Company provides holders of Services Stock separate financial
statements, financial reviews, descriptions of business and other
relevant information for the Services Group in addition to
consolidated financial information of the Company.
Notwithstanding the attribution of assets and liabilities
(including contingent liabilities) between the Minerals Group and
the Services Group for the purpose of preparing their financial
statements, this attribution and the change in the capital
structure of the Company as a result of the approval of the
Services Stock Proposal did not result in any transfer of assets
and liabilities of the Company or any of its subsidiaries.
Holders of Services Stock are shareholders of the Company, which
continues to be responsible for all its liabilities. Therefore,
financial developments affecting the Minerals Group or the
Services Group that affect the Company's financial condition
could affect the results of operations and financial condition of
both Groups. Accordingly, the Company's consolidated financial
statements must be read in connection with the Services Group's
financial statements.
(2) The following analyzes shareholder's equity for the Services
Group for the periods presented:
<TABLE>
<CAPTION>
Quarter Ended Year Ended
March 31, 1994 December 31, 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of period $378,369 329,158
Net income 10,511 47,126
Stock options exercised 2,151 12,124
Stock released from employee benefits
trust to employee benefit plan 158 841
Stock sold from employee benefits trust
to employee benefit plan - 220
Stock sold to Minerals Group 74 128
Stock repurchase (495) (920)
Dividends declared (1,887) (7,055)
Costs of Services Stock Proposal (2) (1,564)
Foreign currency translation adjustment (290) (4,104)
Tax benefit of options exercised - 1,519
Net cash from the Company - 896
-----------------------------------------------------------------------------
Balance at end of period $388,589 378,369
=============================================================================
</TABLE>
(3) As of January 1, 1992, BHS elected to capitalize categories of
costs not previously capitalized for home security installations.
The additional costs not previously capitalized consisted of
costs for installation labor and related benefits for superviso-
ry, installation scheduling, equipment testing and other support
personnel and costs incurred in maintaining facilities and
vehicles dedicated to the installation process. The effect of
this change in accounting principle was to increase operating
profit for the Services Group and the BHS segment for the first
three months of 1994 and 1993 by $1,120 and $874, respectively.
The effect of this change increased net income per share of the
Services Group for the first three months of 1994 and 1993 by
$.02 and $.01, respectively.
(4) The amounts of depreciation and amortization of property, plant
and equipment in the first quarter 1994 and 1993 totaled $10,724
and $9,782, respectively.
(5) Cash payments made for interest and income taxes (net of refunds
received) were as follows:
First Quarter
----------------------------------
1994 1993
----------------------------------
Interest $2,453 2,677
===================================
Income taxes $6,833 9,233
===================================
During the three month periods ended March 31, 1994 and 1993,
capital lease obligations of $925 and $10, respectively, were
incurred for leases of property, plant and equipment.
(6) On April 15, 1994, the Company redeemed all of the $27,811 9.2%
Convertible Subordinate Debentures due July 1, 2004, at a premium
of $767. This debt had been attributed to the Services Group.
The premium and other charges related to the redemption have been
included in the Services Group statement of operations as other
expense.
(7) In January 1994, 161,000 shares of convertible preferred stock
(convertible into Minerals Stock) were issued to finance a
portion of the acquisition of substantially all of the coal
mining operations and coal sales contracts of Addington
Resources, Inc. While the issuance of the preferred stock had no
effect on the capitalization of the Services Group, commencing
March 1, 1994, annual cumulative dividends of $31.25 per share of
convertible preferred stock are payable quarterly, in cash, in
arrears, from the date of original issue out of all funds of the
Company legally available therefor, when, as and if declared by
the Company's Board. A portion of the acquisition was also
financed with additional debt under existing credit facilities.
In March 1994, the additional debt incurred for this acquisition
was refinanced with a five-year term loan. The acquisition and
related financing have been attributed to the Minerals Group.
(8) Certain prior period amounts have been reclassified to conform to
current period financial statement presentation.
(9) All adjustments have been made which are, in the opinion of
management, necessary to a fair presentation of results of
operations for the periods reported herein. All such adjustments
are of a normal recurring nature.
PITTSTON SERVICES GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
The financial statements of the Pittston Services Group (the "Services
Group") include the balance sheets, results of operations and cash
flows of Burlington Air Express Inc. ("Burlington"), Brink's,
Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS"), and
a portion of The Pittston Company's (the "Company") corporate assets
and liabilities and related transactions which are not separately
identified with operations of a specific segment. The Services
Group's financial statements are prepared using the amounts included
in the Company's consolidated financial statements. Corporate
allocations reflected in these financial statements are determined
based upon methods which management believes to be an equitable
allocation of such expenses and credits. The accounting policies
applicable to the preparation of the Services Group's financial
statements may be modified or rescinded at the sole discretion of the
Company's Board of Directors (the "Board") without the approval of the
shareholders, although there is no intention to do so.
The Company provides holders of Pittston Services Group Common Stock
("Services Stock") separate financial statements, financial reviews,
descriptions of business and other relevant information for the
Services Group in addition to consolidated financial information of
the Company. Notwithstanding the attribution of assets and
liabilities (including contingent liabilities) between the Pittston
Minerals Group (the "Minerals Group") and the Services Group for the
purpose of preparing their financial statements, this attribution and
the change in the capital structure of the Company as a result of the
approval of the Services Stock Proposal, as described in the Company's
proxy statement dated June 24, 1993, did not result in any transfer of
assets and liabilities of the Company or any of its subsidiaries.
Holders of Services Stock are shareholders of the Company, which
continues to be responsible for all its liabilities. Therefore,
financial developments affecting the Minerals Group or the Services
Group that affect the Company's financial condition could affect the
results of operations and financial condition of both Groups.
Accordingly, the Company's consolidated financial statements must be
read in connection with the Services Group's financial statements.
The following discussion is a summary of the key factors management
considers necessary in reviewing the Services Group's results of
operations, liquidity and capital resources. This discussion should
be read in conjunction with the financial statements and related notes
of the Company.
<TABLE>
SEGMENT INFORMATION
(In thousands of dollars)
<CAPTION>
Quarter Ended
March 31
----------------------------------------------------------------------
1994 1993
----------------------------------------------------------------------
<S> <C> <C>
Revenues:
Burlington $261,484 230,885
Brink's 123,765 112,023
BHS 25,804 20,849
----------------------------------------------------------------------
Revenues $411,053 363,757
======================================================================
Operating profit:
Burlington $ 9,010 1,474
Brink's 6,133 6,419
BHS 7,566 6,369
----------------------------------------------------------------------
Segment operating profit 22,709 14,262
General corporate expense (2,215) (2,598)
----------------------------------------------------------------------
Operating profit 20,494 11,664
Interest income 622 481
Interest expense (1,769) (2,328)
Other income (expense), net (2,116) (150)
----------------------------------------------------------------------
Income before income taxes 17,231 9,667
Provision for income taxes 6,720 4,253
----------------------------------------------------------------------
Net income $ 10,511 5,414
======================================================================
</TABLE>
RESULTS OF OPERATIONS
- - ---------------------
Net income totaled $10.5 million in the first quarter of 1994 compared
with $5.4 million in the first quarter of 1993. Operating profit for
the 1994 first quarter increased to $20.5 million from $11.7 million
in the prior year quarter. The increase in net income and operating
profit for the 1994 first quarter compared with the same period of
1993 was largely attributable to improved earnings for Burlington and
BHS. Operating profit also benefitted from decreased general
corporate expenses, which was offset by decreased Brink's operating
results.
Revenues for the 1994 first quarter increased $47.3 million compared
with the 1993 first quarter, of which $30.6 million was from
Burlington, $11.7 million was from Brink's and $5.0 million was from
BHS. Operating expenses and selling general and administrative
expenses for the 1994 first quarter increased $38.3 million compared
with the same period last year, of which $23.4 million was from
Burlington, $11.5 million was from Brink's and $3.8 million was from
BHS, partially offset by a $.4 million decrease in the allocation of
corporate expenses.
Burlington
- - ----------
Burlington reported an operating profit of $9.0 million in the 1994
first quarter, a $7.5 million increase over the $1.5 million profit
reported in the first quarter of 1993. Worldwide revenues rose 13% to
$261.5 million in the current year quarter from $230.9 million in the
prior year first quarter. The $30.6 million increase in revenues
resulted principally from higher volume in both domestic and
international markets. Increased revenues from higher volumes
were partially offset by lower average yields (revenues per pound).
Total weight shipped worldwide increased 17% to 275.6 million pounds
in the 1994 first quarter from 235.9 million pounds in the same
period a year earlier. Operating expenses and selling, general
and administrative expenses increased $22.2 million and $1.2
million, respectively, in the 1994 first quarter compared with the
prior year quarter. The increase in operating expenses largely
resulted from the increased volume of business. The increase in
operating profit, resulting from increased revenues exceeding
increased operating expenses, for the comparable period is almost
entirely attributable to increased Americas' operating profit of $7.3
million. Foreign operating profit increased $.2 million compared with
the prior year first quarter.
Americas' operating profit benefitted from domestic volume increases
of which a significant portion was from increased auto and electronics
industry shipments. Although export volumes also increased, U.S.
exports have been impacted by competitors focus on international
freight with aggressive pricing on new business. Americas' operating
profit also benefitted from lower fuel costs, the use of efficient
aircraft placed in service during the first half of 1993 and increased
capacity as a result of the fourth quarter 1993 expansion of its
airfreight hub in Toledo, Ohio, which assisted in achieving greater
efficiency. These operations achieved improved results despite
service interruptions and increased costs due to adverse weather
conditions. The severe winter weather caused airport shutdowns as
well as increased mechanical problems. Gains from increased volume of
business and efficiencies for Americas' operations were partially
offset by decreased average yields in the 1994 first quarter. Average
yields continue to reflect a highly competitive pricing environment.
While pricing stabilized during the 1994 first quarter, such prices
were at reduced levels from those attained in the 1993 first quarter.
Gross profit from Intra-America business increased $10.2 million (30%)
compared with the prior year quarter as a 7% decrease in average costs
per pound and a 23% increase in weight shipped was only partially
offset by a 3% decrease in average yields. Export gross profit
increased $.2 million (2%) as a 5% decrease in average costs per pound
and an 8% increase in weight shipped was partially offset by a 6%
decrease in average yields. Americas' operating profit also included
a $1.2 million increase in profit from imports and charter business
offset by $4.3 million higher station and corporate support group
costs.
Operating results of foreign operations in the current year quarter
increased $.2 million, also benefitting from increased volumes. The
impact of increased volumes was partially offset by lower yields,
increased airline costs where the market capacity is constrained as
well as additional costs incurred in connection with offering complete
global logistics services.
Brink's
- - -------
Brink's operating profit decreased $.3 million to $6.1 million in the
first quarter of 1994 from $6.4 million in the first quarter of 1993
with increased revenues of $11.7 million, increased operating expenses
and selling, general and administrative expenses of $11.5 million and
decreased other operating income of $.5 million. North American
operating profits increased by $1.1 million for the 1994 first quarter
to $4.5 million compared with the same period last year, despite the
adverse impacts of the severe winter weather and the southern
California earthquake. Earnings from international subsidiaries and
affiliates decreased $1.4 million to $1.7 million for the same
comparative period.
The increase in revenues was almost entirely due to North American
operations and largely from armored car and ATM operations. The
increase in operating profit for North American operations, however,
was largely attributable to North American air courier operations
which increased $.9 million resulting from strong volumes of currency
and precious metals shipments. Despite strong revenues, North
American armored car operating profits decreased compared with 1993
results due to adverse weather conditions, the California earthquake,
a low level of special shipments and increased insurance costs.
Results for Canadian operations continued to improve throughout the
1994 first quarter largely due to cost efficiencies, growth in the ATM
line of business and service area withdrawals by a competitor.
The decrease in operating earnings from international subsidiaries and
affiliates was primarily due to unfavorable results in Mexico and
Brazil. Equity in earnings of foreign affiliates, which is included
in other operating income, decreased $.3 million. Unfavorable
results from Brink's Mexican affiliate, in which Brink's has a 20%
equity interest, reflected the impact of the local economic recession,
restructuring costs which included employee severance costs, and
strengthening competition. Brink's Brazil, a wholly-owned subsidiary,
reported an operating loss of $.6 million compared with income of $.4
million in the prior year first quarter. The 1994 first quarter loss
reflected the costs of extra security measures made necessary by the
significant increase in armed robberies at Brink's and its competitors
as well as the industry-wide three day strike in Rio de Janeiro which
was intended to focus government attention on the security problem.
BHS
- - ---
Operating profit of BHS increased $1.2 million to $7.6 million in the
first quarter of 1994 from $6.4 million in the prior year quarter.
The operating profit increase was primarily due to a $1.8 million
increase in monitoring margin, only partially offset by a $.4 million
increase in installation expenses and $.2 million in account servicing
and administrative costs. The increase in the monitoring margin
reflects 20% higher monitoring revenues and a 21% higher average
subscriber base in the first quarter of 1994 compared with the prior
year quarter. Net new subscribers totaled 16,300 in the first quarter
of 1994 compared with 9,900 in the first quarter of 1993. Subscribers
at March 31, 1994 totaled 275,900.
Foreign Operations
- - ------------------
A portion of the Services Group's financial results is derived from
activities in several foreign countries, each with a local currency
other than the U.S. dollar. Because the financial results of the
Services Group are reported in U.S. dollars, they are affected by the
changes in the value of the various foreign currencies in relation to
the U.S. dollar. The Services Group's international activity is not
concentrated in any single currency, which limits the risks of foreign
rate fluctuations. In addition, foreign currency rate fluctuations
may adversely affect transactions which are denominated in currencies
other than the functional currency. The Services Group routinely
enters into such transactions in the normal course of its business.
Although the diversity of its foreign operations limits the risks
associated with such transactions, the Company, on behalf of the
Services Group, uses foreign exchange forward contracts to hedge the
risks associated with certain transactions denominated in currencies
other than the functional currency. Realized and unrealized gains and
losses on these contracts are deferred and recognized as part of the
specific transaction hedged. In addition, cumulative translation
adjustments relating to operations in countries with highly
inflationary economies are included in net income, along with all
transaction gains or losses for the period. Brink's subsidiaries in
Brazil and Israel operate in such highly inflationary economies.
Additionally, the Services Group is subject to other risks customarily
associated with doing business in foreign countries, including
economic conditions, controls on repatriation of earnings and capital,
nationalization, expropriation and other forms of restrictive action
by local governments. The future effects, if any, of such risks on
the Services Group cannot be predicted.
Corporate Expenses
- - ------------------
A portion of the Company's corporate general and administrative
expenses and other shared services has been allocated to the Services
Group based on utilization and other methods and criteria which
management believes to be equitable and a reasonable estimate of such
expenses as if the Services Group operated on a stand alone basis.
These allocations were $2.2 million and $2.6 million for the first
quarter of 1994 and 1993, respectively. General corporate expenses in
the 1993 first quarter were greater than those in the current year
quarter due to costs incurred in the 1993 period related to the
Company's then proposed reclassification of its common stock into two
classes.
Other Operating Income
- - ----------------------
Other operating income decreased $.2 million to $2.0 million in the
1994 first quarter from $2.2 million in the 1993 first quarter. Other
operating income consists primarily of equity earnings of foreign
affiliates. These earnings, which are primarily attributable to
equity affiliates of Brink's, amounted to $1.6 million and $1.9
million for the first quarter of 1994 and 1993, respectively.
Interest Expense
- - ----------------
Interest expense for the first quarter of 1994 decreased by $.5
million to $1.8 million from $2.3 million in the first quarter of
1993. Interest expense in the first quarter of 1993 included interest
on debt which was retired during the latter half of 1993.
Other Income (Expense), Net
- - ---------------------------
Other net expense for the first quarter of 1994 increased by $1.9
million to a net expense of $2.1 million from $.2 million in the first
quarter of 1993. This included expenses of $1.2 million recognized on
the Company's redemption of its 9.2% Convertible Subordinated
Debentures.
FINANCIAL CONDITION
- - -------------------
A portion of the Company's corporate assets and liabilities has been
attributed to the Services Group based upon utilization of the shared
services from which assets and liabilities are generated, which
management believes to be equitable and a reasonable estimate of the
asset and liabilities which would be generated if the Services Group
operated on a stand alone basis.
Cash Flow Provided by Operations
- - --------------------------------
Cash provided by operating activities for the first quarter of 1994
totaled $30.6 million compared with $5.8 million in the first quarter
of 1993. The increase in 1994 compared with 1993 was largely due to
the significant increase in net income for the current year period in
addition to a decrease in net cash requirements for operating assets
and liabilities.
Capital Expenditures
- - --------------------
Cash capital expenditures for the first quarter of 1994 totaled $16.8
million, excluding equipment expenditures that have been or are
expected to be financed through capital and operating leases, and any
acquisition expenditures. Of the $16.8 million of cash capital
expenditures for the 1994 first quarter, $5.2 million was made by
Burlington, $3.0 million was made by Brink's and $8.6 million was made
by BHS. Expenditures incurred by BHS in the 1994 first quarter were
primarily for customer installations, representing the expansion in
the subscriber base. For the full year 1994, capital expenditures
excluding expenditures that have been or are expected to be financed
through capital and operating leases and acquisition expenditures, are
estimated to approximate $65 million.
Financing
- - ---------
The Services Group intends to fund its capital expenditure
requirements during the remainder of 1994 primarily with anticipated
cash flows from operating activities and through operating and capital
leases if the latter are financially attractive. Shortfalls, if any,
will be financed through the Company's revolving credit agreements or
short-term borrowing arrangements or borrowings from the Minerals
Group. In March 1994, the Company entered into a $350 million
revolving credit agreement with a syndicate of banks (the "New
Facility"), replacing the Company's previously existing $250 million
of revolving credit agreements. The New Facility includes a $100
million five-year term loan, which matures in March 1999. The New
Facility also permits additional borrowings, repayments and
reborrowings of up to an aggregate of $250 million until March 1999.
As of March 31, 1994, borrowings of $100 million were outstanding
under the five-year term loan portion of the New Facility with no
additional borrowings outstanding under the remainder of the facility.
Of the total amount outstanding under the New Facility $23.4 million
was attributed to the Services Group.
Debt
- - ----
Cash used for debt repayments and funding to the Minerals Group, net
of borrowings totaled $3.4 million. The amount of the $100 million
term loan attributed to the Services Group was $23.4 million at March
31, 1994.
On April 15, 1994, the Company redeemed all outstanding 9.2%
Convertible Subordinated Debentures due July 1, 2004. Such debt had
been attributed to the Services Group. The principal amount
outstanding was $27.8 million and the premium paid to call the debt
totaled $.8 million. The Company used cash provided under its
revolving credit agreements to redeem the debentures. The premium
paid in addition to other charges related to the redemption were
accrued at March 31, 1994 and were included in the statement of
operations.
Capitalization
- - --------------
Since the approval of the Services Stock Proposal, capitalization of
the Services Group has been affected by all share activity related to
Services Stock.
In 1993, the Board of Directors authorized a new share repurchase
program under which up to 1,250,000 shares of Services Stock and
250,000 shares of Minerals Stock may be repurchased. As of March 31,
1994, a total of 22,600 shares of Services Stock had been acquired
pursuant to the authorization, all of which was acquired in 1994 at an
aggregate cost of $.5 million which was paid subsequent to the end of
the quarter.
Dividends
- - ---------
The Board of Directors intends to declare and pay dividends on
Services Stock based on earnings, financial condition, cash flow and
business requirements of the Services Group. Since the Company remains
subject to Virginia law limitations on dividends and to dividend
restrictions in its public debt and bank credit agreements, losses by
the Minerals Group could affect the Company's ability to pay dividends
in respect of stock relating to the Services Group.
As a result of the Company's issuance in January 1994 of 161,000
shares of a new series of preferred stock, convertible into Minerals
Stock, the Company pays an annual cumulative dividend of $31.25 per
share payable quarterly, in cash, in arrears, out of all funds of the
Company legally available therefor, when, and if declared by the Board
of Directors of the Company which commenced March 1, 1994. Such stock
also bears a liquidation preference of $500 per share, plus an amount
equal to accrued and unpaid dividends thereon.
During the first quarter of 1994, the Board of Directors declared and
paid cash dividends of 5 cents per share of Services Stock and on an
equivalent basis, during the 1993 first quarter the Company paid
dividends of 4.6 cents per share of Services Stock.
<TABLE>
PITTSTON MINERALS GROUP
BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
Mar. 31, Dec. 31,
ASSETS 1994 1993
- - ----------------------------------------------------------------------------------
<S> <C> <C>
Current assets: (Unaudited)
Cash and cash equivalents $ 2,073 2,141
Short-term investments, at lower of cost or market 21,240 21,065
Accounts receivable (net of estimated amount
uncollectible: 1994 - $2,296; 1993 - $2,295) 98,126 84,978
Receivable - Pittston Services Group - 19,098
Inventories, at lower of cost or market:
Coal 28,664 18,649
Other 4,502 2,271
- - ----------------------------------------------------------------------------------
33,166 20,920
Prepaid expenses 14,793 8,235
Deferred income taxes 32,557 30,723
- - ----------------------------------------------------------------------------------
Total current assets 201,955 187,160
Property, plant and equipment, at cost (net of
accumulated depreciation, depletion and amortization:
1994 - $148,694; 1993 - $205,447) 218,123 181,745
Deferred pension assets 75,056 74,641
Deferred income taxes 114,972 76,887
Coal supply contracts 100,884 35,462
Intangibles, net 82,552 1,408
Receivable - Pittston Services Group 14,709 14,709
Other assets 39,006 34,235
- - ----------------------------------------------------------------------------------
Total assets $847,257 606,247
==================================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 304 30
Accounts payable 87,561 50,383
Payable - Pittston Services Group 4,574 -
Accrued liabilities 145,685 124,421
- - ----------------------------------------------------------------------------------
Total current liabilities 238,124 174,834
Long-term debt, less current maturities 77,332 279
Postretirement benefits other than pensions 210,075 207,416
Workers' compensation and other claims 138,360 118,502
Deferred income taxes 289 -
Other liabilities 205,473 130,073
Shareholder's equity (22,396) (24,857)
- - ----------------------------------------------------------------------------------
Total liabilities and shareholder's equity $847,257 606,247
==================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PITTSTON MINERALS GROUP
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Quarter Ended
March 31
- - ---------------------------------------------------------------------------------
1994 1993
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Net sales $176,742 167,991
- - ---------------------------------------------------------------------------------
Cost of sales 189,781 157,835
Special and other charges 90,806 -
Selling, general and administrative 8,887 9,018
- - ---------------------------------------------------------------------------------
Total costs and expenses 289,474 166,853
- - ---------------------------------------------------------------------------------
Other operating income 2,953 2,807
- - ---------------------------------------------------------------------------------
Operating profit (loss) (109,779) 3,945
Interest income 51 299
Interest expense (813) (978)
Other income (expense), net (219) 13
- - ---------------------------------------------------------------------------------
Income (loss) before income taxes (110,760) 3,279
Provision (credit) for income taxes (36,681) 537
- - ---------------------------------------------------------------------------------
Net income (loss) (74,079) 2,742
Preferred stock dividends (1,006) -
- - ---------------------------------------------------------------------------------
Net income (loss) attributed to common shares $(75,085) 2,742
=================================================================================
Per Pittston Minerals Group common share:
Net income (loss) $ (9.96) .38
=================================================================================
Cash dividends $ .1625 .1477
=================================================================================
Average shares outstanding of Pittston Minerals
Group common stock 7,541 7,312
=================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PITTSTON MINERALS GROUP
STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<CAPTION>
Quarter Ended
March 31
- - ---------------------------------------------------------------------------------------
1994 1993
- - ---------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(74,079) 2,742
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Noncash charges and other write-offs 46,487 152
Depreciation, depletion and amortization 10,193 6,498
Provision (credit) for deferred income taxes (30,895) 843
Credit for pensions, noncurrent (415) (645)
Provision for uncollectible accounts receivable 30 23
Equity in (earnings) loss of unconsolidated affiliates,
net of dividends received 93 (58)
Other operating, net (352) 89
Change in operating assets and liabilities net of
effects of acquisitions and dispositions:
Increase in accounts receivable (14,888) (2,188)
Increase in inventories (6,796) (1,949)
Increase in prepaid expenses (3,230) (730)
Increase in accounts payable and accrued liabilities 15,685 13,814
Decrease (increase) in other assets 363 (379)
Increase (decrease) in other liabilities 19,709 (1,495)
Increase (decrease) in workers' compensation and
other claims, noncurrent 15,224 (4,674)
Other, net (106) (17)
- - ---------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (22,977) 12,026
- - ---------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (2,666) (11,783)
Property, plant and equipment pending lease financing (2,687) (1,958)
Disposal of property, plant and equipment 176 144
Acquisitions and related contingent payments (157,245) (19)
Other, net 9,240 8,465
- - ---------------------------------------------------------------------------------------
Net cash used by investing activities (153,182) (5,151)
- - ---------------------------------------------------------------------------------------
Cash flows from financing activities:
Additions to debt 76,566 -
Reductions of debt (528) -
Borrowings (repayments) - Services Group 23,672 (3,544)
Repurchase of common stock (270) (184)
Proceeds from exercise of stock options 776 168
Proceeds from the sale of stock to SIP - 21
Proceeds from sale of stock to Services Group 115 -
Proceeds from the issuance of preferred stock,
net of cash expenses 77,578 -
Cost of Services Stock Proposal (2) -
Dividends paid (1,816) (1,079)
Net cash to the Company - (2,189)
- - ---------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 176,091 (6,807)
- - ---------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (68) 68
Cash and cash equivalents at beginning of period 2,141 1,990
- - ---------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 2,073 2,058
=======================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PITTSTON MINERALS GROUP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(In thousands of dollars, except per share amounts)
(1) The approval on July 26, 1993 (the "Effective Date"), by the
shareholders of The Pittston Company (the "Company") of the
Services Stock Proposal, as described in the Company's proxy
statement dated June 24, 1993, resulted in the reclassification
of the Company's common stock. The outstanding shares of Company
common stock were redesignated as Pittston Services Group Common
Stock ("Services Stock") on a share-for-share basis and a second
class of common stock, designated as Pittston Minerals Group
Common Stock ("Minerals Stock"), was distributed on the basis of
one-fifth of one share of Minerals Stock for each share of the
Company's previous common stock held by shareholders of record on
July 26, 1993. Minerals Stock and Services Stock provide
shareholders with separate securities reflecting the performance
of the Pittston Minerals Group (the "Minerals Group") and the
Pittston Services Group (the "Services Group") respectively,
without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting either
group. Accordingly, all stock and per share data prior to the
reclassification have been restated to reflect the
reclassification. The primary impacts of this restatement are as
follows:
* Net income per common share has been included in the
Statements of Operations. For the purpose of
computing net income per common share of Minerals
Stock, the number of shares of Minerals Stock are
assumed to be one-fifth of the total number of shares
of the Company's common stock.
* All financial impacts of purchases and issuances of
the Company's common stock prior to the Effective Date
have been attributed to each Group in relation of
their respective common equity to the Company's common
stock. Dividends paid by the Company were attributed
to the Services and Minerals Groups in relation to the
initial dividends paid on the Services Stock and the
Minerals Stock.
The Company, at any time, has the right to exchange each
outstanding share of Minerals Stock for shares of Services Stock
having a fair market value equal to 115% of the fair market value
of one share of Minerals Stock. In addition, upon the sale,
transfer, assignment or other disposition, whether by merger,
consolidation, sale or contribution of assets or stock or
otherwise, of all or substantially all of the properties and
assets of the Minerals Group to any person, entity or group (with
certain exceptions), the Company is required to exchange each
outstanding share of Minerals Stock for shares of Services Stock
having a fair market value equal to 115% of the fair market value
of one share of Minerals Stock. Shares of Services Stock are not
subject to either optional or mandatory exchange.
Holders of Services Stock have one vote per share. Holders of
Minerals Stock have one vote per share subject to adjustment on
January 1, 1996, and on each January 1 every two years thereafter
based upon the relative fair market values of one share of
Minerals Stock and one share of Services Stock on each such date.
Accordingly, beginning on January 1, 1996, each share of Minerals
Stock may have more than, less than or continue to have exactly
one vote. Holders of Services Stock and Minerals Stock vote
together as a single voting group on all matters as to which all
common shareholders are entitled to vote. In addition, as
prescribed by Virginia law, certain amendments to the Company's
Restated Articles of Incorporation affecting, among other things,
the designation, rights, preferences or limitations of one class
of common stock, or any merger or statutory share exchange, must
be approved by the holders of such class of common stock, voting
as a separate voting group, and, in certain circumstances, may
also have to be approved by the holders of the other class of
common stock, voting as a separate voting group.
In the event of a dissolution, liquidation or winding up of the
Company, the holders of Services Stock and Minerals Stock will
receive the funds remaining for distribution, if any, to the
common shareholders on a per share basis in proportion to the
total number of shares of Services Stock and Minerals Stock,
respectively, then outstanding to the total number of shares of
both classes of common stock then outstanding.
The financial statements of the Minerals Group include the
balance sheets, results of operations and cash flows of the Coal
and Mineral Ventures operations of the Company, and a portion of
the Company's corporate assets and liabilities and related
transactions which are not separately identified with operations
of a specific segment. The Minerals Group's financial statements
are prepared using the amounts included in the Company's
consolidated financial statements. Corporate allocations
reflected in these financial statements are determined based upon
methods which management believes to be an equitable allocation
of such expenses and credits.
The Company provides holders of Minerals Stock separate financial
statements, financial reviews, descriptions of business and other
relevant information for the Minerals Group in addition to
consolidated financial information of the Company.
Notwithstanding the attribution of assets and liabilities
(including contingent liabilities) between the Minerals Group and
the Services Group for the purpose of preparing their financial
statements, this attribution and the change in the capital
structure of the Company as a result of the approval of the
Services Stock Proposal did not result in any transfer of assets
and liabilities of the Company or any of its subsidiaries.
Holders of Minerals Stock are shareholders of the Company, which
continues to be responsible for all its liabilities. Therefore,
financial developments affecting the Minerals Group or the
Services Group that affect the Company's financial condition
could affect the results of operations and financial condition of
both Groups. Accordingly, the Company's consolidated financial
statements must be read in connection with the Minerals Group's
financial statements.
(2) The following analyzes shareholder's equity for the Minerals
Group for the periods presented:
<TABLE>
<CAPTION>
Quarter Ended Year Ended
March 31, 1994 December 31, 1993
-----------------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of period $ (24,857) 12,302
Net loss (74,079) (32,980)
Stock options exercised 776 2,633
Stock released from employee benefits
trust to employee benefit plan 46 378
Stock sold from employee benefits trust
to employee benefit plan - 44
Stock sold to Services Group 115 48
Stock repurchase (270) (591)
Dividends declared (1,816) (4,583)
Costs of Services Stock Proposal (2) (1,599)
Foreign currency translation adjustment 390 (215)
Tax benefit of options exercised - 602
Issuance of preferred stock 77,301 -
Net cash to the Company - (896)
---------------------------------------------------------------------------------
Balance at end of period $ (22,396) (24,857)
=================================================================================
</TABLE>
(3) The amounts of depreciation, depletion and amortization of
property, plant and equipment in the first quarter 1994 and
1993 totaled $6,632 and $5,455, respectively.
(4) Cash payments made for interest and income taxes (net of
refunds received) were as follows:
First Quarter
----------------------------------
1994 1993
----------------------------------
Interest $630 636
==================================
Income taxes $114 -
==================================
During the three months ended March 31, 1994, the Minerals Group
acquired one business for an aggregate purchase price of
$157,245. See Note 5.
During the three months ended March 31, 1994, capital lease
obligations of $279 were incurred for leases of property, plant
and equipment.
(5) On January 14, 1994, a wholly owned indirect subsidiary of the
Minerals Group completed the acquisition of substantially all of
the coal mining operations and coal sales contracts of Addington
Resources, Inc. for $157,245. The acquisition has been accounted
for as a purchase; accordingly, the purchase price has been
allocated to the underlying assets and liabilities based on their
respective estimated fair values at the date of acquisition.
Based on preliminary estimates, subject to finalization by year-
end, the fair value of assets acquired was $180,592 and
liabilities assumed was $104,912. The excess of the purchase
price over the fair value of the assets acquired and liabilities
assumed was $81,565 and is being amortized over a period of 40
years. The results of operations of the acquired company have
been included in the Minerals Group's results of operations since
the date of acquisition.
The acquisition was financed by the issuance of $80.5 million of
a new series of the Company's preferred stock, convertible into
Minerals Stock, and additional debt under existing credit
facilities. This financing has been attributed to the Minerals
Group. In March 1994, the additional debt incurred for this
acquisition was refinanced with a five-year term loan.
The following pro forma results, however, assume that the
acquisition and related financing had occurred at the beginning
of the periods presented. The unaudited pro forma data below are
not necessarily indicative of results that would have occurred if
the transaction were in effect for the quarters ended March 31,
1994 and 1993, nor are they indicative of the future results of
operations of the Minerals Group.
<TABLE>
<CAPTION>
Pro Forma
Quarter Ended
March 31
---------------------------------------------------------------------
1994 1993
---------------------------------------------------------------------
<S> <C> <C>
Net sales $186,668 226,073
=====================================================================
Net income (loss) $(73,655) 4,351
=====================================================================
Pittston Minerals Group:
Net income (loss) attributed to
common shares $(74,913) 3,093
---------------------------------------------------------------------
Net income (loss) per common share $ (9.93) .42
---------------------------------------------------------------------
Average common shares outstanding 7,541 7,312
=====================================================================
</TABLE>
(6) The Company has authority to issue up to 2,000,000 shares of
preferred stock, par value $10 per share. In January 1994, the
Company issued 161,000 shares of its $31.25 Series C Cumulative
Convertible Preferred Stock, par value $10 per share (the
"Convertible Preferred Stock"). The Convertible Preferred Stock
pays an annual cumulative dividend of $31.25 per share payable
quarterly, in cash, in arrears, out of all funds of the Company
legally available therefor, when, as and if declared by the
Board of Directors of the Company, and bears a liquidation
preference of $500 per share, plus an amount equal to accrued
and unpaid dividends thereon. Each share of the Convertible
Preferred Stock is convertible at the option of the holder at
any time after March 11, 1994, unless previously redeemed or,
under certain circumstances, called for redemption, into shares
of Minerals Stock at a conversion price of $32.175 per share of
Minerals Stock, subject to adjustment in certain circumstances.
Except under certain circumstances, the Convertible Preferred
Stock is not redeemable prior to February 1, 1997. On and after
such date, the Company may at its option, redeem the Convertible
Preferred Stock, in whole or in part, for cash initially at a
price of $521.875 per share, and thereafter at prices declining
ratably annually on each February 1 to an amount equal to
$500.00 per share on and after February 1, 2004, plus in each
case an amount equal to accrued and unpaid dividends on the date
of redemption. Except under certain circumstances or as
prescribed by Virginia law, shares of the Convertible Preferred
Stock are nonvoting. Other than the Convertible Preferred Stock
no shares of preferred stock are presently issued or
outstanding.
(7) During the 1994 first quarter, the Minerals Group incurred pre-
tax charges of $90.8 million ($58.1 million after-tax) for asset
writedowns and accruals for costs related to facilities which
are being closed including contractually or statutorily required
employee severance and other benefit costs.
(8) Certain prior period amounts have been reclassified to conform
to current period financial statement presentation.
(9) All adjustments have been made which are, in the opinion of
management, necessary to a fair presentation of results of
operations for the periods reported herein. All such
adjustments are of a normal recurring nature.
PITTSTON MINERALS GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
The financial statements of the Pittston Minerals Group (the "Minerals
Group") include the balance sheets, results of operations and cash
flows of the Coal and Mineral Ventures operations of The Pittston
Company (the "Company"), and a portion of the Company's corporate
assets and liabilities and related transactions which are not
separately identified with operations of a specific segment. The
Minerals Group's financial statements are prepared using the amounts
included in the Company's consolidated financial statements.
Corporate allocations reflected in these financial statements are
determined based upon methods which management believes to be an
equitable allocation of such expenses and credits. The accounting
policies applicable to the preparation of the Minerals Group's
financial statements may be modified or rescinded at the sole
discretion of the Company's Board of Directors (the "Board") without
the approval of the shareholders, although there is no intention to do
so.
The Company provides to holders of the Pittston Minerals Group Common
Stock ("Minerals Stock") separate financial statements, financial
reviews, descriptions of business and other relevant information for
the Minerals Group in addition to consolidated financial information
of the Company. Notwithstanding the attribution of assets and
liabilities (including contingent liabilities) between the Minerals
Group and the Pittston Services Group (the "Services Group") for the
purpose of preparing their financial statements, this attribution and
the change in the capital structure of the Company as a result of the
approval of the Services Stock Proposal, as described in the Company's
proxy statement dated June 24, 1993, did not result in any transfer of
assets and liabilities of the Company or any of its subsidiaries.
Holders of Minerals Stock are shareholders of the Company, which
continues to be responsible for all its liabilities. Therefore,
financial developments affecting the Minerals Group or the Services
Group that affect the Company's financial condition could affect the
results of operations and financial condition of both Groups.
Accordingly, the Company's consolidated financial statements must be
read in connection with the Minerals Group's financial statements.
The following discussion is a summary of the key factors management
considers necessary in reviewing the Minerals Group's results of
operations, liquidity and capital resources. This discussion should
be read in conjunction with the financial statements and related notes
of the Company.
<TABLE>
SEGMENT INFORMATION
(In thousands of dollars)
<CAPTION>
Quarter Ended
March 31
------------------------------------------------------------------------------
1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
Net sales:
Coal $ 173,416 163,985
Mineral Ventures 3,326 4,006
------------------------------------------------------------------------------
Net sales $ 176,742 167,991
==============================================================================
Operating profit (loss):
Coal $(107,839) 5,539
Mineral Ventures (246) 366
------------------------------------------------------------------------------
Segment operating profit (loss) (108,085) 5,905
General corporate expense (1,694) (1,960)
------------------------------------------------------------------------------
Operating profit (loss) (109,779) 3,945
Interest income 51 299
Interest expense (813) (978)
Other income (expense), net (219) 13
------------------------------------------------------------------------------
Income (loss) before income taxes (110,760) 3,279
Provision (credit) for income taxes (36,681) 537
------------------------------------------------------------------------------
Net income (loss) $ (74,079) 2,742
==============================================================================
</TABLE>
RESULTS OF OPERATIONS
- - ---------------------
In the first quarter of 1994, the Minerals Group reported a net loss
of $74.1 million compared with net income of $2.7 million in the first
quarter of 1993. The decrease was attributable to the Coal segment
whose results included charges for asset writedowns, accruals for
costs related to facilities which are being closed and operating
losses incurred related to these facilities, which in the aggregate
reduced operating profit and net income by $97.5 million and $63.4
million, respectively. Decreased operating results for Mineral
Ventures in the 1994 first quarter were offset by lower general
corporate expenses for the period. The first quarter of 1993 was
adversely affected by a one-time coal litigation charge and a
corporate charge related to the Company's then proposed
reclassification of its common stock into two classes.
Coal
- - ----
Coal operations had an operating loss totaling $107.8 million in the
first quarter of 1994 compared with an operating profit of $5.5
million in the year earlier quarter. The 1994 first quarter coal
operating loss included $90.8 million of charges for asset writedowns
and accruals for costs related to facilities which are being closed
and $6.7 million of operating losses incurred during the first quarter
related to those facilities. Coal's ongoing operations incurred
losses of $10.3 million in the 1994 first quarter. The decrease
compared with prior year operating results reflected the adverse
impact of the severe winter weather which particularly hampered
surface mine production and river transportation. The 1994 first
quarter included the operating results from substantially all the coal
mining operations and coal sales contracts of Addington Resources,
Inc. ("Addington"), which acquisition was completed by the Minerals
Group on January 14, 1994.
Sales volume of 6.1 million tons for the 1994 first quarter was 13% or
.7 million tons greater than sales volume in the 1993 first quarter.
Coal produced and purchased totaled 6.3 million tons for the 1994
first quarter, an 18% or 1.0 million ton increase over the 1993 first
quarter. Coal sales and produced/purchased in the first quarter of
1994 attributable to Addington operations amounted to 1.4 million tons
and 1.6 million tons, respectively.
In the 1994 first quarter, 38% of total production was derived from
deep mines and 62% was derived from surface mines compared with 62%
and 38% of deep and surface mine production, respectively, in the
first quarter of 1993.
Both production and sales in the 1994 first quarter were impacted by
the extreme cold weather and above-normal precipitation. Production
was hampered not only by a large number of lost production days, but
also by the continuing interruptions which limited output efficiencies
during periods of performance. Sales suffered due to lost loading
days and were impeded by closed and restricted road accessibility.
Sales were further impacted by the lack of rail car availability and
the disruption of river barge service initially due to frozen
waterways and subsequently due to the heavy snow melt and rain, which
raised the rivers above operational levels. The severe weather also
reduced output from purchased coal suppliers, which hindered the
ability to meet customer shipments during the period. In addition to
weather related difficulties, operations in the 1994 first quarter
were affected by lost business due to a utility customer's plant
closure and production shortfalls due to withdrawal of contractors
from the market.
Average coal margin (realization less current production costs of coal
sold), which was a loss of $1.02 per ton for the current year quarter,
decreased $3.81 per ton from the prior year first quarter with a 3.8%
or $1.13 per ton decrease in average realization and a 10.0% or $2.68
per ton increase in average current production costs of coal sold.
The increase in average current production costs was primarily caused
by the previously mentioned adverse weather conditions, which
significantly reduced planned production, and unusually high costs
incurred at mines which are being closed.
The metallurgical coal markets continued their long-term decline with
price reductions of $3.85 per ton negotiated early in the year between
Canadian and Australian producers and Japanese steel mills. The Coal
Operation recently reached agreement with its major Japanese steel
customers for new three-year contracts for metallurgical coal
shipments. Such agreements replace sales contracts which expired on
March 31, 1994. Pricing under the new agreements for the coal year
beginning April 1, 1994 was impacted by the price reductions accepted
by foreign producers, but is largely offset by modifications in coal
quality specification which allows the Coal Operation flexibility in
sourcing and blending the coals. The net margin for coal sold under
such agreements is expected to decrease less than $1 a ton for the
current contract year. Negotiations continue with certain customers
in Europe and Brazil. Although the outcome of these negotiations is
uncertain they are expected to result in potential margin reductions
of no change up to $1 per ton. Sales of metallurgical coal are
expected to decrease.
As a result of the continuing long-term decline in the metallurgical
coal markets, which is evidenced by the recent severe price
reductions, the Coal Operation is accelerating its strategy of
decreasing its exposure to these markets by reducing its metallurgical
coal production and increasing its production and sales of lower cost
surface minable steam coal. After a review of the economic viability
of the remaining metallurgical coal assets, certain underground mines
are being closed resulting in significant economic impairment of the
related preparation plants. In addition, one surface steam coal mine,
the Heartland mine, is being closed due to rising costs caused by
unfavorable geological conditions. The $90.8 million in charges to
operating earnings in the 1994 first quarter included a reduction in
the carrying value of these assets and related accruals for mine
closure costs. These charges include asset writedowns of $46.5
million, mine closing costs including reclamation expenses estimated
at $23.1 million and contractually or statutorily required employee
severance and other benefit costs estimated at $21.2 million. Of the
total charges, liabilities which are expected to be paid within one
year total $16.8 million with the balance over the next several years.
Operating results for the remainder of 1994 and thereafter should
benefit from these measures, the continued integration of Addington
operations, the planned expansion of surface mine operations and cost
reductions resulting from personnel cutbacks and the realignment of
administrative duties which were put in place at the end of the 1994
first quarter.
The Coal Operation's principal labor agreement with the UMWA expires
on June 30, 1994. The Company expects a replacement contract will be
submitted for a ratification vote prior to expiration of the existing
contract.
Operating profit in the first quarter of 1993 was negatively impacted
by a $1.8 million charge to settle litigation related to the moisture
content of tonnage used to compute royalty payments to the UMWA
pension and benefit funds during the period ending February 1, 1988.
The effect of these costs were offset by strong production, good
productivity, a solid performance at certain surface mining operations
in Virginia and Kentucky and favorable labor related expenses during
the period.
Mineral Ventures
- - ----------------
Operating profit of Mineral Ventures decreased $.6 million in the 1994
first quarter to an operating loss of $.2 million, from an operating
profit of $.4 million in the prior year first quarter. The decrease
in operating profit principally reflects increased exploration costs
in Australia and Nevada as well as lower production at the Stawell
gold mine. The production shortfall at the Stawell mine was largely
due to an operator accident during the 1994 first quarter, which also
resulted in higher operating costs for the period. The Stawell gold
mine, in which Mineral Ventures has a 67% net equity interest,
produced 16,855 ounces in the 1994 first quarter compared with 18,765
ounces in the comparable 1993 period. A joint venture in which
Mineral Ventures also has a net 67% equity interest continued gold
exploration in Nevada and Australia during the 1994 first quarter.
Other Operating Income
- - ----------------------
Other operating income for the first quarter of 1994 increased $.2
million to $3.0 million from $2.8 million recognized in the year
earlier quarter. Other operating income principally includes royalty
income from coal and natural gas properties and gains and losses
attributable to sales of property and equipment.
Corporate Expenses
- - ------------------
A portion of the Company's corporate general and administrative
expenses and other shared services has been allocated to the Minerals
Group based on utilization and other methods and criteria which
management believes to be equitable and a reasonable estimate of such
expenses as if the Minerals Group operated on a stand alone basis.
These allocations were $1.7 million and $2.0 million for the first
quarter of 1994 and 1993, respectively. General corporate expenses in
the 1993 first quarter were greater than those in the current year
quarter due to costs incurred in the 1993 period related to the
Company's then proposed reclassification of its common stock into two
classes.
Interest Expense
- - ----------------
Interest expense for the first quarter of 1994 decreased slightly to
$.8 million from $1.0 million in the first quarter of 1993. Interest
expense in the 1994 first quarter included interest incurred on
borrowings used to finance the Addington acquisition. Interest
expense in the 1993 first quarter included interest assessed on
settlement of coal litigation related to the moisture content of
tonnage used to compute royalty payments to UMWA pension and benefit
funds.
FINANCIAL CONDITION
- - -------------------
A portion of the Company's corporate assets and liabilities has been
attributed to the Minerals Group based upon utilization of the shared
services from which assets and liabilities are generated, which
management believes to be equitable and a reasonable estimate of the
asset and liabilities which would be generated if the Minerals Group
operated on a stand alone basis.
Cash Flow Provided by Operations
- - --------------------------------
Operating activities for the first quarter of 1994 used cash of $23.0
million, while operations in the first quarter of 1993 provided cash
of $12.0 million. Operations provided less cash in the 1994 period
largely due to the integration of operating activities of Addington
which required cash to finance working capital needs since
acquisition. Net income, noncash charges and changes in operating
assets and liabilities in the 1994 first quarter were significantly
affected by after-tax special and other charges of $58.1 million which
had no effect in the first quarter on cash generated by operations.
Of the total $90.8 million of the 1994 first quarter pre-tax charges,
$46.5 million was for noncash writedowns of assets and the remainder
represents liabilities, of which $16.8 million are expected to be paid
within one year or are expected to be over the next several years.
Capital Expenditures
- - --------------------
Cash capital expenditures for the first quarter of 1994 totaled $2.7
million, excluding equipment expenditures that have been or are
expected to be financed through capital and operating leases, and any
acquisition expenditures. For the full year 1994, capital
expenditures, excluding expenditures that have been or are expected to
be financed through capital and operating leases and acquisition
expenditures, are estimated to approximate $30 million.
Other Investing Activities
- - --------------------------
All other investing activities in the 1994 first quarter used net cash
of $150.5 million. In January 1994, the Company paid approximately
$157 million in cash for the acquisition of substantially all the coal
mining operations and coal sales contracts of Addington. The purchase
price of the acquisition was subsequently financed through the
issuance of $80.5 million of a new series of preferred stock,
convertible into Pittston Minerals Group Common Stock, and additional
debt under revolving credit agreements.
Financing
- - ---------
The Minerals Group intends to fund its capital expenditure
requirements during the remainder of 1994 primarily with anticipated
cash flows from operating activities and through operating and capital
leases if the latter are financially attractive. Shortfalls, if any,
will be financed through the Company's revolving credit agreements or
short-term borrowing arrangements or borrowings from the Services
Group. In March 1994, the Company entered into a $350 million
revolving credit agreement with a syndicate of banks (the "New
Facility"), replacing the Company's previously existing $250 million
of revolving credit agreements. The New Facility includes a $100
million five-year term loan, which matures in March 1999. The New
Facility also permits additional borrowings, repayments and
reborrowings of up to an aggregate of $250 million until March 1999.
As of March 31, 1994, borrowings of $100 million were outstanding
under the five-year term loan portion of the New Facility with no
additional borrowings outstanding under the remainder of the facility.
Of the total amount outstanding under the New Facility, $76.6 million
was attributed to the Minerals Group.
Debt
- - ----
Net cash proceeds from outstanding debt and funding from the Services
Group totaled $99.7 million for the first quarter of 1994, including
borrowings under revolving credit agreements which were attributed to
the Minerals Group aggregating $76.6 million at March 31, 1994. Cash
proceeds from the issuance of preferred stock was not sufficient to
fund current operating activities, capital expenditures, other net
investing activities and net costs related to share activity during
the 1994 first quarter, resulting in additional borrowings under the
Company's revolving credit agreements.
Capitalization
- - --------------
Since the creation of Minerals Stock upon approval of the Services
Stock Proposal, capitalization of the Minerals Group has been affected
by all share activity related to Minerals Stock.
In January 1994, the Company issued $80.5 million (161,000 shares) of
a new series of preferred stock, convertible into Minerals Stock, to
finance a portion of the Addington Acquisition. Such stock has been
attributed to the Minerals Group.
In 1993, the Board of Directors of the Company authorized a new share
repurchase program under which up to 1,250,000 shares of Services
Stock and 250,000 shares of Minerals Stock may be repurchased. As of
March 31, 1994, a total of 31,500 shares of Minerals Stock had been
acquired pursuant to the authorization. Of that amount, 12,700 shares
of Minerals Stock was repurchased in the first quarter of 1994 at an
aggregate cost of $.3 million.
Dividends
- - ---------
The Board of Directors intends to declare and pay dividends on
Services Stock and Minerals Stock based on earnings, financial
condition, cash flow and business requirements of the Services Group
and the Minerals Group, respectively. Since the Company remains
subject to Virginia law limitations on dividends and to dividend
restrictions in its public debt and bank credit agreements, losses by
one Group could affect the Company's ability to pay dividends in
respect of stock relating to the other Group. Dividends on Minerals
Stock are also limited by the Available Minerals Dividend Amount as
defined in the Company's Articles of Incorporation.
As a result of the Company's issuance in January 1994 of 161,000
shares of a new series of preferred stock, convertible into Minerals
Stock, the Company pays an annual cumulative dividend of $31.25 per
share payable quarterly, in cash, in arrears, out of all funds of the
Company legally available therefor, when, and if declared by the Board
of Directors of the Company which commenced March 1, 1994. Such stock
also bears a liquidation preference of $500 per share, plus an amount
equal to accrued and unpaid dividends thereon.
During the first quarter of 1994, the Board of Directors declared and
the Company paid cash dividends of 16.25 cents per share of Minerals
Stock. On an equivalent basis, during the 1993 first quarter the
Company paid dividends of 14.8 cents per share of Minerals Stock.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- - ------ ---------------------------------------------------
(a) The Company's annual meeting of shareholders was held on May 6,
1994.
(b) Not required.
(c) The following persons were elected directors for terms expiring
in 1997, by the following votes:
For Withheld
--- --------
R. G. Ackerman 44,275,693 762,508
M. J. Anton 44,001,021 771,031
J. C. Farrell 44,291,304 746,897
R. H. Spilman 44,284,318 753,883
The selection of KPMG Peat Marwick as independent certified
public accountants to audit the accounts of the Company and its
subsidiaries for the year 1994 was approved by the following
vote:
Broker
For Against Abstentions Non-votes
--- ------- ----------- -----------
44,147,919 399,267 296,805 194,210
Amendments to the Company's 1988 Stock Option Plan to (i)
increase the maximum number of shares that may be issued pursuant
to options exercised under such Plan to 1,600,000 of Services
Stock and 225,000 shares of Minerals Stock plus, in each case,
the number of shares of Services Stock or Minerals Stock, as the
case may be, issuable pursuant to options outstanding on May 6,
1994 and (ii) limit the maximum number of options that may be
granted to any single participant to options to purchase no more
than 250,000 shares of Services Stock and 200,000 shares of
Minerals Stock, to conform the administration provisions of such
Plan so as to assure disinterested administration and to make
certain other related amendments to such Plan in order to qualify
the grant of stock options under such Plan as "performance-based
remuneration" within the meaning of the Omnibus Budget
Reconciliation Act of 1993 were approved by the following vote:
Broker
For Against Abstentions Non-votes
--- ------- ----------- -----------
38,083,049 2,439,291 518,486 3,997,375
Amendments to the Company's Key Employees' Deferred Payment
Program to (i) rename such plan the Key Employees' Deferred
Compensation Program of The Pittston Company, (ii) require that
all distributions generally be made in the form of Services Stock
or Minerals Stock, (iii) permit certain officers and employees to
defer (a) up to 50% of their base salary and (b) amounts that are
not permitted to be deferred under the Company's Savings-
Investment Plan as a result of limitations imposed by the
Internal Revenue Code of 1986, as amended, and (iv) to permit the
distribution of up to 250,000 shares of Services Stock and
100,000 shares of Minerals Stock were approved by the following
vote:
Broker
For Against Abstentions Non-votes
--- ------- ----------- -----------
38,394,350 2,116,541 531,133 3,996,177
A proposal to approve the 1994 Employee Stock Purchase Plan of
the Company pursuant to which (i) each employee of the Company
and designated subsidiaries that have at least six months of
service with the Company or any such subsidiary and who satisfy
certain other criteria are eligible, subject to certain
limitations, to purchase shares of common stock of the Company at
a price equal to 85% of the fair market value of such stock on
certain dates as specified in such Plan through payroll
deductions and (ii) up to 750,000 shares of Services Stock and
250,000 shares of Minerals Stock may be sold was approved by the
following vote:
Broker
For Against Abstentions Non-votes
--- ------- ----------- -----------
39,114,723 1,685,945 367,387 3,870,146
<PAGE>
<TABLE>
Item 6. Exhibits and Reports on Form 8-K
- - ------ --------------------------------
<CAPTION>
(a) Exhibits:
Exhibit
Number
<S> <C>
10.1 First Supplement Indenture,
between Toledo-Lucas County
Port Authority, and Society
National Bank, as Trustee,
dated as of March 1, 1994.
10.2 Third Supplement to Lease,
between Toledo-Lucas County
Port Authority, as Lessor,
and Burlington Air Express
Inc., as Lessee, dated as of
June 1, 1991.
10.3 Fourth Supplement to Lease,
between Toledo-Lucas County
Port Authority, as Lessor,
and Burlington Air Express
Inc., as Lessee, dated as of
March 1, 1994.
10.4 Credit Agreement, dated as of
March 4, 1994, among The
Pittston Company, as Borrower,
Lenders Parties Thereto, Chemical
Bank, Credit Suisse and Morgan
Guaranty Trust Company of New
York, as Co-agents, and Credit
Suisse, as Administrative Agent.
10.5* The Company's 1988 Stock Option
Plan, as amended.
10.6* The Company's Key Employees'
Deferred Compensation Program.
10.7* The Company's 1994 Employee Stock
Purchase Plan.
11 Statement re Computation of
Per Shares Earnings.
(b) A report on Form 8-K dated January 14, 1994, was filed with
respect to (i) the completion of the Company's previously
reported purchase of substantially all of the coal mining
operations and coal sales contracts of Addington Resources, Inc.
and (ii) the completion of an $80,500,000 private issue of
1,610,000 Depository Shares each representing a one-tenth
interest in the Company's $31.25 Series C Cumulative Convertible
Preferred Stock and related amendment to its Restated Articles of
Incorporation.
A report on Form 8-K dated March 16, 1994, was filed with respect
to the redemption of all of the Company's outstanding 9.20%
Convertible Subordinated Debentures due July 1, 2004.
- - ----------------------------
* Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE PITTSTON COMPANY
May 12, 1994 By G. R. Rogliano
---------------------------------
(G. R. Rogliano)
Vice President -
Controllership and Taxes
(Duly Authorized Officer and
Chief Accounting Officer)
<PAGE>
EXHIBIT 10.1
FIRST SUPPLEMENTAL INDENTURE
Between
TOLEDO-LUCAS COUNTY PORT AUTHORITY
and
SOCIETY NATIONAL BANK,
as Trustee
_________________________
$36,120,000
Toledo-Lucas County Port Authority
Airport Refunding and Improvement Revenue Bonds, Series 1994-1
(Burlington Air Express Project)
_________________________
Dated
as of
March 1, 1994
This First Supplemental Indenture
supplements a Trust Indenture
dated as of April 1, 1989 between
the Toledo-Lucas County Port
Authority and the above-named
Trustee (successor by merger to
Society Bank & Trust, formerly
known as Trustcorp Bank, Ohio).
Squire, Sanders & Dempsey
Bond Counsel
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of March 1,
1994, is made by and between the TOLEDO-LUCAS COUNTY PORT AUTHORITY
(the "Issuer"), a port authority and a political subdivision, and
a body corporate and politic, in and of, and duly created and
validly existing under, the laws of the State of Ohio (the
"State"), and SOCIETY NATIONAL BANK, a national banking association
duly organized and validly existing under the laws of the United
States of America and duly authorized to exercise corporate trust
powers under the laws of the State, with its principal corporate
trust office located in Cleveland, Ohio, operating by and through
its Toledo, Ohio corporate trust office (successor by merger to
Society Bank & Trust, formerly known as Trustcorp Bank, Ohio), as
Trustee (the "Trustee"), under the circumstances summarized in the
following recitals (the capitalized words and terms not defined in
this First Supplemental Indenture have the meanings assigned to
them in Article I of the Trust Indenture between the Issuer and the
Trustee dated as of April 1, 1989 (the "Original Indenture")):
1. By virtue of the authority of the laws of the State
including, without limitation, Section 13 of Article VIII of the
Ohio Constitution and Sections 4582.01 through 4582.20 of the Ohio
Revised Code, and the Bond Legislation duly adopted by the
Legislative Authority, the Issuer heretofore executed and delivered
the Original Indenture to the Trustee to secure the Issuer's
Airport Improvement Revenue Bonds, Series 1989-1 (Burlington Air
Express Project), issued in the original aggregate principal amount
of $30,870,000 and currently outstanding in an aggregate principal
amount of $30,245,000 (the "Refunded Bonds"), and to secure any
Additional Bonds that might thereafter be issued pursuant to
Section 2.04 of the Original Indenture; and
2. The Issuer has determined to issue $36,120,000
Airport Refunding and Improvement Revenue Bonds, Series 1994-1
(Burlington Air Express Project) (the "Series 1994-1 Bonds"), as
Additional Bonds under the Original Indenture, for the purposes of
(i) refunding, at a reduced interest cost, the outstanding
principal amount of the Refunded Bonds and (ii) paying costs of
acquiring, constructing, improving and equipping certain additional
"port authority facilities", including "aviation facilities", both
as defined in the Act (the "1994 Project"), for lease to the
Company for use in connection with the Hub Facility; and
3. Pursuant to the Bond Legislation, including a
resolution duly adopted by the Legislative Authority on December 9,
1993, the Issuer is authorized to enter into this First
Supplemental Indenture to secure the Series 1994-1 Bonds and to do
or cause to be done all acts provided or required herein to be
performed on its part; and
4. All acts and conditions required to happen, exist
and be performed precedent to and in the issuance of the Series
1994-1 Bonds and the execution and delivery of this First
Supplemental Indenture have happened, exist and have been performed
(i) to make the Series 1994-1 Bonds, when issued, delivered and
authenticated, valid special obligations of the Issuer in
accordance with the terms thereof and hereof, and (ii) to make the
Indenture, including this First Supplemental Indenture, a valid,
binding and legal trust agreement for the security of the Series
1994-1 Bonds and any further Additional Bonds in accordance with
the terms of the Original Indenture; and
5. The Trustee has accepted the trusts created by this
First Supplemental Indenture, and in evidence thereof has joined in
the execution hereof;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE
WITNESSETH, that in order to secure the payment of the Bond Service
Charges on the Series 1994-1 Bonds and any further Additional Bonds
hereafter issued according to their true intent and meaning, and to
secure the performance and observance of all the covenants and
conditions therein and in the Indenture contained and to declare
the terms and conditions upon and subject to which the Series 1994-
1 Bonds are and are intended to be issued, held, secured, and
enforced, the Issuer, in consideration of the premises and the
acceptance by the Trustee of the trusts hereby created and of the
purchase and acceptance of the Series 1994-1 Bonds by the Holders
thereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, has executed and
delivered this First Supplemental Indenture and does hereby
absolutely and irrevocably assign to Society National Bank, as
Trustee, and to its successors in trust, and its and their assigns,
(i) the right of the Issuer under the Lease to receive, and the
rights and remedies of the Issuer under the Lease to enforce the
payment of, the Basic Rent and other payments to be made under the
Lease specifically relating to the payment of Bond Service Charges
and the rights of the Issuer to receive and enforce payments under
the Guaranty corresponding to the Basic Rent and other payments to
be made under the Lease specifically relating to the payment of
Bond Service Charges, and (ii) all right, title and interest of the
Issuer in and to the Revenues including, without limitation, the
moneys and investments in the Special Funds (except any moneys that
are required to be rebated to the United States of America), the
Basic Rent, the Net Facility Revenues and the Issuer Payments,
TO HAVE AND TO HOLD unto the Trustee and its successors
in that trust and its and their assigns forever;
BUT IN TRUST, NEVERTHELESS, and subject to the terms of
the Indenture,
(a) except as provided otherwise in the Indenture, for
the equal and proportionate benefit, security and protection of all
present and future Holders of the Bonds issued or to be issued
under and secured by the Indenture,
(b) for the enforcement of the payment of the Bond
Service Charges on the outstanding Bonds, when payable, according
to the true intent and meaning thereof and of the Indenture, and
(c) to secure the observance and performance of and
compliance with the covenants, agreements, obligations, terms and
conditions of the Indenture,
in each case without preference, priority or distinction, as to
lien or otherwise, of any one Bond over any other by reason of
designation, number, date of the Bonds or of authorization,
issuance, sale, execution, authentication, delivery or maturity
thereof, or otherwise, so that, except as otherwise provided in the
Indenture, each Bond and all Bonds shall have the same right, lien
and privilege under the Indenture, and shall be secured equally and
ratably thereby, it being intended that the lien and security of
the Indenture take effect from the date of the Original Indenture,
without regard to the date of the actual issue, sale or disposition
of the Bonds, as though upon that date all of the Bonds were
actually issued, sold and delivered to purchasers for value;
provided, however, that if
(i) the principal of the Series 1994-1
Bonds and the interest due or to become due
thereon together with any premium required by
redemption of any of the Series 1994-1 Bonds
prior to maturity shall be well and truly
paid, at the times and in the manner mentioned
in the Series 1994-1 Bonds, according to the
true intent and meaning thereof, or the
outstanding Series 1994-1 Bonds shall have
been paid and discharged in accordance with
Article IX of the Original Indenture, and
(ii) all the covenants, agreements,
obligations, terms and conditions of the
Issuer under the Indenture shall have been
kept, observed and performed, and there shall
have been paid to the Trustee, the Registrar,
the Paying Agents and the Authenticating
Agents all sums of money due to them in
accordance with the terms and provisions
hereof,
then this First Supplemental Indenture and the rights hereby
assigned shall cease, determine and be void except as provided in
Section 9.03 of the Original Indenture with respect to the survival
of certain provisions thereof; otherwise, this First Supplemental
Indenture shall be and remain in full force and effect.
IT IS EXPRESSLY DECLARED that all Bonds issued hereunder
and secured hereby are to be issued, authenticated and delivered,
and that all Revenues assigned hereby are to be dealt with and
disposed of under, upon and subject to and in accordance with the
terms, conditions, stipulations, covenants, agreements,
obligations, trusts, uses and purposes provided in the Indenture
including this First Supplemental Indenture. The Issuer has agreed
and covenanted, and agrees and covenants with the Trustee and with
each and all Holders, as follows:
Section 1. Issuance of Series 1994-1 Bonds. It is
determined to be necessary to, and the Issuer shall, issue, sell
and deliver its $36,120,000 aggregate principal amount of Series
1994-1 Bonds for the purposes of (i) refunding the Refunded Bonds
at a reduced interest cost thereby providing funds sufficient,
together with other available moneys in the Special Funds, to
retire the portion the Refunded Bonds heretofore called for
mandatory sinking fund redemption pursuant to Section 4.01(a) of
the Original Indenture, on April 1, 1994, pursuant to such call for
mandatory sinking fund redemption, and to pay all interest due on
that date and to retire, pursuant to call for optional redemption
pursuant to Section 4.01(d) of the Original Indenture, all
remaining outstanding Refunded Bonds on April 21, 1994, and
including moneys sufficient for the payment of the premium and any
accrued interest required by Section 4.01(d) of the Original
Indenture in connection with such optional redemption, and (ii)
paying costs of the acquisition, construction, improvement and
equipping of the 1994 Project, including those facilities generally
described Exhibit A to the Fourth Supplement to Lease of even date
herewith between the Issuer and the Company (the "Fourth
Supplement"), and which 1994 Project consists of the "1994
Additional Project" leased to the Company for use in connection
with the Hub Facility, and the "1994 Airport Improvements", all as
more fully described in Exhibit A to the Fourth Supplement, the
terms of which are hereby approved. The Series 1994-1 Bonds shall
be issued as Additional Bonds under and in accordance with the
Original Indenture, particularly Section 2.04 thereof, except
subparagraph 9 of the second paragraph thereof which shall only
apply to future series of Additional Bonds, and upon satisfaction
of the conditions stated therein (other than those in that
subparagraph 9), the proceeds of the Series 1994-1 Bonds and other
available funds shall be allocated and deposited by the Trustee on
the date of issuance of the Series 1994-1 Bonds in accordance with
Section 3 hereof.
The Series 1994-1 Bonds shall be issuable, only in fully
registered form, substantially in the form set forth as Exhibit A
to this First Supplemental Indenture; shall be numbered in such
manner as determined by the Trustee in order to distinguish each
Series 1994-1 Bond from any other Series 1994-1 Bond; shall be in
the denominations of $5,000 and any integral multiples thereof; and
shall be dated of even date with this First Supplemental Indenture.
The Bonds shall bear interest from the most recent date to which
interest has been paid or duly provided for or, if no interest has
been paid or duly provided for, from their date.
Section 2. Terms and Provisions of the Series 1994-1
Bonds.
(a) Interest Rates and Principal Maturities. The Series
1994-1 Bonds shall mature on April 1 in the years and in the
principal amounts, and shall bear interest at the annual interest
rates, payable on each Interest Payment Date, in accordance with
the schedule set forth below:
Principal Amount Annual
Year of of Series 1994-1 Interest
Maturity Bonds Maturing Rate
2004 8,170,000 7.00%
2009 5,385,000 7.25%
2014 8,200,000 7.375%
2019 14,365,000 7.50%
(b) Mandatory Sinking Fund Redemption. (i) The Series
1994-1 Bonds maturing on April 1,2004 shall be subject to mandatory
redemption pursuant to mandatory sinking fund requirements, at a
redemption price of 100% of the principal amount redeemed plus
interest accrued to the redemption date, on the Principal Payment
Date in the years specified below and in the principal amounts set
forth opposite the respective year of redemption:
<PAGE>
Refunding 1994 Project
Year Amount Amount Total
1995 $560,000 $70,000 $630,000
1996 630,000 90,000 720,000
1997 665,000 100,000 765,000
1998 710,000 105,000 815,000
1999 755,000 115,000 870,000
2000 805,000 120,000 925,000
2001 855,000 130,000 985,000
2002 630,000 140,000 770,000
2003 670,000 150,000 820,000
If retired only by mandatory sinking fund redemption prior to their
stated maturity, there would remain $870,000 principal amount
($710,000 principal amount of which constitutes refunding bonds) of
the Series 1994-1 Bonds maturing on April 1, 2004 to be paid at
maturity.
(ii) The Series 1994-1 Bonds maturing on April 1, 2009
shall be subject to mandatory redemption pursuant to mandatory
sinking fund requirements, at a redemption price of 100% of the
principal amount redeemed plus interest accrued to the redemption
date, on the Principal Payment Date in the years specified below
and in the principal amounts set forth opposite the respective year
of redemption:
Refunding 1994 Project
Year Amount Amount Total
2005 $760,000 $170,000 $930,000
2006 820,000 180,000 1,000,000
2007 880,000 195,000 1,075,000
2008 935,000 210,000 1,145,000
If retired only by mandatory sinking fund redemption prior to their
stated maturity, there would remain $1,235,000 principal amount
($1,010,000 principal amount of which constitutes refunding bonds)
of the Series 1994-1 Bonds maturing on April 1, 2009 to be paid at
maturity.
(iii) The Series 1994-1 Bonds maturing on April 1, 2014
shall be subject to mandatory redemption pursuant to mandatory
sinking fund requirements, at a redemption price of 100% of the
principal amount redeemed plus interest accrued to the redemption
date, on the Principal Payment Date in the years specified below
and in the principal amounts set forth opposite the respective year
of redemption:
Refunding 1994 Project
Year Amount Amount Total
2010 $1,080,000 $240,000 $1,320,000
2011 1,155,000 260,000 1,415,000
2012 1,240,000 275,000 1,515,000
2013 1,335,000 295,000 1,630,000
If retired only by mandatory sinking fund redemption prior to their
stated maturity, there would remain $2,320,000 principal amount
(all which constitutes refunding bonds) of the Series 1994-1 Bonds
maturing on April 1, 2014 to be paid at maturity.
(iv) The Series 1994-1 Bonds maturing on April 1, 2019
(all of which constitute refunding bonds) shall be subject to
mandatory redemption pursuant to mandatory sinking fund
requirements, at a redemption price of 100% of the principal amount
redeemed plus interest accrued to the redemption date, on the
Principal Payment Date in the years specified below and in the
principal amounts set forth opposite the respective year of
redemption:
Refunding
Year Amount
2015 $2,385,000
2016 2,565,000
2017 2,765,000
2018 3,110,000
If retired only by mandatory sinking fund redemption prior to their
stated maturity, there would remain $3,540,000 principal amount of
the Series 1994-1 Bonds maturing on April 1, 2019 to be paid at
maturity.
(v) The procedures and conditions for the satisfaction
of the mandatory sinking fund requirements set forth in Section
4.01(a) of the Original Indenture with respect to the Refunded
Bonds (referred to as the "Project Bonds" therein), beginning with
the third sentence of the first paragraph of that Section 4.01(a),
shall apply to the Series 1994-1 Bonds and are incorporated herein
by reference as fully as if set forth here with all references
therein to the "Project Bonds" instead to refer to the "Series
1994-1 Bonds maturing on the applicable maturity date".
(c) Optional Redemption. The Series 1994-1 Bonds shall
be subject to redemption on or after April 1, 2004 (from funds
other than those deposited in accordance with the mandatory sinking
fund requirements applicable to the Series 1994-1 Bonds), at the
option of the Issuer, in whole on any date or in part on any
Interest Payment Date, at redemption prices equal to the following
percentages of the principal amount redeemed plus, in each case,
interest accrued to the redemption date:
Redemption Period (dates inclusive) Redemption Price
April 1, 2004 through March 31, 2005 102%
April 1, 2005 through March 31, 2006 101%
April 1, 2006 and thereafter 100%
If optional redemption at a redemption price exceeding 100% of the
principal amount to be redeemed is to take place as of any
applicable mandatory redemption date identified in subsection (b)
of this Section, the Series 1994-1 Bonds, or portions thereof, to
be so redeemed shall be selected (by lot within a maturity) prior
to the selection of the Series 1994-1 Bonds to be redeemed on the
same date by operation of the mandatory redemption provisions of
that subsection (b).
(d) Extraordinary Optional Redemption. Subject to the
terms of the Lease, the Series 1994-1 Bonds shall be subject to
redemption by the Issuer, upon 45 days prior written notice to the
Trustee, in whole on any date upon the occurrence of any of the
events described in subparagraphs (i), (ii) and (iii) of the first
paragraph of Section 4.01(b) of the Original Indenture at a
redemption price of 100 percent of the principal amount redeemed
plus interest accrued to the redemption date.
(e) Mandatory Redemption Upon a Determination of
Taxability. The Series 1994-1 Bonds shall be subject to mandatory
redemption upon the occurrence of a Determination of Taxability
with respect to the Series 1994-1 Bonds. "Determination of
Taxability" is used herein as defined in Section 1.01 of the
Original Indenture with respect to the Refunded Bonds (referred to
therein as the "Project Bonds") and that definition shall apply to
the Series 1994-1 Bonds and is incorporated herein by reference as
fully as if set forth here, with all references to the "Project
Bonds" instead to refer to the Series 1994-1 Bonds. The procedures
and conditions for implementation of the mandatory redemption upon
a Determination of Taxability set forth in Section 4.01(c) of the
Original Indenture with respect to the Refunded Bonds shall apply
to the Series 1994-1 Bonds and are incorporated herein by reference
as fully as if set forth here, with all references therein to the
"Project Bonds" instead to refer to the Series 1994-1 Bonds.
(f) Redemption - Generally. The provisions of Sections
4.02 through 4.05 of the Original Indenture shall apply to the
Series 1994-1 Bonds; provided, that, for purposes of the Series
1994-1 Bonds, references therein to Section 4.01(b) shall refer to
subsection (d) of this Section 2 and references therein to Section
4.01(d) shall refer to subsection (c) of this Section 2.
Section 3. Application of Proceeds of Series 1994-1
Bonds. The proceeds of sale of the Series 1994-1 Bonds shall be
allocated and deposited as provided in the Bond Legislation for the
Series 1994-1 Bonds. In accordance therewith, $154,258.85 of those
proceeds representing accrued interest shall be deposited into the
Interest Account in the Bond Fund, $3,546,984.00 of those proceeds,
representing the Bond Funded Reserve Requirement for the Series
1994-1 Bonds, shall be deposited into the Bond Funded Reserve Fund,
$29,086,562.64 of those proceeds shall be deposited in the Escrow
Fund pursuant to the Escrow Agreement hereafter described and the
balance of those proceeds shall be deposited into the Proceeds
Account of the Project Fund. Concurrently all amounts on deposit
in the Principal and Interest Accounts in the Bond Fund (but not
the Earnings Account) and the Bond Funded Reserve Fund (except to
the extent directed to be retained as described above), in each
case prior to the deposits described in the preceding sentence,
shall be transferred in immediately available funds to Society
National Bank, as trustee (the "Escrow Trustee") under the Escrow
Agreement dated as of even date herewith (the "Escrow Agreement")
among the Issuer, the Company and the Escrow Trustee, for deposit,
investment and redemption of the Refunded Bonds, all in accordance
with the terms of the Escrow Agreement. In accordance with the
Escrow Agreement, all investment earnings on the Escrow Fund shall,
upon receipt by the Escrow Trustee, be transferred to the Trustee
for deposit into the Proceeds Account of the Project Fund. The
Trustee represents and warrants that, as of the date of issuance of
the Series 1994-1 Bonds and except for moneys to be deposited in
the Project Fund from the proceeds of the Series 1994-1 Bonds,
there are and shall be no moneys deposited in or credited to the
Project Fund or the Company Funded Reserve Fund. The Company
Funded Reserve Fund was heretofore released pursuant to the terms
of the Indenture and, accordingly, there is no Company Funded
Reserve Requirement with respect to the Series 1994-1 Bonds and
Section 5.04(f) of the Original Indenture shall be of no further
force and effect.
Section 4. Special Funds. Moneys in the Special Funds
pertaining to the Series 1994-1 Bonds shall be held, invested, used
and disposed of in accordance with Article V of the Original
Indenture except as expressly set forth herein and in the Lease, it
being understood and agreed that the 1994 Additional Project
constitutes an "Additional Project" for all purposes of the
Indenture and the Lease and that the 1994 Project constitutes a
"Project" for all purposes of the Indenture; provided, that the
amount that may be disbursed from the Project Fund to pay "issuance
costs" (as that term is used in Section 147(g) of the Code) with
respect to the Series 1994-1 Bonds shall not exceed $722,400. The
subparagraph numbered (v) of the definition of Eligible
Investments, as heretofore set forth in Article I of the Indenture
is hereby amended to read as set forth below, and that
subparagraph, as heretofore set forth therein, is hereby deleted
therefrom:
(v) investment agreements (which term shall not include
repurchase agreements) with a bank or bank holding
company or an insurance company rated by a Rating Service
in at least the second highest long term debt rating
category, without distinction as to number or symbol
assigned within a category, or, if such bank, bank
holding company or insurance company has no long term
debt rating, rated by a Rating Service in the highest
short term debt rating category; provided that any such
agreement shall be in writing and shall contain
provisions that require the termination of such agreement
not more than sixty (60) days after the provider of such
agreement is downgraded by a Rating Service, if such
downgrade results in the provider being disqualified as
an investment agreement provider under this paragraph
(v);
Section 5. Basic Rent, Net Facility Revenues and Issuer
Payments; Amendment of Section 5.04(c) and Exhibit B of the
Original Indenture. As permitted by the Indenture, upon the
issuance of the Series 1994-1 Bonds and the defeasance of the
Refunded Bonds, Section 5.04(c) of the Original Indenture is hereby
amended, in its entirety, to read as follows:
(c) Application of Basic Rent, Net Facility
Revenues and Issuer Payments. On or prior to October 31,
2013, so long as there are any outstanding Series 1994-1
Bonds, all Basic Rent shall be paid by the Company
directly to the Trustee and shall be in an amount which
is sufficient to make the payments to be made from Basic
Rent as described below. If the Lease is terminated in
accordance with its terms prior to October 31, 2013 (or
earlier with respect to Additional Bonds other than
Series 1994-1 Bonds), the Net Facility Revenues derived
from the Hub Facility shall be applied, but only to the
extent thereof, to the payments to be made from Basic
Rent, as described below, when due; provided, however,
that nothing herein requires or shall be construed to
require that the Issuer make such payments except solely
from and to the extent of such Net Facility Revenues. On
and after November 1, 2013 (or earlier with respect to
Additional Bonds other than Series 1994-1 Bonds), so long
as there are any outstanding Series 1994-1 Bonds, the
Issuer shall pay, but only out of Net Revenues, the
Issuer Payments directly to the Trustee, on or before
each Issuer Payment Date, in amounts which are sufficient
to make all of the deposits and payments required to be
made on or before each Issuer Payment Date as described
below. The Basic Rent, the Issuer Payments and any
amounts paid to the Trustee under the Guaranty or
otherwise received by the Trustee, including from the
Issuer, in payment of Bond Service Charges shall be
deposited by the Trustee as follows (provided that any
interest or penalty paid to the Trustee with respect to
a late Basic Rent payment pursuant to Section 3.6 of the
Lease shall be promptly delivered by the Trustee to the
Issuer):
(1) To the applicable subaccounts of the Principal
Account and the Interest Account of the Bond Fund,
commencing on or prior to the April 1994 Rental Payment
Date, and monthly thereafter on or prior to each Rental
Payment Date, the amounts set forth in or pursuant to
Section 3.1 of the Lease unless otherwise provided, and
provided for, therein;
(2) To the applicable subaccounts of the Principal
Account and the Interest Account of the Bond Fund, on or
prior to each Issuer Payment Date, the amounts set forth
on the Issuer Payment Schedule attached as Exhibit B
hereto and incorporated herein by reference and, on or
prior to the date established by the Trustee, the amount
of any accelerated Issuer Payments accelerated pursuant
to Section 7.03 hereof; provided, that in the event that
the Issuer issues Additional Bonds, the Issuer Payment
Schedule shall, if necessary, be adjusted to include any
Issuer Payments to be made by the Issuer with respect to
such Additional Bonds to the extent that the Issuer has
agreed to make such payments out of Net Revenues, which
adjustment may be by preparation and delivery of
additional or replacement schedules to be attached as
part of Exhibit B or by Supplemental Indenture; and
provided, further, that if any of the Bonds are redeemed
other than pursuant to the mandatory sinking fund
requirements of the Indenture, there shall be prepared by
the Trustee and delivered to the Issuer replacement
schedules to be attached as Exhibit B hereto setting
forth the amounts of Issuer Payments to be paid pursuant
to this subparagraph after such redemption;
(3) Except as otherwise provided herein, to the
applicable account in the Bond Funded Reserve Fund: (i)
on or prior to the Rental Payment Date or Issuer Payment
Date next succeeding the date on which the amount on
deposit in such account in the Bond Funded Reserve Fund
is below the applicable Bond Funded Reserve Requirement
in part because moneys are transferred from such account
in the Bond Funded Reserve Fund to the Interest Account
or the Principal Account pursuant to the provisions of
Section 5.04(e) hereof an amount equal to the amount
necessary to repay the transfer, and (ii) on or prior to
the Rental Payment Date or Issuer Payment Date next
succeeding the date on which the Company or the Issuer,
as applicable, receives notice pursuant to Section 5.05
hereof that the balance in an account of the Bond Funded
Reserve Fund is less than ninety percent (90%) of the
applicable Bond Funded Reserve Requirement, and monthly
thereafter on or prior to each Rental Payment Date or
Issuer Payment Date until the balance is restored, an
amount not less than 1/3rd of the amount necessary to
make the balance in such account of the Bond Funded
Reserve Fund at least equal to the applicable Bond Funded
Reserve Requirement; and
(4) In each case and on or prior to each Rental
Payment Date or Issuer Payment Date any amount which may
be necessary to make up any previous deficiency in any of
the payments described above and to make up any
deficiency or loss in the respective funds or accounts to
which payments are required to be made, in connection
with investments or otherwise, including without
limitation, the restoration of any amounts paid from any
of those funds or accounts pursuant to this Indenture,
except as provided otherwise expressly herein.
The Basic Rent and Issuer Payments to be made with
respect to any series of Additional Bonds shall be made
in accordance with this subsection; provided, however,
that, in any event, the aggregate of the Basic Rent and,
as applicable, Issuer Payments to be made hereunder shall
always be sufficient to pay, when due, the Bond Service
Charges.
The Issuer Payment Schedule, Exhibit B to the Indenture is hereby
amended, in its entirety, by replacing said Schedule with the
Issuer Payment Schedule set forth in Exhibit B hereto. The
provisions of Section 5.04(c) and Exhibit B of the Original
Indenture, as set forth therein, are hereby replaced by the
provisions set forth in or pursuant to this Section 5 and the
provisions of Section 5.04(c) and Exhibit B of the Original
Indenture are deleted from the Indenture and of no further force
and effect.
Section 6. Concerning the Trustee. The Trustee hereby
accepts the trusts hereby declared and provided and agrees to
perform the same upon the terms and conditions set forth in the
Original Indenture and in this First Supplemental Indenture.
Except as specifically provided by the Original Indenture or set
forth herein, the Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this
First Supplemental Indenture or the due execution thereof by the
Issuer, nor for or in respect of the recitals contained herein, all
of which recitals are made solely by the Issuer.
Section 7. The Original Indenture. Wherever in the
Original Indenture the name "Trustcorp Bank, Ohio" appears it is
hereby amended to read "Society National Bank" and references to
its corporate trust office are amended to read "its Toledo, Ohio
corporate trust office". Wherever in the Original Indenture the
date "October 1, 2012" appears it is hereby amended to read
"November 1, 2013". Except as explicitly modified by this First
Supplemental Indenture, each and every term and condition contained
in the Original Indenture shall apply to this First Supplemental
Indenture with such omissions, variations and modifications
thereof as may be appropriate to make the same conform to this
First Supplemental Indenture. In accordance with Section 8.05 of
the Original Indenture, all the terms and conditions of this First
Supplemental Indenture shall be part of the terms and conditions of
the Indenture.
Section 8. Binding Effect. This First Supplemental
Indenture shall inure to the benefit of and shall be binding upon
the Issuer and the Trustee and their respective successors and
assigns, subject, however, to the limitations contained in the
Indenture.
Section 9. Counterparts. This First Supplemental
Indenture may be executed in counterpart, and in any number of
counterparts, each of which shall be regarded as an original and
all of which shall constitute but one and the same instrument.
SECTION 10. GOVERNING LAW. THIS FIRST SUPPLEMENTAL
INDENTURE AND THE SERIES 1994-1 BONDS SHALL BE DEEMED TO BE
CONTRACTS MADE UNDER THE LAWS OF THE STATE AND FOR ALL PURPOSES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE.
[Balance of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this First
Supplemental Indenture to be executed for it and in its name and on
its behalf by its duly authorized officers; and the Trustee, in
token of its acceptance of the trusts created hereunder, has caused
this First Supplemental Indenture to be executed for it and in its
name and on its behalf by its duly authorized officer, as Trustee
and as Registrar for the Series 1994-1 Bonds, all as of the day and
year first above written.
Signed as to the Issuer TOLEDO-LUCAS COUNTY PORT AUTHORITY
in the presence of:
___________________________ By: _______________________________
Chairman
___________________________ And By:__________________________
Witnesses as to the Issuer) Secretary
Signed as to the Trustee and SOCIETY NATIONAL BANK, as
Registrar the presence of: Trustee, and as Registrar for the
Series 1994-1 Bonds
________________________________
By:______________________________
Vice President
________________________________
(Witnesses as to the Trustee and
Registrar)
Approved as to form by ________________________
Staff Counsel
<PAGE>
FISCAL OFFICER'S CERTIFICATE
The undersigned, Fiscal Officer of the Issuer under the
foregoing First Supplemental Indenture, certifies hereby that the
moneys required to meet the obligations of the Issuer during the
year 1994 under the foregoing First Supplemental Indenture have
been appropriated lawfully by the Board of Directors of the Issuer
for that purpose, are in the Special Funds created under the
Indenture and are in the custody of the Trustee or in the process
of collection to the credit of an appropriate fund, free from any
previous encumbrances. This Certificate is given in compliance
with Sections 5705.41 and 5705.44, Ohio Revised Code.
Dated: March __, 1994 ________________________________
Secretary, Toledo-Lucas County
Port Authority
<PAGE>
EXHIBIT B
Issuer Payment Schedule
The following schedule sets forth the Issuer Payments to
be made by the Issuer pursuant to Section 5.04(c) of the Indenture,
which payments are to be paid on the Issuer Payments Dates next
preceding the dates set forth on such schedule.
Monthly Monthly Total
Principal Interest Monthly
Month Payment Payment Payment
12/01/2013 193,333.34 104,039.58 297,372.92
01/01/2014 193,333.34 104,039.58 297,372.92
02/01/2014 193,333.34 104,039.58 297,372.92
03/01/2014 193,333.34 104,039.58 297,372.92
04/01/2014 193,333.34 104,039.58 297,372.92
05/01/2014 198,750.00 89,781.25 288,531.25
06/01/2014 198,750.00 89,781.25 288,531.25
07/01/2014 198,750.00 89,781.25 288,531.25
08/01/2014 198,750.00 89,781.25 288,531.25
09/01/2014 198,750.00 89,781.25 288,531.25
10/01/2014 198,750.00 89,781.25 288,531.25
11/01/2014 198,750.00 89,781.25 288,531.25
12/01/2014 198,750.00 89,781.25 288,531.25
01/01/2015 198,750.00 89,781.25 288,531.25
02/01/2015 198,750.00 89,781.25 288,531.25
03/01/2015 198,750.00 89,781.25 288,531.25
04/01/2015 198,750.00 89,781.25 288,531.25
05/01/2015 213,750.00 74,875.00 288,625.00
06/01/2015 213,750.00 74,875.00 288,625.00
07/01/2015 213,750.00 74,875.00 288,625.00
08/01/2015 213,750.00 74,875.00 288,625.00
09/01/2015 213,750.00 74,875.00 288,625.00
10/01/2015 213,750.00 74,875.00 288,625.00
11/01/2015 213,750.00 74,875.00 288,625.00
12/01/2015 213,750.00 74,875.00 288,625.00
01/01/2016 213,750.00 74,875.00 288,625.00
02/01/2016 213,750.00 74,875.00 288,625.00
03/01/2016 213,750.00 74,875.00 288,625.00
04/01/2016 213,750.00 74,875.00 288,625.00
05/01/2016 230,416.67 58,843.75 289,260.42
06/01/2016 230,416.67 58,843.75 289,260.42
07/01/2016 230,416.67 58,843.75 289,260.42
08/01/2016 230,416.67 58,843.75 289,260.42
09/01/2016 230,416.67 58,843.75 289,260.42
10/01/2016 230,416.67 58,843.75 289,260.42
11/01/2016 230,416.67 58,843.75 289,260.42
12/01/2016 230,416.67 58,843.75 289,260.42
<PAGE>
Monthly Monthly Total
Principal Interest Monthly
Month Payment Payment Payment
01/01/2017 230,416.67 58,843.75 289,260.42
02/01/2017 230,416.67 58,843.75 289,260.42
03/01/2017 230,416.67 58,843.75 289,260.42
04/01/2017 230,416.67 58,843.75 289,260.42
05/01/2017 259,166.67 41,562.50 300,729.17
06/01/2017 259,166.67 41,562.50 300,729.17
07/01/2017 259,166.67 41,562.50 300,729.17
08/01/2017 259,166.67 41,562.50 300,729.17
09/01/2017 259,166.67 41,562.50 300,729.17
10/01/2017 259,166.67 41,562.50 300,729.17
11/01/2017 259,166.67 41,562.50 300,729.17
12/01/2017 259,166.67 41,562.50 300,729.17
01/01/2018 259,166.67 41,562.50 300,729.17
02/01/2018 259,166.67 41,562.50 300,729.17
03/01/2018 259,166.67 41,562.50 300,729.17
04/01/2018 259,166.67 41,562.50 300,729.17
05/01/2018 295,000.00 22,125.00 317,125.00
06/01/2018 295,000.00 22,125.00 317,125.00
07/01/2018 295,000.00 22,125.00 317,125.00
08/01/2018 295,000.00 22,125.00 317,125.00
09/01/2018 295,000.00 22,125.00 317,125.00
10/01/2018 295,000.00 22,125.00 317,125.00
11/01/2018 295,000.00 22,125.00 317,125.00
12/01/2018 295,000.00 22,125.00 317,125.00
01/01/2019 295,000.00 22,125.00 317,125.00
02/01/2019 295,000.00 22,125.00 317,125.00
03/01/2019 295,000.00 22,125.00 317,125.00
04/01/2019 295,000.00 22,125.00 317,125.00
<PAGE>
CONSENT OF COMPANY
Burlington Air Express Inc. (formerly known as Burlington
Air Express USA Inc.), the Company as defined in the First
Supplemental Indenture to which this Consent is attached, in
accordance with Section 8.04 of the Original Indenture referred to
therein, hereby acknowledges prior written notice of, and consents
to, the execution and delivery of the foregoing First Supplemental
Indenture.
Dated: March __, 1994 BURLINGTON AIR EXPRESS INC.
By: ________________________
Chairman of the Board
And by: __________________
Treasurer
<PAGE>
CONSENT OF ORIGINAL PURCHASER
The undersigned Miller & Schroeder Financial, Inc., by
its duly authorized officer, hereby certifies that on the date of
this Certificate, pursuant to a Bond Purchase Agreement dated March
___, 1994, it purchased and received delivery of all of the
Toledo-Lucas County Port Authority Airport Refunding and
Improvement Revenue Bonds, Series 1994-1 (Burlington Air Express
Project) dated as of March 1, 1994 (the "Series 1994-1 Bonds") in
exchange for payment therefor and thereupon became the owner of all
of the Series 1994-1 Bonds and as such owner, the undersigned
hereby acknowledges prior written notice of the execution and
delivery of the First Supplemental Indenture to which this Consent
is attached, including the amendments therein of the Original
Indenture referred to therein, and as such owner consents to that
execution and delivery and to those amendments and waives any
required compliance with subparagraph 9 of the second paragraph of
Section 2.04 of the Original Indenture.
Dated: March __, 1994 MILLER & SCHROEDER FINANCIAL, INC.
By: _____________________________
Senior Vice President
EXHIBIT 10.2
THIRD SUPPLEMENT TO LEASE
between
TOLEDO-LUCAS COUNTY PORT AUTHORITY, as Lessor
and
BURLINGTON AIR EXPRESS INC., as Lessee
Dated as of June 1, 1991
__________________________________________________________________
__________________________________________________________________
Supplemental Memorandum of Lease This Third Supplement to Lease
filed for record on October 1, 1991 supplements a Lease between the
at 8:55 o'clock a.m., E.D.S.T., above-named Lessor and Lessee
as Instrument No. M91-144A06 dated as April 1, 1989, as
in LUCAS COUNTY, OHIO, RECORDS previously amended and supple-
mented by a First Supplement to
Lease dated as of January 1,
1990 and a Revised and Amended
Second Supplement to Lease dated
as of September 1, 1990, both
between the Lessor and the
Lessee. A Restated Memorandum
of Lease was filed for record on
October 1, 1990 at 12:44 o'clock
p.m. E.D.S.T., as Instrument No.
M90-1318C06 in the Records of
Lucas County, Ohio
<PAGE>
THIRD SUPPLEMENT TO LEASE
This Third Supplement to Lease ("Supplement") dated as of the
first day of June, 1991 between the Toledo-Lucas County Port Authority
("Port Authority"), a port authority and political subdivision and a
body corporate and politic, duly created and validly existing under the
laws of the State of Ohio ("State"), and Burlington Air Express Inc.
("Burlington"), a for profit corporation organized and existing under
the laws of the State of Delaware and duly authorized to transact
business in the State;
WITNESSETH:
WHEREAS, the Port Authority, as lessor, and Burlington, as
lessee, have heretofore entered into a Lease dated as of April 1, 1989,
as amended and supplemented by a First Supplement to Lease dated as of
January 1, 1990 and a Revised and Amended Second Supplement to Lease
dated as of September 1, 1990 both between the Port Authority and
Burlington (as the same may be further amended and supplemented, the
"Lease") and have caused a Restated Memorandum of Lease to be filed for
record as described on the cover page hereto (all terms used herein as
defined terms and not defined herein being used, unless the context
requires otherwise, as those terms are defined or used in the Lease as
heretofore amended); and
WHEREAS, the Lease provides, among other things, for acquiring,
constructing, improving, equipping and developing the Project, including
the Hub Facility and the Fuel Farm, and for the lease by the Port
Authority to Burlington of, among other things, the Hub Facility and the
Initial Site, for the use by Burlington of the Fuel Farm, including the
Aviation Fuel Facility and the Diesel and Gasoline Tanks, and for the
exercise by Burlington of an option to lease the Expansion Site; and
WHEREAS, the Port Authority and Burlington have determined to
modify the terms of the Lease in certain respects and to set forth their
agreements in that regard in this Supplement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for other good and
valuable considerations, receipt of which is hereby acknowledged, the
Port Authority and Burlington hereby covenant and agree as follows:
Section 1. Amendments to Lease. The Port Authority and
Burlington hereby covenant and agree to amend the Lease (as heretofore
amended and supplemented) as and to the extent provided for in this
Section. The Port Authority and Burlington hereby covenant and agree
that the portions of the Lease to be amended shall be amended to read as
set forth below and that those provisions of the Lease (as heretofore
amended and supplemented), and any other provisions thereof, to the
extent inconsistent with the provisions set forth below, shall be
considered deleted therefrom and of no further force and effect:
a. Section 2.4 of the Lease shall be and is hereby
amended, in its entirety, to read as follows:
Section 2.4. Option to Lease Expansion Site. Upon and
subject to the provisions herein set forth, and in further
consideration of the Land Rental and the covenants and agreements
herein contained, the Lessor hereby irrevocably grants to the
Lessee the exclusive right, at its sole option, to lease all or
any portion of the Expansion Site (in increments of one acre or
integral multiples thereof) upon the same terms and conditions as
are contained in this Lease, including increased monthly Land
Rental. The Lessor and the Lessee agree that the precise size and
location of the Expansion Site will be agreed upon and included in
one or more supplements to this Lease as soon as practicable,
including in connection with one or more exercises of the option
granted in this Section. The option granted may be exercised by
the Lessee, at its sole expense, by delivering written notice of
the exercise of that option to the Lessor at any time, or from
time to time, during the period ending on the tenth anniversary of
the Date of Occupancy; provided, however that if the Expansion
Site is not owned or leased by the Lessor, in its entirety, on or
before the Date of Occupancy, the option granted in this Section
shall be extended by one day for each day thereafter during which
such property is not acquired. Upon the exercise of that option,
the Expansion Site or portion thereof as to which the option is
exercised shall be a part of the Leased Real Property and shall
remain so, unless released in accordance herewith, for the
remainder of the Lease Term. Upon exercise of that option,
officers of the Lessor shall execute and deliver, without further
action of the Legislative Authority, a supplement to this Lease
which leases to the Lessee that portion of the Expansion Site as
to which the option granted in this Section is then exercised.
b. The subparagraph numbered (vii) of the second
paragraph of Section 4.1 of the Lease shall be and is
hereby amended, in its entirety, to read as follows:
(vii) The Lessor hereby agrees to provide,
on or prior to the Delivery Date and at its sole
cost, all infrastructure for the Project,
including without limitation, utilities, sewer
lines, a retention pond, if necessary, and access
roads at the Airport to the Leased Real Property,
the Ramp Site and the site of the Fuel Farm
sufficient to support the requirements thereof;
provided, that the sewer and water facilities to
be provided by the Lessor to the site of the Hub
Facility shall be available and operational not
later than August 15, 1991.
c. Section 7.11 of the Lease shall be and is hereby
amended, in its entirety to read as follows:
Section 7.11. Fuel Farm; Fees. As provided in Section
2.2 of this Lease, the Fuel Farm shall be available for the
exclusive use of the Lessee during the Lease Term commencing on
the Delivery Date. The Lessor hereby agrees, in consideration of
the payments by the Lessee provided for herein and determined as
set forth below, that the Lessee may elect to provide its own fuel
services and maintain the Aviation Fuel Facility or contract with
an operator reasonably acceptable to the Lessor for the
management, maintenance and operation thereof. The Lessor will
cooperate and assist in the implementation thereof upon the
reasonable request of the Lessee. During the Lease Term, the
Lessee agrees that it shall fuel its aircraft at the Airport as
often as is operationally practical. Notwithstanding any other
provision of this Lease to the contrary, the Lessor shall not, at
any time, be required to operate any portion of the Fuel Farm or
otherwise to provide in any way for into-plane or deplane fueling
of the Lessee's aircraft, including leased and chartered aircraft.
While operating the Fuel Farm, the Lessee hereby agrees to
be responsible, and shall be responsible, for ensuring compliance
with all federal, state and local governmental regulations
pertaining to the operation and use of the Fuel Farm, including
any generally applicable and non-discriminatory regulations
adopted by the Lessor in its capacity as the operator of the
Airport, and for obtaining all necessary permits for the use and
operation of the Aviation Fuel Facility or the Diesel and Gasoline
Tanks, as applicable. The Lessor agrees that it will not impose
any lien on the fuel received at the Fuel Farm.
In consideration of the agreement of the Lessor and the
Lessee to finance the Fuel Farm from the proceeds of the Project
Bonds and of the value of the right of use of the Fuel Farm
granted hereby, the Lessee agrees as follows:
(i) To pay, as Additional Payments pursuant
to Section 3.2 hereof, on or prior to each Rental
Payment Date commencing with the November 1991
Rental Payment Date, as Fuel Fees for the
provision and use of the Fuel Farm, the amount of
$1,052.98 each month during the Initial Term.
(ii) Commencing on January 1, 1993, to pay, as
Additional Payments pursuant to Section 3.2
hereof, a royalty based on the aviation fuel
planed and deplaned to and from Burlington's
planes (including leased and chartered planes),
calculated as described below in this
subparagraph. Unless otherwise agreed in writing
by the Lessor and the Lessee, that royalty shall
be calculated on a daily (any calendar day) fuel
flowage basis with the royalty fixed at the rate
of (A) $0.0050 (0.50 cents (1/2 of one cent) or 5
mills) per gallon (up to 60,000 gallons) of
aviation fuel planed or deplaned for or on behalf
of the Lessee from the Aviation Fuel Facility or
otherwise provided at the Airport, (B) $0.0034
(0.34 cents (thirty-four one-hundredths of one
cent) or 3.4 mills) per such gallon per day (for
each gallon above 60,000 gallons but not more
than 90,000 gallons), (C) $0.0020 (0.20 cents
(1/5 of one cent) or 2 mills) per such gallon per
day (for each gallon above 90,000 gallons but not
more than 120,000 gallons) and (D) $0.0010 (0.10
cents (1/10 of one cent) or 1 mill) per such
gallon per day (for each gallon above 120,000
gallons in any day). Within ten (10) business
days after the end of each month, commencing in
February 1993 (with respect to January 1993)
during the Lease Term, the Lessee will provide
the Lessor with written verification of the total
number of gallons of aviation fuel planed or
deplaned from the Aviation Fuel Facility or
otherwise provided at the Airport to the Lessee's
planes during such month and will thereupon pay,
or cause to be paid, the royalty to be paid
pursuant to this subparagraph.
(iii) If, at any time, the Lessor and the
Lessee agree to permit the Lessee to provide fuel
service to aircraft other than the Lessee's at
the Airport, the Lessee shall pay, as Additional
Payments pursuant to Section 3.2 hereof, or shall
cause to be paid, to the Lessor a fixed rate of
not less than $0.0050 (0.50 cents (1/2 of one
cent) or 5 mills) per gallon planed or deplaned
with respect to the aircraft of others.
It is understood by the Lessor that the Lessee has the
right to fuel its cargo tugs, forklifts, loaders, snow removal
equipment, pickup trucks, company cars, any other equipment of the
Lessee and the freight trucks used by the Lessee from the Diesel
and Gasoline Tanks. It is understood by the Lessee that the
Lessor intends and expects to fuel any sweepers and snow removal
or other equipment purchased to fulfill its maintenance
obligations under Section 11.2 hereof from the Diesel and Gasoline
Tanks. The Lessor and the Lessee agree to negotiate in good faith
to reach an agreement regarding the operation of, the provision of
fuel to, the priority of fueling from and compensation for the use
or services of the Diesel and Gasoline Tanks. Absent such an
agreement, the Lessee (or its agents, operators or independent
contractors) shall have the right to operate the Diesel and
Gasoline Tanks in accordance herewith without any obligation to
pay any fee or royalty to the Lessor.
The Lessor shall have no obligation whatsoever to operate,
or provide fuel services from, or to maintain any portion of the
Fuel Farm. Unless the context shall otherwise require, all
requirements of this Lease (including without limitation Article
VII hereof) relating to the Fuel Farm shall apply to each of the
Aviation Fuel Facility and the Diesel and Gasoline Tanks, as
applicable. The Lessor shall have the right, at times of
reasonable frequency, to inspect the Fuel Farm, the fuel being
pumped into Lessee's planes and other equipment, all fuel pumping
and related equipment and any component thereof, and all gauges
for measuring the fuel and any records maintained by the Lessee in
connection with the fuel.
Section 2. Additional Agreements Pertaining to the
Expansion Site. The Port Authority and Burlington, in accordance
with Section 2.4 of the Lease, hereby designate the real estate
described in Exhibit A attached hereto and incorporated by
reference as a portion of the Expansion Site. Burlington hereby
exercises its option, granted pursuant to Section 2.4 of the
Lease, to lease the portion of the Expansion Site described in
Exhibit A hereto (the "Leased Expansion Site"), upon the same
terms and conditions as are contained in the Lease with respect to
the lease of all other Leased Real Property, including increased
monthly Land Rental; provided that such increased monthly Land
Rental shall not commence until the first Rental Payment Date
after the latest of (i) November 1, 1991, (ii) the date of
commencement of construction with respect to the building
described as TIC-1 below, and (iii) the provision of water and
sewer facilities to the boundary of the Leased Expansion Site by
the Port Authority as provided below in this Section 2.
Burlington declares its, and the Port Authority acknowledges
Burlington's present intention to construct a structure shown on
Burlington's technical representative's preliminary drawing dated
January 20, 1991 as BAX-TIC-C-00, which building ("TIC-1") is to
be a two-story building of approximately 48,000 square feet
constructed on the Leased Expansion Site in accordance with the
plans and specifications therefor. The Port Authority
acknowledges that the Lessee has delivered plans and
specifications for TIC-1 to it and that, by its signature hereto,
it consents, pursuant to Section 7.8 of the Lease to the
construction of TIC-1. Burlington shall be permitted to construct
TIC-1 at its sole cost and expense and in compliance with the
applicable provisions of the Lease; provided that the Port
Authority agrees that, by November 15, 1991 (or by such date as
may be agreed to by Burlington), the Port Authority will, at its
sole cost and expense (except for the tap-in charge described in
the next succeeding sentence) provide water and sewer facilities
to the boundary of the Leased Expansion Site for TIC-1, in
accordance with plans and specifications approved by the
Authorized Lessor Representative and the Burlington Project
Representative, and will connect those water and sewer facilities
to the Airport's existing water and sewer systems. At the
inception of water and sewer service to TIC-1, Burlington shall
pay to the Port Authority, a one-time tap-in charge that
corresponds with tap-in charges for a building of the size and
type of the TIC-1 building, determined under the standard schedule
of water and sewer tap-in charges for buildings and structures on
the Airport, which tap-in charge shall not exceed $25,000.
Burlington will also pay all water and sewer usage charges based
upon customary rates during the Lease Term. In accordance with
Section 7.1 of the Lease, the TIC-1 building will be the property
of Burlington during the Lease Term. Subject to the express terms
of the Lease and the Airport Operating Agreement, Burlington shall
be responsible for all matters pertaining to maintenance, repairs,
operation, taxes, utility charges and insurance with respect to
TIC-1.
Section 3. Ratification of Lease. As supplemented
hereby, the Lease is, in all respects, ratified and confirmed and
remains in full force and effect.
Section 4. General Agreements. This Third Supplement
shall take effect upon the execution and delivery thereof and
shall continue in effect until the expiration of the Lease Term.
The Port Authority and Burlington agree that they will execute and
deliver such further documents and do such further acts and things
as are necessary fully to effect the purposes of this Third
Supplement. Each party is responsible for its own legal fees
arising from the preparation and execution of this Third
Supplement and from any such further documents, acts and things
required; provided, however, that nothing herein shall be
construed to alter the arrangements in the Lease and the Indenture
concerning the payment of legal fees for any Person other than the
Port Authority and Burlington. This Third Supplement shall be
governed by and construed in accordance with the laws of the State
and shall inure to the benefit of and be binding upon the Port
Authority and Burlington and their respective successors and
assigns. The Lease, as amended and supplemented by the First
Supplement, the Second Supplement and this Third Supplement,
constitutes the entire agreement of the Port Authority and
Burlington with respect to the subject matter thereof and
supersedes all other oral and written agreements prior to the
effective date hereof with respect thereto. Any provision hereof
invalid under any law shall be inapplicable and deemed omitted
herefrom, but shall not invalidate the remaining provisions
hereof. This Third Supplement may be executed in counterpart, and
in several counterparts each of which shall be deemed an original.
IN WITNESS WHEREOF, the Port Authority and Burlington have
caused this Third Supplement to Lease to be duly executed in their
respective names by their duly authorized officers all as of the
date first hereinbefore written.
Signed and acknowledged as to the TOLEDO-LUCAS COUNTY PORT
Port Authority in the presence of: AUTHORITY
____________________________ By: _________________________
President and Authorized
Lessor Representative
_____________________________ By:__________________________
(Witnesses as to both) Assistant Secretary
Signed and acknowledged as to BURLINGTON AIR EXPRESS INC.
Burlington in the presence of:
______________________________ By:_____________________________
Joint Chief Executive Officer
_______________________________ By:_____________________________
(Witnesses as to both) Senior Vice President,
Finance and Controller
Approved as to form: ________________________________
Staff Counsel
<PAGE>
STATE OF OHIO )
) SS:
COUNTY OF LUCAS )
On this ______ day of June, 1991, before me, a Notary
Public in and for said County and State, personally appeared Gary
L. Failor and Jerry J. Arkebauer, President and Assistant
Secretary, respectively, of the Toledo-Lucas County Port
Authority, and acknowledged that they did sign the foregoing
instrument as such officers of said Port Authority, respectively,
for and on behalf of said Port Authority and by authority granted
by law and by the Board of Directors of said Port Authority and
that the same is their voluntary act and deed as such officers on
behalf of said Port Authority and the voluntary and corporate act
and deed of said Port Authority.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed my official seal on the day and year aforesaid.
[Seal] _____________________________
Notary Public
STATE OF )
) SS:
COUNTY OF )
On this ______ day of June, 1991, before me, a Notary
Public in and for said County and State, personally appeared Roger
I. MacFarlane and Robert Arovas, Joint Chief Executive Officer and
Senior Vice President, Finance and Controller, respectively, of
Burlington Air Express Inc., and acknowledged that they did sign
the foregoing instrument as such officers of said corporation,
respectively, for and on behalf of said corporation and by
authority granted by the Board of Directors of said corporation
and that the same is their voluntary act and deed as such officers
on behalf of said corporation and the voluntary and corporate act
and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed my official seal on the day and year aforesaid.
[Seal] _______________________________
Notary Public
This instrument was prepared by: Jeffrey A. Bomberger
Squire, Sanders & Dempsey
1800 Huntington Building
Cleveland, Ohio 44115
<PAGE>
CERTIFICATE
The undersigned, Fiscal Officer of the Port Authority
under the aforesaid Third Supplement to Lease, hereby certifies
that the moneys required to meet the obligations of the Port
Authority during the year 1991 under the Third Supplement to Lease
have been lawfully appropriated by the Board of Directors of the
Port Authority for such purposes and are in the treasury of the
Port Authority or in the process of collection to the credit of an
appropriate fund, free from any previous encumbrances. This
Certificate is given in compliance with Sections 5705.41 and
5705.44, Ohio Revised Code.
Dated: August 6, 1991 _______________________________
Secretary, Toledo-Lucas County
Port Authority
<PAGE>
CONSENT OF TRUSTEE
The undersigned, the Trustee identified below, by the
undersigned duly authorized officer, hereby (i) acknowledges
receipt of notice of the foregoing Third Supplement to Lease and
the amendments, changes, modifications, covenants and agreements
therein made, (ii) determines that such amendments, changes and
modifications of the Lease referred to therein are required in
connection with changes therein which are not to the prejudice of
the Trustee or the holders of the Bonds issued under the Trust
Indenture referred to below, and (iii) consents to that Third
Supplement to Lease and the amendments, changes, modifications,
covenants and agreements therein made.
SOCIETY BANK & TRUST, as Trust
under a Trust Indenture, dated as
of April 1, 1989, with the Port
Authority identified in the fore-
going Third Supplement to Lease.
Dated: June 20, 1991 By:_____________________________
Assistant Vice President
<PAGE>
CONSENT OF DIRECTOR
The undersigned, The Director of Development of the State
of Ohio, by the undersigned duly authorized officer, hereby
acknowledges receipt of notice of, and hereby consents to, the
foregoing Third Supplement to Lease and the amendments, changes,
modifications, covenants and agreements therein made to the
extent, if any, that those amendments, changes, modifications,
covenants and agreements are material to that Director.
THE DIRECTOR OF DEVELOPMENT OF
THE STATE OF OHIO
Dated: July 12, 1991 By:_________________________________
Deputy Director, Division of
Economic Development Financing
<PAGE>
EXHIBIT A
LEASED EXPANSION SITE
Being a parcel of land in the Northeast one-quarter (1/4) of the
Southwest one-quarter (1/4) of Section 10, Town 7 North, Range 9
East in Swanton Township, Lucas County, Ohio being more
particularly bounded and described as follows:
Commencing at the center of said Section 10, said point being a
stone monument; thence South 00 degrees 30' 35" East, along the
North-South centerline of said Section 10.81.40 feet, to the POINT
OF BEGINNING: thence continuing South 00 degrees 30' 35" East,
along the said North-South centerline of Section 10, 818.30 feet,
more or less, to the centerline of Maumee-Western Road; thence
North 67 degrees 44' 47" West, along the said centerline of
Maumee-Western Road, 396.00 feet; thence North 00 degrees 30' 35"
West, 404.97 feet to a point of curve; thence along a circular
curve to the right or East, said curve having a radius of 331.97
feet, an arc length of 304.63 feet, said arc subtending a central
angle of 52 degrees 34' 41" and having a chord bearing and
distance of North 25 degrees 46' 48" East, 294.06 feet; thence
South 89 degrees 38' 50" East, 234.94 feet, more or less, to the
point of beginning. Containing 6.00 acres of land, more or less.
Subject to legal highways, easements and restrictions of record.
EXHIBIT 10.3
FOURTH SUPPLEMENT TO LEASE
between
TOLEDO-LUCAS COUNTY PORT AUTHORITY, as Lessor
and
BURLINGTON AIR EXPRESS INC., as Lessee
Dated as of March 1, 1994
Second Restated Memorandum of
Lease filed for record on
March 22, 1994 at ____ o'clock
__ .m., E.S.T., at M94-_______
in the LUCAS COUNTY, OHIO
RECORDS
<PAGE>
This Fourth Supplement to Lease
supplements a Lease between the
named Lessor and Lessee dated as
of April 1, 1989, as previously
supplemented by a First
Supplement to Lease dated as of
January 1, 1990, a Revised and
Amended Second Supplement to
Lease dated as of September 1,
1990 and a Third Supplement to
Lease dated as of June 1, 1991,
each between the Lessor and the
Lessee. A Restated Memorandum
of Lease was filed for record on
October 1, 1990 at 12:44 o'clock
p.m. E.D.S.T., at M90-1318C06 in
the Records of Lucas County,
Ohio and the Third Supplement to
Lease was filed for record on
October 1, 1991 at 8:55 o'clock
a.m. E.D.S.T., at M91-1446A06 in
the Records of Lucas County,
Ohio.<PAGE>
FOURTH SUPPLEMENT TO LEASE
This Fourth Supplement to Lease (the "Fourth Supplement")
dated as of March 1, 1994 between the Toledo-Lucas County Port
Authority (the "Issuer"), a port authority and political
subdivision and a body corporate and politic, duly created and
validly existing under the laws of the State of Ohio (the "State"),
and Burlington Air Express Inc. (formerly known as Burlington Air
Express USA Inc.) (the "Company"), a for profit corporation
organized and existing under the laws of the State of Delaware and
duly authorized to transact business in the State;
W I T N E S E T H:
WHEREAS, the Issuer, as lessor, and the Company, as
lessee, have heretofore entered into a Lease dated as of April 1,
1989 (the "Original Lease"), as amended and supplemented by a First
Supplement to Lease dated as of January 1, 1990 (the "First
Supplement"), a Revised and Amended Second Supplement to Lease
dated as of September 1, 1990 (the "Second Supplement") and a Third
Supplement to Lease dated as of June 1, 1991 (the "Third
Supplement"), each between the Issuer and the Company (as so
amended and supplemented, the "Existing Lease") and have caused a
Restated Memorandum of Lease and the Third Supplement to be filed
for record as described on the cover page hereto (all terms used
herein as defined terms and not defined herein being used, unless
the context requires otherwise, as those terms are defined or used
in the Existing Lease); and
WHEREAS, the Lease provides, among other things, for
acquiring, constructing, improving, equipping and developing the
Project (including the Hub Facility) and Additional Projects from
time to time, and for the lease by the Issuer to the Company of,
among other things, the Leased Real Property (including the
Expansion Site), the Hub Facility and the Additional Projects and
for the use by the Company of the Airport operated by the Issuer;
and
WHEREAS, at the request of the Company, the Issuer has
authorized the issuance of its $36,120,000 Airport Refunding and
Improvement Revenue Bonds, Series 1994-1 (Burlington Air Express
Project) dated as of March 1, 1994 (the "Series 1994-1 Bonds") as
Additional Bonds under the Indenture, including as modified by the
First Supplemental Indenture of even date herewith between the
Issuer and the Trustee (the "First Supplemental Indenture"), for
the purposes of (i) refunding at a reduced interest cost certain
outstanding revenue bonds previously issued to finance a portion of
the costs of the Hub Facility as described in Exhibit A to the
Original Lease as amended by the Second Supplement, and (ii) paying
a portion of the costs of acquiring, constructing, improving,
equipping and developing certain additional "port authority
facilities", including "aviation facilities" (both terms used as
defined in the Act); and
WHEREAS, the facilities described generally in Part I of
Exhibit A to this Fourth Supplement are to be leased to the Company
as an Additional Project under the Lease (the "1994 Additional
Project") and the facilities described generally in Part II of
Exhibit A to this Fourth Supplement are to be provided for the
improvement of the Airport and the facilities and services thereof
provided to the Company (the "1994 Airport Improvements" and,
together with the 1994 Additional Project, the "1994 Project") and
are intended and expected to be available for the use of the
Company in accordance with the terms of this Fourth Supplement and
the applicable provisions of the Existing Lease; and
WHEREAS, the Issuer and the Company have determined to
modify the terms of the Existing Lease as permitted and required by
the Existing Lease and the Indenture in connection with the
issuance of the Series 1994-1 Bonds, the refunding of the Project
Bonds and the financing of the 1994 Project, and to set forth their
agreements in that regard in this Fourth Supplement;
NOW THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Issuer and the Company hereby
covenant and agree as follows:
Section 1. Demise of 1994 Additional Project;
Possession; Additional Project Term; Extension. The Issuer, in
consideration of the rents, covenants and agreements stated in the
Existing Lease, as supplemented and amended hereby, agrees to and
does hereby lease to the Company and, in consideration of the
issuance of the Series 1994-1 Bonds and the acquisition,
construction, developing, improving, equipping and financing of the
1994 Project generally described in Exhibit A hereto, including the
1994 Additional Project described therein, which constitutes an
"Additional Project" under, as defined in, and for all purposes of,
the Lease, the Company agrees to and does hereby lease from the
Issuer the 1994 Additional Project, subject to such encumbrances as
are permitted by the Lease,
TO HAVE AND TO HOLD the 1994 Additional Project unto the
Lessee for the Additional Project Term set forth in this Section
and for the purposes set forth in the Lease.
Possession of the 1994 Additional Project shall be
delivered and accepted upon the date of execution and delivery of
this Fourth Supplement.
The "Additional Project Term" for the 1994 Additional
Project, for all purposes of the Lease, shall commence on the date
of execution and delivery of this Fourth Supplement and shall
extend through October 31, 2013. Pursuant to the third and fourth
paragraphs of Section 2.5 of the Original Lease, the Lease Term
with respect to the 1994 Additional Project may be extended by the
Company for three consecutive five year periods at fair market
rental and the 1994 Additional Project may be purchased by the
Company from the Issuer at certain times at fair market value. The
notice and Opinion of Bond Counsel requirements set forth in the
last three sentences of the first paragraph of Section 2.5 of the
Original Lease with respect to extensions of the Initial Term for
the Hub Facility shall apply to the extensions of the Additional
Project Term for the 1994 Additional Project contemplated hereby,
and, unless otherwise specified in the notice, any such notice
given with respect to an extension of the Initial Term shall be
deemed to include the notice required hereby with respect to the
corresponding extension of that Additional Project Term.
Section 2. Adjustment of Basic Rent. Pursuant to and in
accordance with Section 2.1 of the Original Lease as amended by the
Second Supplement and with Section 3.1 of the Original Lease, in
connection with the refunding of the Project Bonds from the
proceeds of the refunding portion of the Series 1994-1 Bonds, the
Basic Rent payable pursuant to the first paragraph (other than
subparagraphs (iii) and (iv) thereof) of that Section 3.1 shall be
adjusted to the amounts, in the aggregate, required to pay, when
due, the aggregate amounts of principal of and interest on the
refunding portion of the Series 1994-1 Bonds. The rental for the
lease of the Hub Facility building and the Material Handling System
as described in Part I of Exhibit A to the Original Lease as
amended by the Second Supplement, on or prior to each Rental
Payment Date during the remainder of the Initial Term, shall be the
respective "Total Monthly Payment" set forth in Exhibit B hereto,
to be used to pay a portion of principal of and interest on the
refunding portion of the Series 1994-1 Bonds. The rental for the
lease of the portion of the Moveable Hub Equipment described in
Part II of Exhibit A to the Lease as amended by the Second
Supplement, on or prior to each Rental Payment Date during the
remainder of the initial Lease Term with respect thereto, shall be
the respective "Total Monthly Payment" set forth in Exhibit C
hereto, to be used to pay a portion of principal of and interest on
the refunding portion of the Series 1994-1 Bonds. The foregoing
rentals shall replace the rentals required by subparagraphs (i) and
(ii) of the first paragraph of Section 3.1 of the Original Lease
and Exhibits B and C hereto shall replace Schedules I and II of
Exhibit D to the Original Lease as amended by the Second
Supplement.
In addition to the foregoing, pursuant to and in
accordance with Section 2.1 of the Original Lease as amended by the
Second Supplement and with Section 3.1 of the Original Lease, and
subject to the same terms and conditions applicable to other
payments of Basic Rent under the Lease, the Company shall pay as
additional Basic Rent under and for all purposes of the Lease, for
the lease and use of the 1994 Project during the Additional Project
Term for the 1994 Additional Project, on or prior to each Rental
Payment Date during that Additional Project Term, the respective
amounts set forth as "Total Monthly Payments" in Exhibit D hereto
to be used to pay the principal of and interest on the portion of
the Series 1994-1 Bonds issued to finance the 1994 Project.
It is understood and agreed by the Issuer and the Company
that, in addition to the last paragraph of Section 3.7 of the
Original Lease (which, by its terms, applies to all of the Series
1994-1 Bonds), the last sentence of the penultimate paragraph of
that Section 3.7 applies in the event of a Determination of
Taxability with respect to the Series 1994-1 Bonds (as described in
the First Supplemental Indenture).
Section 3. Issuance of Series 1994-1 Bonds. Upon the
request of the Company, the Issuer has determined to and shall
issue the Series 1994-1 Bonds as Additional Bonds under the
Indenture, including as modified by the First Supplemental
Indenture. The Project Bonds shall be refunded in accordance with
the Escrow Agreement of even date herewith among the Issuer, the
Company and the Trustee, as Escrow Trustee (the "Escrow
Agreement"). The Company hereby approves the First Supplemental
Indenture, and the terms of the Series 1994-1 Bonds and the use of
the proceeds thereof and of the amounts in the Special Funds, all
as set forth in the First Supplemental Indenture and the Escrow
Agreement.
Section 4. Completion of Projects. The facilities
financed with proceeds of the Project Bonds, including those
facilities described in Exhibit A of the Original Lease as amended
by the Second Supplement, were completed in accordance with the
terms and provisions of the Existing Lease. The Company represents
and warrants and the Issuer acknowledges and agrees, that the
acquisition, construction and installation of the 1994 Additional
Project were heretofore completed by the Company on behalf of the
Issuer in accordance with their agreements regarding same
including, without limitation, the Agreement to Issue Bonds entered
into between them pursuant to Resolution No. 19-93 duly adopted by
the Legislative Authority of the Issuer on March 11, 1993, and in
accordance with the Plans and Specifications therefor provided to
and approved by the Issuer. It is further understood and agreed
that a portion of the costs of the 1994 Additional Project in the
amount of $131,508 have heretofore been reimbursed to the Company
from investment earnings on the moneys deposited in the Bond Funded
Reserve Fund in connection with the issuance of the Project Bonds,
all in accordance with Section 5.2(d) of the Original Lease as
amended by the Second Supplement. The Company represents that the
1994 Additional Project was or is expected to be placed in service
as described in Part I of Exhibit A. All such actions taken in
connection with the completion of the 1994 Additional Project are
hereby ratified and approved. At the time of issuance and delivery
of the Series 1994-1 Bonds, the Company shall be reimbursed
$2,235,374.63 from the Proceeds Account of the Project Fund upon
provision to the Trustee of a disbursement request with respect to
the completed portions of the 1994 Additional Project conforming
substantially to the applicable requirements of the Existing Lease.
In addition, to complete the 1994 Additional Project, amounts now
estimated at $600,918.73 will be disbursed to pay or reimburse the
Company for the payment of additional costs of the 1994 Additional
Project upon provision to the Trustee of a disbursement request
substantially in the form presented in connection with the
disbursement referred to in the preceding sentence. Upon
completion of the 1994 Additional Project, a completion certificate
substantially conforming to the applicable requirements of the
Existing Lease, which completion certificate shall be signed by the
Burlington Project Representative, shall be provided to the Issuer
and the Trustee. In addition, not more than $722,400.00 shall be
disbursed from the Proceeds Account in the Project Fund, upon the
written request of the Issuer and the Company, to pay or reimburse
the Issuer and the Company for the payment of costs of issuance
with respect to the Series 1994-1 Bonds. It is understood and
agreed that the foregoing provisions with respect to the 1994
Additional Project, which constitutes an Additional Project for all
purposes of the Lease, correspond to the provisions of the Existing
Lease to the extent required by Section 4.4 of the Original Lease.
It is further understood and agreed that: (i) in
accordance with applicable law and subject to receipt by the Issuer
of final approval by the Federal Aviation Administration of the
construction of, and of the funding by the FAA of 90% of the costs
of, the south parallel taxiway included in the 1994 Airport
Improvements, the Issuer shall acquire, construct, improve, equip
and develop the 1994 Airport Improvements; (ii) after the
completion date of the south parallel taxiway, the Company shall
have, during the Lease Term, the free and nonexclusive use thereof
consistent with its right to use the Airport generally in
accordance with Section 11.1 of the Original Lease; (iii) after
that completion date, the Issuer shall, during the Lease Term,
maintain the south parallel taxiway and its environs consistent
with its covenants and agreements under Section 11.2 of the
Original Lease as amended by the Second Supplement; and (iv) in
consideration of the foregoing agreements of the Issuer with
respect to the 1994 Airport Improvements, and to induce the Issuer
to undertake such obligations, the Company hereby (A) approves the
disbursement, in accordance herewith, of amounts in the Proceeds
Account of the Project Fund to pay or reimburse the Issuer for
payment of the costs of the 1994 Airport Improvements and (B)
agrees to pay to the Trustee the portion of the Basic Rent referred
to in the second paragraph of Section 2 above relating to the 1994
Airport Improvements. Anything herein or in the Existing Lease or
any other document to the contrary notwithstanding, the 1994
Airport Improvements shall not constitute an "Additional Project"
or a part of the "Leased Premises" within the meaning of the Lease.
Nevertheless, the acquisition, construction, improving, equipping
and developing of the 1994 Airport Improvements is deemed to be and
shall, for the purposes of authorizing the payment of costs
(including all costs generally described therein as "Project
Costs") of the 1994 Airport Improvements under Section 5.2 of the
Lease be considered the "implementation of the Additional Project"
as that term is used in Section 5.2(e) of the Original Lease;
provided that no disbursements shall be made to pay costs of the
1994 Airport Improvements unless the Issuer shall have received the
final approval of the Federal Aviation Administration as described
above; and provided, further, that no approval of the Burlington
Project Representative shall be necessary in connection with any
disbursement for costs of the 1994 Airport Improvements except as
described below; and provided, further, that the amount disbursed
for costs of the 1994 Airport Improvements shall not exceed
$380,300, plus the estimated investment earnings thereon prior to
completion of the 1994 Airport Improvements, unless the Burlington
Project Representative shall have approved the disbursement of such
excess amounts. Completion of the construction of the 1994 Airport
Improvements shall be evidenced by delivery of a separate
completion certificate, conforming substantially to the applicable
requirements of the Existing Lease, which certificate shall be
signed by the Authorized Lessor Representative and delivered to the
Trustee and the Company.
Section 5. Representations and Warranties. The Issuer
hereby confirms the representations, warranties and covenants set
forth in Sections 6.1 and 9.1(a) through (h) of the Original Lease
and extends those representations, warranties and covenants to the
Existing Lease as supplemented hereby, and to the Indenture as
supplemented by the First Supplemental Indenture, the Escrow
Agreement and the Series 1994-1 Bonds, all to the extent
applicable. The Company hereby confirms the representations,
warranties and covenants set forth in Sections 6.1 and 9.2 of the
Original Lease and extends those representations, warranties and
covenants to the Existing Lease as supplemented hereby, and to the
Escrow Agreement, the Series 1994-1 Bonds and the 1994 Project, all
to the extent applicable, except that Section 9.2(c) of the
Original Lease, as applied to the 1994 Project, shall be deemed to
read as follows:
"The provision of financial
assistance to be made available to
it under the Lease and the
commitments therefor made by the
Lessor have induced the Lessee to
expand within the jurisdiction of
the Lessor that business of the
Lessee to be conducted by the use of
the Hub Facility and Fuel Farm and
such expansion will create
additional jobs and employment
opportunities within the
jurisdiction of the Issuer."
The Issuer and the Company further confirm all of their additional
representations, warranties, covenants and agreements (including
the non-merger agreement) set forth in the Guaranty, as assumed,
confirmed and supplemented by the Assumption and Non-Merger
Agreement (the "Assumption Agreement") dated as of September 1,
1990 among the Issuer, the Company and the Trustee.
The Issuer and the Company, jointly and severally, each
to the other and for the benefit of the Trustee and the Holders of
the Series 1994-1 Bonds, hereby (i) confirm the representations,
warranties and covenants set forth in Sections 6.2 (b) through (t)
of the Original Lease as amended and supplemented by the Second
Supplement and extend the representations, warranties and covenants
set forth in Sections 6.2(b) through (s) of the Original Lease as
amended and supplemented by the Second Supplement to the Series
1994-1 Bonds and to all of the facilities financed and refinanced
thereby, and (ii) further represent, warrant and covenant that:
(a) The acquisition, construction and
installation of the 1994 Additional Project
were not commenced prior to the adoption of
Resolution No. 19-93 of the Legislative
Authority on March 11, 1993 and, since that
adoption, such acquisition, construction and
installation have not changed in any material
way and the capacity of the 1994 Additional
Project has not increased materially, however,
certain costs of the 1994 Additional Project
were paid or incurred on and prior to such
date but such costs will not be treated as
costs of an "airport" within the meaning of
Section 142 of the Code except to the extent
that they consist of costs paid on or after
January 15, 1993 or consist, in an amount not
in excess of 20% of the aggregate issue price
of the portion of the Series 1994-1 Bonds
issued to finance the 1994 Additional Project,
of "preliminary expenditures" within the
meaning of Treas. Reg. Section 1.150-2(f)(2), which
include architectural, engineering, surveying,
soil testing, reimbursement bond issuance, and
similar costs that are incurred prior to
commencement of acquisition, construction, or
rehabilitation of a project, other than land
acquisition, site preparation, and similar
costs incident to commencement of
construction;
(b) The acquisition, construction,
equipping and development of the 1994 Airport
Improvements were not commenced prior to the
adoption of Resolution No. 94-93 of the
Legislative Authority on December 9, 1993 and,
since that adoption, such acquisition,
construction, equipping and development have
not changed in any material way and the
capacity of the south parallel taxiway
improvements has not increased materially,
however, certain costs of the 1994 Airport
Improvements were paid or incurred on and
prior to such date but such costs will not be
treated as costs of an "airport" within the
meaning of Section 142 of the Code except to
the extent that they consist of costs paid on
or after October 15, 1993 or consist, in an
amount not in excess of 20% of the aggregate
issue price of the portion of the Series 1994-
1 Bonds issued to finance the 1994 Airport
Improvements, of "preliminary expenditures"
within the meaning of Treas. Reg. Section 1.150-
2(f)(2), which include architectural,
engineering, surveying, soil testing,
reimbursement bond issuance, and similar costs
that are incurred prior to commencement of
acquisition, construction, or rehabilitation
of a project, other than land acquisition,
site preparation, and similar costs incident
to commencement of construction;
(c) Each item included in the 1994
Project has a reasonably expected economic
life, within the meaning of Section
142(b)(1)(B) of the Code, of at least 30
years; and
(d) The proceeds of the refunding
portion of the Series 1994-1 Bonds will be
used exclusively to refund the Project Bonds
in accordance with the Escrow Agreement and
will be used to retire the Project Bonds not
later than 90 days after the date of issuance
of the Series 1994-1 Bonds.
Notwithstanding the preceding sentence, it is understood and agreed
that the representations made in subparagraphs (a), (b) and (c)
above are made by the Issuer with respect to the 1994 Airport
Improvements and are made by the Company with respect to the 1994
Additional Project.
Section 6. Certain Additional Amendments to Lease. The
Issuer and the Company hereby covenant and agree to amend the Lease
as and to the extent provided for in this Section. The Issuer and
the Company hereby covenant and agree that the portions of the
Existing Lease to be amended shall be amended to read as set forth
below and that those provisions of the Existing Lease, and any
other provisions thereof to the extent inconsistent with the
provisions set forth below, shall be considered deleted therefrom
and of no further force and effect:
(a) Trustee. The name "Society Bank & Trust", each time
it appears in the Existing Lease, including without limitation in
the definitions of "Notice Address" and "Trustee" in Section 1.1
thereof, shall be and is hereby amended to be instead, Society
National Bank. The Trustee has heretofore given notice that its
Notice Address has changed to 333 North Summit Street, Toledo, Ohio
43604, Attention: Corporate Trust Department.
(b) Termination. The second sentence of the first
paragraph of Section 8.4 of the Original Lease as amended by the
Second Supplement is stricken therefrom and the first sentence of
that paragraph is amended to read as follows:
"Section 8.4. Termination at Option of
Lessee. If (i) the Lessor shall have
determined, pursuant to Section 8.1 hereof and
upon the recommendation of the Lessee, not to
repair or restore the Hub Facility, or (ii)
the Lessee shall have exercised the option,
granted under Section 8.3 hereof, not to
repair or restore the Hub Facility, or (iii)
the Lessee elects to direct the redemption of
all Series 1994-1 Bonds pursuant to Section
4.01(b)(iii) of the Indenture, the Lessee
shall have the option, subject to the terms of
this Section, to terminate this Lease."
The phrase "or 4.01(b)(iv)(A) or during the continuation, on or
after November 1, 1991, of the conditions stated in Section
4.01(b)(iv)(B)" is stricken from the second paragraph of that
Section 8.4.
(c) Expansion Site. Exhibit A to the Third Supplement
is hereby amended, in its entirety, by replacing the description of
the Leased Expansion Site included therein with the description set
forth in Exhibit E hereto and such property as set forth in Exhibit
E hereto shall be considered for all purposes of this Lease, as
amended and supplemented, the "Leased Expansion Site" as such term
is used in Section 2 of the Third Supplement and any land included
in Exhibit A to the Third Supplement which is not included in
Exhibit E hereto is, pursuant to Section 10.1 of the Original
Lease, released from the Lease and is no longer a part of the
Leased Expansion Site, the Expansion Site, the Leased Real Property
or the Leased Premises. The Company acknowledges that the Issuer
has satisfied the condition referred to in clause (iii) of Section
2 of the Third Supplement and the Issuer acknowledges that the
Company shall not be required to pay the additional tap-in-charge
set forth in that Section 2.
Section 7. Additional Instruments, Documents and
Requirements. The Issuer and the Company hereby agree to cooperate
in the preparation and filing of this Fourth Supplement, or of a
memorandum thereof, of any documents ancillary thereto or required
or advisable in connection therewith, of a supplement to the
Mortgage (as required by the Lease and the Indenture) and, as
necessary, the Assignment and any Subordinated Mortgage (as
defined in the Mortgage), and of any necessary financing statements
related thereto.
Section 8. Ratification of Lease; Integration. As
amended and supplemented hereby, the Existing Lease is, in all
respects, ratified and confirmed and remains in full force and
effect. It is understood and agreed that as of the date of
execution and delivery of this Fourth Supplement, the Lease is
comprised only and exclusively of the Original Lease, the First
Supplement, the Second Supplement, the Third Supplement and this
Fourth Supplement and that the Lease, as so constituted, together
with the Guaranty and the Assumption Agreement, constitute the
entire understanding of the Issuer and the Company with respect to
the subject matter thereof and hereof, and that the Lease, as so
constituted, together with the Guaranty and Assumption Agreement,
supersede all other oral or written agreements, prior to the date
of execution and delivery of this Fourth Supplement, with respect
thereto.
Section 9. General Agreements. This Fourth Supplement
shall take effect upon the execution and delivery thereof and shall
continue in effect until the expiration of the Lease Term. The
Issuer and the Company agree that they will execute and deliver
such further documents and do such further acts and things as are
necessary fully to effect the purposes of this Fourth Supplement.
THIS FOURTH SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE and shall inure to the
benefit of and be binding upon the Issuer and the Company and their
respective successors and assigns. Any provision hereof invalid
under any law shall be inapplicable and deemed omitted herefrom,
but shall not invalidate the remaining provisions hereof. This
Fourth Supplement may be executed in counterpart, and in several
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the Issuer and the Company have
caused this Fourth Supplement to Lease to be duly executed in
their respective names by their duly authorized officers all as of
the date first hereinbefore written.
Signed and acknowledged as to
the Issuer in the presence of: TOLEDO-LUCAS COUNTY PORT
AUTHORITY
By:
Name: Chairman
By:
Name: Secretary
(Witnesses as to both)
Signed and acknowledged as to BURLINGTON AIR EXPRESS INC.
the Company in the presence of:
By:
Name: Chairman of the Board
By:
Name: Treasurer
(Witnesses as to both)
Approved as to form:
Staff Counsel
<PAGE>
STATE OF OHIO )
)
COUNTY OF LUCAS )
On this ________ day of March, 1994, before me, a Notary
Public in and for said County and State, personally appeared Richard D.
Ruppert and Jerry J. Arkebauer, Chairman of the Board of Directors and
Secretary, respectively, of the Toledo-Lucas County Port Authority, and
acknowledged that they did sign the foregoing instrument as such
officers of said Port Authority, respectively, for and on behalf of said
Port Authority and by authority granted by law and by the Board of
Directors of said Port Authority and that the same is their voluntary
act and deed as such officers on behalf of said Port Authority and the
voluntary and corporate act and deed of said Port Authority.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed my official seal on the day and year aforesaid.
[Seal] ___________________________
Notary Public
STATE OF )
)
COUNTY OF )
On this ________ day of March, 1994, before me, a Notary
Public in and for said County and State, personally appeared Joseph C.
Farrell and James B. Hartough, Chairman of the Board and Treasurer,
respectively, of Burlington Air Express Inc., and acknowledged that they
did sign the foregoing instrument as such officers of said corporation,
respectively, for and on behalf of said corporation and by authority
granted by the Board of Directors of said corporation and that the same
is their voluntary act and deed as such officers on behalf of said
corporation and the voluntary and corporate act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed my official seal on the day and year aforesaid.
[Seal] _____________________________
Notary Public
This instrument was prepared by: Jeffrey A. Bomberger
Squire, Sanders & Dempsey
4900 Society Center
127 Public Square
Cleveland, Ohio 44114-1304
<PAGE>
CERTIFICATE
The undersigned, Fiscal Officer of the Issuer under the
aforesaid Fourth Supplement to Lease, hereby certifies that the moneys
required to meet the obligations of the Issuer during the year 1994
under that Fourth Supplement to Lease have been lawfully appropriated by
the Board of Directors of the Issuer for such purposes and are in the
treasury of the Issuer or in the process of collection to the credit of
an appropriate fund, free from any previous encumbrances. This
Certificate is given in compliance with Sections 5705.41 and 5705.44,
Ohio Revised Code.
Dated: March 8, 1994 ________________________________
Secretary, Toledo-Lucas
Port Authority
<PAGE>
EXHIBIT A
1994 Project
I. 1994 Additional Project.
A. Material Handling System Improvements. The 1994
Additional Project includes the addition of three additional material
handling modules to the existing material handling and sortation system
(10 modules) in the Hub Facility. The three new modules were
manufactured and designed with the same specifications as the existing
ten modules. The major components of the three new modules are the
fabrication and installation of container decks, package carts and
conveyors. The container decks include unload decks, scales, highway
decks and loading decks. The carts include "conveyable" carts for
packages up to 27" x 27" x 32" and 70 lbs., and "nonconveyable" carts
for oversized pieces. In addition to the conveyor system for the three
new modules, modifications of existing conveyors were made including
installation of three tertiary slides and three unload conveyors and the
addition of jam platforms and additional storage areas under the primary
sites. In addition 12 unload slides for nonconveyable freight were
installed on twelve of the existing and new unload conveyors. In
addition, modifications were made to the Motor Control Center (MCC) and
additional telephones were installed. The MCC modifications included
installation of motors, emergency stops, diverter and secondary control
panels, lighting and electrical feeders and extensive electrical work in
connection with the foregoing. Finally, additional improvements to the
outer modules of the Material Handling System are underway. All such
items have a reasonably expected useful life consistent with that of the
existing material handling system, being not less than 30 years from the
place-in-service date. Information pertaining to the foregoing items is
set forth below:
Material Handling System Improvements
Payments
Prior to
Item Number or Estimated Issuance Placed in
Description Amount Vendor Cost Date Service
___________ _________ ________ _________ _________ _________
Deck W.A.S.P. $ 800,033.00 $ 800,033.00 07/10/93
Carts W.A.S.P. 85,680.00 85,680.00 08/01/93
Conveyors SEAMCO 916,027.00 916,027.00 08/11/93
Unload Slides SEAMCO 27,060.00 24,037.00 *
MCC/Controls Innovative 52,400.00 52,400.00 05/01/93
MCC/Electrical GEM 148,627.00 148,627.00 09/01/93
Telephones Trans West 5,968.29 5,968.29 09/01/93
Outer Module
Improvements 36,000.00* *
Engineering KMetz 80,000.00 80,000.00 N/A
_____________ _____________
Total Material Handling
System Improvements $2,151,795.29 $2,112,772.29
_____________________
* - Estimate
B. Other Hub Facility Improvements. In addition to the
Material Handling System improvements described in part I.A above, the
1994 Additional Project includes other improvements to the Hub Facility
including raising the height of the bulkload docktruck doors, building an
interior guard rail and a mezzanine security fence, expanding the parking
lot and relocating the fence, expanding the customs office and
constructing an exterior office for the truck supervisor. In addition,
an additional 10,000 gallon glycol storage tank, together with a concrete
pad and dike, and connections to the existing heating and mixing tank will
be constructed, an overhead crane will be installed in the Hub Facility,
additional storage space will be added under the primary slides and
directional and building signage will be installed. All such items have
a reasonably expected useful life consistent with that of the Hub Facility
building, being a period ending not earlier than September 1, 2021, thirty
years from the placed in service date for the Hub Facility. Information
pertaining to the foregoing items is set forth below:
Payments
Prior to
Item Number or Estimated Issuance Placed in
Description Amount Vendor Cost Date Service
___________ _________ ________ _________ _________ _________
Truck Doors Quality
Overhead $ 3,567.00 $ 3,567.00 10/01/93
Interior
Guard Rail Toledo Fence 11,440.00 11,440.00 06/01/93
Mezzanine
Security Fence Toledo Fence 4,795.00 4,795.00 09/15/93
Parking Lot Rudolph Libbe 126,300.00 81,495.00 *
Parking Lot Crestline 91,466.00 91,466.00 09/01/93
Customs Office Cousino 31,128.00 31,128.00 12/01/93
Truck Office Starrco 8,351.00 8,351.00 12/01/93
Office Hook Up BAX-Supplies 228.00 228.34 12/01/93
Parking Lot Fence Toledo Fence 6,900.00 1,640.00 *
Glycol Tank 30,000.00 *
Overhead Crange 62,000.00 *
Primary Slide
Storage 20,000.00 *
Signage 20,000.00 *
Engineering KMetz 25,000.00 20,000.00 N/A
___________ ___________
Total Hub Facility
Improvements $441,175.00 $254,110.34
_____________________
* - Estimate
II. 1994 Airport Improvements
The South Parallel Taxiway will be the primary taxiway
parallel to and immediately south of Runway 7/25. The South
Parallel Taxiway will begin at the west connector of the Ramp and
proceed past the east connector, crossing Runway 16/34 to the
approach end of Runway 25. The South Parallel Taxiway will be
approximately 5,200 feet long and 75 feet wide, with 35 feet of
paved shoulders on each side. The South Parallel Taxiway
improvements will include a high-speed exit taxiway and associated
connecting taxiways.
The South Parallel Taxiway will be fully lighted, with
both lighting at the edges of the Taxiway and installed within the
centerline of the high speed exit pavement. The pavement will
consist of 15 inches of stabilized base coarse covered by 7 inches
of asphalt.
<PAGE>
EXHIBIT B
SCHEDULE I OF BASIC RENT
The following Schedule sets forth Basic Rent payments to
be made by the Company for the rental of the Hub Facility buildings
and Material Handling System during the Initial Term and replaces
Schedule I of Exhibit D of the Original Lease as amended by the
Second Supplement. All payments are to be paid on the Rental
Payment Date next preceding the date set forth on such schedule.
Monthly Monthly Total
Principal Interest Monthly
Month/Date Payment Payment Payment
__________ _________ ________ _______
[Voluminous schedule showing monthly payment dates, monthly
principal amounts, monthly interest amounts and total monthly
payments. Total monthly payments decline from $259,024.65 on
May 1, 1994 to $223,594.27 on April 1, 2013 and decline from
$297,372.92 on May 1, 2013 to $289,260.42 on April 1, 2017 and are
$300,729.17 from and including May 1, 2017 through April 1, 2018.
Total monthly principal, interest and combined principal and
interest payments from May 1, 1994 through April 1, 2019 are
$31,475,000.00, $41,369,785.44 and $72,844,785.44, respectively.]
<PAGE>
EXHIBIT C
SCHEDULE II OF BASIC RENT
The following Schedule sets forth Basic Rent payments to
be made by the Company for the rental of certain Movable Hub
Equipment during the initial lease term with respect thereto and
replaces Schedule II to Exhibit D of the Original Lease as amended
by the Second Supplement. All payments are to be paid on the
Rental Payment Dates next preceding the dates set forth on such
Schedule.
Monthly Monthly Total
Principal Interest Monthly
Month/Date Payment Payment Payment
__________ _________ ________ _______
[Voluminous schedule showing monthly payment dates, monthly
principal amounts, monthly interest amounts and total monthly
payments. Total monthly payment ranges from $22,163.89 on May 1,
1994 to $23,629.17 on April 1, 2001. Total monthly principal,
interest and combined principal and interest payments from May 1,
1994 through April 1, 2001 are $1,420,000.00, $443,333.33 and
$1,863,333.33, respectively.]
<PAGE>
EXHIBIT D
SCHEDULE III OF BASIC RENT
The following Schedule sets forth the Basic Rent payments
to be made by the Company for the lease and use of the 1994 Project
during the Additional Project Term for the 1994 Additional Project.
All payments are to be paid on the Rental Payment Date next
preceding the dates set forth on such Schedule.
Monthly Monthly Total
Principal Interest Monthly
Month/Date Payment Payment Payment
__________ _________ ________ _______
[Voluminous schedule showing monthly payment dates, monthly
principal amounts, monthly interest amounts and total monthly
payments. Total monthly payment ranges from $28,409.55 on May 1,
1994 to $26,396.36 on April 1, 2013. Total monthly principal,
interest and combined principal and interest payments from May 1,
1994 through April 1, 2013 are $3,225,000.00, $2,846,157.30 and
$6,071,157.30, respectively.]
<PAGE>
EXHIBIT E
LEGAL DESCRIPTION TO LEASED EXPANSION SITE
A parcel of land being a part of Section 10, Town 7 North,
Range 9 East, Swanton Township, and part of Section 11, Town 7
North, Range 9 East, Monclova Township, Lucas County, Ohio, and
being more particularly described as follows:
Commencing at an existing stone monument at the Southwest
corner of the Northeast quarter of Section 10;
thence South 88 degrees 46' 07" East, on the South line of
the Northeast quarter of Section 10, a distance of 1773.60 feet to
a point on the South line of an existing 23.784 acre leased parcel,
said point also being the TRUE POINT OF BEGINNING of the parcel
herein described; thence continuing South 88 degrees 46' 07" East,
on the South line of the Northeast quarter of Section 10 and on the
South line of an existing 23.784 acre leased parcel, a distance of
868.00 feet to the most Southeasterly corner of said 23.784 acre
leased parcel;
thence North 21 degrees 23' 38" West, on the Northeasterly
line of said 23.784 acre leased parcel, a distance of 629.74 feet
to a point;
thence North 68 degrees 36' 22" East, on the Southeasterly
line of said 23.784 acre leased parcel, a distance of 28.85 feet to
a point;
thence North 21 degrees 23' 38" West, on the Northeasterly
line of said 23.784 acre leased parcel, a distance of 104.96 feet
to a point;
thence North 68 degrees 36' 22" East, distance of 69.95 feet
to a point;
thence South 21 degrees 23' 38" East, distance of 750.78
feet to a point;
thence South 68 degrees 36' 22" West, distance of 900.00
feet to a point;
thence North 21 degrees 23' 38" West, a distance of 350.00
feet to the TRUE POINT OF BEGINNING of the parcel herein described,
containing 5.00 acres of land, more or less, subject to all
easements, zoning restrictions of record and legal highways.
The bearings used herein are for the purpose of describing
angles only and are not referenced to true or magnetic North.
<PAGE>
CONSENT
The undersigned officer of the City of Toledo, Ohio,
acknowledges that:
1. The City has leased the Toledo Express Airport to the
Toledo-Lucas County Port Authority for a term ending on February
11, 2023.
2. The Port Authority, with the City's consent, has
subleased a "Hub Facility" and site to Burlington Air Express Inc.
for a term, including all extensions, ending on October 31, 2028.
3. To assist Burlington in financing additional fixtures
to the Hub Facility and site, the Port Authority is required to
lease such fixtures to Burlington and mortgage its interest therein
consistent with the terms of the sublease, indenture and mortgages
securing the original Hub Facility financing.
4. Burlington has the option to extend the sublease term
with respect to such fixtures so that the sublease term for the
fixtures will terminate at the same time as the sublease of the Hub
Facility and site.
Dated: March 18, 1994
By:___________________________
Mayor, City of Toledo, Ohio
<PAGE>
CONSENT OF DIRECTOR
The undersigned, The Director of Development of the State of
Ohio, by the undersigned duly authorized officer, hereby acknowledges
receipt of notice of, and hereby consents to, the foregoing Fourth
Supplement to Lease and the amendments, changes, modifications,
covenants and agreements therein made to the extent, if any, that those
amendments, changes, modifications, covenants and agreements are
material to that Director.
THE DIRECTOR OF DEVELOPMENT OF
THE STATE OF OHIO
Dated: March 18, 1994 By: __________________________
Deputy Director
<PAGE>
CONSENT OF TRUSTEE
The undersigned, the Trustee under the Indenture identified in
the foregoing Fourth Supplement to Lease, by the undersigned duly
authorized officer, hereby (i) acknowledges receipt of notice of the
foregoing Fourth Supplement to Lease and the amendments, changes,
modifications, covenants and agreements therein made, (ii) determines
that such amendments, changes and modifications of the Lease are
required (a) by the provisions of that Indenture, (b) in connection with
the issuance of Additional Bonds and as contemplated by the Existing
Lease referred to in that Fourth Supplement or (c) in connection with
changes in the Lease which are not to the prejudice of the Trustee or
the holders of the Bonds issued under that Indenture, and (iii) consents
to that Fourth Supplement to Lease and the amendments, changes,
modifications, covenants and agreements therein made.
SOCIETY NATIONAL BANK, as Trustee
Dated: March 22, 1994 By:_______________________________
Vice President
EXHIBIT 10.4
$350,000,000
CREDIT AGREEMENT
Dated as of March 4, 1994
among
THE PITTSTON COMPANY,
as Borrower,
LENDERS PARTIES HERETO,
CHEMICAL BANK
CREDIT SUISSE and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as
Co-Agents
and
CREDIT SUISSE,
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS . . . .. . . . . . . . . . . . . . . . . .1
SECTION 1.01. Certain Defined Terms . . . . . . . 1
SECTION 1.02. Terms Generally . . . . . . . . . .24
ARTICLE II. THE CREDITS . . . . . . . . . . . . . . . . . . . . .24
SECTION 2.01. Commitments . . . . . . . . . . . .24
SECTION 2.02. Loans . . . . . . . . . . . . . . .25
SECTION 2.03. Money Market Bid Procedure . . . .27
SECTION 2.04. Notice of Term and Standby
Borrowings . . . . . . . . .. . . 29
SECTION 2.05. Refinancings . . . . . . . .. . . 30
SECTION 2.06. Notes; Repayment of Loans . .. . . 31
SECTION 2.07. Fees . . . . . . . . . . . .. . . 32
SECTION 2.08. Interest on Loans . . . . . .. . . 33
SECTION 2.09. Default Interest . . . . . .. . . 33
SECTION 2.10. Termination and Reduction of
Commitments . . . . . . . . . . . .34
SECTION 2.11. Conversion and Continuation of
Term Borrowings . . . . . . . . . 34
SECTION 2.12. Prepayment . . .. . . . . . . . . 36
SECTION 2.13. Pro Rata Treatment . . . . . . . 38
SECTION 2.14. Sharing of Setoffs . . . . . . . 38
SECTION 2.15. Payments . . . . . . . . . . . . 39
SECTION 2.16. Taxes . . . . . . . . . . . . . . 40
ARTICLE III. YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . 43
SECTION 3.01. Additional Costs . . . . . . . . 43
SECTION 3.02. Limitations on Types of Loans . . 46
SECTION 3.03. Illegality . . . . . . . . . . . 47
SECTION 3.04. Certain Prepayments or Conversions. 48
SECTION 3.05. Indemnification . . . . . . . . . . 49
SECTION 3.06. Termination or Assignment of
Commitments Under Certain
Circumstances . . . . . . . . . . . 49
ARTICLE IV. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . 50
SECTION 4.01. The Initial Loan. . . . . . . . . . 50
SECTION 4.02. Each Loan . . . . . . . . . . . . . 53
ARTICLE V. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . .54
SECTION 5.01. Corporate Existence . . . . . . . . 54
SECTION 5.02. Non-Contravention . . . . . . . . . 54
SECTION 5.03. No Consent. . . . . . . . . . . . . 55
SECTION 5.04. Binding Obligations . . . . . . . . 55
SECTION 5.05. Title to Properties . . . . . . . . 55
SECTION 5.06. Subsidiaries. . . . . . . . . . . . 55
SECTION 5.07. Financial Statements. . . . . . . . 55
SECTION 5.08. Litigation. . . . . . . . . . . . . 56
SECTION 5.09. Taxes . . . . . . . . . . . . . . . 56
SECTION 5.10. ERISA . . . . . . . . . . . . . . . 57
SECTION 5.11. No Default. . . . . . . . . . . . . 58
SECTION 5.12. Federal Reserve Regulations . . . . 58
SECTION 5.13. Investment Company Act. . . . . . . 58
SECTION 5.14. Environmental Matters . . . . . . . 58
ARTICLE VI. COVENANTS . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.01. Affirmative Covenants . . . . . . . 59
SECTION 6.02. Negative Covenants. . . . . . . . . 61
SECTION 6.03. Reporting Requirements. . . . . . . 65
ARTICLE VII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 68
ARTICLE VIII. THE AGENTS. . . . . . . . . . . . . . . . . . . . . 71
SECTION 8.01. Appointment . . . . . . . . . . . . 71
SECTION 8.02. Powers. . . . . . . . . . . . . . . 72
SECTION 8.03. General Immunity. . . . . . . . . . 72
SECTION 8.04. No Responsibility for Loans,
Recitals, etc. . . . . . . . . . . 72
SECTION 8.05. Action on Instructions of Lenders . 73
SECTION 8.06. Employment of Administrative Agent
and Counsel . . . . . . . . . . . . 73
SECTION 8.07. Reliance on Documents; Counsel. . . 73
SECTION 8.08. Reimbursement and Indemnification . 73
SECTION 8.09. Rights as a Lender. . . . . . . . . 74
SECTION 8.10. Lender Credit Decision. . . . . . . 74
SECTION 8.11. Successor Administrative Agent. . . 74
ARTICLE IX. BENEFIT OF AGREEMENT;
ASSIGNMENTS; PARTICIPATIONS .. . . . . . . . . . . . . 75
SECTION 9.01. Successors and Assigns. . . . . . . 75
SECTION 9.02. Participations. . . . . . . . . . . 76
SECTION 9.03. Assignments . . . . . . . . . . . . 77
SECTION 9.04. Dissemination of Information;
Confidentiality . . . . . . . . . . 78
SECTION 9.05. Tax Treatment . . . . . . . . . . . 79
SECTION 9.06. Assignments to the Federal
Reserve . . . . . . . . . . . . . . 79
ARTICLE X. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . 80
SECTION 10.01. Amendments. . . . . . . . . . . . . 80
SECTION 10.02. Preservation of Rights. . . . . . . 80
SECTION 10.03. Survival . . . . . . .. . . . . . . 81
SECTION 10.04. Headings . . . . . . .. . . . . . . 81
SECTION 10.05. Entire Agreement .. . . . . . . . . 81
SECTION 10.06. Several Obligations. . . . . . . . 81
SECTION 10.07. Expenses; Indemnification. . . . . 81
SECTION 10.08. Numbers of Documents . . . . . . . 83
SECTION 10.09. Severability of Provisions . . . . 83
SECTION 10.10. Nonliability of Lenders. . . . . . 84
SECTION 10.11. CHOICE OF LAW. . . . . . . . . . . 84
SECTION 10.12. CONSENT TO JURISDICTION. . . . . . 84
SECTION 10.13. WAIVER OF JURY TRIAL . . . . . . . 84
SECTION 10.14. Notices. . . . . . . . . . . . . . 84
SECTION 10.15. Binding Effect; Counterparts . . . 85
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Term Note
Exhibit B Form of Assignment Agreement
Exhibit C-1 Form of Opinion of Vice President-Law and
Secretary
Exhibit C-2 Form of Opinion of Cravath, Swaine & Moore
Schedule 1.01A Existing Lender Credit Agreements
Schedule 1.01B Unrestricted Subsidiaries
Schedule 2.01 Commitments
Schedule 5.06 Subsidiaries
Schedule 6.02 Encumbrances
<PAGE>
CREDIT AGREEMENT dated as of March 4, 1994,
among THE PITTSTON COMPANY, a corporation duly
organized and validly existing under the laws of
the Commonwealth of Virginia (the "Borrower"), the
Institutional Lenders (as defined herein) listed
on Schedule 2.01 (the "Lenders"), CHEMICAL BANK,
CREDIT SUISSE and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as agents for the Lenders (in such
capacity, the "Co-Agents"), and CREDIT SUISSE, as
administrative agent (in such capacity, the
"Administrative Agent").
The Borrower has requested the Lenders to extend credit
in order to enable the Borrower, subject to the terms and
conditions of this Agreement, to borrow (a) on a term basis, on
the Closing Date (as defined herein), an aggregate principal
amount not in excess of $100,000,000, and (b) on a revolving
basis, at any time and from time to time prior to the Maturity
Date (as defined herein), an aggregate principal amount at any
time outstanding not in excess of $250,000,000. The Borrower has
also requested the Lenders to provide a procedure pursuant to
which the Borrower may receive and request bids from Lenders on
borrowings by the Borrower. The proceeds of such borrowings are
to be used for general corporate purposes, including
acquisitions. The Lenders are willing to extend such credit to
the Borrower on the terms and subject to the conditions set forth
herein.
Accordingly, the Borrower, the Lenders, the Co-Agents
and the Administrative Agent agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used herein,
the following terms shall have the following meanings:
"Acquisition" shall mean any transaction pursuant to
which the Borrower or any Subsidiary of the Borrower (i) acquires
20% or more of the outstanding equity securities of any Person
pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of such securities, or in one or more negotiated block,
market or other transactions not involving a tender offer, or a
combination of any of the foregoing or (ii) makes any Person a
Subsidiary of, or causes any Person to be merged into, the
Borrower or any Subsidiary of the Borrower; provided, however,
that any acquisition by the Borrower or any Subsidiary of the
Borrower of equity securities of the Borrower or any Subsidiary
or Affiliate of the Borrower pursuant to clause (i) above or any
merger of a Subsidiary or Affiliate of the Borrower into the
Borrower or any Subsidiary of the Borrower shall not be deemed to
be an Acquisition.
"Adjusted CD Rate" shall mean, for any CD Rate
Borrowing for any Interest Period therefor, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%)
equal to the sum of: (a) the product of (i) the CD Base Rate for
such Borrowing for such Interest Period and (ii) a fraction of
which the numerator is 100% and the denominator is 100% minus the
Reserve Percentage in effect at any time during such Interest
Period; plus (b) the Assessment Rate in effect at the
commencement of such Interest Period. The Adjusted CD Rate shall
be adjusted automatically on and as of the effective date of any
change in the Reserve Percentage; provided, however, that no such
adjustment shall occur unless and until the Administrative Agent
notifies the Borrower of such adjustment.
"Administrative Agent" shall mean Credit Suisse in its
capacity as administrative agent for the Lenders pursuant to
Article VIII, and not in its individual capacity as a Lender, and
any successor Administrative Agent appointed pursuant to
Section 8.11.
"Administrative Agent Fee" shall have the meaning
assigned to that term in Section 2.07(c).
"Affiliate" of any designated Person means any Person
that has a relationship with the designated Person whereby either
of such Persons directly or indirectly controls or is controlled
by or is under common control with the other. For this purpose
"control" means the power, direct or indirect, of one Person to
direct or cause direction of the management and policies of
another, whether by contract, through voting securities or
otherwise.
"Agents" shall mean the Co-Agents and the
Administrative Agent.
"Agreement" shall mean this credit agreement, as it may
be amended or modified and in effect from time to time.
"Applicable Commitment Fee Rate" shall mean, on any
date, the applicable percentage set forth below based upon the
Applicable LT Ratings by Moody's and S&P (with references in this
definition to "levels" being references to levels 1-5 below):
<TABLE>
<CAPTION>
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
_____ _____ _____ _____ _____
Senior Senior Senior Senior Senior
LT LT LT LT LT
Rating: Rating: Rating: Rating: Rating:
BBB+/ BBB/Baa2 BBB-/ BB+/Ba1 Below
Baa1 _____ Baa3 _____ BB+/Ba1
or better Sub- _____ Sub- _____
_____ ordinated Sub- ordinated Sub-
Sub- LT Rating: ordinated LT Rating: ordinated
ordinated BBB-/Baa3 LT Rating: BB-/Ba3 LT Rating:
LT Rating: BB+/Ba2 Below
BBB/Baa2 BB-/Ba3
or Better
___________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Commitment
Fee Rate .200 .225 .250 .375 .500
</TABLE>
For purposes of the foregoing, (i) if the Applicable LT Ratings
established by Moody's and S&P shall fall within different levels
and there is only a one level difference between such Applicable
LT Ratings, the Applicable Commitment Fee Rate shall be based
upon the superior (i.e., numerically lower) level, (ii) if the
Applicable LT Ratings established by Moody's and S&P shall fall
within different levels and there is more than one level
difference between such Applicable LT Ratings, the Applicable
Commitment Fee Rate shall be based upon the level that is one
level superior to (i.e., numerically lower) the inferior (i.e.,
numerically higher) of the two levels, (iii) notwithstanding
clauses (i) and (ii), if either the Applicable LT Rating
established by Moody's or the Applicable LT Rating established by
S&P falls within level 4 or 5, the Applicable Commitment Fee Rate
shall be based upon the inferior (i.e., numerically higher)
level, (iv) if only one of Moody's or S&P has in effect an
Applicable LT Rating, then the Applicable Commitment Fee Rate
shall be based upon such Applicable LT Rating, (v) if neither
Moody's nor S&P has in effect an Applicable LT Rating (other than
because neither rating agency shall be in the business of rating
corporate debt obligations), then the Applicable Commitment Fee
Rate shall be based upon level 4, provided that if the Borrower
has outstanding non-rated Index Debt for which a rating could be
obtained from Moody's or S&P, then the Applicable Commitment Fee
Rate shall be based upon level 5, and (vi) if any Applicable LT
Rating established by Moody's or S&P shall be changed (other than
as a result of a change in the rating system of Moody's or S&P),
such change shall be effective as of the date on which it is
first announced by the applicable rating agency. Such change in
the Applicable Commitment Fee Rate shall apply during the period
commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such
change. If the rating system of either Moody's or S&P shall
change prior to the Maturity Date, the Borrower and the Lenders
shall negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating system.
"Applicable Lending Office" shall mean, with respect to
each Lender and each Type of Loan, the lending office as
designated for such Type of Loan below the name of such Lender on
Schedule 2.01 hereof or such other office of such Lender or of an
Affiliate of such Lender as such Lender may from time to time
specify in writing to the Borrower and the Administrative Agent
as the office at which its Loans of such Type are to be made and
maintained.
"Applicable LT Ratings" shall mean, on any date (i) if
Moody's or S&P has in effect a Senior LT Rating on such date,
Senior LT Ratings and (ii) if neither Moody's nor S&P has in
effect a Senior LT Rating on such date, Subordinated LT Ratings.
"Applicable Margin" shall mean, on any date, the
applicable percentage set forth below based upon the Applicable
LT Ratings by Moody's and S&P (with references in this definition
to "levels" being references to levels 1-5 below):
<TABLE>
<CAPTION>
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
_____ _____ _____ _____ _____
Senior Senior Senior Senior Senior
LT LT LT LT LT
Rating: Rating: Rating: Rating: Rating:
BBB+/ BBB/Baa2 BBB-/ BB+/Ba1 Below
Baa1 _____ Baa3 _____ BB+/Ba1
or better Sub- _____ Sub- _____
_____ ordinated Sub- ordinated Sub-
Sub- LT Rating: ordinated LT Rating: ordinated
ordinated BBB-/Baa3 LT Rating: BB-/Ba3 LT Rating:
LT Rating: BB+/Ba2 Below
BBB/Baa2 BB-/Ba3
or Better
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Eurodollar
Revolving Margin .40000 .45000 .50000 .62500 .87500
CD Revolving
Margin .52500 .57500 .62500 .75000 1.00000
Base Rate Revolving
Margin .00000 .00000 .00000 .00000 .00000
Eurodollar Term
Margin .4625 .54375 .62500 .87500 1.2500
CD Term Margin .58750 .66875 .75000 1.0000 1.2500
Base Rate Term
Margin .00000 .00000 .00000 .00000 .00000
</TABLE>
For purposes of the foregoing, (i) if the Applicable LT Ratings
established by Moody's and S&P shall fall within different levels
and there is only a one level difference between such Applicable
LT Ratings, the Applicable Margin shall be based upon the
superior (i.e., numerically lower) level, (ii) if the Applicable
LT Ratings established by Moody's and S&P shall fall within
different levels and there is more than one level difference
between such Applicable LT Ratings, the Applicable Margin shall
be based upon the level that is one level superior to (i.e.,
numerically lower) the inferior (i.e., numerically higher) of the
two levels, (iii) notwithstanding clauses (i) and (ii), if either
the Applicable LT Rating established by Moody's or the Applicable
LT Rating established by S&P falls within level 4 or 5, the
Applicable Margin shall be based upon the inferior (i.e.,
numerically higher) level, (iv) if only one of Moody's or S&P has
in effect an Applicable LT Rating, then the Applicable Margin
shall be based upon such Applicable LT Rating, (v) if neither
Moody's nor S&P has in effect an Applicable LT Rating (other than
because neither rating agency shall be in the business of rating
corporate debt obligations), then the Applicable Margin shall be
based upon level 4, provided that if the Borrower has outstanding
non-rated Index Debt for which a rating could be obtained from
Moody's or S&P, then the Applicable Margin shall be based upon
level 5, and (vi) if any Applicable LT Rating established by
Moody's or S&P shall be changed (other than as a result of a
change in the rating system of Moody's or S&P), such change shall
be effective as of the date on which it is first announced by the
applicable rating agency. Such change in the Applicable Margin
shall apply during the period commencing on the effective date of
such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of
either Moody's or S&P shall change prior to the Maturity Date,
the Borrower and the Lenders shall negotiate in good faith to
amend the references to specific ratings in this definition to
reflect such changed rating system.
"Applicable Utilization Rate" shall mean, on any date,
the applicable percentage set forth below based upon the
Applicable LT Ratings by Moody's and S&P (with references in this
definition to "levels" being references to levels 1-5 below):
<TABLE>
<CAPTION>
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
_____ _____ _____ _____ _____
Senior Senior Senior Senior Senior
LT LT LT LT LT
Rating: Rating: Rating: Rating: Rating:
BBB+/ BBB/Baa2 BBB-/ BB+/Ba1 Below
Baa1 _____ Baa3 _____ BB+/Ba1
or better Sub- _____ Sub- _____
_____ ordinated Sub- ordinated Sub-
Sub- LT Rating: ordinated LT Rating: ordinated
ordinated BBB-/Baa3 LT Rating: BB-/Ba3 LT Rating:
LT Rating: BB+/Ba2 Below
BBB/Baa2 BB-/Ba3
or Better
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Utilization Rate .06250 .09375 .12500 .25000 .37500
</TABLE>
For purposes of the foregoing, (i) if the Applicable LT Ratings
established by Moody's and S&P shall fall within different levels
and there is only a one level difference between such Applicable
LT Ratings, the Applicable Utilization Rate shall be based upon
the superior (i.e., numerically lower) level, (ii) if the
Applicable LT Ratings established by Moody's and S&P shall fall
within different levels and there is more than one level
difference between such LT Ratings, the Applicable Utilization
Rate shall be based upon the level that is one level superior to
(i.e., numerically lower) the inferior (i.e., numerically higher)
of the two levels, (iii) notwithstanding clauses (i) and (ii), if
either the Applicable LT Rating established by Moody's or the
Applicable LT Rating established by S&P falls within level 4 or
5, the Applicable Utilization Rate shall be based upon the
inferior (i.e., numerically higher) level, (iv) if only one of
Moody's or S&P has in effect an Applicable LT Rating, then the
Applicable Utilization Rate shall be based upon such Applicable
LT Rating, (v) if neither Moody's nor S&P has in effect an
Applicable LT Rating (other than because neither rating agency
shall be in the business of rating corporate debt obligations),
then the Applicable Utilization Rate shall be based upon level 4,
provided that if the Borrower has outstanding non-rated Index
Debt for which a rating could be obtained from Moody's or S&P,
then the Applicable Utilization Rate shall be based upon level 5,
and (vi) if any Applicable LT Rating established by Moody's or
S&P shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective
as of the date on which it is first announced by the applicable
rating agency. Such change in the Applicable Utilization Rate
shall apply during the period commencing on the effective date of
such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of
either Moody's or S&P shall change prior to the Maturity Date,
the Borrower and the Lenders shall negotiate in good faith to
amend the references to specific ratings in this definition to
reflect such changed rating system.
"Assessment Rate" shall mean, for any Interest Period,
a rate per annum equal to (i) the rate (rounded upwards, if
necessary, to the nearest 1/100 of 1%) then charged by the
Federal Deposit Insurance Corporation (or any successor) for
deposit insurance for Dollar time deposits with the
Administrative Agent at the Administrative Agent's domestic
offices as determined by the Administrative Agent minus (ii) the
most recently determined credit against such assessments,
expressed as an annual rate, available under applicable law to
the Administrative Agent, in each case as determined by the
Administrative Agent as of the first day of such Interest Period.
"Available Money Market Commitment" shall mean, at any
time and with respect to each Lender, the Revolving Credit
Commitment of such Lender at such time minus the aggregate
principal amount of Revolving Loans made by such Lender and
outstanding at such time.
"Available Standby Commitment" shall mean, at any time
and with respect to each Lender, the Revolving Credit Commitment
of such Lender at such time minus the aggregate principal amount
of Money Market Loans made by such Lender and outstanding at such
time.
"Average Utilized Percentage" shall mean, for any
period, the quotient (expressed as a decimal and rounded to the
nearest 0.1%) obtained by dividing (i) the average daily amount
of the outstanding Revolving Loans during such period by (ii) the
average daily amount of the Total Revolving Credit Commitment
during such period.
"Base Rate" means, on any date and with respect to all
Base Rate Borrowings, a fluctuating rate of interest per annum
equal to the higher of (i) the base commercial lending rate
announced from time to time by Credit Suisse (New York Branch),
or (ii) the Federal Funds Effective Rate plus .50% per annum.
Changes in the rate of interest on any Base Rate Borrowing will
take effect simultaneously with each change in the Base Rate.
The Administrative Agent will give notice promptly to the
Borrower and the Lenders of changes in the Base Rate.
"Base Rate Borrowing" shall mean a Borrowing comprised
of Base Rate Loans.
"Base Rate Loan" shall mean any Base Rate Term Loan or
Base Rate Revolving Loan.
"Base Rate Revolving Loan" shall mean any Revolving
Loan bearing interest at a rate determined by reference to the
Base Rate.
"Base Rate Term Loan" shall mean any Term Loan bearing
interest at a rate determined by reference to the Base Rate.
"Board" shall mean the Board of Governors of the
Federal Reserve System of the United States (or any successor
thereof).
"Board of Directors" shall mean the board of directors
of the Borrower or any duly appointed committee of such board of
directors.
"Borrowing" shall mean a group of Loans of a single
Type made by the Lenders (or, in the case of a Money Market
Borrowing, by the Lender or Lenders whose Money Market Bids have
been accepted pursuant to Section 2.03) on a single date and as
to which a single Interest Period is in effect.
"Business Day" shall mean any day other than a
Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required to close under the laws
of the State of New York.
"Capital Lease" means any lease of property which
should be capitalized on the lessee's balance sheet in accordance
with GAAP; and "Capital Lease Obligation" means the amount of the
liability so capitalized.
"CD Base Rate" shall mean, for any Interest Period, the
prevailing per annum rate of interest (rounded upward, if
necessary, to the nearest 1/100th of 1%) bid at 10:00 a.m., New
York City time (or as soon thereafter as is practicable), on the
first day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing selected by
the Administrative Agent for the purchase at face value from the
Administrative Agent of its certificates of deposit in an amount
comparable to the principal amount of the portion of the CD Rate
Borrowing to which such Interest Period applies that would be
allocable to the Administrative Agent if no Money Market Loans
were outstanding and with a maturity comparable to such Interest
Period.
"CD Rate Borrowing" shall mean a Borrowing comprised of
CD Rate Loans.
"CD Rate Loan" shall mean any CD Term Loan or CD
Revolving Loan.
"CD Revolving Loan" shall mean any Revolving Loan
bearing interest at a rate determined by reference to the
Adjusted CD Rate.
"CD Term Loan" shall mean any Term Loan bearing
interest at a rate determined by reference to the Adjusted CD
Rate.
A "Change in Control" shall be deemed to have occurred
if (i) any person or group (within the meaning of Rule 13d-5 of
the Securities and Exchange Commission as in effect on the date
hereof) shall own directly or indirectly, beneficially or of
record, shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding
capital stock of the Borrower or (ii) a majority of the seats on
the board of directors of the Borrower shall be occupied by
persons other than (x) directors on the date of this Agreement or
(y) directors initially nominated or appointed by action of the
Board of Directors.
"Closing Date" shall mean the date of the first
Borrowing hereunder.
"Co-Agents" shall mean Chemical Bank, Credit Suisse and
Morgan Guaranty Trust Company of New York, in their capacity as
agents for the Lenders.
"Coal Operations" shall have the meaning given to such
term from time to time in the Borrower's annual reports on Form
10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K filed with the Securities and Exchange Commission.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commitment" shall mean, with respect to any Lender,
such Lender's Term Loan Commitment and Revolving Credit
Commitment.
"Commitment Fee" shall have the meaning assigned to
that term in Section 2.07(a).
"Consolidated Debt", "Consolidated Lease Rentals", and
"Consolidated Net Worth" means the Debt, Lease Rentals, or Net
Worth, as the case may be, of the Borrower and its Restricted
Subsidiaries, if any, all consolidated in accordance with GAAP
and after giving appropriate effect to any outside minority
interests in the Restricted Subsidiaries.
"Contaminant" shall mean any waste, hazardous material,
hazardous substance, toxic substance, hazardous waste, special
waste, petroleum or petroleum-derived substance or waste,
including any such pollutant, material, substance or waste
regulated under any Environmental Law.
"Credit Suisse" shall mean Credit Suisse in its
individual capacity, and its successors and permitted assigns.
"Debt" of any Person means all obligations which would,
in accordance with GAAP, be classified upon its balance sheet as
debt, and in any event includes any Capital Lease Obligation and
all debt of any other Person:
(a) guaranteed, directly or indirectly in any manner,
by the Person or endorsed (otherwise than for collection or
deposit in the ordinary course of business) or discounted
with recourse or debt which has the substantially equivalent
or similar economic effect of being guaranteed by the
Person, or of otherwise making the Person contingently
liable therefor, through an agreement or otherwise,
including, without limitation, an agreement (i) to purchase,
or to advance or supply funds for the payment or purchase
of, the debt, (ii) to purchase, sell or lease property,
products, materials or supplies, or transportation or
services, primarily for the purpose of enabling such other
Person to pay the debt or to assure the owner of the debt
against loss, regardless of the delivery or nondelivery of
the property, products, materials or supplies, or transpor-
tation or services or (iii) to make any loan, advance,
capital contribution or other investment in such other
Person to assure a minimum equity, asset base, working
capital or other balance sheet condition for any date, or to
provide funds for the payment of any liability, dividend or
stock liquidation payment, or otherwise to supply funds to
or in any manner invest in such other Person, it being
expressly understood and agreed, however, that Lease Rentals
under Leases shall not be considered Debt; or
(b) secured by an Encumbrance in respect of property
owned by the Person even though the Person has not assumed
or become liable for the payment of such debt.
"Default" shall mean an Event of Default or an event
which with notice or lapse of time or both would become an Event
of Default.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"Encumbrance" means, as to any Person, any mortgage,
lien, pledge, adverse claim, charge, security interest or other
encumbrance in or on, or any interest or title of any vendor,
lender or other secured party to or of the Person under any
conditional sale or other title retention agreement or Capital
Lease with respect to, any property or asset of the Person, or
the signing or filing of a financing statement which names the
Person as debtor, or the signing of any security agreement
authorizing any other party as the secured party thereunder to
file any financing statement.
"Environmental Encumbrance" shall mean any Encumbrance
in favor of any Governmental Authority for Environmental
Liabilities and Costs.
"Environmental Laws" shall mean any and all Federal,
state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, licenses, agreements
or other governmental restrictions relating to the environment or
to emissions, discharges or releases of pollutants, contaminants,
petroleum or petroleum products, or toxic or hazardous substances
or wastes into the environment, including ambient air, surface
water, groundwater, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
petroleum or petroleum products, or toxic or hazardous substances
or wastes or the clean-up or other remediation thereof.
"Environmental Liabilities and Costs" shall mean, as to
the Borrower or any Subsidiary, all liabilities, obligations,
responsibilities, remedial actions, losses, damages, punitive
damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel,
reasonable expert and consulting fees and reasonable costs of
investigation and feasibility studies), fines, penalties, and
sanctions incurred as a result of any claim or demand, by any
Person, under any Environmental Law.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" shall mean any entity or trade or
business, whether or not incorporated, that, together with the
Borrower, is treated as a single employer under Section 414 of
the Code.
"Eurodollar Business Day" shall mean a Business Day on
which dealings in Dollar deposits are carried out in the London
interbank Eurodollar market.
"Eurodollar Borrowing" shall mean a Borrowing comprised
of Eurodollar Loans.
"Eurodollar Loan" shall mean any Eurodollar Term Loan
or Eurodollar Revolving Loan.
"Eurodollar Rate" means, with respect to a Eurodollar
Borrowing for any Interest Period, the arithmetic average
(rounded upwards to the nearest 1/16th of 1%) of the offered
quotation, if any, to first class banks in the London interbank
market by the applicable Reference Bank for Dollar deposits of
amount in immediately available funds comparable to the principal
amount of the portion of the Eurodollar Borrowing for which the
Eurodollar Rate is being determined that would be allocable to
the applicable Reference Bank if no Money Market Loans were
outstanding and with maturities comparable to the Interest Period
for which such Eurodollar Rate will apply, as of approximately
11:00 a.m. (London time) two Eurodollar Business Days prior to
the commencement of such Interest Period. If any Reference Bank
fails to provide its offered quotation to the Administrative
Agent, the Administrative Agent shall obtain a quotation from a
Lender (other than a Reference Bank) selected by the
Administrative Agent.
"Eurodollar Revolving Loan" shall mean any Revolving
Loan bearing interest at a rate determined by reference to the
Eurodollar Rate.
"Eurodollar Term Loan" shall mean any Term Loan bearing
interest at a rate determined by reference to the Eurodollar
Rate.
"Event of Default" shall have the meaning assigned to
that term in Article VII hereof.
"Existing Lender Credit Agreements" shall mean the
credit agreements listed on Schedule 1.01A.
"Federal Funds Effective Rate" shall mean for any day,
the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%), equal to the weighted average of the rates of
overnight Federal funds transactions with members 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 New York,
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 Credit Suisse from three Federal funds
brokers of recognized standing selected by Credit Suisse.
"Fees" shall mean the Commitment Fees, the Utilization
Fees and the Administrative Agent Fees.
"Fixed Rate Loans" shall mean CD Rate Loans, Eurodollar
Loans and Money Market Loans.
"GAAP" means United States generally accepted
accounting principles in effect at the time of application to the
provisions hereof, except that (i) a Default or Event of Default
shall be deemed not to have occurred if such Default or Event of
Default would not have occurred but for a change in generally
accepted accounting principles or the Borrower's initial
implementation of a generally accepted accounting principle or a
Financial Accounting Standard issued by the Financial Accounting
Standards Board and (ii) a Default or Event of Default that is
cured as a result of a subsequent change in generally accepted
accounting principles or the Borrower's subsequent initial
implementation of a generally accepted accounting principle or a
Financial Accounting Standard issued by the Financial Accounting
Standards Board shall be deemed not to have been cured to the
extent attributable to such change or implementation.
"Governmental Authority" shall mean any Federal, state,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Hedging Agreements" shall mean interest rate
protection agreements, foreign currency exchange agreements,
other interest or exchange rate hedging, cap or collar
arrangements or arrangements designed to protect the Borrower or
any Subsidiary against fluctuations in the prices of commodities.
"Increased Costs" shall have the meaning assigned to
that term in Section 3.01(a).
"Index Debt" shall mean (i) the Borrower's, unsecured,
non-credit-enhanced long-term debt for borrowed money (whether
senior or subordinated) or (ii) unsecured long-term debt of any
other Person the rating of which by Moody's or S&P is based upon
an unsecured, non-credit-enhanced guarantee by the Borrower
(whether senior or subordinated).
"Institutional Lender" shall mean a bank or other
financial institution (other than a financial institution
reasonably specified in writing by the Borrower to the
Administrative Agent, prior to such financial institution's
becoming a Transferee, as being a competitor or an Affiliate of a
competitor of the Borrower or any of its Subsidiaries).
"Interest Payment Date" shall mean, with respect to any
Loan, the last day of the Interest Period applicable thereto and,
in the case of a Eurodollar Loan with an Interest Period of more
than six months' duration, each day that would have been an
Interest Payment Date for such Loan had successive Interest
Periods of three months' duration been applicable to such Loan
and, in addition, the date of any refinancing or conversion of
such Loan with or to a Loan of a different Type.
"Interest Period" shall mean:
(a) with respect to any Eurodollar Borrowing, the
period commencing on the date such Borrowing is made or
converted from a Borrowing of another Type or the last day
of the next preceding Interest Period with respect to such
Borrowing and ending on the same day in the first, second,
third, sixth, ninth or twelfth calendar month thereafter, as
the Borrower may select as provided herein, except that each
such Interest Period which commences on the last Eurodollar
Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Eurodollar
Business Day of such appropriate subsequent calendar month;
(b) with respect to any CD Rate Borrowing, the period
commencing on the date such Borrowing is made or converted
from a Borrowing of another Type or the last day of the next
preceding Interest Period with respect to such Borrowing and
ending on the day 30, 60, 90 or 180 days thereafter, as the
Borrower may select as provided herein;
(c) as to any Base Rate Borrowing, the period
commencing on the date of such Borrowing or on the last day
of the next preceding Interest Period with respect to such
Borrowing, as the case may be, and ending on the earliest of
(i) the next Quarterly Date, (ii) the Maturity Date and
(iii) the date such Borrowing is converted to a Borrowing of
a different Type in accordance with Section 2.11 or prepaid
in accordance with Section 2.12; and
(d) with respect to any Money Market Borrowing, the
period commencing on the date such Borrowing is made and
ending on a date selected by the Borrower pursuant to
Section 2.03.
Notwithstanding the foregoing, each Interest Period which would
otherwise end on a day which is not a Eurodollar Business Day (in
the case of an Interest Period for a Eurodollar Borrowing) or a
Business Day (in the case of an Interest Period for a CD Rate
Borrowing, Base Rate Borrowing or a Money Market Borrowing) shall
end on the next succeeding Eurodollar Business Day or Business
Day, as the case may be (or, in the case of an Interest Period
for a Eurodollar Borrowing, if such next succeeding Eurodollar
Business Day falls in the next succeeding calendar month, on the
next preceding Eurodollar Business Day).
"Labor Dispute" shall mean any strike, lockout,
slowdown, combination of workmen, boycott (primary, secondary or
otherwise), picketing, disturbance, sabotage, intentional decline
in workers' productivity or similar condition or event.
"Labor Laws" shall mean any and all Federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments and orders relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security
and similar taxes, occupational safety and health, and plant
closing.
"Lease" means a lease, other than a Capital Lease, of
real or personal property; and "Lease Rentals" for any period
means the sum of the rental and other obligations to be paid by
the lessee under a Lease during the remaining term of such Lease
(excluding any extension or renewal thereof at the option of the
lessor or the lessee unless such option has been exercised),
excluding any amount required to be paid by the lessee (whether
or not therein designated as rental or additional rental) on
account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges.
"Leverage Ratio" shall mean, as of any date, the ratio
of (a) the sum of (i) Consolidated Debt as of such date, plus
(ii) the amount by which (A) the aggregate amount, as of the
preceding December 31 (or as of such date, if such date is
December 31), of Consolidated Lease Rentals under noncancellable
Leases entered into by the Borrower or any of its Restricted
Subsidiaries, discounted to present value at 10% and net of
aggregate minimum noncancellable sublease rentals, determined on
a basis consistent with Note 10 to the Borrower's consolidated
financial statements at and for the period ended December 31,
1992, included in the Borrower's 1992 Annual Report to
shareholders, exceeds (B) $300,000,000, to (b) the sum of (i) the
amount determined pursuant to clause (a), plus (ii) Consolidated
Net Worth as of such date.
"Loan Documents" shall mean this Agreement and the
Notes.
"Loans" shall mean the Revolving Loans and the Term
Loans.
"Long Term Debt" of any Person means all Debt which
would, in accordance with GAAP, be classified upon its balance
sheet as long term debt, excluding any portion thereof which
would, in accordance with GAAP, be classified thereon as current
liabilities, and in any event includes (a) any obligation for
borrowed money outstanding under a revolving credit or similar
agreement providing for borrowings (and renewals and extensions
thereof) over a period of more than one year after the creation
of such agreement notwithstanding that any obligation thereunder
may be payable on demand or within one year after the creation
thereof, (b) any Capital Lease Obligation and (c) any guarantee
or equivalent or similar obligation under any agreement specified
in subsection (a) of the definition of Debt with respect to Debt
of another Person of the kind otherwise described in this
definition.
"Major Subsidiary" shall mean each of Pittston Coal
Company, Brink's, Incorporated and Burlington Air Express Inc.,
so long as such Major Subsidiary continues to be a Subsidiary of
the Borrower.
"Margin Stock" shall have the meaning given such term
under Regulation U.
"Maturity Date" shall mean the date five years after
the date of this Agreement.
"Money Market Bid" shall mean an offer by a Lender to
make a Money Market Loan pursuant to Section 2.03.
"Money Market Borrowing" shall mean a Borrowing
consisting of a Money Market Loan or concurrent Money Market
Loans from the Lender or Lenders whose Money Market Bids for such
Borrowing have been accepted by the Borrower under the bidding
procedure described in Section 2.03.
"Money Market Loan" shall mean a Loan from a Lender to
the Borrower pursuant to the bidding procedure described in
Section 2.03.
"Money Market Rate" shall mean, as to any Money Market
Bid made by a Lender pursuant to Section 2.03, the fixed rate of
interest offered by the Lender making such Money Market Bid.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan
within the meaning of Section 4001(a)(3) of ERISA to which the
Borrower or any ERISA Affiliate contributes or has, on or after
September 25, 1980, been obligated to contribute.
"Net Worth" of any Person, at any time, means
shareholders' equity at such time determined in accordance with
GAAP, provided that in determining "Net Worth" there shall be
included any issue of preferred stock of such Person and, further
provided, that in determining "Net Worth" there shall be
disregarded (i) any non-cash write-down or write-off in the book
value of any asset, (ii) any loss on the sale of any asset or
(iii) any change in shareholders' equity attributable to a change
in GAAP or the Borrower's initial implementation of a generally
accepted accounting principle or a Financial Accounting Standard
issued by the Financial Accounting Standards Board, all after
December 31, 1993.
"Note" shall mean a Term Note or a Revolving Credit
Note.
"Notice of Assignment" shall mean a notice in the form
of Annex I to Exhibit B hereto.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its
functions under ERISA.
"Person" shall mean an individual, a corporation, a
company, a voluntary association, a partnership, a trust, a joint
venture, an unincorporated organization or a government or any
agency, instrumentality or political subdivision thereof or any
other judicial entity.
"Plan" shall mean a pension plan within the meaning of
Section 3(2) of ERISA subject to Title IV of ERISA which the
Borrower or any ERISA Affiliate maintains or to which the
Borrower or any ERISA Affiliate contributes, other than a
Multiemployer Plan.
"Post-Default Rate" shall mean: (i) in respect of any
Loans not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum during the period
commencing on the due date until such Loans are paid in full
equal to 1% above (a) if such Loans are Base Rate Loans, the Base
Rate as in effect from time to time or (b) if such Loans are
Fixed Rate Loans, the rate of interest in effect thereon at the
time of default until the end of the then current Interest Period
therefor and, thereafter, the Base Rate as in effect from time to
time; and (ii) in respect of other amounts payable by the
Borrower hereunder not paid when due (whether at stated maturity,
by acceleration or otherwise), a rate per annum during the period
commencing on the due date until such other amounts are paid in
full equal to 1% above the Base Rate as in effect from time to
time.
"Quarterly Dates" shall mean the last Business Day of
each March, June, September and December, the first of which
shall be the first such day after the date of this Agreement.
"Reference Banks" shall mean Chemical Bank, Credit
Suisse and Morgan Guaranty Trust Company of New York.
"Refunding Borrowing" shall mean a Borrowing which,
after application of the proceeds thereof, results in no net
increase in the outstanding principal amount of all Loans.
"Regulation D" shall mean Regulation D of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as
the same is from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
"Regulatory Change" shall mean, as to any Lender, any
change after the date of this Agreement in United States Federal,
state or foreign laws or regulations or the adoption or making
after such date of any interpretations, directives, requests
applying to a class of banks including such Lender of or under
any United States Federal, state, or foreign laws or regulations
(whether or not having the force of law) by any court or
governmental or monetary authority charged with the
interpretation or administration thereof, including any guideline
adopted pursuant to or arising out of the July 1988 report of the
Basle Committee on Banking Regulations and Supervisory Practices
entitled "International Convergence of Capital Measurement and
Capital Standards", excluding, however, but only for purposes of
the CD Rate Loans, any such change which results in an adjustment
of the Assessment Rate or the Reserve Percentage and the effect
of which is reflected in a change in the Adjusted CD Rate as
provided in the definition of such term in this Section 1.01.
"Reportable Event" shall have the meaning attributed
thereto in Section 4043 of ERISA but shall not include any event
for which the 30-day requirement in Section 4043 of ERISA has
been waived under regulations of the Pension Benefit Guaranty
Corporation.
"Required Lenders" shall mean, at any time, Lenders
having Commitments and holding Term Loans representing more than
66-2/3% of the Total Commitment plus the aggregate outstanding
principal amount of Term Loans; provided, however, that (i) for
purposes of acceleration pursuant to clause (y) of the final
clause of Article VII, "Required Lenders" shall mean Lenders
holding Loans representing more than 66-2/3% of the aggregate
principal amount of Loans outstanding and (ii) for the purpose of
waiving a Default or Event of Default at a time when the
aggregate outstanding principal amount of Money Market Loans
constitutes in excess of 50% of the Total Revolving Credit
Commitment and the Revolving Credit Commitments of Lenders with
no outstanding Revolving Loans represents more than 35% of the
Total Revolving Credit Commitment, "Required Lenders" shall mean
both (x) with respect to Lenders with outstanding Revolving
Loans, such Lenders having more than 66-2/3% of the aggregate
Revolving Credit Commitments of such Lenders and (y) with respect
to the Lenders with no outstanding Revolving Loans, such Lenders
having more than 66-2/3% of the aggregate Revolving Credit
Commitments of such Lenders.
"Reserve Percentage" shall mean, for any day and in
respect of an Interest Period, the rate, as determined by the
Administrative Agent, which is in effect on such day, expressed
as a decimal, of the reserve requirements applicable to member
banks of the Federal Reserve System in New York City with
deposits exceeding $1 billion which are imposed by the Board on
nonpersonal time deposits in Dollars in New York City having a
maturity comparable to such Interest Period and in an amount of
$100,000 or more.
"Restricted Subsidiary" means (i) any Subsidiary of the
Borrower at the date of this Agreement other than a Subsidiary
designated as an Unrestricted Subsidiary in Schedule 1.01B and
(ii) any Person that becomes a Subsidiary of the Borrower after
the date hereof unless prior to such Person becoming a Subsidiary
the Board of Directors designates such Subsidiary as an
Unrestricted Subsidiary, in each case provided that none of the
shares or Long Term Debt of any Restricted Subsidiary are owned,
directly or indirectly, by an Unrestricted Subsidiary. A
Restricted Subsidiary (other than a Major Subsidiary) may be
designated by the Board of Directors as an Unrestricted
Subsidiary by written notice to the Administrative Agent, but
only if (a) the Subsidiary owns no shares or Long Term Debt of
the Borrower or any Restricted Subsidiary and (b) immediately
after such designation, the Leverage Ratio is not greater than
0.55:1.00. An Unrestricted Subsidiary may be designated by the
Board of Directors as a Restricted Subsidiary by written notice
to the Administrative Agent, but only if immediately after such
designation (x) the Borrower shall be in compliance with
Section 6.02(i) and (y) the Leverage Ratio is not greater than
0.55:1.00.
"Revolving Credit Borrowing" shall mean a Borrowing
comprised of Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect
to each Lender, the commitment of such Lender to make Revolving
Loans hereunder as set forth in Section 2.01, as the same may be
reduced from time to time pursuant to Section 2.10.
"Revolving Credit Note" shall mean a promissory note of
the Borrower, substantially in the form of Exhibit A-1,
evidencing Revolving Loans.
"Revolving Loan" shall mean a Standby Loan or a Money
Market Loan.
"S&P" shall mean Standard and Poor's Corporation.
"Sale and Leaseback Transaction" means the sale by the
Borrower or a Restricted Subsidiary to any Person (other than the
Borrower or a Restricted Subsidiary) of any property or asset
and, as part of the same transaction or series of transactions,
the leasing as lessee by the Borrower or any Restricted
Subsidiary of the same or another property or asset which it
intends to use for substantially the same purpose.
"Senior LT Rating" shall mean, on any date, the rating
applicable to senior Index Debt on such date.
"Standby Borrowing" shall mean a Revolving Credit
Borrowing comprised of Standby Loans.
"Standby Loans" shall mean the revolving loans made by
the Lenders to the Borrower pursuant to Section 2.04. Each
Standby Loan shall be a Eurodollar Revolving Loan, a CD Revolving
Loan or a Base Rate Revolving Loan.
"Subordinated LT Rating" shall mean, on any date, the
rating applicable to subordinated Index Debt on such date.
"Subsidiary" of any designated corporation means any
corporation of which at least a majority of the outstanding stock
having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by the
designated corporation or one or more of its Subsidiaries or by
the designated corporation and one or more of its Subsidiaries.
"Term Borrowing" shall mean a Borrowing comprised of
Term Loans.
"Term Loans" shall mean the term loans made by the
Lenders to the Borrower pursuant to Section 2.04. Each Term Loan
shall be a Eurodollar Term Loan, a CD Term Loan or a Base Rate
Term Loan.
"Term Loan Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Term Loans
hereunder as set forth in Section 2.01.
"Term Note" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit A-2, evidencing
Term Loans.
"Total Commitment" shall mean, at any time, the
aggregate amount of Commitments of all the Lenders, as in effect
at such time.
"Total Revolving Credit Commitment" shall mean, at any
time, the aggregate amount of Revolving Credit Commitments of all
the Lenders, as in effect at such time.
"Type", when used in respect of any Loan or Borrowing,
shall refer to the Rate by reference to which interest on such
Loan or on the Loans comprising such Borrowing is determined.
For purposes hereof, "Rate" shall include the Eurodollar Rate,
Adjusted CD Rate, Base Rate and Money Market Rate.
"Unrestricted Subsidiary" means any Subsidiary other
than a Restricted Subsidiary.
"Utilization Fees" shall have the meaning assigned to
that term in Section 2.07(b).
SECTION 1.02. Terms Generally. The definitions in
Section 1.01 shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine
and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation", and, unless the context otherwise requires, the word
"or" is not exclusive. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require. Except as
otherwise expressly provided, all references herein or in any
other Loan Document to agreements and other documents shall be
deemed references to such agreements and other documents as
amended or modified from time to time, subject to any
restrictions herein or in the other Loan Documents relating to
the amendment or modification thereof. Except as otherwise
expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and
conditions and relying upon the representations and warranties
herein set forth, each Lender agrees, severally and not jointly,
(a) to make Term Loans to the Borrower on the Closing Date in an
aggregate principal amount not to exceed the Term Loan Commitment
set forth opposite its name below, and (b) to make Standby Loans
to the Borrower, at any time and from time to time on or after
the date hereof and until the earlier of the Maturity Date and
the termination of the Revolving Credit Commitment of such Lender
in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding not to exceed such Lender's
Available Standby Commitment at such time, subject, however, to
the condition that (i) except as contemplated by Section 2.10(c),
at no time shall (A) the sum of (x) the outstanding aggregate
principal amount of all Standby Loans made by a Lender plus
(y) the outstanding aggregate principal amount of all Money
Market Loans made by such Lender exceed (B) the Revolving Credit
Commitment of such Lender and (ii) at no time shall (A) the sum
of (1) the outstanding aggregate principal amount of all Standby
Loans made by all Lenders plus (2) the outstanding aggregate
principal amount of all Money Market Loans made by all Lenders
exceed (B) the Total Revolving Credit Commitment. Within the
limits set forth in clause (b) of the preceding sentence, the
Borrower may borrow, pay or prepay and reborrow Revolving Loans
on or after the Closing Date and prior to the Maturity Date,
subject to the terms, conditions and limitations set forth
herein. Amounts paid or prepaid in respect of Term Loans may not
be reborrowed.
Each Lender's Term Loan Commitment and Revolving Credit
Commitment are set forth opposite its name in Schedule 2.01.
Such Revolving Credit Commitments may be terminated or reduced
from time to time pursuant to Section 2.10.
SECTION 2.02. Loans. (a) Each Term Loan shall be
made as part of a Borrowing consisting of Term Loans made by the
Lenders ratably in accordance with their respective Term Loan
Commitments. Each Standby Loan shall be made as part of a
Borrowing consisting of Standby Loans made by the Lenders ratably
in accordance with their respective Available Standby
Commitments. Each Money Market Loan shall be made in accordance
with the procedures set forth in Section 2.03. Notwithstanding
the foregoing, the failure of any Lender to make any Loan shall
not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender). The Loans comprising
each Standby Borrowing and Term Borrowing shall be in an
aggregate principal amount which is an integral multiple of
$1,000,000 and not less than $5,000,000 (or an aggregate
principal amount equal to the remaining balance of the available
applicable Commitments), and the Loans comprising each Money
Market Borrowing shall be in an aggregate principal amount which
is an integral multiple of $100,000 and not less than $1,000,000
(or an aggregate principal amount equal to the remaining balance
of the available Revolving Credit Commitments).
(b) Each Term Borrowing shall be comprised entirely of
Base Rate Loans, CD Rate Loans or Eurodollar Loans, each Standby
Borrowing shall be comprised entirely of Base Rate Loans, CD Rate
Loans or Eurodollar Loans, and each Money Market Borrowing shall
be comprised entirely of Money Market Loans, in each case as the
Borrower may request pursuant to Section 2.03 or 2.04, as
applicable. The Loans of each Type made by a Lender shall be
made and maintained at such Lender's Applicable Lending Office
for Loans of such Type.
(c) Subject to Section 2.05, each Lender shall make
each Term Loan and Standby Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available
funds to the Administrative Agent in New York, New York, at its
address specified pursuant to Section 10.14, not later than
3:00 p.m., New York City time, and the Administrative Agent shall
by 5:00 p.m., New York City time, credit the amounts so received
to the general deposit account of the Borrower with the
Administrative Agent or, if a Borrowing shall not occur on such
date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective
Lenders. Each Lender shall make each Money Market Loan to be
made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds to the account of the
Borrower set forth below the Borrower's name on the signature
pages hereto (or such other account as may be designated by the
Borrower by notice in accordance with Section 10.14) not later
than 5:00 p.m., New York City time. Money Market Loans shall be
made by the Lender or Lenders whose Money Market Bids therefor
are accepted pursuant to Section 2.03 in the amounts so accepted
and Term Loans and Standby Loans shall be made by the Lenders pro
rata in accordance with Section 2.13. Unless the Administrative
Agent shall have received notice from the Borrower or a Lender,
as the case may be, prior to the date on which it is scheduled to
make payment to the Administrative Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the
Administrative Agent for the account of the Lenders, that it will
not make such payment, the Administrative Agent may assume that
such payment has been made, and the Administrative Agent may, in
reliance upon such assumption, make available to the intended
recipient on such date a corresponding amount. If and to the
extent that the Borrower or the Lender, as the case may be, shall
not have made such payment to the Administrative Agent, the
recipient of such payment agrees to repay to the Administrative
Agent forthwith on demand such corresponding amount together with
interest thereon for each day from the date such amount is made
available to the recipient until the date such amount is repaid
to the Administrative Agent at (i) in the case of repayment by
the Borrower, the interest rate applicable at the time to the
relevant Loans and (ii) in the case of repayment by a Lender, the
Federal Funds Effective Rate. If a Lender shall pay to the
Administrative Agent such corresponding amount in respect of its
portion of a Borrowing prior to repayment of such corresponding
amount by the Borrower, such amount shall constitute such
Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(d) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request any
Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
SECTION 2.03. Money Market Bid Procedure.
(a) A Lender may, in its sole and absolute discretion, submit a
Money Market Bid to the Borrower on any Business Day. A Money
Market Bid may be submitted to the Borrower by hand delivery,
telecopier or by telephone and must be submitted by 10:30 a.m.,
New York City time, on the Business Day to which it applies.
Each Money Market Bid shall set forth (i) one or more Interest
Periods (or Interest Period ranges) and a Money Market Rate with
respect to each such Interest Period (or range) and (ii) the
maximum amount the Lender is willing to lend pursuant to such
Money Market Bid (which shall not exceed such Lender's Available
Money Market Commitment, taking into account all Standby
Borrowings to be made on the date of such Money Market Bid), in
the aggregate or for specified Interest Periods (or ranges).
Notwithstanding anything to the contrary in a Money Market Bid,
each Money Market Bid shall be irrevocable in respect of the date
on which it is submitted and shall automatically expire at
11:30 a.m., New York City time, on the date submitted.
(b) If Money Market Bids were made by Lenders on a
Business Day with respect to a particular Interest Period and
such bids expired at 11:30 a.m., New York City time, on such
Business Day pursuant to paragraph (a) above, the Borrower may,
in its sole and absolute discretion, subject only to the
provisions of this Section 2.03, contact one or more of such
Lenders, by hand delivery, telecopier or telephone, prior to
3:00 p.m., New York City time, on such Business Day to request
such Lenders to reinstate such Money Market Bids for such
Interest Period or provide new Money Market Bids for such
Interest Period on such Business Day; provided, however, that
(i) the Borrower shall not request a bid from a Lender in respect
of an Interest Period unless such Lender submitted a bid in
respect of such Interest Period on such Business Day in
accordance with paragraph (a) above, (ii) the Borrower shall not
request a bid from a Lender in respect of an Interest Period
unless it is requesting bids from all Lenders that on such
Business Day submitted bids in respect of such Interest Period
pursuant to paragraph (a) above that were equal to or lower than
the bid submitted by such Lender pursuant to paragraph (a) above,
(iii) the Borrower shall not disclose to any Lender the bid of
any other Lender, and (iv) the Borrower shall not accept a bid
from a Lender other than the Lenders requested by the Borrower to
bid pursuant to this paragraph (b). A Money Market Bid may be
reinstated or submitted in response to any such request by hand
delivery, telecopier or by telephone. Notwithstanding anything
to the contrary in any Money Market Bid reinstated or submitted
pursuant to this paragraph (b), each such Money Market Bid shall
be irrevocable in respect of the date on which it is reinstated
or submitted and shall automatically expire at the earlier of
(x) 3:00 p.m., New York City time, on the date submitted and
(y) one hour after such Money Market Bid is received by the
Borrower.
(c) The Borrower may, in its sole and absolute
discretion, subject only to the provisions of this Section 2.03,
accept any Money Market Bid submitted pursuant to paragraph (a)
or (b) above by notifying the Lender submitting such Money Market
Bid and the Administrative Agent (by telephone, which telephone
notice shall be confirmed (x) by telecopier to the Administrative
Agent and (y) in writing, which may include regular first class
mail, to such Lender) of such acceptance by not later than the
expiration time of such bid, indicating the Interest Period,
Money Market Rate and principal amount of the Money Market Loan
to be made by such Lender on such Business Day; provided,
however, that (i) the Borrower shall not accept a bid made at a
particular Money Market Rate for a particular Interest Period if
the Borrower has decided to reject a bid made at a lower Money
Market Rate for such Interest Period, (ii) the aggregate amount
of each Money Market Borrowing shall not be less than $1,000,000
and shall be in an integral multiple of $100,000, (iii) if the
Borrower accepts a bid at a particular Money Market Rate for a
particular Interest Period and the aggregate bids at such Money
Market Rate for such Interest Period exceed the aggregate amount
the Borrower wishes to borrow at such Money Market Rate and
Interest Period, then the Borrower shall accept such bids pro
rata in accordance with the maximum amounts that could be
accepted from the Lenders making such bids (taking into account
the amounts set forth in the bids and the limitation in
clause (iv) below), (iv) the aggregate amount of Money Market
Bids accepted by the Borrower from any Lender shall not exceed
such Lender's Available Money Market Commitment (taking into
account all Standby Borrowings to be made on the date of such
Money Market Bids), and (v) the Borrower shall not accept a Money
Market Bid on any Business Day unless such Money Market Bid was
received by the Borrower on such Business Day in accordance with
this Section 2.03. A notice given by the Borrower pursuant to
this paragraph (c) shall be irrevocable.
(d) Upon receipt by a bidding Lender of notice from
the Borrower in accordance with paragraph (c) above that a bid
made by such Lender has been accepted, such Lender will thereupon
become bound, subject to the other applicable conditions hereof,
to make the Money Market Loan in respect of which its bid has
been accepted.
(e) Except as expressly provided otherwise in this
Section 2.03, all notices required by this Section 2.03 shall be
given in accordance with Section 10.14.
(f) At the written request of any Lender, the Borrower
shall disclose to the Administrative Agent the Money Market Bids
received by the Borrower on any date specified in such request,
provided that such date is not more than 30 days prior to the
date on which such request is received by the Borrower.
SECTION 2.04. Notice of Term and Standby Borrowings.
The Borrower shall give the Administrative Agent written or
telecopy notice (or telephone notice promptly confirmed in
writing or by telecopy) (a) in the case of a Eurodollar
Borrowing, not later than 12:00 (noon), New York City time, three
Eurodollar Business Days before a proposed borrowing, (b) in the
case of a CD Rate Borrowing, not later than 12:00 (noon), New
York City time, two Business Days before a proposed borrowing and
(c) in the case of a Base Rate Borrowing, not later than
11:00 a.m., New York City time, on the date of the proposed
borrowing. Such notice shall be irrevocable and shall in each
case refer to this Agreement and specify (i) whether the
Borrowing then being requested is to be a Term Borrowing or a
Standby Borrowing, and whether such Borrowing is to be a
Eurodollar Borrowing, a CD Rate Borrowing or a Base
Rate Borrowing; (ii) the date of such Borrowing (which shall be a
Eurodollar Business Day, in the case of a Eurodollar Borrowing,
or a Business Day in the case of a CD Rate Borrowing or a Base
Rate Borrowing) and the amount thereof; and (iii) if such
Borrowing is to be a Eurodollar Borrowing or CD Rate Borrowing,
the Interest Period with respect thereto. If no election as to
the Type of Borrowing is specified in any such notice, then the
requested Borrowing shall be a Base Rate Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing or
CD Rate Borrowing is specified in any such notice, then the
Borrower shall be deemed to have selected an Interest Period of
one month's duration, in the case of a Eurodollar Borrowing, or
30 days' duration, in the case of a CD Rate Borrowing. If the
Borrower shall not have given notice in accordance with this Sec-
tion 2.04 of its election to refinance a Revolving Credit
Borrowing prior to the end of the Interest Period in effect for
such Borrowing, then the Borrower shall (unless such Borrowing is
repaid at the end of such Interest Period) be deemed to have
given notice of an election to refinance such Borrowing with a
Base Rate Borrowing. The Administrative Agent shall promptly
advise the Lenders of any notice given or deemed given pursuant
to this Section 2.04 and of each Lender's portion of the
requested Borrowing.
SECTION 2.05. Refinancings. The Borrower may
refinance all or any part of any Standby Borrowing with a Standby
Borrowing of the same or a different Type made pursuant to
Section 2.04, subject to the conditions and limitations set forth
herein and elsewhere in this Agreement. Any Standby Borrowing or
part thereof so refinanced shall be deemed to be repaid in
accordance with Section 2.06 with the proceeds of a new Standby
Borrowing hereunder and the proceeds of the new Standby
Borrowing, to the extent they do not exceed the principal amount
of the Standby Borrowing being refinanced, shall not be paid by
the Lenders to the Administrative Agent or by the Administrative
Agent to the Borrower pursuant to Section 2.02(c); provided,
however, that (i) if the principal amount extended by a Lender in
a refinancing is greater than the principal amount extended by
such Lender in the Standby Borrowing being refinanced, then such
Lender shall pay such difference to the Administrative Agent for
distribution to the Lenders described in (ii) below, (ii) if the
principal amount extended by a Lender in the Standby Borrowing
being refinanced is greater than the principal amount being
extended by such Lender in the refinancing, the Administrative
Agent shall return the difference to such Lender out of amounts
received pursuant to (i) above, and (iii) to the extent any
Lender fails to pay the Administrative Agent amounts due from it
pursuant to (i) above, any Loan or portion thereof being
refinanced with such amounts shall not be deemed repaid in
accordance with Section 2.06 and shall be payable by the Borrower
(but the Borrower shall not be deemed to be in default in respect
of its obligation to make such payment until two Business Days
after the Administrative Agent shall have notified it of the
failure of such Lender to make such payment).
SECTION 2.06. Notes; Repayment of Loans. The
Revolving Loans and Term Loans made by each Lender shall be
evidenced by a Revolving Credit Note and a Term Note,
respectively, duly executed on behalf of the Borrower, dated the
Closing Date, in substantially the form attached hereto as
Exhibit A-1 or A-2, respectively, with the blanks appropriately
filled, payable to the order of such Lender in a principal amount
equal to such Lender's Revolving Credit Commitment, in the case
of its Revolving Credit Note, or Term Loan Commitment, in the
case of its Term Note. The outstanding principal balance of each
Loan, as evidenced by such a Note, shall be payable (a) in the
case of a Revolving Loan, on the last day of the Interest Period
applicable to such Loan and on the Maturity Date and (b) in the
case of a Term Loan, on the Maturity Date. Each Note shall bear
interest from the date of the first borrowing hereunder on the
outstanding principal balance thereof as set forth in
Section 2.08. Each Lender shall, and is hereby authorized by the
Borrower to, endorse on the schedule attached to each Note
delivered to such Lender (or on a continuation of such schedule
attached to such Note and made a part thereof), or otherwise to
record in such Lender's internal records, an appropriate notation
evidencing the date and amount of each Loan from such Lender,
each payment and prepayment of principal of any such Loan, each
payment of interest on any such Loan and the other information
provided for on such schedule; provided, however, that the
failure of any Lender to make such a notation or any error
therein shall not affect the obligation of the Borrower to repay
the Loans made by such Lender in accordance with the terms of
this Agreement and the applicable Notes.
SECTION 2.07. Fees. (a) The Borrower agrees to pay
to each Lender, through the Agent, on the Quarterly Dates in each
year, and on the date on which the Revolving Credit Commitment of
such Lender shall be terminated as provided herein, a commitment
fee (a "Commitment Fee") equal to the Applicable Commitment Fee
Rate per annum on the average daily unused amount of the
Revolving Credit Commitment of such Lender during the preceding
quarter (or shorter period commencing with the earlier of the
Closing Date and March 10, 1994, or ending with the Maturity Date
or the date on which the Revolving Credit Commitment of such
Lender shall be terminated). All Commitment Fees shall be
computed on the basis of the actual number of days elapsed in a
year of 365 or 366 days, as the case may be. The Commitment Fee
due to each Lender shall commence to accrue on the earlier of the
Closing Date and March 10, 1994, and shall cease to accrue on the
date on which the Revolving Credit Commitment of such Lender
shall be terminated as provided herein.
(b) The Borrower agrees to pay to each Lender, through
the Administrative Agent, on the Quarterly Dates in each year,
and on the date on which the Revolving Credit Commitment of such
Lender shall be terminated as provided herein, a utilization fee
(the "Utilization Fee") equal to (i) the average daily
outstanding principal amount of the Revolving Loans of such
Lender during the preceding quarter (or shorter period commencing
with the Closing Date or ending with the Maturity Date or the
date on which the Revolving Credit Commitment of such Lender
shall be terminated), multiplied by (ii) the Applicable
Utilization Rate per annum; provided, however, that a Utilization
Fee shall be paid in respect of a quarter or period only if the
Average Utilized Percentage during such quarter or period shall
have been greater than 50%. All Utilization Fees shall be
computed on the basis of the actual number of days elapsed in a
year of 365 or 366 days, as the case may be.
(c) The Borrower agrees to pay to the Administrative
Agent, for its own account, the administrative agent fee (the
"Administrative Agent Fee") separately agreed in writing between
the Borrower and the Administrative Agent, at the times and in
the amounts so agreed.
(d) All Fees shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for
prompt distribution, if and as appropriate, among the Co-Agents
and the Lenders. Once paid, none of the Fees shall be refundable
under any circumstances, absent manifest error.
SECTION 2.08. Interest on Loans. (a) Subject to the
provisions of Section 2.09, the Loans comprising each Base
Rate Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as
the case may be) at a rate per annum equal to the Base Rate plus
the Applicable Margin.
(b) Subject to the provisions of Section 2.09, the
Loans comprising each CD Rate Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over
a year of 360 days) at a rate per annum equal to the Adjusted CD
Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin.
(c) Subject to the provisions of Section 2.09, the
Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over
a year of 360 days) at a rate per annum equal to the Eurodollar
Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin.
(d) Subject to the provisions of Section 2.09, each
Money Market Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the fixed rate of interest offered
by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(e) Interest on each Loan shall be payable on the
Interest Payment Dates applicable to such Loan except as
otherwise provided in this Agreement. The applicable Base Rate,
Adjusted CD Rate or Eurodollar Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error in the determination
thereof.
SECTION 2.09. Default Interest. If the Borrower shall
default in the payment of the principal of any Loan or any other
amount becoming due hereunder, by acceleration or otherwise, the
Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount up to (but not
including) the date of actual payment at the applicable Post-
Default Rate.
SECTION 2.10. Termination and Reduction of
Commitments. (a) The Term Loan Commitments shall be
automatically terminated at 5:00 p.m., New York City time, on the
earlier of the Closing Date and April 1, 1994. The Revolving
Credit Commitments shall be automatically terminated on the
Maturity Date.
(b) Upon at least three Business Days' prior
irrevocable written or telecopy notice to the Administrative
Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the
Revolving Credit Commitments; provided, however, that each
partial reduction of the Commitments shall be in an integral
multiple of $1,000,000 and in a minimum principal amount of
$5,000,000.
(c) Each reduction in the Commitments hereunder shall
be made ratably among the Lenders in accordance with their
respective applicable Commitments (it being recognized that a
reduction may reduce the Revolving Credit Commitment of a Lender
to an amount less than the aggregate outstanding principal amount
of Revolving Loans made by such Lender if such Revolving Loans
include Money Market Loans). The Borrower shall pay to the
Administrative Agent for the account of the Lenders, on the date
of each termination or reduction, the Commitment Fees on the
amount of the Commitments so terminated or reduced accrued to the
date of such termination or reduction.
SECTION 2.11. Conversion and Continuation of Term
Borrowings. The Borrower shall have the right at any time upon
prior irrevocable notice to the Administrative Agent (i) not
later than 11:00 a.m., New York City time, on the day of
conversion, to convert any Borrowing comprised of Eurodollar Term
Loans or CD Term Loans into a Borrowing comprised of Base Rate
Term Loans, (ii) not later than 12:00 (noon), New York City time,
two Business Days prior to conversion or continuation, to convert
any Borrowing comprised of Eurodollar Term Loans or Base Rate
Term Loans into a Borrowing comprised of CD Term Loans or to
continue any Borrowing comprised of CD Term Loans as a Borrowing
comprised of CD Term Loans for an additional Interest Period,
(iii) not later than 12:00 (noon), New York City time, three
Business Days prior to conversion, to convert the Interest Period
with respect to any Borrowing comprised of CD Term Loans to
another permissible Interest Period, (iv) not later than 12:00
(noon), New York City time, three Eurodollar Business Days prior
to conversion or continuation, to convert any Borrowing comprised
of CD Term Loans or Base Rate Term Loans into a Borrowing
comprised of Eurodollar Term Loans or to continue any Borrowing
comprised of Eurodollar Term Loans as a Borrowing comprised of
Eurodollar Term Loans for an additional Interest Period, and
(v) not later than 12:00 (noon), New York City time, three
Eurodollar Business Days prior to conversion, to convert the
Interest Period with respect to any Borrowing comprised of
Eurodollar Term Loans to another permissible Interest Period,
subject in each case to the following:
(a) each conversion or continuation shall be made pro
rata among the Lenders in accordance with the respective
principal amounts of the Loans comprising the converted or
continued Term Borrowing;
(b) if less than all the outstanding principal amount
of any Term Borrowing shall be converted or continued, the
aggregate principal amount of such Term Borrowing converted
or continued shall be an integral multiple of $1,000,000 and
not less than $5,000,000;
(c) each conversion shall be effected by each Lender by
applying the proceeds of the new Term Loan of such Lender
resulting from such conversion to the Term Loan (or portion
thereof) of such Lender being converted; accrued interest on
a Term Loan (or portion thereof) being converted shall be
paid by the Borrower at the time of conversion;
(d) if any Borrowing comprised of CD Term Loans or
Eurodollar Term Loans is converted at a time other than the
end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 3.05;
(e) a Term Borrowing may not be converted into or
continued as a Borrowing comprised of CD Term Loans if the
Maturity Date will occur in less than 30 days;
(f) a Term Borrowing may not be converted into or
continued as a Borrowing comprised of Eurodollar Term Loans
if the Maturity Date will occur in less than one month; and
(g) any portion of a Borrowing comprised of CD Term
Loans or Eurodollar Term Loans which cannot be converted
into or continued as a Borrowing comprised of CD Term Loans
or Eurodollar Term Loans by reason of clauses (e) and (f)
above shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into a Term
Borrowing comprised of Base Rate Term Loans.
Each notice pursuant to this Section 2.11 shall be
irrevocable and shall refer to this Agreement and specify (i) the
identity and amount of the Term Borrowing that the Borrower
requests be converted or continued, (ii) whether such Term
Borrowing is to be converted to or continued as a Term Borrowing
comprised of CD Term Loans, a Term Borrowing comprised of
Eurodollar Term Loans or a Term Borrowing comprised of Base Rate
Term Loans, (iii) if such notice requests a conversion, the date
of such conversion (which shall be a Eurodollar Business Day, in
the case of conversion to a Borrowing comprised of Eurodollar
Term Loans, or a Business Day, in the case of conversion to a
Borrowing comprised of CD Term Loans or Base Rate Term Loans) and
(iv) if such Term Borrowing is to be converted to or continued as
a Borrowing comprised of CD Term Loans or Eurodollar Term Loans,
the Interest Period with respect thereto. If no Interest Period
is specified in any such notice with respect to any conversion to
or continuation as a Borrowing comprised of CD Term Loans or
Eurodollar Term Loans, the Borrower shall be deemed to have
selected an Interest Period of 30 days' duration, in the case of
a Borrowing comprised of CD Term Loans, or one month's duration,
in the case of a Borrowing comprised of Eurodollar Term Loans.
The Administrative Agent shall advise the other Lenders of any
notice given or deemed given pursuant to this Section 2.11 and of
each Lender's portion of any converted or continued Term
Borrowing. If the Borrower shall not have given notice in
accordance with this Section 2.11 to continue any Term Borrowing
into a subsequent Interest Period (and shall not otherwise have
given notice in accordance with this Section 2.11 to convert such
Term Borrowing), such Term Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the
terms hereof), automatically be continued into a new Interest
Period as a Borrowing comprised of Base Rate Term Loans.
SECTION 2.12. Prepayment. (a) The Borrower shall
have the right at any time and from time to time to prepay any
Revolving Credit Borrowing or Term Borrowing, in whole or in
part, upon prior written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) to the
Administrative Agent; provided, however, that each partial
prepayment shall be in an amount which is an integral multiple of
$1,000,000 and not less than $5,000,000. Such notice shall be
given (i) in the case of a Eurodollar Borrowing or a CD Rate
Borrowing, at least three Business Days prior to the prepayment
date and (ii) in the case of a Base Rate Borrowing, not later
than 12:00 (noon), New York City time, on the prepayment date.
(b) On the date of any termination or reduction of the
Revolving Credit Commitments pursuant to Section 2.10, the
Borrower shall pay or prepay so much of the Standby Borrowings as
shall be necessary in order that the aggregate principal amount
of the Revolving Loans outstanding will not exceed the Total
Revolving Credit Commitment after giving effect to such
termination or reduction.
(c) The Required Lenders shall have the right, at
their option and upon notice to the Borrower, to demand
prepayment of all Loans and termination of all Commitments in the
event of (i) a consolidation or merger involving the Borrower, if
the Borrower or a Restricted Subsidiary shall not be the
successor or surviving corporation, (ii) a sale or other
disposition by the Borrower of its assets as an entirety or
substantially as an entirety or (iii) a Change in Control;
provided, however, that such right must be exercised and such
notice given within the period of 60 days following any such
event. The Lenders acknowledge that such demand for prepayment
of the Loans and termination of the Commitments pursuant to this
Section 2.12(c) shall in no event constitute a Default or Event
of Default. The Borrower shall prepay all Loans and terminate
all Commitments within five Business Days following receipt of
such a notice from the Administrative Agent, at the request of
the Required Lenders.
(d) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Borrowing (or
portion thereof) to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Borrowing by the amount stated
therein on the date stated therein. All prepayments under this
Section 2.12 shall be subject to Section 3.05 but otherwise
without premium or penalty. All prepayments under this Section
2.12 shall be accompanied by accrued interest on the principal
amount being prepaid to the date of payment.
SECTION 2.13. Pro Rata Treatment. Except as required
under Section 3.04 or 3.06: (i) each Term Borrowing, each
payment or prepayment of principal of any Term Borrowing, each
payment of interest on the Term Loans and each conversion of any
Term Borrowing to or continuation of any Term Borrowing as a
Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective Term Loan Commitments
(or, if such Commitments shall have expired or been terminated,
in accordance with the respective principal amounts of their
outstanding Term Loans); (ii) each Standby Borrowing and each
refinancing of any Standby Borrowing shall be allocated pro rata
among the Lenders in accordance with their Available Standby
Commitments; (iii) each payment of Commitment Fees or Utilization
Fees shall be allocated pro rata among the Lenders in accordance
with the respective Commitment Fees or Utilization Fees, as the
case may be, owed to the Lenders; (iv) each reduction of the
Commitments shall be allocated pro rata among the Lenders in
accordance with their respective Commitments; (v) each payment of
principal of any Revolving Credit Borrowing shall be allocated
pro rata among the Lenders participating in such Borrowing in
accordance with the respective principal amounts of their
outstanding Revolving Loans comprising such Borrowing; and
(vi) each payment of interest on any Revolving Credit Borrowing
shall be allocated pro rata among the Lenders participating in
such Borrowing in accordance with the respective amounts of
accrued and unpaid interest on their outstanding Revolving Loans
comprising such Borrowing. Each Lender agrees that in computing
such Lender's portion of any Borrowing to be made hereunder, the
Agent may, in its discretion, round each Lender's percentage of
such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.14. Sharing of Setoffs. Each Lender agrees
that if it shall, through the exercise of a right of banker's
lien, setoff or counterclaim against the Borrower, or pursuant
to, a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Lender under any
applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or
involuntary) in respect of any Loan or Loans as a result of which
the unpaid principal portion of its Term Loans and Revolving
Loans shall be proportionately less than the unpaid principal
portion of the Term Loans or Revolving Loans, as the case may be,
of any other Lender, it shall be deemed simultaneously to have
purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a
participation in the applicable Loans of such other Lender, so
that the aggregate unpaid principal amount of such Loans and
participations in such Loans held by each Lender shall be in the
same proportion to the aggregate unpaid principal amount of all
such Loans then outstanding as the principal amount of its Term
Loans and Revolving Loans prior to such exercise of banker's
lien, setoff or counterclaim or other event was to the principal
amount of all such Term Loans or Revolving Loans, as the case may
be, outstanding prior to such exercise of banker's lien, setoff
or counterclaim or other event; provided, however, that, if any
such purchase or purchases or adjustments shall be made pursuant
to this Section 2.14 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without
interest. The Borrower expressly consents to the foregoing
arrangements and agrees that any Lender holding a participation
in a Loan deemed to have been so purchased may exercise any and
all rights of banker's lien, setoff or counterclaim with respect
to any and all moneys owing by the Borrower to such Lender by
reason thereof as fully as if such Lender had made a Loan
directly to the Borrower in the amount of such participation.
SECTION 2.15. Payments. (a) The Borrower shall make
each payment of principal and interest hereunder in respect of
any Money Market Loan not later than 4:00 p.m., New York City
time, on the date when due in dollars to the Applicable Lending
Office of the Lender that made such Loan in immediately available
funds. The Borrower shall make each other payment (including
principal of or interest on any Term Borrowing or Standby
Borrowing or any Fees or other amounts) hereunder not later than
3:00 p.m., New York City time, on the date when due in dollars to
the Administrative Agent at its offices designated pursuant to
Section 10.14 in immediately available funds.
(b) Whenever any payment (including principal of or
interest on any Borrowing or any Fees or other amounts) hereunder
shall become due, or otherwise would occur, on a day that is not
a Eurodollar Business Day (in the case of Eurodollar Loans) or a
Business Day (in all other cases), such payment may be made on
the next succeeding Eurodollar Business Day (unless such next
succeeding Eurodollar Business Day is the first Eurodollar
Business Day of a calendar month, in which case such date shall
be the next preceding Eurodollar Business Day) or Business Day,
as the case may be, and such extension of time shall in such case
be included in the computation of interest or Fees, if appli-
cable.
SECTION 2.16. Taxes. (a) Any and all payments by the
Borrower hereunder shall be made, in accordance with
Section 2.15, free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto,
excluding (i) in the case of each Lender and each Agent, taxes
that would not be imposed but for a connection between such
Lender or such Agent (as the case may be) and the jurisdiction
imposing such tax, other than a connection arising solely by
virtue of the activities of such Lender or such Agent (as the
case may be) pursuant to or in respect of this Agreement or under
any other Loan Document, including, without limitation, entering
into, lending money or extending credit pursuant to, receiving
payments under, or enforcing, this Agreement or any other Loan
Document, and (ii) in the case of each Lender, any withholding
taxes payable with respect to payments hereunder or under the
other Loan Documents under laws (including, without limitation,
any statute, treaty, ruling, determination or regulation) in
effect on the Initial Date (as hereinafter defined) for such
Lender, and on the date, if any, on which such Lender changes any
Applicable Lending Office by designating a different Applicable
Lending Office (a "New Lending Office"), but not excluding any
withholding taxes payable solely as a result of any change in
such laws occurring after the Initial Date or the designation of
such New Lending Office, as the case may be, (all such non-
excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). For purposes of this Section 2.16, the term "Initial
Date" shall mean (i) in the case of each Lender as of the date of
this Agreement, the date of this Agreement, and (ii) in the case
of any other Lender, the effective date specified in the Notice
of Assignment delivered when such Lender became a Lender. If any
Taxes shall be required by law to be deducted from or in respect
of any sum payable hereunder or under any other Loan Document to
any Lender or any Agent (i) the sum payable by the Borrower shall
be increased as may be necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 2.16) such Lender or
Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or
any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower will indemnify each Lender and each
Agent for the full amount of Taxes and Other Taxes paid by such
Lender or such Agent, as the case may be, and any liability
(including interest and penalties, if any) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted by the relevant taxing
authority or other Governmental Authority. Such indemnification
shall be made within 30 days after the date any Lender or Agent,
as the case may be, makes written demand therefor. If a Lender
or an Agent shall become aware that it is entitled to receive a
refund (including interest and penalties, if any) in respect of
Taxes or Other Taxes as to which it has been indemnified by the
Borrower pursuant to this Section 2.16, it shall promptly notify
the Borrower of the availability of such refund and shall, within
30 days after receipt of a request by the Borrower, apply for
such refund at the Borrower's expense. If any Lender or Agent
receives a refund in respect of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower pursuant to this
Section 2.16, it shall promptly notify the Borrower of such
refund and shall, within 30 days after receipt of a request by
the Borrower (or promptly upon receipt, if the Borrower has
requested application for such refund pursuant hereto), repay
such refund (including interest and penalties, if any) to the
Borrower (to the extent of amounts that have been paid by the
Borrower under this Section 2.16 with respect to such refund),
net of all out-of-pocket expenses of such Lender or Agent;
provided that the Borrower, upon the request of such Lender or
Agent, agrees to return such refund (including interest and
penalties, if any) to such Lender or Agent in the event such
Lender or Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of
Taxes or Other Taxes withheld by the Borrower in respect of any
payment to any Lender or any Agent, the Borrower will furnish to
the Administrative Agent, at its address referred to in Sec-
tion 10.14, the original or a certified copy of a receipt
evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations
contained in this Section 2.16 shall survive the payment in full
of the principal of and interest on all Loans made hereunder.
(f) At least five Business Days prior to the first
date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under
the laws of the United States of America, or a state thereof (a
"Non-U.S. Lender"), agrees that it will deliver to each of the
Borrower and the Administrative Agent two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Non-U.S. Lender is entitled
to receive payments under the Loan Documents without deduction or
withholding of any United States Federal income taxes. Each Non-
U.S. Lender that so delivers a Form 1001 or 4224 further under-
takes to deliver to each of the Borrower and the Administrative
Agent two additional copies of such form (or a successor form) on
or before the date that such form expires or becomes invalid or
obsolete, or on or before the date, if any, such Non-U.S. Lender
designates a New Lending Office, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by
the Borrower or the Administrative Agent, in each case certifying
that such Lender is entitled to receive payments under the Loan
Documents without deduction or withholding of, or at a reduced
rate of withholding of, any United States Federal income taxes.
Notwithstanding any other provision of this Section 2.16(f), a
Non-U.S. Lender shall not be required to deliver any form
pursuant to this Section 2.16(f) that such Non-U.S. Lender is not
legally able to deliver.
(g) The Borrower shall not be required to indemnify
any Non-U.S. Lender, or to pay any additional amounts to any Non-
U.S. Lender, in respect of United States Federal withholding tax
pursuant to paragraph (a) or (c) above to the extent that (i) the
obligation to pay such additional amounts would not have arisen
but for a failure by such Lender to comply with the provisions of
paragraph (f) above or (ii) the obligation to withhold amounts
with respect to United States Federal withholding tax existed on
the Initial Date in respect of such Non-U.S. Lender or, with
respect to payments to a New Lending Office, the date such Non-
U.S. Lender designated such New Lending Office with respect to a
Loan.
(h) Any Lender or Agent claiming any additional
amounts payable pursuant to this Section 2.16 shall use
reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document requested by
the Borrower or to change the jurisdiction of its Applicable
Lending Office if the making of such a filing or change would
avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue and would not, in the sole
determination of such Lender, be otherwise disadvantageous to
such Lender.
(i) Each Lender represents and warrants to the
Borrower that, as of the Initial Date in respect of such Lender,
it is not subject to any withholding of Taxes and would not be
entitled to any indemnification payments under this Section 2.16
with respect to payments made by the Borrower to such Lender
pursuant to this Agreement or any other Loan Document.
ARTICLE III. YIELD PROTECTION AND ILLEGALITY
SECTION 3.01. Additional Costs. (a) If, as a result
of any Regulatory Change:
(i) the basis of taxation of payments to any Lender of
the principal of or interest on any Loan (other than a Base
Rate Loan) or any other amounts payable under this Agreement
in respect thereof (other than in respect of (x) taxes
covered by Section 2.16, (y) taxes imposed on the overall
net income, regardless of how measured, including but not
limited to gross receipts, net worth and asset base, of such
Lender or of its Applicable Lending Office for Loans of such
Type by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office or
(z) increases in taxes imposed on such Lender or any
Applicable Lending Office as a result of a move of its
principal office or any Applicable Lending Office to a
different tax jurisdiction) is changed; or
(ii) any reserve, special deposit or similar
requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, any
Lender are imposed, modified or deemed applicable; or
(iii) any other condition affecting this Agreement or any
Loan (other than a Base Rate Loan) is imposed on any Lender;
and such Lender determines that, by reason thereof, the cost to
such Lender of making or maintaining any of its Loans (other than
Base Rate Loans) is increased, or any amount receivable by such
Lender hereunder in respect of any of such Loans is reduced, in
each case by an amount deemed by such Lender to be material (such
increases in cost and reductions in amounts receivable being
herein called "Increased Costs"), then the Borrower shall pay to
such Lender upon its written request such additional amount or
amounts as will compensate such Lender for such Increased Costs.
Such Lender will notify the Borrower and the Administrative Agent
of any event occurring after the date hereof which will entitle
such Lender to compensation pursuant to this Section 3.01(a) as
promptly as practicable after it obtains knowledge thereof and
determines to request such compensation, and will designate a
different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation
and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender. If any Lender requests
compensation under this Section 3.01(a), the Borrower may, by
notice to such Lender and the Administrative Agent, require that:
(x) such Lender furnish to the Borrower a statement setting forth
the basis for requesting such compensation and the method for
determining the amount thereof; or (y) the Loans of the Type with
respect to which such compensation is requested be either prepaid
or converted into Loans of another Type in accordance with
Section 3.04. Notwithstanding the foregoing, no Lender shall be
entitled to request compensation under this Section 3.01(a) with
respect to any Money Market Loan if the Regulatory Change giving
rise to such request shall, or in good faith should, have been
taken into account in formulating the Money Market Bid pursuant
to which such Money Market Loan shall have been made.
(b) Without limiting (but without duplicating) the
effect of the foregoing provisions of this Section 3.01, upon
written request from any Lender to the Borrower and the
Administrative Agent, the Borrower shall pay to such Lender on
the last day of each Interest Period for any Eurodollar Loan, so
long as such Lender may be required to maintain reserves against
"Eurocurrency Liabilities" under Regulation D of the Board, an
additional amount equal to the product of the following for each
such Eurodollar Loan for each day during such Interest Period:
(i) the principal amount of such Eurodollar Loan
outstanding on such day;
(ii) the remainder of (x) a fraction the numerator of
which is the Eurodollar Rate (expressed as a decimal) and
the denominator of which is one minus the applicable
percentage rate, if any, stated in Regulation D of the Board
at which reserves are to be maintained under said
Regulation D for such day during such Interest Period
against "Eurocurrency Liabilities" (but only to the extent
such reserves were actually maintained by such Lender on
such day) minus (y) the Eurodollar Rate; and
(iii) 1/360.
(c) Without limiting (but without duplicating) the
effect of the foregoing, if at any time any Lender shall have
determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by such Lender (or its Applicable Lending Office) with any
request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect 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 adoption, change or compliance
(taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such
Lender for such reduction; provided, however, that to the extent
any reduction in the rate of return on such Lender's capital
results both from its obligations hereunder and from developments
in its business or financial position not related to this
Agreement, such Lender shall, in determining the amount necessary
to compensate it under this paragraph, attempt in good faith to
take account of the relative contributions of such obligations
hereunder and such other developments or change in its financial
position to such reduction.
(d) Each Lender will promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender
to compensation under this Section 3.01, and will designate a
different Applicable Lending Office for each affected Loan if
such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the sole judgment of such
Lender, be otherwise disadvantageous to such Lender. A
certificate of such Lender setting forth the additional amount or
amounts required to compensate such Lender in respect of any
Increased Costs, the changes as a result of which such amounts
are due and the manner of computing such amounts shall be deemed
conclusive, provided that the determinations set forth in such
certificate are made reasonably and in good faith. The Borrower
shall not be obligated to compensate any Lender pursuant to this
Section 3.01 for Increased Costs or other amounts accruing prior
to the date which is 270 days before such Lender requests
compensation. Notwithstanding any other provision of this
Section 3.01, no Lender shall demand compensation for any
increased cost or reduction referred to above if it shall not at
the time be the general policy or practice of such Lender to
demand such compensation in similar circumstances under
comparable provisions of other credit agreements, if any. In the
event a Borrower shall reimburse any Lender pursuant to this
Section 3.01 for any cost and the Lender shall subsequently
receive a refund in respect thereof, the Lender shall so notify
the Borrower and, upon its request, will pay to the Borrower the
portion of such refund which it shall determine in good faith to
be allocable to the cost so reimbursed.
SECTION 3.02. Limitation on Types of Loans. Anything
herein to the contrary notwithstanding, if, on or prior to the
determination of an interest rate under Section 2.08 for any CD
Rate Loans or Eurodollar Loans for any period:
(i) the Administrative Agent determines (which
determination shall be conclusive), based on communications
with the Reference Banks, that quotations of interest rates
for the relevant deposits are not being provided by the
relevant Persons in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest
for such Loans under this Agreement, or
(ii) any Lender (an "Affected Lender") shall have
determined (which determination shall be conclusive) and
shall have notified the Administrative Agent that the rates
of interest referred to in the definitions of "Eurodollar
Rate" or "CD Base Rate" upon the basis of which the rate of
interest on any CD Rate Loans or Eurodollar Loans are to be
determined for such period do not accurately reflect the
cost to such Lender of making or maintaining such Loans for
such period;
then the Administrative Agent shall give the Borrower prompt
notice thereof, and so long as such condition remains in effect,
the Lenders (in the case of clause (i)) or the Affected Lender
(in the case of clause (ii)) shall be under no obligation to make
Loans of such Type or to convert Loans of any other Type into
Loans of such Type and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Loans of
the affected Type of all Lenders (in the case of clause (i)) or
the Affected Lender (in the case of clause (ii)), prepay such
Loans in accordance with Section 2.12, convert such Loans into
another Type or Types of Loans in accordance with Section 2.11 or
refinance such Loans into another Type or Types of Loans in
accordance with Section 2.05. In the case of clause (ii), all
Loans which would otherwise be made by an Affected Lender as
Loans of the affected Type shall be made instead as Base Rate
Loans and all Loans of such Affected Lender which would otherwise
be converted into Loans of the affected Type shall be converted
instead into (or shall remain as) Base Rate Loans.
SECTION 3.03. Illegality. Notwithstanding any other
provision in this Agreement, in the event that it becomes
unlawful for any Lender or the Applicable Lending Office of any
Lender to (i) honor its obligation to make Eurodollar Loans
hereunder, or (ii) maintain Eurodollar Loans hereunder, then such
Lender shall promptly notify the Borrower and the Administrative
Agent thereof and such Lender's obligation to make Eurodollar
Loans and to convert other Types of Loans into Eurodollar Loans
hereunder shall be suspended until such time as such Lender may
again make and maintain Eurodollar Loans and such outstanding
Eurodollar Loans shall be either prepaid or converted into Base
Rate Loans in accordance with Section 3.04. Before giving any
notice to the Borrower pursuant to this Section 3.03, such Lender
will designate a different Applicable Lending Office for each
affected Loan if such designation will avoid the need for giving
such notice hereunder and will not, in the sole judgment of such
Lender, be otherwise disadvantageous to such Lender.
SECTION 3.04. Certain Prepayments or Conversions. If
Loans of one Type (Loans of such Type being herein called
"Affected Loans" and such Type being herein called the "Affected
Type") are to be either prepaid or converted pursuant to
Section 3.01 or 3.03, such Affected Loans shall be prepaid or
automatically converted into Loans of another Type, as the
Borrower may elect by notice to the relevant Lender and the
Administrative Agent (provided that, if the Borrower fails to
give such notice prior to the date two Business Days, if the
Affected Loans are or are to be converted into CD Rate Loans or
Money Market Loans, or three Eurodollar Business Days, if the
Affected Loans are or are to be converted into Eurodollar Loans,
before the last day of the first to expire of the then current
Interest Periods for the Affected Loans, such Loans will be
automatically converted into Base Rate Loans), in either case on
the last day(s) of the then current Interest Period(s) for the
Affected Loans (or, in the case of a prepayment or conversion
required by Section 3.03, on such earlier date as such Lender may
specify to the Borrower) and, unless and until such Lender gives
notice as provided below that the circumstances specified in
Section 3.01 or 3.03 which gave rise to such prepayment or
conversion no longer exists:
(i) all payments and prepayments of principal which
would otherwise be applied to Loans of the Affected Type
that would have been made by such Lender or to the converted
Affected Loans shall instead be applied to repay the Loans
made by such Lender in lieu thereof or resulting from the
conversion of such Affected Loans;
(ii) all Loans which would otherwise be made by such
Lender as Loans of the Affected Type shall be made instead
as Base Rate Loans and all Loans of such Lender which would
otherwise be converted into Loans of the Affected Type shall
be converted instead into (or shall remain as) Base Rate
Loans.
SECTION 3.05. Indemnification. The Borrower shall pay
to a Lender, upon the request of such Lender, such amount or
amounts as shall compensate such Lender for any loss, cost or
expense incurred by such Lender as a result of:
(i) any payment, prepayment or conversion of a Fixed
Rate Loan on a date other than the last day of an Interest
Period for such Loan; or
(ii) any failure by the Borrower to borrow, convert or
prepay a Fixed Rate Loan on the date for such borrowing,
conversion or prepayment specified in the relevant notice of
borrowing, conversion or prepayment under Section 2.03,
2.04, 2.11 or 2.12;
such compensation to include, without limitation, an amount equal
to the excess, if any, of (a) the amount of interest which would
have accrued on the amount so paid, prepaid or converted or not
borrowed, converted or prepaid for the period from the date of
such payment, prepayment or conversion or failure to borrow,
convert or prepay to the last date of the then current Interest
Period for such Fixed Rate Loan (or, in the case of a failure to
borrow, convert or prepay, the Interest Period for such Fixed
Rate Loan which would have commenced on the date of such failure
to borrow, convert or prepay) at the applicable rate of interest
for such Fixed Rate Loan provided for herein over (b) the amount
of interest (as reasonably determined by such Lender) such Lender
would have paid on Eurodollar deposits or certificates of deposit
(as the case may be) of comparable amounts having terms
comparable to such period placed with it by leading banks in the
London interbank Eurodollar market or the New York certificate of
deposit market (as the case may be).
SECTION 3.06. Termination or Assignment of Commitments
Under Certain Circumstances. In the event that the Borrower
shall be required to make additional payments to any Lender under
Section 2.16, or any Lender shall have delivered a notice or
certificate pursuant to Section 3.01, 3.02(ii) or 3.03, the
Borrower shall have the right, at its own expense, upon notice to
such Lender and the Administrative Agent (a) to terminate the
Commitments of such Lender (other than during the continuance of
a Default or an Event of Default) or (b) to require such Lender
to transfer and assign without recourse (in accordance with and
subject to the restrictions contained in Section 9.03) all its
interests, rights and obligations under this Agreement to another
Institutional Lender which shall assume such obligations,
provided that (i) no such termination or assignment shall
conflict with any law, rule, regulation or order of any
Governmental Authority, and (ii) the Borrower or the assignee, as
the case may be, shall pay to the affected Lender in immediately
available funds on the date of such termination or assignment the
principal of and interest accrued to the date of payment on the
Loans made by it hereunder and all other amounts accrued for its
account or owed to it hereunder.
ARTICLE IV. CONDITIONS PRECEDENT
SECTION 4.01. The Initial Loan. The obligations of
the Lenders to make their initial Loans hereunder are subject to
satisfaction of the following conditions on the Closing Date:
(i) the Administrative Agent shall have been furnished
with (a) a copy of the Restated Articles of Incorporation,
including all amendments thereto, of the Borrower, certified
as of a recent date by the Secretary of State of the state
of its organization, and a certificate as to the good
standing of the Borrower as of a recent date, from such
Secretary of State; (b) a certificate of the Secretary or
Assistant Secretary of the Borrower dated the Closing Date
and certifying (1) that attached thereto is a true and
complete copy of the by-laws of the Borrower as in effect on
the Closing Date and at all times since a date prior to the
date of the resolutions described in clause (2) below, (2)
that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors
authorizing the execution, delivery and performance of the
Loan Documents and the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and
are in full force and effect, and (3) that the Restated
Articles of Incorporation of the Borrower have not been
amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to
clause (a) above;
(ii) the Administrative Agent shall have received (a) an
opinion of the Vice President-Law and Secretary of the
Borrower substantially in the form attached hereto as
Exhibit C-1 and (b) an opinion of Cravath, Swaine & Moore,
special counsel to the Borrower, in the form of Exhibit C-2;
(iii) the Administrative Agent shall have received a
certificate of a financial officer of the Borrower, dated
the Closing Date, certifying that each of the repre-
sentations and warranties made by the Borrower herein is
true in all material respects as if made on and as of the
Closing Date;
(iv) the Administrative Agent shall have received a
certificate of a duly authorized officer of the Borrower as
to the incumbency, and setting forth a specimen signature,
of each of the persons (a) who has signed this Agreement on
behalf of the Borrower; (b) who will sign the Notes on
behalf of the Borrower; and (c) who will, until replaced by
other persons duly authorized for that purpose, act as the
representatives of the Borrower for the purpose of signing
documents in connection with this Agreement and the
transactions contemplated hereby;
(v) the Administrative Agent shall have received, on
behalf of each Lender, a duly executed Term Note and
Revolving Credit Note;
(vi) all consents and approvals necessary on the Closing
Date for the valid execution, delivery and performance by
the Borrower of this Agreement and the Notes shall have been
obtained and shall be in full force and effect;
(vii) the Administrative Agent shall have received copies
of all consents and approvals of any Governmental Authority
necessary on the Closing Date for the valid execution,
delivery and performance by the Borrower of this Agreement
and the Notes;
(viii) the Borrower and each Restricted Subsidiary shall
be in compliance with the requirements of all applicable
laws, rules, regulations, and orders (other than laws,
rules, regulations, and orders which are not final and are
being contested in good faith by proper proceedings) of any
Governmental Authority (including ERISA, Labor Laws and
Environmental Laws), noncompliance with which would
materially adversely affect its business or credit;
(ix) the Borrower and each Restricted Subsidiary shall
have in place insurance with reputable insurance companies
or associations (or, to the extent consistent with prudent
business practice, through its own program of self-
insurance) in such amounts and covering such risks as is
usually carried by companies in similar businesses and
owning similar properties in the same general areas in which
the Borrower or such Restricted Subsidiary operates;
(x) there shall be no material actions, suits, or
proceedings pending against or affecting the Borrower or any
of its Subsidiaries or the properties of the Borrower or any
of its Subsidiaries before any Governmental Authority that
have not been disclosed in writing to the Lenders (including
through the delivery of reports and statements filed by the
Borrower with the Securities and Exchange Commission) prior
to the Closing Date;
(xi) the Borrower shall, on a basis that is satisfactory
to the Administrative Agent (having consulted with the
relevant Lender with respect to each Existing Lender Credit
Agreement) and is substantially contemporaneous with the
first Borrowing hereunder on the Closing Date (A) have
repaid in full the principal of and accrued interest on all
loans and other amounts outstanding under the Existing
Lender Credit Agreements and (B) have terminated the
Existing Lender Credit Agreements and all commitments
thereunder; provided, however, that (without limiting the
obligation of the Borrower under the Existing Lender Credit
Agreements to pay principal, interest, fees and other
amounts) each Lender party to an Existing Credit Agreement
agrees that the Borrower may terminate the commitments
thereunder and prepay any outstanding amounts thereunder
with the proceeds of Borrowings hereunder, in each case on
the Closing Date and notwithstanding any notice requirements
or other restrictions applicable thereto (which requirements
and restrictions are hereby waived) and that a Term
Borrowing hereunder shall be deemed notice thereunder to
terminate all such commitments and prepay all amounts
outstanding thereunder on the date of such Term Borrowing;
and
(xii) the Administrative Agent shall have received all
Fees and other amounts due and payable hereunder on or prior
to the Closing Date.
SECTION 4.02. Each Loan. The obligations of the
Lenders to make Loans hereunder in respect of a Borrowing shall
be subject to the satisfaction of the following conditions on the
date of such Borrowing:
(i) receipt by the Administrative Agent of a notice of
borrowing to the extent required by Section 2.04, such
notice and each Borrowing pursuant to such notice to consti-
tute a certification by the Borrower that, as of the date of
such notice or such Borrowing, as the case may be (a) no
Default or Event of Default has occurred and is continuing
and (b) each of the representations and warranties made by
the Borrower herein, except, in the case of a Refunding
Borrowing, the representations and warranties set forth in
Section 5.07(b) as to any material adverse change and in
Section 5.08, is true and correct in all material respects
as if made on and as of such dates, it being expressly
understood and agreed, however, that, to the extent that any
change in the consolidated financial condition or results of
operations of the Borrower is attributable to (a) any Labor
Dispute affecting the Borrower's Coal Operations or (b) any
non-cash write-down or write-off in the book value of any
asset or any loss on the sale of any asset after
December 31, 1993, such change shall not be deemed a
material adverse change for purposes of Section 5.07(b) or
this Section 4.02; and
(ii) immediately after the making of such Borrowing no
Default or Event of Default shall have occurred and be
continuing.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the
Lenders as follows:
SECTION 5.01. Corporate Existence. (a) The Borrower
is duly organized, validly existing and in good standing under
the laws of the Commonwealth of Virginia; (b) the Borrower
(i) has the requisite power and authority to own its property and
assets and to carry on its business as now conducted and (ii) is
qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to qualify
would not have a material adverse effect on the condition,
financial or otherwise, of the Borrower and its Subsidiaries
taken as a whole. The Borrower has the corporate power to
execute and deliver and to perform its obligations under the Loan
Documents and to borrow hereunder.
SECTION 5.02. Non-Contravention. The execution,
delivery, and performance by the Borrower of the Loan Documents
have been duly authorized by all necessary corporate action and
do not and will not (i) require any consent or approval of the
shareholders of the Borrower, (ii) violate any provision of any
law, rule, regulation (including, without limitation,
Regulation G, U or X of the Board), order, writ, judgment,
injunction, decree, determination, or award presently in effect
having applicability to the Borrower or any Restricted Subsidiary
or of the charter or bylaws of the Borrower or any Restricted
Subsidiary, (iii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other
agreement, lease, or instrument to which the Borrower or any
Restricted Subsidiary is a party or by which it or its properties
may be bound or affected, or (iv) result in the creation of an
Encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower or any
Restricted Subsidiary; and the Borrower and each Restricted
Subsidiary is not in default under any such order, writ,
judgment, injunction, decree, determination, or award or any such
indenture, agreement, lease, or instrument or in default under
any such law, rule, or regulation, which default would have a
material adverse effect on the consolidated assets, properties,
or financial condition of the Borrower and its Restricted
Subsidiaries.
SECTION 5.03. No Consent. No authorization, consent,
approval, license, exemption of, or filing or registration with,
or any other action in respect of any Governmental Authority is
or will be necessary for the valid execution, delivery or
performance by the Borrower of the Loan Documents.
SECTION 5.04. Binding Obligations. The Loan Documents
constitute legal, valid, and binding obligations of the Borrower
enforceable against the Borrower in accordance with their
respective terms.
SECTION 5.05. Title to Properties. The Borrower and
each Restricted Subsidiary has good and marketable title to all
of the material assets and properties purported to be owned by
it, free and clear of all liens except such as are permitted by
Section 6.02(i) and except for covenants, restrictions, rights,
easements and minor irregularities in title which do not
interfere with the occupation, use and enjoyment by the Borrower
or the respective Restricted Subsidiaries of such properties and
assets in the normal course of business as presently conducted or
materially impair the value thereof for such business.
SECTION 5.06. Subsidiaries. All the outstanding
shares of the Borrower's Subsidiaries shown in Schedule 5.06
hereto as being owned by the Borrower or any of its Subsidiaries
have been duly authorized and validly issued, are fully paid and
nonassessable and are free and clear of any Encumbrance except as
set forth on Schedule 6.02. No Subsidiary owns any shares of the
Borrower. Each of the Subsidiaries of the Borrower is duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its organization; and each of the
Subsidiaries of the Borrower (i) has the requisite power and
authority to own its property and assets and to carry on its
business as now conducted and (ii) is qualified to do business in
every jurisdiction where such qualification is required, except
where the failure so to qualify would not have a material adverse
effect on the condition, financial or otherwise, of the Borrower
and its Subsidiaries taken as a whole.
SECTION 5.07. Financial Statements. (a) The consoli-
dated balance sheet of the Borrower and its Subsidiaries as at
December 31, 1992, and the related consolidated statements of
operations, shareholders' equity and cash flow of the Borrower
and its Subsidiaries for the fiscal year then ended, certified by
KPMG Peat Marwick, independent public accountants, copies of
which have been delivered to the Lenders, fairly present the
consolidated financial condition of the Borrower and its
Subsidiaries as at such date and the consolidated results of the
operations of the Borrower and its Subsidiaries for the period
ended on such date, all prepared in accordance with GAAP applied
on a consistent basis.
(b) The unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at December 31, 1993, the
related unaudited consolidated statement of operations of the
Borrower and its Subsidiaries for the fiscal year then ended, and
the related unaudited consolidated statement of cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended,
copies of which have been delivered to the Lenders, fairly
present the consolidated financial condition of the Borrower and
its Subsidiaries as at such date and the consolidated results of
the operations of the Borrower and its Subsidiaries for the
period ended on such date, subject to normal recurring year-end
adjustments, all prepared in accordance with GAAP (except for the
omission of notes) applied on a consistent basis; and there has
been no material adverse change in such condition or operations
since December 31, 1993.
SECTION 5.08. Litigation. Except as otherwise
disclosed in writing to the Lenders, including through the
delivery of reports and statements filed by the Borrower with the
Securities and Exchange Commission and through disclosure
contained in documents provided to the Lenders pursuant to
Section 6.03(iv), there are no material actions, suits, or
proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its
Subsidiaries or the properties of the Borrower or any Sub-
sidiaries before any Governmental Authority or arbitrator, and
neither the Borrower nor any of its Subsidiaries is in default
(in any respect which might have a material adverse effect on the
ability of the Borrower to perform its obligations hereunder or
under the Notes) with respect to any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
presently in effect and applicable to the Borrower or any of its
Subsidiaries.
SECTION 5.09. Taxes. The Borrower and each Restricted
Subsidiary has filed all material tax returns (Federal, state,
and local) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, or provided adequate
reserves, in accordance with GAAP, for the payment thereof.
SECTION 5.10. ERISA. Each Plan has complied with and
has been administered in all material respects in accordance with
the applicable provisions of ERISA and the Code. No Plan has
terminated under circumstances giving rise to liability of the
Borrower or any ERISA Affiliate to the PBGC under Section 4062,
4063 or 4064 of ERISA, which liability remains unpaid in whole or
in part, and no lien under Section 4068 of ERISA exists with
respect to the assets of the Borrower or any Subsidiary. No
Reportable Event has occurred with respect to any Plan, except
for Reportable Events previously disclosed in writing to the
Lenders that would not have a material adverse effect on the
consolidated financial condition or results of operations of the
Borrower or its consolidated Subsidiaries. No accumulated
funding deficiency within the meaning of Section 302 of ERISA or
Section 412 of the Code (whether or not waived) exists with
respect to any Plan, nor does any lien under Section 302 of ERISA
or Section 412 of the Code exist with respect to any Plan.
Neither the Borrower nor any ERISA Affiliate has
completely or partially withdrawn from any one or more
Multiemployer Plans under circumstances which would give rise to
withdrawal liability which, in the aggregate, could have a
material adverse effect on the consolidated financial condition
or results of operations of the Borrower or its consolidated
Subsidiaries and which has not been fully paid as of the date
hereof. Neither the Borrower nor any ERISA Affiliate has
received notice that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA), or has terminated
under Title IV of ERISA, nor, to the best knowledge of the
Borrower, is any such reorganization, insolvency or termination
reasonably likely to occur, where such reorganization, insolvency
or termination has resulted or can reasonably be expected to
result in an increase in the contributions required to be made to
such Multiemployer Plan in an amount that would have a material
adverse effect on the consolidated financial condition of the
Borrower or its consolidated Subsidiaries. Neither the Borrower
nor any ERISA Affiliate has failed to make any contribution to a
Multiemployer Plan which is required under ERISA or an applicable
collective bargaining agreement in an amount which is material in
the aggregate (except to the extent there is a good faith dispute
as to whether any contribution is owed, the amount owed or the
existence of facts that would give rise to a withdrawal).
SECTION 5.11. No Default. No Default and no Event of
Default has occurred and is continuing.
SECTION 5.12. Federal Reserve Regulations.
(a) Neither the Borrower nor any Subsidiary of the Borrower is
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used,
whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose which entails a
violation of, or which is inconsistent with, the provisions of
the Regulations of the Board, including, without limitation,
Regulations G, U or X.
SECTION 5.13. Investment Company Act. The Borrower is
not an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940.
SECTION 5.14. Environmental Matters. In the ordinary
course of its business, the Borrower conducts an ongoing review
of the effect of Environmental Laws and laws relating to
occupational safety and health on the business, operations and
properties of the Borrower and its Subsidiaries, in the course of
which it identifies and evaluates associated liabilities and
costs (including any capital or operating expenditures required
for clean-up, closure or restoration of properties presently or
previously owned, any capital or operating expenditures required
to achieve or maintain compliance with environmental protection
and occupational health and safety standards imposed by law or as
a condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or
permanent shutdown of any facility or reduction in the level of
or change in the nature of operations conducted thereat and any
actual or potential liabilities to third parties, including
employees, and any related costs and expenses). On the basis of
this review, the Borrower represents and warrants that applicable
Environmental Laws and laws relating to occupational health and
safety do not have a material adverse effect on the business,
financial condition or results of operations of the Borrower and
its Restricted Subsidiaries, considered as a whole. The Borrower
and each Restricted Subsidiary has obtained and holds all
material permits, licenses and approvals required under
Environmental Laws which are necessary for the conduct of its
business and the operation of its facilities, and the Borrower
and its Restricted Subsidiaries have not received any written
notice of any failure to be in compliance with the terms and
conditions of such permits, licenses and approvals, which failure
could reasonably be expected to have a material adverse effect on
the Borrower and its Restricted Subsidiaries, considered as a
whole.
ARTICLE VI. COVENANTS
SECTION 6.01. Affirmative Covenants. So long as any
Loan remains outstanding hereunder or any Commitment remains in
effect, the Borrower shall, unless the Required Lenders shall
otherwise consent in writing:
(i) Payment of Taxes, etc. Pay and discharge, and
cause each Restricted Subsidiary to pay and discharge, all
taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims which, if
unpaid, might become a lien or charge upon any properties of
the Borrower or any Restricted Subsidiary; provided,
however, that neither the Borrower nor any Restricted
Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim which is being contested
in good faith and by proper proceedings and against which it
is maintaining adequate reserves in accordance with GAAP.
(ii) Maintenance of Insurance. Maintain, and cause
each Restricted Subsidiary to maintain, insurance with
responsible and reputable insurance companies or
associations (or, to the extent consistent with prudent
business practice, through its own program of self-
insurance) in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in
which the Borrower or such Restricted Subsidiary operates.
(iii) Preservation of Corporate Existence, etc.
Preserve and maintain, and cause each Restricted Subsidiary
to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its
incorporation; provided, however, that nothing herein
contained shall prevent any merger or consolidation
permitted by Section 6.02(ii); and provided further that the
Borrower shall not be required to cause any Restricted
Subsidiary to preserve its corporate existence or any such
rights, franchises or privileges if the Borrower shall
determine that the preservation thereof is no longer
desirable in the conduct of the business of the Borrower and
its Subsidiaries taken as a whole and that the loss thereof
is not disadvantageous in any material respect to the
Borrower and its Subsidiaries taken as a whole.
(iv) Compliance with Laws, etc. Comply, and cause each
Subsidiary to comply, with the requirements of all
applicable laws, rules, regulations and orders (other than
laws, rules, regulations, and orders which are not final and
are being contested in good faith by proper proceedings) of
any Governmental Authority (including Labor Laws and
Environmental Laws), noncompliance with which would
materially adversely affect the business or credit of the
Borrower or any Restricted Subsidiary.
(v) Compliance with ERISA. Comply, and cause each of
its Subsidiaries to comply, with the minimum funding
standards under ERISA with respect to its Plans and use its
best efforts, and cause each Restricted Subsidiary to use
its best efforts, to comply in all material respects with
all other applicable provisions of ERISA and the regulations
and interpretations promulgated thereunder.
(vi) Access to Properties. Permit any representatives
designated by any Lender, upon reasonable prior notice to
the Borrower, to visit the properties of the Borrower or any
Subsidiary at reasonable times and as often as reasonably
requested.
(vii) Use of Proceeds. Use the proceeds of the Loans
for general corporate purposes, including possible
acquisitions, in compliance with all applicable legal and
regulatory requirements; provided, however, that no portion
of the proceeds of any Loan hereunder shall be used to fund
any Acquisition unless at such time the board of directors
of the subject company shall have either (a) approved such
Acquisition or recommended it to shareholders or (b) taken a
position that it will neither recommend for or against such
Acquisition.
SECTION 6.02. Negative Covenants. So long as any Loan
remains outstanding hereunder or any Commitment remains in
effect, the Borrower will not, and will not suffer or permit any
Restricted Subsidiary to, unless the Required Lenders otherwise
consent in writing:
(i) Encumbrances. Have any Debt for borrowed money
secured by an Encumbrance on any property of the Borrower or
any Restricted Subsidiary, unless (a) the Notes shall have
effectively been secured equally and ratably with (or, at
the option of the Borrower, prior to) such secured Debt or
(b) immediately after giving effect thereto and to any
concurrent repayment of Debt, the aggregate amount of all
such secured Debt of the Borrower and of each of its
Restricted Subsidiaries, plus the aggregate amount of
Consolidated Lease Rentals (excluding Consolidated Lease
Rentals under Leases in effect as of December 31, 1993, (and
any renewal, extension or replacement thereof) and Leases
with respect to property not owned by the Borrower on such
date), discounted to present value at 10%, compounded
annually, arising out of all Sale and Leaseback Transactions
to which the Borrower or any of its Restricted Subsidiaries
is then a party, does not exceed 5% of Consolidated Net
Worth; provided, however, that this subsection (i) shall not
apply to, and there shall be excluded from secured Debt in
any computation under this subsection (i), Debt secured by:
(t) Encumbrances securing Debt of a Restricted
Subsidiary to the Borrower or to a Restricted
Subsidiary;
(u) Encumbrances (including Capital Leases) to
secure all or any part of the purchase price or to
secure Debt assumed or incurred to pay all or part of
the purchase price of property acquired by the Borrower
or a Restricted Subsidiary after December 31, 1993 on
condition that any such Encumbrance shall only cover
the acquired property and improvements thereto and
shall be created within 12 months after, in the case of
property, its acquisition or, in the case of
improvements, their completion;
(v) any Encumbrance on any property of a corpo-
ration (other than any Affiliate of the Borrower) at
the time such corporation becomes a Restricted
Subsidiary or is merged with or into or consolidated
with the Borrower or a Restricted Subsidiary, provided
that (1) such Encumbrance was not created by such
corporation in connection with such acquisition, merger
or consolidation (other than in the ordinary course of
business of such corporation) and (2) such Encumbrance
does not extend to any other property of the Borrower
or any Restricted Subsidiary;
(w) Encumbrances (including Capital Leases)
securing Debt of the Borrower or of a Restricted
Subsidiary set forth in Schedule 6.02;
(x) Encumbrances on coal reserves leased by the
Borrower or by any Restricted Subsidiary as lessee,
securing Debt to the lessors thereof, arising out of
such leases;
(y) Encumbrances on any Margin Stock purchased or
carried by the Borrower or any of its Subsidiaries; and
(z) the extension, renewal or replacement of any
Encumbrance permitted by subsections (u) through (y),
inclusive, but only if the principal amount of Debt
secured by the Encumbrance immediately prior thereto is
not increased and the Encumbrance is not extended to
other property.
For purposes of this subsection (i), property of a
corporation when it becomes a successor or transferee of the
Borrower or a Restricted Subsidiary shall be deemed to have
been acquired at that time and any Encumbrance existing on
property when acquired shall be deemed to have been created
at that time.
The sale or transfer of (A) coal, oil, gas or other
minerals in place for a period of time until, or in an
amount such that, the transferee will realize therefrom a
specified amount of money (however determined) or a
specified amount of such coal or other minerals or (B) any
other interest in property of the character commonly
referred to as a "production payment" shall not be deemed to
constitute Debt secured by an Encumbrance.
In the event the Borrower shall hereafter be required
to secure the Notes equally and ratably with any other Debt
pursuant to this subsection (i), (X) the Borrower will
promptly deliver to the Administrative Agent a certificate
of a duly authorized officer of the Borrower stating that
the provisions of this subsection (i) have been complied
with and an opinion of counsel satisfactory to the
Administrative Agent to the effect that the provisions of
this subsection (i) have been complied with and all
instruments executed by the Borrower or any Restricted
Subsidiary in the performance of the requirements of this
subsection (i) comply with such requirements and have been
duly executed and delivered and are valid, binding and
enforceable and (Y) the Borrower shall enter into an
agreement supplemental hereto, and take such other
reasonable action, if any, as the Lenders deem advisable, to
enable the Lenders as so secured to enforce their rights
hereunder and under the Notes.
(ii) Disposition of Debt and Shares of Restricted
Subsidiaries; Issuance of Shares by Restricted Subsidiaries;
Consolidation, Merger or Disposition of Assets. (a) Sell or
otherwise dispose of any shares or any Long Term Debt of any
Restricted Subsidiary, (b) in the case of any Restricted
Subsidiary, issue, sell or otherwise dispose of any of such
Restricted Subsidiary's shares (other than directors'
qualifying shares, to satisfy preemptive rights or in
connection with a split or combination of shares or a
dividend in shares) except to the Borrower or another
Restricted Subsidiary or (c) directly or indirectly,
consolidate with or merge with or into or sell, lease or
otherwise dispose of all or substantially all of its assets
(other than in the ordinary course of business) to any
Person, unless, after giving effect thereto, all of the
following conditions shall be met:
(w) the Leverage Ratio shall not be greater than
0.55:1.00;
(x) in the case of a consolidation, merger or sale
or other disposition of its assets as an entirety or
substantially as an entirety to any corporation by the
Borrower, the successor or surviving corporation shall
be a solvent corporation organized under the laws of a
state of the United States of America which (unless it
is the Borrower) expressly assumes in writing the due
and punctual payment and performance of the obligations
of the Borrower hereunder;
(y) if any properties or assets of the Borrower or
a Restricted Subsidiary would thereupon become subject
to an Encumbrance other than those described in
Section 6.02(i)(t) through (z), inclusive, the
obligations of the Borrower hereunder shall have been
equally and ratably secured with (or, at the option of
the Borrower, prior to) any Debt secured by the
Encumbrance on such properties and assets, and the last
paragraph of Section 6.02(i) shall be applicable
thereto; and
(z) no Default or Event of Default has occurred
and is continuing.
Provided that the conditions of this Section 6.02(ii)
are met, none of the foregoing shall be deemed to prohibit
the Borrower and/or its Subsidiaries from selling,
transferring, assigning or otherwise disposing of Margin
Stock for fair market value.
(iii) Transactions with Affiliates. Engage in any
transaction with an Affiliate (other than the Borrower or a
Restricted Subsidiary) material to the Borrower or any
Restricted Subsidiary on terms more favorable to the
Affiliate than would have been obtainable in arm's-length
dealing.
(iv) Consolidated Net Worth. Permit Consolidated Net
Worth as of the last day of any fiscal quarter of the
Borrower to be less than $300,000,000.
(v) Leverage Ratio. Permit the Leverage Ratio as of
the last day of any fiscal quarter of the Borrower to be
greater than 0.55:1.00.
(vi) Compliance with Regulations G, U and X. In the
case of the Borrower and any Subsidiary controlled by the
Borrower, purchase or carry any Margin Stock or incur,
create or assume any obligation for borrowed money or other
liability or make any investment, capital contribution,
loan, advance or extension of credit or sell or otherwise
dispose of any assets or pay any dividend or make any other
distribution to its shareholders or take or permit to be
taken any other action or permit to occur or exist any event
or condition if such action, event or condition would result
in this Agreement, the Loans, the use of the proceeds
thereof or the other transactions contemplated hereby
violating or being inconsistent with Regulation G, U or X,
including, Section 221.3(f) of Regulation U.
(vii) Hedging Agreements. Enter into material Hedging
Agreements for the purpose of speculation and not for the
purpose of hedging risks associated with the businesses of
the Borrower and its Subsidiaries.
(viii) ERISA. (a) Terminate, or permit any of its
Subsidiaries to terminate, any Plan under circumstances
which would reasonably result in a material liability of the
Borrower or any ERISA Affiliate to the PBGC, or permit to
exist the occurrence of any Reportable Event or any other
event or condition which presents a material risk of such a
termination by the PBGC; (b) engage, or permit any of its
Subsidiaries or any Plan to engage, in a "prohibited
transaction" (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) that would reasonably result in
material liability of the Borrower or any of its
Subsidiaries; (c) fail, or permit any of its Subsidiaries to
fail, to make any contribution to a Multiemployer Plan which
is required by ERISA or an applicable collective bargaining
agreement in an amount which is material (except to the
extent there is a good faith dispute as to whether any
contribution is owed, the amount owed or the existence of
facts that would give rise to a withdrawal); or (d)
completely or partially withdraw, or permit any of its
Subsidiaries to completely or partially withdraw, from a
Multiemployer Plan, if such complete or partial withdrawal
will result in any material withdrawal liability under Title
IV of ERISA. For purposes of this clause (viii), an amount
is material if it would have a material adverse effect on
the consolidated financial condition or results of
operations of the Borrower and its consolidated
Subsidiaries, and the materiality of any amount described in
this clause (viii) shall be determined after aggregation
with all other liabilities described in this clause (viii).
SECTION 6.03. Reporting Requirements. So long as any
Loan remains outstanding hereunder or any Commitment remains in
effect, the Borrower will, unless the Required Lenders shall
otherwise consent in writing:
(i) furnish to the Administrative Agent (1) annually,
as soon as available, but in any event within 120 days after
the last day of each of its fiscal years, a consolidated
balance sheet of the Borrower, as at such last day of the
fiscal year, and consolidated statements of operations and
cash flow for the Borrower for such fiscal year, each
prepared in accordance with GAAP, in reasonable detail, and
certified by independent certified public accountants of
recognized national standing; (2) as soon as available, but
in any event within 60 days after the end of each of the
Borrower's first three fiscal quarterly periods of each
fiscal year, a consolidated balance sheet of the Borrower as
at the last day of such quarter and consolidated statements
of operations for such quarter, and for the then current
fiscal year through the end of such quarter, and a
consolidated statement of cash flow of the Borrower for the
then current fiscal year through the end of such quarter,
prepared in accordance with GAAP (except for omission of
notes and subject to year-end adjustments); (3) at the same
time as it delivers the financial statements required under
the provisions of clause (1) above, a certificate signed by
the chief financial officer or the chief executive officer
of the Borrower to the effect that such officer has made due
inquiry and that to the best of the knowledge of such
officer except as stated therein no Default or Event of
Default has occurred hereunder and that such officer has
made due inquiry and that to the best of the knowledge of
such officer except as stated therein no default has oc-
curred under any other agreement to which the Borrower is a
party or by which it is bound, or by which any of its
properties or assets may be affected, which could have a
material adverse effect on the business or operations of the
Borrower and specifying in reasonable detail the exceptions,
if any, to such statements; (4) at the same time as it
delivers the financial statements required under the
provisions of clauses (1) and (2) above, a statement of a
financial officer of the Borrower showing the Leverage Ratio
and Consolidated Net Worth as of the last day of the fiscal
period to which such financial statements relate; (5) at the
same time as it delivers the financial statements required
under the provisions of clause (2) above, a certificate
signed by a financial officer of the Borrower and stating
that such officer has made due inquiry and that to the best
of his knowledge no Default has occurred and is continuing,
or, if such Default has occurred and is continuing,
specifying the nature and extent thereof; and (6) forthwith
upon the occurrence of any Default or Event of Default, a
certificate of the chief financial officer or the chief
executive officer of the Borrower setting forth the details
thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(ii) keep proper books of record and accounts in which
full, true and correct entries in accordance with GAAP shall
be made of all dealings or transactions in relation to its
business and activities;
(iii) furnish with reasonable promptness such other
financial information as any Lender may reasonably request,
provided that the Borrower shall not be required to furnish
any information that would result in violation of any
confidentiality agreement by which it is bound but, at the
request of a Lender, shall use its reasonable best efforts
to obtain a waiver of such agreement to permit furnishing of
such information under this provision;
(iv) promptly after the same are available, copies of
all current reports on Form 8-K, quarterly reports on
Form 10-Q, annual reports on Form 10-K (or similar
corresponding reports) and registration statements or
statements which the Borrower or any Restricted Subsidiary
may be required to file with the Securities and Exchange
Commission (excluding registration statements filed pursuant
to employee stock option or benefit plans); and
(v) furnish to the Administrative Agent, as soon as
reasonably practicable after receipt by the Borrower or any
Subsidiary, a copy of any written notice or claim to the
effect that the Borrower or any Subsidiary is liable to any
Person as a result of the presence or release of any
Contaminant which claim could reasonably be expected to have
a material adverse effect on the Borrower and its Restricted
Subsidiaries, considered as a whole.
ARTICLE VII. EVENTS OF DEFAULT
If any of the following events (hereinafter called
"Events of Default") shall occur and shall be continuing:
(i) the Borrower shall fail to pay an installment of
principal of, or interest on, any Note or any Fee when due
and, in the case of any such interest payment or any Fee,
such failure shall remain unremedied for three Business
Days;
(ii) any representation or warranty made by the Borrower
herein or by the Borrower in connection with this Agreement
shall prove to have been incorrect in any material respect
when made;
(iii) the Borrower fails to observe any of the provisions
of Sections 6.02(i) through (viii) inclusive and, in the
case of the provisions of Sections 6.02(i), (iii), (iv),
(v), (vii) and (viii), any such failure remains unremedied
for 30 days after receipt by the Borrower of written notice
thereof from the Administrative Agent or any Lender;
(iv) the Borrower shall fail to perform or observe any
other term, covenant or agreement (other than those referred
to in clauses (i), (ii) and (iii) above) contained in this
Agreement and such failure remains unremedied for 30 days
after receipt by the Borrower of written notice thereof from
the Administrative Agent or any Lender; provided, however,
that with respect to any term, covenant or agreement
contained in Section 6.03(ii) or 6.03(iii), such 30-day
period during which any such failure may be remedied shall
only be available once during each consecutive 12-month
period with respect to such term, covenant or agreement;
(v) (a) the Borrower or any Restricted Subsidiary shall
default in the payment when due, after giving effect to any
grace period permitted from time to time, of any Debt for
borrowed money heretofore or hereafter issued, assumed,
guaranteed, contracted or incurred by it, and the aggregate
amount of such default equals or exceeds $10,000,000 (or
equivalent), or (b) there shall be any default under any
agreement or instrument under or by which any such Debt is
created, evidenced or secured, if the effect of such default
pursuant to this clause (b) is to cause, or to permit the
holder or holders of such Debt (or a trustee on its or their
behalf) to cause, and such holder or holders or trustee does
cause, such Debt to become due prior to its stated maturity,
and the aggregate amount of the Debt the maturity of which
is so accelerated pursuant to clause (b) equals or exceeds
$10,000,000 (or equivalent);
(vi) the Borrower or any Major Subsidiary shall
(a) apply for or consent to the appointment of a receiver,
trustee or liquidator of the Borrower or such Major
Subsidiary or of all or a substantial part of its assets,
(b) be unable, or admit in writing its inability, to pay its
debts as they mature, (c) make a general assignment for the
benefit of creditors, (d) be adjudicated a bankrupt or
insolvent or (e) file a voluntary petition in bankruptcy or
a petition or an answer seeking reorganization or an
arrangement with creditors or to take advantage of any
insolvency law or an answer admitting the material
allegations of a petition filed against the Borrower or such
Major Subsidiary in any bankruptcy, reorganization or
insolvency proceeding or corporate action shall be taken by
the Borrower or any Major Subsidiary for the purpose of
effecting any of the foregoing or an order for relief under
the Federal Bankruptcy Code shall have been entered in
respect of the Borrower or any Major Subsidiary;
(vii) without the application, approval or consent of the
Borrower or a Major Subsidiary, as the case may be, a
proceeding shall be instituted, in any court of competent
jurisdiction, seeking in respect of the Borrower or such
Major Subsidiary: adjudication in bankruptcy, reorganiza-
tion, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a receiver, custodian,
liquidator or the like of the Borrower or such Major
Subsidiary or of all or any substantial part of its assets,
or other like relief in respect of the Borrower or such
Major Subsidiary if such proceeding is being contested by
the Borrower or such Major Subsidiary in good faith, the
same shall continue unstayed and in effect for any period of
60 consecutive days;
(viii) a final and unappealable judgment for the payment
of money shall be rendered by a court of record against the
Borrower or any Restricted Subsidiary in an amount in excess
of $10,000,000 and the Borrower or such Restricted
Subsidiary, as the case may be, shall not discharge the same
or provide for its discharge in accordance with its terms or
procure a stay of execution thereof within 60 days after the
date of entry thereof;
(ix) a Reportable Event shall have occurred with respect
to any Plan of the Borrower, or any Restricted Subsidiary of
the Borrower and, within 30 days after the reporting of such
Reportable Event to the Lenders, the Required Lenders (or
the Administrative Agent at the request of the Required
Lenders) shall have notified the Borrower in writing that a
good faith determination has been made by the Required
Lenders that such Reportable Event is likely to have a
material adverse effect on the consolidated financial
condition or results of operations of the Borrower and its
consolidated Restricted Subsidiaries; or
(x) (a) any Plan terminates under circumstances that
would reasonably result in a material liability of the
Borrower or any ERISA Affiliate to the PBGC; (b) an
"accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or
not waived, exists with respect to any Plan(s) in an amount
which is material; (c) the Borrower, any of its Subsidiaries
or any Plan engages in a "prohibited transaction" (within
the meaning of Section 406 of ERISA or Section 4975 of the
Code) that would reasonably result in any material liability
of the Borrower or any of its Subsidiaries and that is not
cured within 90 days of the date Borrower knows or has
reason to know of such prohibited transaction; (d) the
Borrower or any ERISA Affiliate (other than one considered
an ERISA Affiliate only by reason of subsection (m) or (o)
of Section 414 of the Code) fails to make any contribution
to a Multiemployer Plan which is required by ERISA or an
applicable collective bargaining agreement in an amount
which is material (except to the extent there is a good
faith dispute as to whether any contribution is owed, the
amount owed or the existence of facts that would give rise
to a withdrawal); or (e) the Borrower or any ERISA Affiliate
(other than one considered an ERISA Affiliate only by reason
of subsection (m) or (o) of Section 414 of the Code)
completely or partially withdraws from a Multiemployer Plan,
if such complete or partial withdrawal will result in any
withdrawal liability under Title IV of ERISA which is
material (for purposes of this clause (x), (A) an amount is
material if it would have a material adverse effect on the
consolidated financial condition or results of operations of
the Borrower and its consolidated Subsidiaries, and the
materiality of any amount described in this clause (x) shall
be determined after aggregation with all other liabilities
described in this clause (x) and (B) materiality shall be
determined in the reasonable judgment of the Required
Lenders);
then, and in every such event (other than an event with respect
to the Borrower described in paragraph (vi) or (vii) above), and
at any time thereafter during the continuance of such event, the
Administrative Agent, at the request of the Required Lenders,
shall, by notice to the Borrower, take either or both of the
following actions, at the same or different times: (x) terminate
forthwith the Commitments and (y) declare the Loans then
outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrower accrued
hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in
any other Loan Document to the contrary notwithstanding; and in
any event with respect to the Borrower described in para-
graph (vi) or (vii) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued
Fees and all other liabilities of the Borrower accrued hereunder
and under any other Loan Document, shall automatically become due
and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by
the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
ARTICLE VIII. THE AGENTS
SECTION 8.01. Appointment. Each Lender hereby
appoints Chemical Bank, Credit Suisse and Morgan Guaranty Trust
Company of New York as the Co-Agents of such Lender under this
Agreement and acknowledges that (i) no Co-Agent, in its capacity
as such, shall have any duties under the Loan Documents and
(ii) the Administrative Agent, in its capacity as such, shall
have no duties under the Loan Documents other than those
specifically provided in the Loan Documents. Each Lender hereby
appoints Credit Suisse as Administrative Agent hereunder and
under each other Loan Document, and each of the Lenders
irrevocably authorizes the Administrative Agent to act as the
agent of such Lender. Each Agent agrees to act as such upon the
express conditions contained in this Article VIII. The Agents
shall not have a fiduciary relationship in respect of any Lender
by reason of this Agreement.
SECTION 8.02. Powers. The Administrative Agent shall
have and may exercise such powers under the Loan Documents as are
specifically delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental
thereto. No Agent shall have any implied duties to the Lenders
or any obligation to the Lenders to take any action thereunder
except any action specifically provided by the Loan Documents to
be taken by such Agent.
SECTION 8.03. General Immunity. Neither the Agents
nor any of their directors, officers, agents or employees shall
be liable to the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith except for
its or their own gross negligence or wilful misconduct.
SECTION 8.04. No Responsibility for Loans, Recitals,
etc. Neither the Agents nor any of their directors, officers,
agents or employees shall be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or
representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of
the covenants or agreements of any obligor under any Loan
Document; (iii) the satisfaction of any condition specified in
Article IV, except receipt of items required to be delivered to
the Administrative Agent; or (iv) the validity, effectiveness or
genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith.
SECTION 8.05. Action on Instructions of Lenders. The
Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions
signed by the Required Lenders, except for those cases which
(i) pursuant to Section 10.01 of this Agreement require approval
by all the Lenders or all the affected Lenders and (ii) involve
gross negligence or wilful misconduct on the part of the
Administrative Agent, and such instructions and any action taken
or failure to act pursuant thereto shall be binding on all of the
Lenders and on all holders of Notes.
SECTION 8.06. Employment of Administrative Agent and
Counsel. The Administrative Agent may execute any of its duties
as Administrative Agent hereunder and under any other Loan
Document by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Lenders, except as to money or
securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Administrative Agent
shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder
and under any other Loan Document.
SECTION 8.07. Reliance on Documents; Counsel. Each
Agent shall be entitled to rely upon any Note, notice, consent,
certificate, affidavit, letter, telegram, statement, paper or
document believed by it to be genuine and correct and to have
been signed or sent by the proper person or persons, and, in
respect to legal matters, upon the opinion of counsel selected by
such Agent, which counsel may be employees of such Agent;
provided, however, that if such counsel is an employee of such
Agent such counsel shall be required to act in good faith and
render advice as if such counsel was not an employee of such
Agent.
SECTION 8.08. Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify each Agent ratably in
proportion to the Lenders' respective Commitments (i) for any
amounts not reimbursed by the Borrower for which such Agent is
entitled to reimbursement by the Borrower under the Loan
Documents, (ii) for any other expenses incurred by such Agent on
behalf of the Lenders in connection with the enforcement of the
Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against such Agent in
any way relating to or arising out of the Loan Documents or any
other document delivered in connection therewith or the
transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that
no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or wilful misconduct of such
Agent.
SECTION 8.09. Rights as a Lender. With respect to its
Commitments, Loans made by it and the Notes issued to it, each
Agent shall have the same rights, obligations and powers
hereunder and under any other Loan Document as any Lender and may
exercise the same as though it was not an Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise
indicates, include such Agent in its individual capacity. Each
Agent may accept deposits from, lend money to, and generally
engage in any kind of banking or trust business with the Borrower
or any of its Subsidiaries as if it was not an Agent.
SECTION 8.10. Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
any Agent or any other Lender and based on the financial
statements prepared by the Borrower and such other documents and
information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other
Loan Documents. Each Lender also acknowledges that it will,
independently and without reliance upon any Agent or any other
Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and
the other Loan Documents.
SECTION 8.11. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, and the
Administrative Agent may be removed at any time with or without
cause by written notice received by the Administrative Agent from
the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint from among the
other Lenders, with the prior written consent of the Borrower
(which shall not be unreasonably withheld), on behalf of the
Borrower and the Lenders, a successor Administrative Agent. If
no successor Administrative Agent shall have been so appointed by
the Required Lenders and shall have accepted such appointment
within thirty days after the retiring Administrative Agent's
giving notice of resignation, then the retiring Administrative
Agent may appoint from among the other Lenders, with the prior
written consent of the Borrower (which shall not be unreasonably
withheld), on behalf of the Borrower and the Lenders, a successor
Administrative Agent. Such successor Administrative Agent shall
be a commercial bank having capital and retained earnings of at
least $500,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall thereafter be discharged
from its duties and obligations hereunder and under the other
Loan Documents. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of
this Article VIII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while
it was acting as the Administrative Agent hereunder and under the
other Loan Documents.
ARTICLE IX. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
SECTION 9.01. Successors and Assigns. The terms and
provisions of the Loan Documents shall be binding upon and inure
to the benefit of the Borrower, the Agents and the Lenders and
their respective successors and assigns, except that neither the
Borrower nor any Agent shall have the right to assign its rights
or obligations under the Loan Documents and any assignment by any
Lender must be made in compliance with Section 9.03. Any
attempted assignment in violation of this Section 9.01 shall be
void. The Administrative Agent and the Borrower may treat the
payee of any Note as the owner thereof for all purposes hereof
unless and until such payee complies with Section 9.03 in the
case of an assignment thereof or, in the case of any transfer
pursuant to Section 9.06, a written notice of the transfer is
filed with the Administrative Agent. Any assignee or transferee
of a Note agrees by acceptance thereof to be bound by all the
terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making
such request or giving such authority or consent is the holder of
any Note, shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor, regardless of whether any such
Note shall have been marked to make reference thereto.
SECTION 9.02. Participations. (a) Any Lender may, in
the ordinary course of its commercial lending business and in
accordance with applicable law, at any time sell to one or more
Institutional Lenders ("Participants") participating interests in
any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender
under the Loan Documents; provided, however, that the Lender
shall, upon request of the Borrower, provide the Borrower with
the identities of all such Participants and the amounts of their
participations. Any attempted sale of any such interest in
violation of this Section 9.02 shall be void. In the event of
any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such
Note for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined
as if such Lender had not sold such participating interests, and
the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
(b) Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents
other than any amendment, modification or waiver with respect to
any Loan or Commitment in which such Participant has an interest
which (i) forgives principal, interest or fees or reduces the
interest rate or fees payable with respect to any such Loan or
Commitment, (ii) postpones any date fixed for any regularly-
scheduled payment of principal of, or interest or fees on, any
such Loan or Commitment, (iii) increases any such Commitment, or
(iv) extends the Maturity Date.
(c) The Borrower agrees that each Participant shall be
deemed to have the right of setoff provided in Section 2.14 in
respect of its participating interest in amounts owing under the
Loan Documents up to, but not exceeding, the amount of its
participating interest and to the same extent as if the amount of
its participating interest were owing directly to it as a Lender
under the Loan Documents, provided that each Lender shall also
have the right of setoff provided in Section 2.14 with respect to
the amount of participating interests sold to each Participant.
The Lenders agree to share with each Participant, and Lenders
selling participations agree to cause participation agreements to
provide that Participants, by exercising the right of setoff
provided in Section 2.14, agree to share with each Lender, any
amount received pursuant to the exercise of its right of setoff,
such amounts to be shared in accordance with Section 2.14 as if
each Participant were a Lender.
SECTION 9.03. Assignments. (a) Any Lender may, in
the ordinary course of its commercial lending business and in
accordance with applicable law, at any time assign to one or more
Institutional Lenders ("Purchasers") all or any part of its
rights and obligations under the Loan Documents; provided,
however, that (i) except in the case of an assignment to a Lender
or an Affiliate of the assigning Lender (other than if at the
time of such assignment, such Lender or Affiliate would be
entitled to require the Borrower to pay, or the Borrower would be
required to pay, greater amounts under Section 2.16 or 3.01 than
if no such assignment had occurred, in which case such assignment
shall be subject to the consent requirement of this clause (i)),
the Borrower must give its prior written consent to such
assignment (which consent shall not be unreasonably withheld),
(ii) such assignment shall be in substantially the form of
Exhibit B, (iii) each such assignment shall be of a constant, and
not a varying, percentage of all the assigning Lender's rights
and obligations under this Agreement, (iv) the amount of the
Commitments of the assigning Lender subject to each such
assignment (determined as of the date the Notice of Assignment
with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $10,000,000 and the
amount of the Commitments of such Lender remaining after such
assignment shall not be less than $10,000,000 or shall be zero
and (iv) the parties to each such assignment shall execute and
deliver to the Administrative Agent a Notice of Assignment,
together with the Note or Notes subject to such assignment.
(b) Upon (i) delivery to the Administrative Agent of a
Notice of Assignment, the Note or Notes subject to such
assignment and any consents required by Section 9.03(a), and
(ii) payment by the assigning Lender or the Purchaser of a $2,500
fee to the Administrative Agent for processing such assignment,
such assignment shall become effective on the effective date
specified in such Notice of Assignment. On and after the
effective date of such assignment, such Purchaser shall for all
purposes be a Lender party to this Agreement and any other Loan
Document executed by the Lenders and shall have all the rights
and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further
consent or action by the Borrower, the Lenders or the Agents
shall be required to release the transferor Lender with respect
to the percentage of the Commitments and Loans assigned to such
Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 9.03, the transferor Lender,
the Administrative Agent and the Borrower shall make appropriate
arrangements so that replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitments, as adjusted pursuant to
such assignment.
SECTION 9.04. Dissemination of Information;
Confidentiality. (a) The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law
(each a "Transferee") and any prospective Transferee (which, in
the case of a prospective Participant or Purchaser, shall be an
Institutional Lender) any and all information in such Lender's
possession concerning the creditworthiness of the Borrower and
its Subsidiaries; provided, however, that prior to any such
disclosure to a proposed Transferee such proposed Transferee
shall agree in writing to be bound by the terms of this
Section 9.04.
(b) Each Lender and Transferee that receives
information concerning the Borrower, any of its Affiliates, their
businesses or the transactions contemplated by the Loan
Documents, which is not publicly available ("Proprietary
Information") will be bound to treat such Proprietary Information
in a confidential manner and to use such Proprietary Information
only for the purpose of evaluating and monitoring the
creditworthiness of the Borrower and its Subsidiaries in
connection with such Lender's or such Transferee's extensions of
credit pursuant to this Agreement, or as otherwise may be
required by law, regulation or court order; provided, that if any
Lender or Transferee shall be required to disclose any
Proprietary Information by a court order or other legal process
reasonably believed by such Lender or Transferee (upon the advice
of legal counsel) to compel disclosure (i) such Lender or
Transferee shall, unless prohibited by applicable law, applicable
regulation or the terms of the applicable court order,
communicate such fact to the Administrative Agent and the
Administrative Agent shall communicate such fact to the Borrower
and (ii) such Lender or Transferee shall disclose only such
Proprietary Information which it is required to disclose;
provided further, that any Lender or Transferee may disclose such
information which it is requested to disclose or is advised by
counsel to disclose to an auditor or examiner if it has advised
such auditor or examiner that such information is confidential;
provided further that any Lender or Transferee may disclose
Proprietary Information (i) to Affiliates of such Lender or
Transferee provided that such Affiliates agree to keep the
Proprietary Information confidential as set forth herein,
(ii) with the written consent of the Borrower, (iii) in
connection with any litigation involving the Borrower and such
Lender or Transferee, (iv) to accountants, independent auditors,
legal counsel, officers, directors, agents and employees of such
Lender or Transferee if it advises such Persons that such
information is confidential, (v) if such Proprietary Information
was in the possession of such Lender or Transferee on a non-
confidential basis prior to the Borrower furnishing it to such
Lender or Transferee, or (vi) if such Proprietary Information is
received by such Lender or Transferee, without restriction as to
its disclosure or use, from a Person who, to such Lender's or
Transferee's knowledge or reasonable belief, was not prohibited
from disclosing it by any duty of confidentiality.
SECTION 9.05. Tax Treatment. If any interest in any
Loan Document is transferred to any Transferee which is organized
under the laws of any jurisdiction other than the United States
or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer,
to comply with the provisions of Section 2.16.
SECTION 9.06. Assignments to the Federal Reserve.
Notwithstanding anything else contained in this Agreement, each
Lender reserves the right to assign its Note or any of its rights
under this Agreement to any Federal Reserve Bank. No such
assignment shall release the assigning Lender from its
obligations hereunder.
ARTICLE X. GENERAL PROVISIONS
SECTION 10.01. Amendments. The Required Lenders (or
the Administrative Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the
rights or obligations of the Lenders or the Borrower hereunder or
waiving any Default or Event of Default hereunder; provided,
however, that no such supplemental agreement shall:
(i) Extend the maturity of any Loan or Note or reduce the
principal amount thereof, or reduce the rate or extend
the time of payment of interest, or waive or excuse any
such payment or any part thereof, without the consent
of each holder of a Note affected thereby.
(ii) Change the definition of Required Lenders without the
consent of each Lender.
(iii) Extend or increase the Commitment or decrease the
Commitment Fees or Utilization Fees of any Lender
hereunder without the consent of such Lender.
(iv) Amend this Section 10.01 or Section 2.13 without the
consent of each Lender.
(v) If the Loans become, and must continue to be, secured
pursuant to Section 6.02(i) or (ii), release more than
the lesser of (x) $10,000,000 and (y) 50% of the
collateral in respect thereof (based upon its fair
market value), without the consent of each Lender.
No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written
consent of the Administrative Agent. The Administrative Agent
may waive payment of the fee required under Section 9.03(b)
without obtaining the consent of any of the Lenders.
SECTION 10.02. Preservation of Rights. No delay or
omission of the Lenders or the Administrative Agent in exercising
any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence
of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Loan shall not constitute any waiver
or acquiescence. Any single or partial exercise of any such
right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by
the Lenders required pursuant to Section 10.01, and then only to
the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Administrative Agent
and the Lenders until all amounts due under the Loan Documents
have been paid in full.
SECTION 10.03. Survival. The obligations of the
Borrower under Sections 2.16, 3.01, 3.05, and 10.07 shall survive
the repayment of the Loans and termination of the Commitments.
SECTION 10.04. Headings. Section headings in this
Agreement are for convenience of reference only, and shall not
govern the interpretation of any of the provisions of this
Agreement.
SECTION 10.05. Entire Agreement. The Loan Documents
embody the entire agreement and understanding among the Borrower,
the Co-Agents, the Administrative Agent and the Lenders and
supersede all prior agreements and understandings among the
Borrower, the Co-Agents, the Administrative Agent and the Lenders
relating to the subject matter thereof.
SECTION 10.06. Several Obligations. The respective
obligations of the Lenders hereunder are several and not joint
and no Lender shall be the partner or agent of any other (except
to the extent to which the Administrative Agent is authorized to
act as such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any
of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective
successors and assigns and, in the case of Section 10.07, the
Indemnitees referred to therein.
SECTION 10.07. Expenses; Indemnification. (a) Each
party to this Agreement agrees to pay all its own fees
and expenses in connection with the Loan Documents and any
amendment, modification or waiver of the terms thereof; provided,
however, that the Borrower agrees to pay (i) the reasonable
disbursements and up to $20,000 in respect of the reasonable fees
of Sullivan & Worcester, counsel for the Lenders, in connection
with the negotiation, execution and delivery of the Loan
Documents; (ii) the reasonable out-of-pocket expenses of the
Agents and the Lenders (including the reasonable fees and
disbursements of one counsel representing the Agents and Lenders)
in connection with any amendment, modification or waiver of the
terms of any Loan Document, and (iii) all reasonable out-of-
pocket expenses (including reasonable fees and disbursements of
counsel) of the Agents and each Lender in connection with the
enforcement of the Loan Documents.
(b) In consideration of the execution and delivery of
this Agreement by each Lender and the extension of the
Commitments, the Borrower hereby indemnifies, exonerates and
holds the Agents and each Lender and each of their respective
officers, directors, employees and agents (each an "Indemnitee")
free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and
expenses (irrespective of whether such Indemnitee is a party to
the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Indemnitees or any of
them as a result of, or arising out of, or relating to:
(i) the use of any of the proceeds of the Borrowings by
the Borrower for any purpose;
(ii) the syndication of this Agreement by the Co-Agents
to the Lenders;
(iii) the making of any claim by an investment banking
firm, broker or third party engaged by the Borrower that it
is entitled to compensation from any Agent or any of the
Indemnitees in connection with this Agreement;
(iv) the entering into and performance of this Agreement
and any other Loan Document by any of the Indemnitees;
(v) the release of any Contaminant, in, under or on any
property in violation of any Environmental Law for which the
Borrower or any Subsidiary has any liability or which occurs
upon any real estate at any time owned, leased or operated,
as defined in any Environmental Law, by the Borrower or any
Subsidiary in violation of any Environmental Law and which
release is not caused by an act or omission of any
Indemnitees, or the imposition of any Environmental
Encumbrance (other than an Environmental Encumbrance that is
being contested in good faith by appropriate proceedings and
for which appropriate reserves have been made to the extent
required by GAAP); or
(vi) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any
Indemnitee is a party thereto;
except for any such Indemnified Liabilities arising for the
account of a particular Indemnitee by reason of the relevant
Indemnitee's gross negligence or wilful misconduct as determined
by a final and nonappealable decision of a court of competent
jurisdiction. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The foregoing indemnity shall
become effective immediately upon the execution and delivery
hereof and shall remain operative and in full force and effect
notwithstanding the consummation of the transactions contemplated
hereunder, the repayment of any of the Loans made hereunder, the
invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, any investigation made by
or on behalf of any Lender, any Agent or the Borrower, or the
content or accuracy of any representation, warranty or statement
made by the Borrower or any other Person.
SECTION 10.08. Numbers of Documents. All statements,
notices, closing documents, and requests hereunder shall be
furnished to the Administrative Agent with sufficient
counterparts so that the Administrative Agent may furnish one to
each of the Lenders.
SECTION 10.09. Severability of Provisions. Any
provision in any Loan Document that is held to be inoperative,
unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any
other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
SECTION 10.10. Nonliability of Lenders. The
relationship between the Borrower and the Lenders and the Agents
shall be solely that of borrower and lender. Neither any Agent
nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither any Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower's
business or operations.
SECTION 10.11. CHOICE OF LAW. THE LOAN DOCUMENTS
SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK.
SECTION 10.12. CONSENT TO JURISDICTION. THE BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW
YORK CITY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS, AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 10.13. WAIVER OF JURY TRIAL. THE BORROWER,
EACH AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT
OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
SECTION 10.14. Notices. Except as expressly provided
otherwise in Article II, notices and other communications
provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 100 First Stamford
Place, P.O. Box 120070, Stamford, Connecticut 06912-0070,
Attention of Vice President--Corporate Finance and Treasurer
(Telecopy No. 203-978-5315);
(b) if to the Administrative Agent, to it at Tower 49,
12 East 49th Street, New York, New York 10017, Attention of
Barry Zamore (Telecopy No. 212-238-5073; and
(c) if to a Lender, to it at its address (or telecopy
number) set forth in Schedule 2.01 or in the Notice of
Assignment delivered when such Lender shall have become a
party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed
to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by telecopy, or on the date
five Business Days after dispatch by certified or registered
mail, in each case delivered, sent or mailed (properly addressed)
to such party as provided in this Section 10.14 or in accordance
with the latest unrevoked direction from such party given in
accordance with this Section 10.14.
SECTION 10.15. Binding Effect; Counterparts.
(a) This Agreement shall become effective when it shall have
been executed by the Borrower and the Administrative Agent and
when the Administrative Agent shall have received copies hereof
which, when taken together, bear the signatures of each Co-Agent
and each Lender. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile transmission shall
be effective as delivery of a manually executed counterpart of
this Agreement.
(b) This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract,
and shall become effective as provided in this Section 10.15.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
THE PITTSTON COMPANY,
by
James B. Hartough
________________________
Title: Vice President--
Corporate Finance and
Treasurer
Account for Deposit
of Money Market Loans:
The Chase Manhattan Bank
(National Association),
New York, New York
Account No.: 910-4-010609
CREDIT SUISSE, as a Co-Agent, the Administration Agent and as a
Lender,
by
Robert C. Rubino
_________________________
Title: Associate
Jeurg Johner
_________________________
Title: Associate
<PAGE>
CHEMICAL BANK, as a Co-Agent and a Lender,
by
Peter Eckstein
___________________________
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Co-Agent and a
Lender,
by
Diana H. Imhof
__________________________
Title: Associate
BANK OF MONTREAL,
by
Brian C. Savage
____________________________
Title: Director, Mining and
Metals
THE BANK OF NOVA SCOTIA,
by
Terry K. Fryett
_________________________
Title: Vice President
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
by
Alexander S. Rapetski II
____________________________
Title: Vice President
FLEET BANK, N.A.,
by
Quay B. McKeough
__________________________
Title: Vice President
J.P. MORGAN DELAWARE,
by
David J. Morris
_______________________
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH,
by
Noboru Kubota
______________________________
Title: Deputy General Manager
MELLON BANK, N.A.,
by
Andrew Mellgard
__________________________
Title: Assistant Vice
President
NATIONAL WESTMINSTER BANK PLC,
by
Ian M. Plester
__________________________
Title: Vice President
NATIONSBANK OF GEORGIA, N.A.,
by
Moses James Sawney
__________________________
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by
Dale A. Stein
__________________________
Title: Vice President
SHAWMUT BANK, N.A.,
by
Kerry Day
__________________________
Title: Corporate Banking
Officer
TORONTO DOMINION (NEW YORK), INC.,
by
Martin T. Snyder
__________________________
Title: Director-Corporate
Finance
<PAGE>
EXHIBIT A-1
[FORM OF]
REVOLVING CREDIT NOTE
$__________________ New York, New York
____________, 1994
FOR VALUE RECEIVED, the undersigned, THE PITTSTON
COMPANY, a Virginia corporation (the "Borrower"), hereby promises
to pay to the order of _______________________ (the "Lender")
(i) on the last day of each Interest Period, as defined in the
Credit Agreement dated as of March 4, 1994 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"),
among the Borrower, the Lenders party thereto, the Co-Agents
party thereto and the Administrative Agent, the aggregate unpaid
principal amount of all Revolving Loans (as defined in the Credit
Agreement) made to the Borrower by the Lender pursuant to the
Credit Agreement to which such Interest Period applies and
(ii) on the Maturity Date (as defined in the Credit Agreement)
the lesser of the principal sum of __________________ Dollars
($______________) and the aggregate unpaid principal amount of
all Revolving Loans made to the Borrower by the Lender pursuant
to the Credit Agreement, in lawful money of the United States of
America in immediately available funds, and to pay interest from
the date hereof on the principal amount hereof from time to time
outstanding, in like funds, at the rate or rates per annum and
payable on the dates provided in the Credit Agreement. Payments
in respect of Money Market Loans shall be made at the Applicable
Lending Office of the Lender provided in the Credit Agreement,
and payments in respect of Standby Loans shall be made at the
office of Credit Suisse (the "Administrative Agent") at
One Liberty Plaza, 165 Broadway, New York, New York 10006.
The Borrower promises to pay interest, on demand, on
any overdue principal from their due dates at the rate or rates
provided in the Credit Agreement.
The Borrower hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The
nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that
or any subsequent instance.
All borrowings evidenced by this Note and all payments
and prepayments of the principal hereof and interest hereon and
the respective dates and maturity dates thereof shall be endorsed
by the holder hereof on the schedule attached hereto and made a
part hereof or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such
holder in its internal records; provided, however, that the
failure of the holder hereof to make such a notation or any error
in such a notation shall not affect the obligations of the
Borrower under this Note.
This Note is one of the Revolving Credit Notes referred
to in the Credit Agreement, which, among other things, contains
provisions for the acceleration of the maturity hereof upon the
happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the
Credit Agreement, all upon the terms and conditions therein
specified. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.
THE PITTSTON COMPANY,
by
______________________
Name:
Title:
<PAGE>
Loans and Payments
Unpaid Name of
Amount Principal Person
and type Maturity Payments Payments Balance Making
Date of Loan Date Principal Interest of Note Notation
____ ________ ________ _________ ________ _______ ________
<PAGE>
EXHIBIT A-2
[FORM OF]
TERM NOTE
$______________________ New York, New York
____________, 1994
FOR VALUE RECEIVED, the undersigned THE PITTSTON
COMPANY, a Virginia corporation (the "Borrower"), hereby promises
to pay to the order of ______________________ (the "Lender"), at
the office of Credit Suisse (the "Administrative Agent"), at One
Liberty Plaza, 165 Broadway, New York, New York 10006, on the
Maturity Date, as defined in the Credit Agreement dated as of
March 4, 1994 (as amended, modified, extended or restated from
time to time, the "Credit Agreement"), among the Borrower, the
Lenders party thereto, the Co-Agents party thereto and the
Administrative Agent, the aggregate unpaid principal amount of
all Term Loans (as defined in the Credit Agreement) made to the
Borrower by the Lender pursuant to the Credit Agreement in lawful
money of the United States of America in immediately available
funds, and to pay interest from the date hereof on the principal
amount hereof from time to time outstanding, in like funds, at
said office, at the rate or rates per annum and payable on the
dates provided in the Credit Agreement.
The Borrower promises to pay interest, on demand, on
any overdue principal from their due dates at the rate or rates
provided in the Credit Agreement.
The Borrower hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The
nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that
or any subsequent instance.
All borrowings evidenced by this Note and all payments
and prepayments of the principal hereof and interest hereon and
the respective dates thereof shall be endorsed by the holder
hereof on the schedule attached hereto and made a part hereof or
on a continuation thereof which shall be attached hereto and made
a part hereof, or otherwise recorded by such holder in its
internal records; provided, however, that the failure of the
holder hereof to make such a notation or any error in such
notation shall not affect the obligations of the Borrower under
this Note.
This Note is one of the Term Notes referred to in the
Credit Agreement, which, among other things, contains provisions
for the acceleration of the maturity hereof upon the happening of
certain events, for optional and mandatory prepayment of the
principal hereof prior to the maturity hereof and for the
amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
THE PITTSTON COMPANY,
by
_______________________
Name:
Title:
<PAGE>
Loans and Payments
Unpaid Name of
Amount Principal Person
and type Maturity Payments Payments Balance Making
Date of Loan Date Principal Interest of Note Notation
____ ________ ________ _________ ________ _______ ________
<PAGE>
EXHIBIT B
FORM OF
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement")
between (the "Assignor") and (the
"Assignee") is dated as of , 19 . The parties
hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to
the Credit Agreement, dated as of March 4, 1994, (as amended,
modified, extended or restated from time to time, the "Credit
Agreement"), among The Pittston Company (the "Borrower"), the
Lenders party thereto, the Co-Agents party thereto and Credit
Suisse, as Administrative Agent. Capitalized terms used herein
and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement. The Assignor desires
to assign to the Assignee, and the Assignee desires to assume
from the Assignor, a __% undivided interest (the "Purchased
Percentage") in the Commitments and Loans (if applicable) of the
Assignor such that after giving effect to the assignment and
assumption hereinafter provided (i) the Revolving Credit
Commitment of the Assignee shall equal $ and its
percentage of the Total Revolving Credit Commitment shall equal
% and (ii) the Assignee's percentage of the outstanding Term
Loans shall equal ___%.
2. ASSIGNMENT. For and in consideration of the
assumption of obligations by the Assignee set forth in Section 3
hereof and the other consideration set forth herein, and
effective as of the Effective Date (as hereinafter defined), the
Assignor does hereby sell, assign, transfer and convey all of its
right, title and interest in and to the Purchased Percentage of
(i) the Commitments of the Assignor (as in effect on the
Effective Date), (ii) any Loans of the Assignor outstanding on
the Effective Date, (iii) the Credit Agreement and the other Loan
Documents and (iv) any fees accruing after the Effective Date.
Pursuant to Section 9.03(b) of the Credit Agreement, on and after
the Effective Date the Assignee shall have the same rights,
benefits and obligations as the Assignor had under the Loan
Documents with respect to the Purchased Percentage of the Loan
Documents, all determined as if the Assignee were a "Lender"
under the Credit Agreement with % of the Total Revolving
Credit Commitment and ___% of the outstanding Term Loans. The
Effective Date shall be the later of or two Business
Days (or such shorter period agreed to by the Administrative
Agent) after a Notice of Assignment substantially in the form of
Annex I attached hereto and any consents required to be delivered
to the Administrative Agent by Section 9.03(a) of the Credit
Agreement have been delivered to the Administrative Agent. In no
event will the Effective Date occur if the payments required to
be made by the Assignee to the Assignor on the Effective Date
under Sections 4 and 5 hereof are not made on the proposed
Effective Date. The Assignor will notify the Assignee of the
proposed Effective Date on the Business Day prior to the proposed
Effective Date.
3. ASSUMPTION. For and in consideration of the
assignment of rights by the Assignor set forth in Section 2
hereof and the other consideration set forth herein, and
effective as of the Effective Date, the Assignee does hereby
accept that assignment, and assume and covenant and agree fully,
completely and timely to perform, comply with and discharge, each
and all of the obligations, duties and liabilities of the
Assignor under the Credit Agreement which are assigned to the
Assignee hereunder, which assumption includes, without
limitation, the obligation to fund the unfunded portion of the
Total Revolving Credit Commitment in accordance with the
provisions set forth in the Credit Agreement as if the Assignee
were a "Lender" under the Credit Agreement with % of the
Total Revolving Credit Commitment. The Assignee agrees to be
bound by all provisions relating to "Lenders" under and as
defined in the Credit Agreement, including, without limitation,
provisions relating to the dissemination of information and the
payment of indemnification.
4. PAYMENTS OBLIGATIONS. On and after the Effective
Date, the Assignee shall be entitled to receive from the
Administrative Agent all payments of principal, interest and fees
with respect to the Purchased Percentage of the Assignor's
Revolving Credit Commitment and Loans. The Assignee shall
advance funds directly to the Administrative Agent with respect
to all Loans and reimbursement payments made on or after the
Effective Date. In consideration for the sale and assignment of
Loans hereunder, (i) with respect to all Base Rate Loans made by
the Assignor outstanding on the Effective Date, the Assignee
shall pay the Assignor, on the Effective Date, an amount equal to
the Purchased Percentage of all such Base Rate Loans; and
(ii) with respect to each Fixed Rate Loan made by the Assignor
outstanding on the Effective Date, (a) on the last day of the
Interest Period therefor or (b) on such earlier date agreed to by
the Assignor and the Assignee or (c) on the date on which any
such Fixed Rate Loan either becomes due (by acceleration or
otherwise) or is prepaid (the date as described in the foregoing
clauses (a), (b) or (c) being hereinafter referred to as the
"Payment Date"), the Assignee shall pay the Assignor an amount
equal to the Purchased Percentage of such Fixed Rate Loan. On
and after the Effective Date, the Assignee will also remit to the
Assignor any amounts of interest on Loans and fees received from
the Administrative Agent which relate to the Purchased Percentage
of Loans made by the Assignor accrued for periods prior to the
Effective Date, in the case of Base Rate Loans, or the Payment
Date, in the case of Eurodollar Loans, and not heretofore paid by
the Assignee to the Assignor. In the event interest for the
period from the Effective Date to but not including the Payment
Date is not paid by the Borrower with respect to any Eurodollar
Loan sold by the Assignor to the Assignee hereunder, the Assignee
shall pay to the Assignor interest for such period on such Fixed
Rate Loan at the applicable rate provided by the Credit Agree-
ment. In the event that either party hereto receives any payment
to which the other party hereto is entitled under this Assignment
Agreement, then the party receiving such amount shall promptly
remit it to the other party hereto.
5. FEES PAYABLE BY ASSIGNEE. The Assignee agrees to
pay the Administrative Agent a fee of $2,500 pursuant to
Section 9.03(b) of the Credit Agreement.
6. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S
LIABILITY. The Assignee represents and warrants to the Assignor
that it is capable of making and has made and shall continue to
make its own credit determinations and analysis based upon such
information as the Assignee deemed sufficient to enter into the
transaction contemplated hereby and not based on any statements
or representations by the Assignor. It is understood and agreed
that the assignment and assumption hereunder are made without
recourse to the Assignor and that the Assignor makes no
representation or warranty of any kind to the Assignee and shall
not be responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectability of the
Credit Agreement or any other Loan Document, including without
limitation, documents (if any) granting the Assignor and the
other Lenders a security interest in assets of the Borrower,
(ii) any representation, warranty or statement made in or in
connection with any of the Loan Documents, (iii) the financial
condition or creditworthiness of the Borrower or any of its
Subsidiaries, (iv) the performance of or compliance with any of
the terms or provisions of any of the Loan Documents,
(v) inspecting any of the property, books or records of the
Borrower or (vi) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral
securing or purporting to secure the Loans. Neither the Assignor
nor any of its officers, directors, employees, agents or
attorneys shall be liable for any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans
or the Loan Documents, except for its or their own bad faith or
wilful misconduct.
7. INDEMNITY. The Assignee agrees to indemnify and
hold the Assignor harmless against any and all losses, costs and
expenses (including, without limitation, reasonable attorneys'
fees) and liabilities incurred by the Assignor in connection with
or arising in any manner from the Assignee's performance or non-
performance of obligations assumed under this Assignment
Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date,
the Assignee shall have the right to make subsequent assignments
in accordance with Section 9.03 of the Credit Agreement.
9. REDUCTIONS OF TOTAL REVOLVING CREDIT COMMITMENT.
If any reduction in the Total Revolving Credit Commitment occurs
between the date of this Assignment Agreement and the Effective
Date, the percentage of the Total Revolving Credit Commitment
assigned to the Assignee shall remain the percentage specified in
Section 1 hereof and the dollar amount of the Revolving Credit
Commitment of the Assignee shall be recalculated based on the
reduced Total Revolving Credit Commitment.
10. ENTIRE AGREEMENT. This Assignment Agreement and
the attached consent embody the entire agreement and under-
standing between the parties hereto and supersede all prior
agreements and understandings between the parties hereto relating
to the subject matter hereof.
11. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF
THE STATE OF NEW YORK.
12. NOTICES. Notices shall be given under this
Assignment Agreement in the manner set forth in the Credit
Agreement. For the purpose hereof, the addresses of the parties
hereto (until notice of a change is delivered) shall be the
address set forth under each party's name on the signature pages
hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Assignment Agreement by their duly authorized officers as of
the date first above written.
[NAME OF ASSIGNOR]
By:
Name:
Title:
Address:
[NAME OF ASSIGNEE]
By:
Name:
Title:
Address:
<PAGE>
ANNEX I
TO ASSIGNMENT AGREEMENT
FORM OF
NOTICE OF ASSIGNMENT
To: THE PITTSTON COMPANY
100 First Stamford Place
P.O. Box 120070
Stamford, Connecticut 06912-0070
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
From: [NAME OF ASSIGNOR]
[NAME OF ASSIGNEE]
, 19
1. We refer to that Credit Agreement dated as of
March 4, 1994 (as amended, modified, extended or restated from
time to time, the "Credit Agreement") among The Pittston Company
(the "Borrower"), the Lenders party thereto (each a "Lender"),
including (the "Assignor"), the Co-Agents
party thereto and Credit Suisse as Administrative Agent.
Capitalized terms used herein and in any consent delivered in
connection herewith and not otherwise defined herein or in such
consent shall have the meanings attributed to them in the Credit
Agreement.
2. This Notice of Assignment (this "Notice") is given
and delivered to the Borrower and the Administrative Agent
pursuant to Section 9.03 of the Credit Agreement.
3. The Assignor and (the
"Assignee") have entered into an Assignment Agreement, dated as
of , 19 , in the form required by the Credit
Agreement, pursuant to which, among other things, the Assignor
has sold, assigned, delegated and transferred to the Assignee,
and the Assignee has purchased, accepted and assumed from the
Assignor, a ___% undivided interest in and to all of the
Assignor's rights and obligations under the Credit Agreement
(including, without limitation, all Loans made by the Assignor
and outstanding on the Effective Date) such that Assignee's
percentage of the Total Revolving Credit Commitment shall equal
% and its percentage of the outstanding Term Loans shall
equal ___%, in each case effective as of the "Effective Date" (as
hereinafter defined). The "Effective Date" shall be the later
of , 19 or two Business Days (or such shorter
period as agreed to by the Administrative Agent) after this
Notice of Assignment and any consents and fees required by Sec-
tion 9.03 of the Credit Agreement have been delivered to the
Administrative Agent, provided that the Effective Date shall not
occur if any condition precedent agreed to by the Assignor and
the Assignee has not been satisfied.
4. As of this date, the percentage of the Assignor in
the Total Revolving Credit Commitment is %. As of the
Effective Date, the percentage of the Assignor in the Total
Revolving Credit Commitment will be % (as such percentage may
be reduced or increased by assignments which become effective
prior to the assignment to the Assignee becoming effective) and
the percentage of the Assignee in the Total Revolving Credit
Commitment will be %.
5. The Assignor and the Assignee hereby give to the
Borrower and the Administrative Agent notice of the assignment
and delegation referred to herein. The Assignor will confer with
the Administrative Agent before ,
19 to determine if the Assignment Agreement will become
effective on such date pursuant to Section 3 hereof, and will
confer with the Administrative Agent to determine the Effective
Date pursuant to Section 3 hereof if it occurs thereafter. The
Assignor shall notify the Administrative Agent if the Assignment
Agreement does not become effective on any proposed Effective
Date as a result of the failure to satisfy the conditions
precedent agreed to by the Assignor and the Assignee. At the
request of the Administrative Agent, the Assignor will give the
Administrative Agent written confirmation of the occurrence of
the Effective Date.
6. The Assignee hereby accepts and assumes the
assignment and delegation referred to herein and agrees as of the
Effective Date (i) to perform fully all of the obligations under
the Credit Agreement which it has hereby assumed and (ii) to be
bound by the terms and conditions of the Credit Agreement as if
it were a "Lender".
7. The Assignor and the Assignee request and agree
that any payments to be made by the Administrative Agent to the
Assignor on and after the Effective Date shall, to the extent of
the assignment referred to herein, be made entirely to the
Assignee, it being understood that the Assignor and the Assignee
shall make between themselves any desired allocations.
8. The Assignee shall pay to the Administrative Agent
on or before the Effective Date the processing fee of $2,500
required by Section 9.03 of the Credit Agreement.
9. The Assignor and the Assignee request and direct
that the Administrative Agent prepare and cause the Borrower to
execute and deliver replacements notes to the Assignor and the
Assignee in accordance with Section 9.03 of the Credit Agreement.
The Assignor agrees to deliver to the Administrative Agent the
original Notes received by it from the Borrower upon the
Assignee's receipt of replacement Notes in the appropriate
amounts.
10. The Assignee advises the Administrative Agent that
the address listed below is its address for notices under the
Credit Agreement:
______________________________
______________________________
______________________________
ASSIGNOR ASSIGNEE
By: _______________________ By: ______________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT C-1
(Letterhead of Austin F. Reed, Esq.,
Vice President-Law and
Secretary of
The Pittston Company]
[Date]
To each of the lenders (the "Lenders")
listed on Annex A hereto that are
parties to the Credit Agreement dated as
of March 4, 1994 (the "Credit
Agreement"), among The Pittston Company,
such Lenders, the Co-Agents named therein
and Credit Suisse, as Administrative Agent
Dear Sirs:
As Vice President-Law and Secretary of The Pittston
Company, a Virginia corporation (the "Company"), I have general
supervision over the legal affairs of the Company and its
Subsidiaries. As such, I have participated in the preparation of
the Credit Agreement. Unless otherwise specifically defined,
capitalized terms used herein shall have the meanings assigned to
such terms in the Credit Agreement.
I am familiar with the corporate proceedings taken by
the Company in connection with the Credit Agreement and the
transactions contemplated thereby, and I have made such
examinations of documents and matters as I have considered
necessary or appropriate for the basis of the opinions
hereinafter expressed. I have assumed the genuineness of all
signatures (other than of officers of the Company) on all
certificates and documents and the conformity to the originals of
all records, certificates and documents submitted to me as
copies. I have also assumed the due organization, existence and
powers of the Lenders, the Co-Agents and the Administrative Agent
and the due authorization, execution and delivery of the Credit
Agreement on behalf of each of them.
On the basis of the foregoing, I am of the opinion
that:
1. The Company is duly organized, validly existing
and in good standing under the laws of the Commonwealth of
Virginia. The Company (i) has the requisite power and authority
to own its property and assets and to carry on its business as
now conducted and (ii) is qualified to do business in every
jurisdiction where such qualification is required, except where
the failure so to qualify would not have a material adverse
effect on the condition, financial or otherwise, of the Company
and its Subsidiaries taken as a whole. The Company has the
corporate power to execute and deliver and to perform its
obligations under the Credit Agreement and to borrow thereunder.
2. The execution, delivery and performance by the
Company of the Credit Agreement and the Notes have been duly
authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of the shareholders of
the Company, (ii) violate any provision of any law, rule,
regulation (including, without limitation, Regulation G, U or X
of the Board), order, writ, judgment, injunction, decree,
determination or award known to me after due inquiry and having
applicability to the Company or of the Restated Articles of
Incorporation or bylaws of the Company, (iii) result in a breach
of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument known to me
after due inquiry to which the Company is a party or by which it
or its properties may be bound or affected or (iv) result in the
creation of an Encumbrance of any nature upon or with respect to
any of the properties now owned or hereafter acquired by the
Company; and, to the best of my knowledge, the Company is not in
default under any such order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or
instrument or in default under any such law, rule or regulation,
which default would have a material adverse effect on the
consolidated assets, properties or financial condition of the
Company and its Subsidiaries.
3. No authorization, consent, approval, license,
exemption of, or filing or registration with, or any other action
in respect of any Governmental Authority is or will be necessary
for the valid execution, delivery or performance by the Company
of the Credit Agreement or the Notes.
I am a member of the bar of the State of Connecticut
and do not express any opinion as to any matters governed by any
law other than the law of the State of Connecticut, the Virginia
Stock Corporation Act, and the federal law of the United States
of America.
Very truly yours,
<PAGE>
EXHIBIT C-2
[Letterhead of]
CRAVATH, SWAINE & MOORE
[Date]
The Pittston Company
Credit Agreement
dated as of March 4, 1994
Dear Sirs:
We have acted as special New York counsel to The
Pittston Company, a Virginia corporation (the "Borrower"),
in connection with the Credit Agreement dated as of March 4,
1994 (the "Credit Agreement"), among the Borrower, each of
you (the "Lenders"), Chemical Bank, Credit Suisse and Morgan
Guaranty Trust Company of New York, as co-agents for the
Lenders (the "Co-Agents"), and Credit Suisse, as
administrative agent for the Lenders (the "Administrative
Agent"). This opinion is being delivered to you pursuant to
Section 4.01(ii) of the Credit Agreement. Capitalized terms
not otherwise defined herein shall have the meanings given
to them in the Credit Agreement.
In connection with this opinion, we have
investigated such questions of law, received such
information from officers and representatives of the
Borrower and examined such other documents as we have deemed
necessary or appropriate for the purposes of this opinion,
including execution copies of the Credit Agreement and each
Note.
Based on the foregoing we are of opinion that,
assuming due authorization, execution and delivery of the
Credit Agreement by the Borrower, the Lenders, the Co-Agents
and the Administrative Agent, due authorization, execution
and delivery of the Notes by the Borrower, and application
by a court (other than a New York court) of the laws of the
State of New York, the Credit Agreement and the Notes
constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with
their respective terms (subject to applicable bankruptcy,
reorganization, insolvency, fraudulent transfer, moratorium
and other laws affecting creditors' rights generally from
time to time in effect and to general principles of equity,
regardless of whether considered in a proceeding in equity
or at law), except that no opinion is expressed as to the
enforceability of the last sentence of Section 2.14, the
first sentence of Section 9.02(c) or as to the effect of the
law of any jurisdiction (other than the State of New York)
wherein any Lender (including any lending office thereof)
may be located which limits rates of interest which may be
charged or collected by such Lender.
We are admitted to practice only in the State of
New York and express no opinion as to matters governed by
any laws other than the laws of the State of New York and
the Federal laws of the United States of America.
Very truly yours,
To each of the lenders listed
on Annex A hereto that are
parties to the Credit Agreement
dated as of March 4, 1994,
among The Pittston Company,
such Lenders, the Co-Agents
named therein and Credit Suisse,
as Administrative Agent
<PAGE>
SCHEDULE 1.01A
Existing Lender Credit Agreements
Credit Agreement dated as of December 18, 1987, between The
Pittston Company and Bank of Montreal, as amended.
Credit Agreement dated as of December 31, 1991, between The
Pittston Company and The Bank of Nova Scotia, as amended.
Credit Agreement dated as of December 18, 1987, between The
Pittston Company and The Chase Manhattan Bank (National
Association), as amended.
Credit Agreement dated as of December 20, 1991, between The
Pittston Company and The Citizens and Southern National
Bank.
Credit Agreement dated as of December 18, 1989, between The
Pittston Company and Credit Suisse, as amended.
Credit Agreement dated as of December 27, 1991, between The
Pittston Company and The Long-Term Credit Bank of Japan,
Limited, New York Branch.
Credit Agreement dated as of December 18, 1987, between The
Pittston Company and Manufacturers Hanover Trust Company, as
amended.
Credit Agreement dated as of December 18, 1987, between The
Pittston Company and Morgan Guaranty Trust Company of New
York, as amended.
Credit Agreement dated as of December 18, 1989, between The
Pittston Company and National Westminster Bank plc, New York
branch, as amended.
Credit Agreement dated as of December 30, 1991, between The
Pittston Company and Pittsburgh National Bank, as amended.
<PAGE>
SCHEDULE 1.01B
Unrestricted Subsidiaries
None.<PAGE>
SCHEDULE 2.01
COMMITMENTS
Lender (including notice
address and Applicable
Lending Officers)
_________________________
Credit Suisse
Tower 49
12 East 49th Street
New York, NY 10017
Attention: Robert C. Rubino
Telecopy: (212) 238-5439 $28,571,428.57 $11,428,571.43
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: Peter Eckstein
Telecopy: (212) 270-3277 $25,000,000.00 $10,000,000.00
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, NY 10260-0060
Attention: Caroline Shapiro
Telecopy: (212) 648-5014 $12,500,000.00 $5,000,000.00
Bank of Montreal
430 Park Avenue
New York, NY 10022
Attention: Brian Savage
Telecopy: (212) 605-1410 $17,857,142.86 $ 7,142,857.14
The Bank of Nova Scotia
One Liberty Plaza,
26th floor
New York, NY 10006
Attention: Terry Fryett
Telecopy: (212) 225-5145 $17,857,142.86 $ 7,142,857.14
The Chase Manhattan Bank
(National Association)
One Chase Manhattan Plaza
New York, NY 10081
Attention: Peter Dedousis
Telecopy: (212) 552-7773 $14,285,714.29 $ 5,714,285.71
Fleet Bank, N.A.
263 Tresser Boulevard
Stamford, CT 06901-3236
Attention: Quay B. McKeough
Telecopy: (203) 351-1511 $10,714,285.71 $ 4,285,714.29
J.P. Morgan Delaware
902 N. Market Street
Wilmington, DE 19801-3015
Attention: Philip S. Detjens
Telecopy: (302) 654-5336 $12,500,000.00 $5,000,000.00
The Long-Term Credit Bank
of Japan, Limited,
New York Branch
165 Broadway
New York, NY 10006
Attention: Greg Hong
Telecopy: (212) 608-2371 $17,857,142.86 $ 7,142,857.14
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Attention: Andrew Mellgard
Telecopy: (412) 234-8888 $10,714,285.71 $ 4,285,714.29
National Westminster Bank plc
175 Water Street,
29th Floor
New York, NY 10038
Attention: Thomas S. Olzenski
Telecopy: (212) 602-4402 $17,857,142.86 $ 7,142,857.14
NationsBank of Georgia,
N.A.
767 Fifth Avenue,
5th floor
New York, NY 10153
Attention: Moses J. Sawney
Telecopy: (212) 593-1083 $21,428,571.43 $ 8,571,428.57
PNC Bank, National
Association
One PNC Plaza, Third floor
Fifth Avenue and Wood St.
Pittsburgh, PA 15265
Attention: Dale A. Stein
Telecopy: (412) 762-2784 $21,428,571.43 $ 8,571,428.57
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211
Attention: Kerry Day
Telecopy: (617) 292-2566 $10,714,285.71 $ 4,285,714.29
Toronto Dominion
(New York), Inc.
909 Fannin, Suite 1700
Houston, TX 77010
Attention: Jorgi Garcia
Telecopy: (713) 951-9921 $10,714,285.71 $ 4,285,714.29
______________ ______________
Total $250,000,000 $100,000,000
<PAGE>
SCHEDULE 6.02
Encumbrances
1) Encumbrances on facilities of Brink's, Incorporated and
certain of its Subsidiaries representing Capital Lease
Obligations in the aggregate amount of $3,796,000.
2) Encumbrances on facilities of Burlington Air Express Inc.
and certain of its Subsidiaries representing Capital
Lease Obligations in the aggregate amount of $1,151,000.
3) Encumbrances on the facility of Burlington Air Express
Inc. in Chicago, Illinois, securing Debt of $318,000.
EXHIBIT 10.5
THE PITTSTON COMPANY
1988 Stock Option Plan
(May 6, 1994)
ARTICLE I
Purpose of the Plan
This 1988 Stock Option Plan (this "Plan") contains provisions
designed to enable key employees of The Pittston Company (the
"Company") and its Subsidiaries to acquire a proprietary interest
in the Company in the form of shares of either or both classes of
its Common Stock, viz., Pittston Services Group Common Stock and
Pittston Minerals Group Common Stock. The Company intends this
Plan to encourage those individuals who are expected to contribute
significantly to the Company's success to accept employment or
continue in the employ of the Company and its Subsidiaries, to
enhance their incentive to perform at the highest level, and, in
general, to further the best interests of the Company and its
shareholders.
ARTICLE II
Administration of the Plan
Section 1. Subject to the authority as described herein of
the Board of Directors of the Company (the "Board"), this Plan
shall be administered by a committee (the "Committee") designated
by the Board, which shall be composed of at least three members of
the Board, all of whom are Disinterested Persons and satisfy the
requirements for an outside director pursuant to Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), and any
regulations issued thereunder. Until otherwise determined by the
Board, the Compensation and Benefits Committee designated by the
Board shall be the Committee under this Plan. The Committee is
authorized to interpret this Plan as it deems best. All deter-
minations by the Committee shall be made by the affirmative vote of
a majority of its members, but any determination reduced to writing
and signed by a majority of its members shall be fully as effective
as if it had been made by a majority vote at a meeting duly called
and held. Subject to any applicable provisions of the Company's
bylaws or of this Plan, all determinations by the Committee or by
the Board pursuant to the provisions of this Plan, and all related
orders or resolutions of the Committee or the Board, shall be
final, conclusive and binding on all persons, including the Company
and its shareholders and those receiving options under this Plan.
Section 2. All authority of the Committee provided for in
or pursuant to this Plan, including that referred to in Section 1
of this Article II, may also be exercised by the Board. No action
of the Board taken pursuant to the provisions of this Plan shall be
effective unless at the time both a majority of the Board and a
majority of the directors acting in the matter are Disinterested
Persons. In the event of any conflict or inconsistency between
determinations, orders, resolutions or other actions of the
Committee and the Board taken in connection with this Plan, the
actions of the Board shall control.
ARTICLE III
Eligibility
Only persons who are Employees, including individuals who have
agreed to become Employees as provided in Article XII, shall be
eligible to receive option grants under this Plan. Neither the
members of the Committee nor any member of the Board who is not an
Employee shall be eligible to receive any such grant.
ARTICLE IV
Stock Subject to Grants under this Plan
Section 1. Grants under this Plan shall relate to either
or both of the classes of Common Stock ("Common Stock") of the
Company and may be made in the form of incentive stock options or
nonqualified stock options. Unless otherwise indicated, references
in this Plan to Common Stock shall be construed to refer to the
class of Common Stock covered by the particular option.
Section 2. Subject to Section 3 of this Article IV, the
maximum number of shares of Common Stock which may be issued
pursuant to options exercised under this Plan shall be (a) in the
case of Pittston Services Group Common Stock, 1,600,000 shares plus
the number of shares of such Stock issuable pursuant to options
outstanding under this Plan on May 6, 1994, and (b) in the case of
Pittston Minerals Group Common Stock, 225,000 shares plus the
number of shares of such Stock issuable pursuant to options
outstanding under this Plan on May 6, 1994. Such number of shares
of Common Stock referred to in clause (a) or (b) shall be reduced
by the aggregate number of shares of such Common Stock covered by
options purchased pursuant to Section 3 or Section 4 of Article VI.
Notwithstanding the foregoing, in no event will any Employee be
granted in any calendar year options to purchase more than 250,000
shares of Pittston Services Group Common Stock and 200,000 shares
of Pittston Minerals Group Common Stock.
Section 3. In the event of any dividend payable in any
class of Common Stock or any split or combination of any class of
Common Stock, (a) the number of shares of such class which may be
issued under this Plan shall be proportionately increased or
decreased, as the case may be, (b) the number of shares of such
class (including shares subject to options not then exercisable)
deliverable pursuant to grants theretofore made shall be
proportionately increased or decreased, as the case may be, and
(c) the aggregate purchase price of shares of such class subject to
any such grant shall not be changed. In the event of any other
recapitalization, reorganization, extraordinary dividend or
distribution or restructuring transaction (including any distribu-
tion of shares of stock of any Subsidiary or other property to
holders of shares of any class of Common Stock) affecting any class
of Common Stock, the number of shares of such class issuable under
this Plan shall be subject to such adjustment as the Committee or
the Board may deem appropriate, and the number of shares of such
class issuable pursuant to any option theretofore granted (whether
or not then exercisable) and/or the option price per share of such
option, shall be subject to such adjustment as the Committee or the
Board may deem appropriate with a view toward preserving the value
of such option. In the event of a merger or share exchange in
which the Company will not survive as an independent, publicly
owned corporation, or in the event of a consolidation or of a sale
of all or substantially all of the Company's assets, provision
shall be made for the protection and continuation of any
outstanding options by the substitution, on an equitable basis, of
such shares of stock, other securities, cash, or any combination
thereof, as shall be appropriate.
ARTICLE V
Purchase Price of Optioned Shares
Unless the Committee shall fix a greater purchase price, the
purchase price per share of Common Stock under any option shall be
100% of the Fair Market Value of a share of Common Stock covered by
such option at the time such option is granted.
ARTICLE VI
Grant of Options
Section 1. Each option granted under this Plan shall
constitute either an incentive stock option, intended to qualify
under Section 422 of the Code, or a nonqualified stock option, not
intended to qualify under said Section 422, as determined in each
case by the Committee.
Section 2. The Committee shall from time to time determine
the Employees to be granted options, it being understood that
options may be granted at different times to the same Employees.
In addition, the Committee shall determine (a) the number and class
of shares of Common Stock subject to each option, (b) the time or
times when the options will be granted, (c) the purchase price of
the shares subject to each option, which price shall be not less
than that specified in Article V, and (d) the time or times when
each option may be exercised within the limits stated in this Plan,
which except as provided in the following sentence shall in no
event be less than six months after the date of grant. All options
granted under this Plan shall become exercisable in their entirety
at the time of any Change in Control of the Company.
Section 3. In connection with any option granted under
this Plan the Committtee in its discretion may grant a stock
appreciation right (a "Stock Appreciation Right"), providing that
at the election of the holder of a Stock Appreciation Right (which
election shall, unless the Committee otherwise consents, be made
only during an Election Period), the Company shall purchase all or
any part of the related option to the extent that such option is
exercisable at the date of such election for an amount (payable in
the form of cash, shares of Common Stock or any combination
thereof, all as the Committee shall in its discretion determine)
equal to the excess of the Fair Market Value of the shares of
Common Stock covered by such option or part thereof so purchased on
the date such election shall be made over the purchase price of
such shares so covered. A Stock Appreciation Right may also
provide that the Committee or the Board reserves the right to
determine, in its discretion, the date (which shall be subsequent
to six months after the date of grant of such option) on which such
Right shall first become exercisable in whole or in part.
Section 4. In connection with any option granted under
this Plan the Committee in its discretion may grant a limited right
(a "Limited Right") providing that the Company shall, at the
election of the holder of a Limited Right (which election may be
made only during the period beginning on the first day following
the date of expiration of any Offer and ending on the forty-fifth
day following such date), purchase all or any part of such option,
for an amount (payable entirely in cash) equal to the excess of the
Offer Price of the shares of Common Stock covered by such purchase
on the date such election shall be made over the purchase price of
such shares so purchased. Notwithstanding any other provision of
this Plan, no Limited Right may be exercised within six months of
the date of its grant.
Section 5. The authority with respect to the grant of
options and the determination of their provisions contained in
Sections 1 through 4 of this Article VI may be delegated by the
Board to one or more officers of the Company, on such conditions
and limitations as the Board shall approve; provided, however, that
no such authority shall be delegated with respect to the grant of
options to any officer or director of the Company or with respect
to the determination of any of the provisions of any of such
options.
ARTICLE VII
Non-Transferability of Options
No option or Stock Appreciation Right (including any Limited
Rights) granted under this Plan shall be transferable by the
optionee otherwise than by will or by the laws of descent and
distribution, and any such option or Stock Appreciation Right
(including any Limited Rights) shall be exercised during the
lifetime of the optionee only by the optionee or the optionee's
duly appointed legal representative.
ARTICLE VIII
Exercise of Options
Section 1. Each incentive stock option granted under this
Plan shall terminate not later than ten years from the date of
grant. Each nonqualified stock option granted under this Plan
shall terminate not later than ten years and two days from the date
of grant.
Section 2. Except in cases provided for in Article IX,
each option granted under this Plan may be exercised only while the
optionee is an Employee. An Employee's right to exercise any
incentive stock option shall be subject to the provisions of
Section 422 of the Code restricting the exercisability of such
option during any calendar year.
Section 3. A person electing to exercise an option shall
give written notice to the Company of such election and of the
number of shares of Common Stock such person has elected to
purchase, and shall tender the full purchase price of such shares,
which tender shall be made in cash or cash equivalent (which may be
such person's personal check) at the time of purchase or in
accordance with cash payment arrangements acceptable to the Company
for payment prior to delivery of such shares or, if the Committee
so determines either generally or with respect to a specified
option or group of options, in shares of Common Stock already owned
by such person (which shares shall be valued for such purpose on
the basis of their Fair Market Value on the date of exercise), or
in any combination thereof. The Company shall have no obligation
to deliver shares of Common Stock pursuant to the exercise of any
option, in whole or in part, until the Company receives payment in
full of the purchase price thereof. No optionee or legal
representative, legatee or distributee of such optionee shall be or
be deemed to be a holder of any shares of Common Stock subject to
such option or entitled to any rights as a shareholder of the
Company in respect of any shares of Common Stock covered by such
option until such shares have been paid for in full and issued by
the Company. A person electing to exercise a Stock Appreciation
Right or Limited Right then exercisable shall give written notice
to the Company of such election and of the option or part thereof
which is to be purchased by the Company.
ARTICLE IX
Termination of Options
Section 1. If an optionee shall cease to be an Employee
for any reason other than death or retirement under the Company's
Pension-Retirement Plan or any other pension plan sponsored by the
Company or a Subsidiary, all of the optionee's options shall be
terminated except that any option, Stock Appreciation Right or
Limited Right to the extent then exercisable may be exercised
within three months after cessation of employment, but not later
than the termination date of the option or in the case of a Limited
Right not later than the expiration date of such Right.
Section 2. If and when an optionee shall cease to be an
Employee by reason of the optionee's early, normal or late
retirement under the Company's Pension-Retirement Plan or any such
other pension plan, all of the optionee's options shall be
terminated except that (a) any Stock Appreciation Right or Limited
Right to the extent then exercisable may be exercised within three
months after such retirement, but not later than the termination
date of the option or in the case of a Limited Right not later than
the expiration date of such Right, and (b) any option to the extent
then exercisable may, unless it otherwise provides, be exercised
within three years after such retirement, but not later than the
termination date of the option, unless within 45 days after such
retirement the Committee determines, in its discretion, that such
option may be exercised only within a period of shorter duration
(not less than three months following notice of such determination
to the optionee) to be specified by the Committee.
Section 3. If an optionee shall die while an Employee, all
of the optionee's options shall be terminated except that any
option (but not any Stock Appreciation Right or Limited Right) to
the extent then exercisable by the optionee at the time of death,
together with the unmatured installment, if any, of the option
which at that time is next scheduled to become exercisable, may be
exercised within one year after the date of such death, but not
later than the termination date of the option, by the optionee's
estate or by the person designated in the optionee's last will and
testament.
Section 4. If an optionee shall die after ceasing to be an
Employee, all of the optionee's options shall be terminated except
that any option (but not any Stock Appreciation Right or Limited
Right) to the extent exercisable by the optionee at the time of
death may be exercised within one year after the date of death, but
not later than the termination date of the option, by the
optionee's estate or by the person designated in the optionee's
last will and testament.
ARTICLE X
Miscellaneous Provisions
Section 1. Each option grant under this Plan shall be
subject to the requirement that if at any time the Committee shall
determine that the listing, registration or qualification of the
shares of Common Stock subject to such grant upon any securities
exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the making of
such grant or the issue of Common Stock pursuant thereto, then,
anything in this Plan to the contrary notwithstanding, no option
may be exercised in whole or in part, and no shares of Common Stock
shall be issued, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free from
any conditions not reasonably acceptable to the Committee.
Section 2. The Company may establish appropriate
procedures to ensure payment or withholding of such income or other
taxes as may be provided by law to be paid or withheld in connec-
tion with the issue of shares of Common Stock under this Plan or
the making of any payments pursuant to Section 3 or 4 of
Article VI, and to ensure that the Company receives prompt advice
concerning the occurrence of an Income Recognition Date or any
other event which may create, or affect the timing or amount of,
any obligation to pay or withhold any such taxes or which may make
available to the Company any tax deduction resulting from the
occurrence of such event. Such procedures may include arrangements
for payment or withholding of taxes by retaining shares of Common
Stock otherwise issuable to the optionee in accordance with the
provisions of this Plan or by accepting already owned shares, and
by applying the Fair Market Value of such shares to the withholding
taxes payable or to the amount of tax liability in excess of
withholding taxes which arises from the delivery of such shares.
Section 3. Any question as to whether and when there has
been a retirement under the Company's Pension-Retirement Plan or
any other pension plan sponsored by the Company or a Subsidiary or
a cessation of employment for any other reason shall be determined
by the Committee, and any such reasonable determination shall be
final.
Section 4. All instruments evidencing options granted
shall be in such form, consistent with this Plan and any applicable
determinations or other actions of the Committee and the Board, as
the officers of the Company shall determine.
Section 5. The grant of an option to an Employee shall not
be construed to give such Employee any right to be retained in the
employ of the Company or any of its Subsidiaries.
ARTICLE XI
Plan Termination and Amendments
Section 1. The Board may terminate this Plan at any time,
but this Plan shall in any event terminate on May 11, 1998, and no
options may thereafter be granted, unless the shareholders shall
have approved its extension. Options granted in accordance with
this Plan prior to the date of its termination may extend beyond
that date.
Section 2. The Board or the Committee may from time to
time amend, modify or suspend this Plan, but no such amendment or
modification without the approval of the shareholders shall
(a) increase the maximum number (determined as provided
in this Plan) of shares of any class of Common Stock which may
be issued pursuant to options granted under this Plan;
(b) permit the grant of any option at a purchase price
less than 100% of the Fair Market Value of the Common Stock
covered by such option at the time such option is granted;
(c) permit the exercise of an option unless arrangements
are made to ensure that the full purchase price of the shares
as to which the option is exercised is paid prior to delivery
of such shares; or
(d) extend beyond May 11, 1998, the period during which
option grants may be made.
ARTICLE XII
Definitions
Wherever used in this Plan, the following terms shall have the
meanings indicated:
Change in Control: A Change in Control shall be deemed to
have occurred if either (a) any person, or any two or more persons
acting as a group, and all affiliates of such person or persons,
shall own beneficially more than 20% of the total voting power in
the election of directors of the Company of all classes of Common
Stock outstanding (exclusive of shares held by the Company's
Subsidiaries) pursuant to a tender offer, exchange offer or series
of purchases or other acquisitions, or any combination of those
transactions, or (b) there shall be a change in the composition of
the Board at any time within two years after any tender offer,
exchange offer, merger, consolidation, sale of assets or contested
election, or any combination of those transactions (a "Trans-
action"), so that (i) the persons who were directors of the Company
immediately before the first such Transaction cease to constitute
a majority of the Board of Directors of the corporation which shall
thereafter be in control of the companies that were parties to or
otherwise involved in such first Transaction, or (ii) the number of
persons who shall thereafter be directors of such corporation shall
be fewer than two-thirds of the number of directors of the Company
immediately prior to such first Transaction. A Change in Control
shall be deemed to take place upon the first to occur of the events
specified in the foregoing clauses (a) and (b).
Disinterested Persons: Such term shall have the meaning
ascribed thereto in Rule 16b-3(d)(3) under the Securities Exchange
Act of 1934.
Election Period: The period beginning on the third business
day following a date on which the Company releases for publication
its quarterly or annual summary statements of sales and earnings,
and ending on the twelfth business day following such date.
Employee: Any officer and any other salaried employee of
the Company or a Subsidiary, including (a) any director who is
also an employee of the Company or a Subsidiary and (b) an
officer or salaried employee on approved leave of absence provided
such employee's right to continue employment with the Company or a
Subsidiary upon expiration of such employee's leave of absence is
guaranteed either by statute or by contract with or by a policy of
the Company or a Subsidiary. For purposes of eligibility for the
grant of a nonqualified stock option, such term shall include any
individual who has agreed in writing to become an officer or other
salaried employee of the Company or a Subsidiary within 30 days
following the date on which an option is granted to such
individual.
Fair Market Value: With respect to shares of any class of
Common Stock, the average of the high and low quoted sale prices of
a share of such Stock on the date in question (or, if there is no
reported sale on such date, on the last preceding date on which any
reported sale occurred) on the New York Stock Exchange Composite
Transactions Tape.
Income Recognition Date: With respect to the exercise of any
option, the later of (a) the date of such exercise or (b) the date
on which the rights of the holder of such option in the shares of
Common Stock covered by such exercise become transferable and not
subject to a substantial risk of forfeiture (within the meaning of
Section 83 of the Code); provided, however, that, if such holder
shall make an election pursuant to Section 83(b) of the Code with
respect to such exercise, the Income Recognition Date with respect
thereto shall be the date of such exercise.
Offer: Any tender offer, exchange offer or series of
purchases or other acquisitions, or any combination of those
transactions, as a result of which any person, or any two or more
persons acting as a group, and all affiliates of such person or
persons, shall own beneficially more than 30% of the total voting
power in the election of directors of the Company of all classes of
Common Stock outstanding (exclusive of shares held by the Company's
Subsidiaries).
Offer Price: The highest price per share of Common Stock paid
in any Offer which is in effect at any time beginning on the
ninetieth day prior to the date on which a Limited Right is
exercised. Any securities or property which are part or all of the
consideration paid for shares of Common Stock in the Offer shall be
valued in determining the Offer Price at the higher of (a) the
valuation placed on such securities or property by the person or
persons making such Offer or (b) the valuation of such securities
or property as may be determined by the Committee.
Subsidiary: Any corporation of which stock representing at
least 50% of the ordinary voting power is owned, directly or
indirectly, by the Company.
EXHIBIT 10.6
KEY EMPLOYEES' DEFERRED
COMPENSATION PROGRAM
OF
THE PITTSTON COMPANY
_______________________
As Amended and Restated
as of July 1, 1994
_______________________
<PAGE>
TABLE OF CONTENTS
PREAMBLE 1
ARTICLE I DEFINITIONS 2
ARTICLE II ADMINISTRATION 4
SECTION 1 AUTHORIZED SHARES 4
SECTION 2 ADMINISTRATION 5
ARTICLE III DEFERRAL OF CASH INCENTIVE PAYMENTS 5
SECTION 1 DEFINITION 5
SECTION 2 ELIGIBILITY 5
SECTION 3 DEFERRAL OF CASH INCENTIVE PAYMENTS 6
SECTION 4 ALLOCATION OF DEFERRED AMOUNTS
BETWEEN MINERAL UNITS AND SERVICES
UNITS 6
SECTION 5 IRREVOCABILITY OF ELECTION 7
SECTION 6 CONVERSION TO UNITS 7
SECTION 7 ADJUSTMENTS 8
SECTION 8 DIVIDENDS AND DISTRIBUTIONS 8
SECTION 9 ALLOCATION OF UNITS
AS OF JULY 1, 1994 9
SECTION 10 MINIMUM DISTRIBUTION 9
ARTICLE IV DEFERRAL OF SALARY 10
SECTION 1 DEFINITIONS 10
SECTION 2 ELIGIBILITY 10
SECTION 3 DEFERRAL OF SALARY 11
SECTION 4 ALLOCATION OF DEFERRED SALARY
BETWEEN MINERALS UNITS AND
SERVICES UNITS 12
SECTION 5 IRREVOCABILITY OF ELECTION 12
SECTION 6 CONVERSION TO UNITS 13
SECTION 7 ADJUSTMENTS 15
SECTION 8 DIVIDENDS AND DISTRIBUTIONS 16
SECTION 9 MINIMUM DISTRIBUTION 17
ARTICLE V SUPPLEMENTAL SAVINGS PLAN 18
SECTION 1 DEFINITIONS 18
SECTION 2 ELIGIBILITY 19
SECTION 3 DEFERRAL OF COMPENSATION 20
SECTION 4 MATCHING CONTRIBUTIONS 21
SECTION 5 ALLOCATION OF DEFERRED AMOUNTS
BETWEEN MINERAL UNITS AND SERVICES
UNITS 22
SECTION 6 IRREVOCABILITY OF ELECTION 22
SECTION 7 CONVERSION TO UNITS 23
SECTION 8 ADJUSTMENTS 26
SECTION 9 DIVIDENDS AND DISTRIBUTIONS 26
ARTICLE VI DISTRIBUTIONS 27
SECTION 1 PAYMENTS ON TERMINATION OF
EMPLOYMENT 27
SECTION 2 IN-SERVICE DISTRIBUTIONS 28
ARTICLE VII DESIGNATION OF BENEFICIARY 29
ARTICLE VIII MISCELLANEOUS 31
SECTION 1 NONTRANSFERABILITY OF BENEFITS 31
SECTION 2 NOTICES 31
SECTION 3 LIMITATION ON RIGHTS OF EMPLOYEE 32
SECTION 4 NO CONTRACT OF EMPLOYMENT 32
SECTION 5 WITHHOLDING 33
SECTION 6 AMENDMENT AND TERMINATION 33
<PAGE>
Key Employees' Deferred Compensation Program of
The Pittston Company
As Amended and Restated
As of July 1, 1994
PREAMBLE
The Key Employees' Deferred Compensation Program
of The Pittston Company (the "Program"), as amended and
restated as of July 1, 1994, is intended to be a con-
tinuation and expansion of the Key Employees Deferred
Payment Program of The Pittston Company. The expanded
Program is intended to provide an opportunity to certain
employees to defer receipt of (a) all or part of their cash
incentive payments awarded under the Key Employees Incentive
Plan of The Pittston Company, (b) up to 50% of their base
salary, and (c) any or all amounts that are prevented from
being deferred as a matched contribution (and the related
matching contribution) under The Savings-Investment Plan of
The Pittston Company and its Subsidiaries as a result of
limitations imposed by Sections 401(a)(17), 401(k)(3),
402(g) and 415 of the Internal Revenue Code of 1986, as
amended.
The Program is an unfunded plan maintained
primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated
employees, within the meaning of Section 201(2) of the
Employee Retirement Income Security Act of 1974, as amended.
ARTICLE I
Definitions
Wherever used in the Program, the following terms
shall have the meanings indicated:
Code: The Internal Revenue Code of 1986, as
amended from time to time.
Committee: The Compensation and Benefits
Committee of the Company's Board of Directors, which shall
consist of members of the Board of Directors who qualify as
"disinterested persons" as described in Rule 16b-3(c)(2)(i)
promulgated under the Securities Exchange Act of 1934, as
amended.
Company: The Pittston Company.
Employee: Any resident of the United States of
America who is in the employ of the Company or a Subsidiary
whose principal place of business is located in the United
States of America.
Incentive Account: The account maintained by the
Company for an Employee to document the amounts deferred
under the Program by such Employee and any other amounts
credited hereunder and the Units into which such amounts
shall be converted.
Minerals Stock: Pittston Minerals Group Common
Stock, par value $1.00 per share.
Minerals Unit: The equivalent of one share of
Minerals Stock credited to an Employee's Incentive Account.
Program: This Key Employees' Deferred
Compensation Program of The Pittston Company, as in effect
from time to time.
Services Stock: Pittston Services Group Common
Stock, par value $1.00 per share.
Services Unit: The equivalent of one share of
Services Stock credited to an Employee's Incentive Account.
Shares: Minerals Stock or Services Stock, as the
case may be.
Subsidiary: Any corporation incorporated in the
United States of America more than 80% of the outstanding
voting stock of which is owned by the Company, by the
Company and one or more Subsidiaries or by one or more
Subsidiaries.
Unit: A Services Unit or Minerals Unit, as the
case may be.
Year: (a) With respect to the benefits provided
pursuant to Article III, the calendar year, and (b) with
respect to the benefits provided pursuant to Articles IV and
V, the six-month period from July 1, 1994, through
December 31, 1994, and thereafter, the calendar year;
provided, however, that if a newly-hired Employee becomes
eligible to participate in the benefits provided pursuant to
Articles IV and/or V, on a day other than the first day of
the Year, the Year for purposes of Articles IV and V shall
be the portion of the calendar year during which the
Employee is first eligible to participate in the benefits
provided thereunder.
ARTICLE II
Administration
SECTION 1. Authorized Shares. The maximum number
of Units that may be credited hereunder is 100,000 Minerals
Units and 250,000 Services Units. The number of Shares of
each class that may be issued or otherwise distributed
hereunder will be equal to the number of Units (of each
class) that may be credited hereunder.
In the event of any change in the number of shares
of Minerals Stock and/or Services Stock outstanding by
reason of any stock split, stock dividend, recapitalization,
merger, consolidation, reorganization, combination, or
exchange of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, any
distribution to common shareholders other than cash divi-
dends, or any exchange of Minerals Stock for Services Stock,
a corresponding adjustment shall be made to the number or
kind of shares that may be deemed issued under the Program
by the Committee. Such adjustment shall be conclusive and
binding for all purposes of the Program.
SECTION 2. Administration. The Committee is
authorized to construe the provisions of the Program and to
make all determinations in connection with the adminis-
tration of the Program including, but not limited to, the
Employees who are eligible to participate in the benefits
provided under Article III. All such determinations made by
the Committee shall be final, conclusive and binding on all
parties, including Employees participating in the Program.
ARTICLE III
Deferral of Cash Incentive Payments
SECTION 1. Definitions. Whenever used in this
Article III, the following terms shall have the meanings
indicated:
Cash Incentive Payment: A cash incentive
payment awarded to an Employee for any Year under the
Incentive Plan.
Incentive Plan: The Key Employees Incentive
Plan of The Pittston Company, as in effect from time to
time or any successor thereto.
SECTION 2. Eligibility. The Committee shall
designate the key management, professional or technical
Employees who may defer all or part of their Cash Incentive
Payments for any Year pursuant to this Article III.
SECTION 3. Deferral of Cash Incentive Payments.
Each Employee whom the Committee has selected to be eligible
to defer a Cash Incentive Payment for any Year pursuant to
this Article III may make an election to defer all or part
(in multiples of 10%) of any Cash Incentive Payment which
may be made to him or her for such Year. Such Employee's
election for any Year shall be made prior to January 1 of
such Year. An Incentive Account (which may be the same
Incentive Account established pursuant to Articles IV and/or
V) shall be established for each Employee making such
election and Units in respect of such deferred payment shall
be credited to such Incentive Account as provided in
Section 6 below.
SECTION 4. Allocation of Deferred Amounts Between
Mineral Units and Services Units. Unless the Committee
otherwise determines prior to the November 15 next preceding
any Year, each Employee who elects to defer a Cash Incentive
Payment shall specify what portion (in multiples of 10%) of
such deferred Cash Incentive Payment shall be converted into
Minerals Units and Services Units in accordance with
Section 6 of this Article III. Notice of any determination
by the Committee pursuant to this Section 4 with respect to
any Year shall be given prior to December 15 of the next
preceding Year to each Employee participating in the
benefits provided pursuant to this Article III for such
Year.
SECTION 5. Irrevocability of Election. An
election to defer Cash Incentive Payments and the allocation
of the deferred amounts between Minerals Units and Services
Units under the Program for any Year shall be irrevocable
after the first day of such Year.
SECTION 6. Conversion to Units. The amount of an
Employee's deferred Cash Incentive Payment for any Year
shall be converted to Services Units and/or Minerals Units
in accordance with such Employee's election for such Year
and shall be credited to such Employee's Incentive Account
as of the January 1 next following the Year in respect of
which the Cash Incentive Payment was made. The number
(computed to the fourth decimal place) of Units so credited
shall be determined by dividing the aggregate amount
credited to the Employees' Incentive Account for such Year
by the average of the high and low per share quoted sale
prices of Services Stock or Minerals Stock, as the case may
be, as reported on the New York Stock Exchange Composite
Transaction Tape on each trading day during the month of
December of the Year immediately prior to the crediting of
Units.
SECTION 7. Adjustments. The Committee shall
determine such equitable adjustments in the Units credited
to each Incentive Account as may be appropriate to reflect
any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination, or exchange of
shares, split-up, split-off, spin-off, liquidation or other
similar change in capitalization, any distribution to common
shareholders other than cash dividends or any exchange of
Minerals Stock for Services Stock.
SECTION 8. Dividends and Distributions. Whenever
a cash dividend or any other distribution is paid with
respect to shares of Minerals Stock or Services Stock, the
Incentive Account of each Employee will be credited with an
additional number of Minerals Units and/or Services Units
equal to the number of Minerals Shares and Services Shares,
including fractional shares (computed to the fourth decimal
place), that could have been purchased had such dividend or
other distribution been paid to the Incentive Account on the
payment date for such dividend or distribution based on the
number of shares of the class giving rise to the dividend or
distribution represented by Units in such Incentive Account
as of such date and assuming the amount of such dividend or
value of such distribution had been used to acquire
additional Units of the class giving rise to the dividend or
other distribution. Such additional Units shall be deemed
to be purchased at the average of the high and low per share
quoted sale prices of Services Stock or Minerals Stock, as
the case may be, as reported on the New York Stock Exchange
Composite Transaction Tape on the payment date for the
dividend or other distribution. The value of any distribu-
tion in property will be determined by the Committee.
SECTION 9. Allocation of Units as of July 1,
1994. As of July 1, 1994, the number of Units credited to
an Employee's Incentive Account shall be equal to the number
of Units credited to his Incentive Account as of June 30,
1994, under the Key Employees Deferred Payment Program of
The Pittston Company.
SECTION 10. Minimum Distribution. Distributions
shall be made in accordance with Article VI; provided,
however, that the aggregate value of the Minerals Stock
and/or Services Stock and cash distributed to an Employee
(and his or her beneficiaries) in respect of all Units
standing to his or her credit in his or her Incentive
Account attributable to deferrals of Cash Incentive Payments
shall not be less than the aggregate amount of Cash
Incentive Payments and dividends (credited to his Incentive
Account pursuant to Section 8) in respect of which such
Units were initially so credited. The value of the Minerals
Stock and Services Stock so distributed shall be considered
equal to the average of the high and low per share quoted
sale prices of Services Stock and/or Minerals Stock, as the
case may be, as reported on the New York Stock Exchange
Composite Transaction Tape for the last trading day of the
month preceding the month of distribution.
ARTICLE IV
Deferral of Salary
SECTION 1. Definitions. Wherever used in this
Article IV, the following term shall have the meaning
indicated:
Salary: The base salary paid to an Employee
by the Company or a Subsidiary for personal services
determined prior to reduction for any contribution made
on a salary reduction basis.
SECTION 2. Eligibility. An Employee may
participate in the benefits provided pursuant to this
Article IV for any Year if his or her Salary (on an an-
nualized basis) as of the preceding December 31 (June 30 for
the 1994 year) is at least equal to $150,000 (as adjusted
for Years after 1994 to reflect the limitation in effect
under Code Section 401(a)(17) for the Year in which the
Employee's election to participate is filed). Notwith-
standing the foregoing, a newly hired Employee is eligible
to defer a portion of his or her Salary during his or her
initial Year of employment if his or her Salary (on an
annualized basis) in effect on his or her first day of
employment with the Company or a Subsidiary will exceed the
threshold amount determined pursuant to Code
Section 401(a)(17) for his or her initial calendar year of
employment.
Except as otherwise provided by the Committee, an
Employee who is eligible to defer a portion of his or her
Salary shall continue to be so eligible unless his or her
Salary for any Year (on an annualized basis) is less than
$150,000, in which case he or she shall be ineligible to
participate in the benefits provided under this Article IV
until his or her Salary again exceeds the threshold amount
determined pursuant to Code Section 401(a)(17) for the Year
prior to the Year of participation.
SECTION 3. Deferral of Salary. Each Employee who
is eligible to defer Salary for any Year pursuant to this
Article IV may elect to defer up to 50% (in multiples of 5%)
of his or her Salary for such Year; provided, however, that
in the case of a newly hired Employee who is eligible to
participate for his or her initial Year of employment, only
up to 50% of Salary earned after he or she files a deferral
election with the Committee may be deferred. Such
Employee's initial election for any Year shall be made prior
to the first day of such Year or within 30 days after his or
her initial date of employment, if later. Such election
shall remain in effect for subsequent Years unless and until
a new election is filed with the Committee by the
December 31 preceding the Year for which the new election is
to be effective. An Incentive Account (which may be the
same Incentive Account established pursuant to Articles III
and/or V) shall be established for each Employee making such
election and such Incentive Account shall be credited as of
the last day of each month with the dollar amount of
deferred Salary for such month pursuant to such election.
Units in respect of such amounts shall be credited to such
Incentive Account as provided in Section 6 below.
SECTION 4. Allocation of Deferred Salary Between
Minerals Units and Services Units. Unless the Committee
otherwise determines prior to the November 15 next preceding
any Year, each Employee who elects to defer a portion of his
or her Salary shall specify what portion (in multiples of
10%) of such deferred Salary shall be converted into
Minerals Units and Services Units in accordance with
Section 6 of this Article IV. Notice of any determination
by the Committee pursuant to this Section 4 with respect to
any Year shall be given prior to December 15 of the next
preceding Year to each Employee participating in the bene-
fits provided pursuant to this Article IV for such Year.
SECTION 5. Irrevocability of Election. An
election to defer Salary and the allocation of the deferred
Salary between Minerals Units and Services Units under the
Program for any Year shall be irrevocable after the first
day of such Year or after 30 days after his or her initial
date of employment, if later.
SECTION 6. Conversion to Units. The amount of an
Employee's deferred Salary for any Year shall be converted
to Services Units and/or Minerals Units in accordance with
such Employee's election for such Year and shall be credited
to such Employee's Incentive Account as of the January 1
next following the Year in which such Salary was earned.
The number (computed to the fourth decimal place) of Units
so credited shall be determined by dividing the aggregate
amount of all such deferred Salary for such Year by the
average of the high and low per share quoted sale prices of
Services Stock or Minerals Stock, as the case may be, as
reported on the New York Stock Exchange Composite Trans-
action Tape for each trading day during the Year immediately
prior to the crediting of Units.
In addition, an additional number of Units shall
be credited to an Employee's Incentive Account as of the
January 1 next following such Year in the event a dividend
or other distribution is paid with respect to shares of
Minerals Stock or Services Stock during the Year. The
number of additional Units shall be equal to the number of
Minerals Shares and Services Shares, including fractional
shares (computed to the fourth decimal place), that could
have been purchased if (a) the number of Minerals Units and
Services Units credited to the Employee's Incentive Account
for the Year pursuant to the preceding paragraph had been
credited ratably throughout the Year, (b) the dividend or
other distribution had been paid to the Incentive Account on
the payment date based on the number of Shares of the class
giving rise to such dividend or distribution represented by
the Units credited pursuant to (a) above had a ratable
number of Units been credited on the record date for the
dividend or distribution, and (c) such dividend or the value
of such distribution had been used to acquire additional
Units of the class giving rise to the dividend or other
distribution. Such additional Units shall be deemed to be
purchased at the average of the high and low per share
quoted sale prices of Services Stock or Minerals Stock, as
the case may be, as reported on the New York Stock Exchange
Composite Transaction Tape on the payment date for the
dividend or other distribution. The value of any distribu-
tion in property will be determined by the Committee.
Upon the Employee's termination of employment, any
cash amounts not converted into Units credited to his or her
Incentive Account in dollars shall be converted into
Services Units and/or Minerals Units in accordance with the
Employee's election for the Year of termination in the
manner described in the first paragraph of this Section 6
based on the quoted sale prices of Services Stock or
Minerals Stock, as the case may be, as reported on the New
York Stock Exchange Composite Transaction Tape for each
trading day during the portion of the Year preceding the
month of termination. Such Employee's Incentive Account
shall also be credited with an additional number of Units in
the event a dividend or other distribution is paid with
respect to shares of Minerals Stock or Services Stock during
the Year prior to his or her termination of employment. The
additional number of Units shall be determined in accordance
with the second paragraph of this Section 6 assuming that
the number of Minerals Units and Services Units credited to
his or her Incentive Account during the Year as a result of
his or her termination of employment had been credited
ratably during the portion of the Year preceding his or her
termination.
SECTION 7. Adjustments. The Committee shall
determine such equitable adjustments in the Units credited
to each Incentive Account as may be appropriate to reflect
any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination, or exchange of
shares, split-up, split-off, spin-off, liquidation or other
similar change in capitalization, or any distribution to
common shareholders other than cash dividends or any
exchange of Minerals Stock for Services Stock.
SECTION 8. Dividends and Distributions. Whenever
a cash dividend or any other distribution is paid with
respect to shares of Minerals Stock or Services Stock, the
Incentive Account of each Employee will be credited with an
additional number of Minerals Units and/or Services Units
equal to the number of Minerals Shares and Services Shares,
including fractional shares (computed to the fourth decimal
place), that could have been purchased had such dividend or
other distribution been paid to the Incentive Account on the
payment date for such dividend or distribution based on the
number of shares of the class giving rise to the dividend or
distribution represented by the Units in such Incentive
Account as of such date and assuming the amount of such
dividend or value of such distribution had been used to
acquire additional Units of the class giving rise to the
dividend or other distribution. Such additional Units shall
be deemed to be purchased at the average of the high and low
per share quoted sale prices of Services Stock or Minerals
Stock, as the case may be, as reported on the New York Stock
Exchange Composite Transaction Tape on the payment date for
the dividend or other distribution. The value of any dis-
tribution in property will be determined by the Committee.
SECTION 9. Minimum Distribution. Distributions
shall be made in accordance with Article VI; provided,
however, the aggregate value of the Minerals Stock and/or
Services Stock and cash distributed to an Employee (and his
or her beneficiaries) in respect of all Units standing to
his or her credit in his or her Incentive Account attribut-
able to the deferral of Salary and dividends (credited to
his Incentive Account pursuant to Sections 6 and 8) shall
not be less than the aggregate amount of Salary in respect
of which such Units were initially so credited. The value
of the Minerals Stock and Services Stock so distributed
shall be considered equal to the average of the high and low
per share quoted sale prices of Services Stock and/or
Minerals Stock, as the case may be, as reported on the
New York Stock Exchange Composite Transaction Tape for the
last trading day of the month preceding the month of
distribution.
ARTICLE V
Supplemental Savings Plan
SECTION 1. Definitions. Whenever used in this
Article V, the following terms shall have the meanings
indicated:
Compensation: The regular wages received
during any pay period by an Employee while a
participant in the Savings Plan for services rendered
to the Company or any Subsidiary that participates in
the Savings Plan, including any commissions or bonuses,
but excluding any overtime or premium pay, living or
other expense allowances, or contributions by the
Company or such Subsidiaries to any plan of deferred
compensation, and determined without regard to the
application of any salary reduction election under the
Savings Plan. Bonuses paid pursuant to the Incentive
Plan shall be considered received in the Year in which
they are payable whether or not such bonus is deferred
pursuant to Article III hereof.
Incentive Plan: The Key Employees Incentive
Plan of The Pittston Company, as in effect from time to
time or any successor thereto.
Matching Contributions: Amounts allocated to
an Employee's Incentive Account pursuant to Section 4
of this Article V.
Salary: The base salary paid to an Employee
by the Company or a Subsidiary for personal services
determined prior to reduction for any contribution made
on a salary reduction basis.
Savings Plan: The Savings-Investment Plan of
The Pittston Company and Its Subsidiaries, as in effect
from time to time.
SECTION 2. Eligibility. An Employee may
participate in the benefits provided pursuant to this
Article V for any Year if his or her Salary (on an
annualized basis) as of the preceding December 31 (June 30
for the 1994 Year) is at least equal to $150,000 (as
adjusted for Years after 1994 to reflect the limitation in
effect under Code Section 401(a)(17) for the Year in which
the Employee's election to participate is filed). Not-
withstanding the foregoing, a newly hired Employee is
eligible to participate in the benefits provided pursuant to
this Article V if his or her Salary (on an annualized basis)
in effect on his or her first day of employment with the
Company or a Subsidiary will exceed the threshold amount
determined pursuant to Code Section 401(a)(17) for his or
her initial calendar year of employment.
Except as otherwise provided by the Committee, an
Employee who is eligible to participate in the benefits
provided pursuant to this Article V shall continue to be so
eligible unless his or her Salary for any Year is less than
$150,000, in which case he or she shall be ineligible to
participate in the benefits provided under this Article V
until his or her Salary again exceeds the threshold amount
determined pursuant to Code Section 401(a)(17) for the Year
prior to the Year of participation.
SECTION 3. Deferral of Compensation. Effective
July 1, 1994, each Employee who is not permitted to defer
the maximum percentage of his or her Compensation that may
be contributed as a matched contribution under the Savings
Plan for any Year as a result of limitations imposed by
Sections 401(a)(17), 401(k)(3), 402(g) and/or 415 of the
Code may elect to defer all or part of the excess of
(a) such maximum percentage (five percent for 1994) of his
or her Compensation for the calendar year (without regard to
any limitation on such amount imposed by Code Section
401(a)(17)) over (b) the amount actually contributed on his
or her behalf under the Savings Plan for such calendar year
as a matched contribution; provided, however, that with
respect to the 1994 Year, only Compensation paid after
July 1, 1994, may be deferred. In order to be permitted to
defer any portion of his or her Compensation pursuant to
this Section 3 of Article V, the Employee must elect to
defer the maximum amount permitted as a matched contribution
for the calendar year under the Savings Plan. Such
Employee's initial election hereunder for any Year shall be
made prior to the first day of such Year or prior to the
date on which he or she is first eligible to participate in
the Savings Plan, if later. Such election shall remain in
effect for subsequent Years unless and until a new election
is filed with the Committee by the December 31 preceding the
Year for which the new election is to be effective. An
Incentive Account (which may be the same Incentive Account
established pursuant to Articles III and/or IV) shall be
established for each Employee making such election and such
Incentive Account shall be credited as of the last day of
each month with the dollar amount of the Compensation
deferred for such month pursuant to such election. Units in
respect of such amounts shall be credited to such Incentive
Account as provided in Section 7 below.
SECTION 4. Matching Contributions. Each Employee
who elects to defer a portion of his or her Compensation for
a Year pursuant to Section 3 of this Article III shall have
allocated to his or her Incentive Account a Matching Con-
tribution equal to the rate of matching contributions in
effect for such Employee under the Savings Plan for such
Year multiplied by the amount elected to be deferred pur-
suant to Section 3 above for each month in such Year. The
dollar amount of each Employee's Matching Contributions for
each month shall be credited to his or her Incentive Account
as of the last day of each month.
SECTION 5. Allocation of Deferred Amounts Between
Minerals Units and Services Units. Unless the Committee
otherwise determines prior to the November 15 next preceding
any Year, each Employee who elects to defer Compensation
shall specify what portion (in multiples of 10%) of such
deferred Compensation shall be converted into Minerals Units
and Services Units in accordance with Section 7 of this
Article V. Matching Contributions shall be allocated
between Minerals Units and Services Units in the same pro-
portion as deferrals of Compensation. Notice of any
determination by the Committee pursuant to this Section 5
with respect to any Year shall be given prior to December 15
of the next preceding Year to each Employee participating in
the benefits provided pursuant to this Article V for such
Year.
SECTION 6. Irrevocability of Election. An
election to defer amounts and the allocation of the deferred
amounts between Mineral Units and Services Units under the
Program for any Year shall be irrevocable after the first
day of such Year or prior to the date on which he or she is
first eligible to participate in the Savings Plan, if later.
SECTION 7. Conversion to Units. The amount of an
Employee's deferred Compensation and Matching Contributions
for any Year shall be converted to Services Units and/or
Minerals Units in accordance with such Employee's election
for such Year and shall be credited to such Employee's
Incentive Account as of the January 1 next following the
Year in which such Compensation was earned. The number
(computed to the fourth decimal place) of Units so credited
shall be determined by dividing the aggregate amount of all
such amounts credited to the Employees' Incentive Account
for such Year (a) attributable to the deferral of amounts
awarded under the Incentive Plan (including related Matching
Contributions) by the average of the high and low per share
quoted sale prices of Services Stock or Minerals Stock, as
the case may be, as reported on the New York Stock Exchange
Composite Transaction Tape on each trading day during the
month of December of the Year immediately prior to the
crediting of Units and (b) attributable to the deferral of
all other Compensation (including related Matching Contribu-
tions) by the average of the high and low per share quoted
sale prices of Services Stock or Minerals Stock, as the case
may be, as reported on the New York Stock Exchange Composite
Transaction Tape on each trading day during the period
commencing on the first day of the month after the
Employees' salary (as such term is defined in the Savings
Plan) equals the maximum amount of considered compensation
for such Year pursuant to Code Section 401(a)(17) and ending
on December 31.
In addition, an additional number of Units shall
be credited to an Employee's Incentive Account as of the
January 1 of the following Year in the event a dividend or
other distribution is paid with respect to shares of
Minerals Stock or Services Stock during the Year. The
number of additional Units shall be equal to the number of
Minerals Shares and Services Shares, including fractional
shares (computed to the fourth decimal place), that could
have been purchased if (a) the number of Minerals Units and
Services Units credited to the Employee's Incentive Account,
for the Year pursuant to the preceding paragraph had been
credited ratably throughout the portion of the Year com-
mencing on the first day of the month after the Employee's
salary (as defined in the Savings Plan) equals the maximum
amount of considered compensation for such Year pursuant to
Code Section 401(a)(17), (b) the dividend or other distribu-
tion had been paid to the Incentive Account on the payment
date based on the number of shares of the class giving rise
to such dividend or distribution represented by the Units
credited pursuant to (a) above had a ratable number of Units
been credited on the record date for the dividend or dis-
tribution, and (c) such dividend or the value of such
distribution had been used to acquire additional Units of
the class giving rise to the dividend or other distribution.
Such additional Units shall be deemed to be purchased at the
average of the high and low per share quoted sale prices of
Services Stock or Minerals Stock, as the case may be, as
reported on the New York Stock Exchange Composite Trans-
action Tape on the payment date for the dividend or other
distribution. The value of any distribution in property
will be determined by the Committee.
Upon the Employee's termination of employment, any
cash amounts not converted into Units credited to his or her
Incentive Account in dollars shall be converted into
Services Units and/or Minerals Units in accordance with the
Employee's election for the Year of termination in the
manner described in the first paragraph of this Section 7
based on the quoted sale prices of Services Stock or
Minerals Stock, as the case may be, as reported on the New
York Stock Exchange Composite Transaction Tape for each
trading day during the portion of the Year preceding the
month of termination. Such Employee's Incentive Account
shall also be credited with an additional number of Units in
the event a dividend or other distribution is paid with
respect to shares of Minerals Stock or Services Stock during
the Year prior to his or her termination of employment. The
additional number of Units shall be determined in accordance
with the second paragraph of this Section 7 assuming that
the number of Minerals Units and Services Units credited to
his or her Incentive Account during the Year as a result of
his or her termination of employment had been credited
ratably during the portion of the Year preceding his or her
termination.
SECTION 8. Adjustments. The Committee shall
determine such equitable adjustments in the Units credited
to each Incentive Account as may be appropriate to reflect
any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination, or exchange of
shares, split-up, split-off, spin-off, liquidation or other
similar change in capitalization, any distribution to common
shareholders other than cash dividends or any exchange of
Minerals Stock for Services Stock.
SECTION 9. Dividends and Distributions. Whenever
a cash dividend or any other distribution is paid with
respect to shares of Minerals Stock or Services Stock, the
Incentive Account of each Employee will be credited with an
additional number of Minerals Units and/or Services Units
equal to the number of Minerals Shares and Services Shares,
including fractional shares (computed to the fourth decimal
place), that could have been purchased had such dividend or
other distribution been paid to the Incentive Account on the
payment date for such dividend or distribution based on the
number of shares of the class giving rise to the dividend or
distribution represented by the Units in such Incentive
Account as of such date and assuming that the amount of such
dividend or value of such distribution had been used to
acquire additional Units of the class giving rise to the
dividend or other distribution. Such additional Units shall
be deemed to be purchased at the average of the high and low
per share quoted sale prices of Services Stock or Minerals
Stock, as the case may be, as reported on the New York Stock
Exchange Composite Transaction Tape on the payment date for
the dividend or other distribution. The value of any dis-
tribution in property will be determined by the Committee.
ARTICLE VI
Distributions
SECTION 1. Payments on Termination of Employment.
Except as otherwise provided in this Article VI, each
Employee who has an Incentive Account shall receive a dis-
tribution in Minerals Stock and/or Services Stock, in
respect of all Units standing to the credit of such
Employee's Incentive Account, in a single lump-sum distribu-
tion as soon as practicable following his or her termination
of employment; provided, however, that an Employee may
elect, at least 12 months prior to his or her termination of
employment to receive distribution of the Shares represented
by Units credited to his or her Incentive Account in equal
annual installments (not more than five) commencing on the
first day of the month next following the date of his or her
termination of employment (whether by death, disability,
retirement or otherwise) or as promptly as practicable
thereafter. Such Employee may at any time elect to change
the manner of such payment, provided that any such election
is made at least 12 months in advance of his or her
termination of employment.
The number of shares of Minerals Stock and/or
Services Stock to be included in each installment payment
shall be determined by multiplying the number of Minerals
Units and/or Stock Units, respectively, in the Employee's
Incentive Account as of the last day of the month preceding
the initial installment payment and as of each succeeding
anniversary of such date by a fraction, the numerator or
which is one and the denominator of which is the number of
remaining installments (including the current installment).
Any fractional Units shall be converted to cash based on the
average of the high and low per share quoted sale prices of
the Services Stock or Minerals Stock, as the case may be, as
reported on the New York Stock Exchange Composite Trans-
action Tape, on the last trading day of the month preceding
the month of distribution and shall be paid in cash.
SECTION 2. In-Service Distributions. Any
Employee may make an election, on or before December 31 of
any Year, to receive a distribution in Minerals Stock and/or
Services Stock in a lump sum or in not more than five equal
annual installments, on or commencing as of January 1 of the
second following Year (or as promptly as practicable there-
after), in respect of all Units (i.e., both Services Units
and Minerals Units) standing to his or her credit in such
Incentive Account as of such January 1; provided, however,
that no such election shall be effective if (a) such
Employee has outstanding at such December 31 an election
pursuant to Article III, IV or V to defer any amounts here-
under or (b) such Employee's employment shall terminate for
any reason prior to such January 1. Such election to
receive a distribution or distributions shall be
irrevocable, except that it may be revoked, and a new elec-
tion may be made, at any time prior to such December 31.
The number of shares of Minerals Stock and/or Services Stock
(and the amount of cash representing fractional Units) to be
distributed shall be determined in the same manner as
provided in Section 1 of this Article VI.
ARTICLE VII
Designation of Beneficiary
An Employee may designate in a written election
filed with the Committee a beneficiary or beneficiaries
(which may be an entity other than a natural person) to
receive all distributions and payments under the Program
after the Employee's death. Any such designation may be
revoked, and a new election may be made, at any time and
from time to time, by the Employee without the consent of
any beneficiary. If the Employee designates more than one
beneficiary, any distributions and payments to such bene-
ficiaries shall be made in equal percentages unless the
Employee has designated otherwise, in which case the dis-
tributions and payments shall be made in the percentages
designated by the Employee. If no beneficiary has been
named by the Employee or no beneficiary survives the
Employee, the remaining Shares (including fractional Shares)
in the Employee's Incentive Account shall be distributed or
paid in a single sum to the Employee's estate. In the event
of a beneficiary's death after installment payments to the
beneficiary have commenced, the remaining installments will
be paid to a contingent beneficiary, if any, designated by
the Employee or, in the absence of a surviving contingent
beneficiary, the remaining Shares (including fractional
Shares) shall be distributed or paid to the primary
beneficiary's estate in a single distribution. All dis-
tributions shall be made in Shares except that fractional
shares shall be paid in cash.
ARTICLE VIII
Miscellaneous
SECTION 1. Nontransferability of Benefits.
Except as provided in Article VII, Units credited to an
Incentive Account shall not be transferable by the Employee
(or his or her beneficiaries) other than by will or the laws
of descent and distribution or pursuant to a domestic rela-
tions order. No Employee, no person claiming through such
Employee, nor any other person shall have any right or
interest under the Program, or in its continuance, in the
payment of any amount or distribution of any Shares under
the Program, unless and until all the provisions of the
Program, any determination made by the Committee thereunder,
and any restrictions and limitations on the payment itself
have been fully complied with. Except as provided in this
Section 1, no rights under the Program, contingent or other-
wise, shall be transferable, assignable or subject to any
pledge or encumbrance of any nature, nor shall the Company
or any of its Subsidiaries be obligated, except as otherwise
required by law, to recognize or give effect to any such
transfer, assignment, pledge or encumbrance.
SECTION 2. Notices. The Company may require all
elections contemplated by the Program to be made on forms
provided by it. All notices, elections and other
communications pursuant to the Program shall be in writing
and shall be effective when received by the Company at the
following address:
The Pittston Company
100 First Stamford Place
P. O. Box 120070
Stamford, CT 06912-0070
Attention of Vice President -- Human Resources
SECTION 3. Limitation on Rights of Employee.
Nothing in this Program shall be deemed to create, on the
part of any Employee, beneficiary or other person, (a) any
interest of any kind in the assets of the Company or (b) any
trust or fiduciary relationship in relation to the Company.
The right of an Employee to receive any Shares shall be no
greater than the right of any unsecured general creditor of
the Company.
SECTION 4. No Contract of Employment. The
benefits provided under the Program for an Employee shall be
in addition to, and in no way preclude, other forms of
compensation to or in respect of such Employee. However,
the selection of any Employee for participation in the
Program shall not give such Employee any right to be
retained in the employ of the Company or any of its
Subsidiaries for any period. The right of the Company and
of each such Subsidiary to terminate the employment of any
Employee for any reason or at any time is specifically reserved.
SECTION 5. Withholding. All distributions
pursuant to the Program shall be subject to withholding in
respect of income and other taxes required by law to be
withheld. The Company shall establish appropriate
procedures to ensure payment or withholding of such taxes.
Such procedures may include arrangements for payment or
withholding of taxes by retaining Shares otherwise issuable
in accordance with the provisions of this Program or by
accepting already owned Shares, and by applying the fair
market value of such Shares to the withholding taxes
payable.
SECTION 6. Amendment and Termination. The
Committee may from time to time amend any of the provisions
of the Program, or may at any time terminate the Program.
No amendment or termination shall adversely affect any Units
(or distributions in respect thereof) which shall thereto-
fore have been credited to any Employee's Incentive Account.
In conjunction with the termination of the Program, the
Committee may in its discretion determine whether the value
of all Units credited to any or all of the Incentive
Accounts under the Program shall be distributed in Shares as
promptly as practicable after such termination.
EXHIBIT 10.7
1994 EMPLOYEE STOCK PURCHASE PLAN
OF
THE PITTSTON COMPANY
(As Effective July 1, 1994)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - Purpose of the Plan . . . . . . . . . . 1
ARTICLE II - Definitions . . . . . . . . . . . . . . 1
ARTICLE III - Administration. . . . . . . . . . . . . 5
ARTICLE IV - Number of Shares to be Offered. . . . . 7
ARTICLE V - Eligibility and Participation . . . . . 8
ARTICLE VI - Effect of Termination of
Employment. . . . . . . . . . . . . . .17
ARTICLE VII - Rights Not Transferable . . . . . . . .18
ARTICLE VIII - Limitation on Stock Ownership . . . . .18
ARTICLE IX - Miscellaneous Provisions. . . . . . . .19
ARTICLE X - Amendment or Termination
of the Plan . . . . . . . . . . . . . .21
<PAGE>
1994 EMPLOYEE STOCK PURCHASE PLAN
OF
THE PITTSTON COMPANY
ARTICLE I
Purpose of the Plan
This 1994 Employee Stock Purchase Plan of The
Pittston Company (the "Plan") contains provisions designed
to enable eligible employees to purchase through regular
payroll deductions shares of either or both classes of
Common Stock of The Pittston Company, viz., Pittston
Services Group Common Stock and Pittston Minerals Group
Common Stock. The Company intends this Plan to encourage
such employees to acquire a proprietary interest in the
Company with a view toward further identifying their
interests with those of other shareholders of the Company.
The Plan is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue
Code.
ARTICLE II
Definitions
Section 1. Wherever used in the Plan, the
following terms shall have the meanings indicated:
Board: The Board of Directors of the Company.
Code: The Internal Revenue Code of 1986, as
amended.
Committee: The committee designated by the Board
to administer the Plan in accordance with Section 1 of
Article III. Until otherwise determined by the Board,
the Administrative Committee designated by the Board
shall be the Committee under the Plan.
Common Stock: Either or both classes of common
stock of the Company, viz., Pittston Services Group
Common Stock and Pittston Minerals Group Common Stock.
Unless otherwise indicated, references in the Plan to
Common Stock shall be construed to refer to the class
of common stock covered by the particular designation
on a Participant's enrollment form. Such shares of
common stock of the Company shall be subject to such
terms, conditions and restrictions, including without
limitation, restrictions on resale of such shares for a
specified period of time, as shall be determined by the
Committee.
Company: The Pittston Company.
Compensation: The annual base rate of pay of a
Participant as of each Offering Date applicable to such
Participant, including commissions but excluding,
unless otherwise determined by the Committee in
accordance with nondiscriminatory rules adopted by it,
overtime or premium pay.
Dividend Date: The date on which a cash dividend
on Common Stock held by the Nominee is paid.
Eligible Employee: Any employee of the Company or
a Subsidiary (a) whose date of hire was at least six
months prior to the commencement of an Offering Period
and (b) who is customarily employed for at least 20
hours per week and five months in a calendar year;
provided, however, that in the case of an employee who
is covered by a collective bargaining agreement, he or
she shall not be considered an Eligible Employee unless
and until the labor organization representing such
individual has accepted the Plan on behalf of the
employees in the collective bargaining unit. Any such
employee shall continue to be an Eligible Employee
during an approved leave of absence provided such
employee's right to continue employment with the
Company or a Subsidiary upon expiration of such
employee's leave of absence is guaranteed either by
statute or by contract with or a policy of the Company
or a Subsidiary.
Executive Officer: A Participant who is subject
to Section 16 of the Securities Exchange Act of 1934
and the rules thereunder.
Fair Market Value: With respect to shares of any
class of Common Stock, the average of the high and low
quoted sale prices of a share of such stock on the
applicable Offering Date, Purchase Date, Dividend Date
or other date specified herein, as the case may be, as
reported on the New York Stock Exchange Composite
Transactions Tape; provided that (a) if on such
Offering Date, Dividend Date or any other date other
than the Purchase Date, there is no reported sale
transaction on the New York Stock Exchange Composite
Transactions Tape, Fair Market Value shall be
determined on the first subsequent date on which such a
transaction shall have occurred, and (b) if on such
Purchase Date there is no such transaction, Fair Market
Value shall be determined on the last preceding date on
which such a transaction shall have occurred.
Nominee: The custodian designated by the Company
for the Plan Accounts held hereunder.
Offering Date: The first day of each six-month
period commencing on July 1 or January 1 on and after
July 1, 1994.
Offering Period: With respect to each
Participant, the six-month period from an Offering Date
to and including the next following Purchase Date.
Participant: An Eligible Employee who elects to
participate in the Plan on an Offering Date in
accordance with the provisions of the Plan. All
Participants shall have the same rights and privileges
except as otherwise permitted by Section 423 of the
Code and the Plan.
Plan Account: The account established for each
Participant pursuant to the Plan.
Purchase Date: The last day of each six-month
Offering Period.
Purchase Price: The price at which Participants
may purchase shares of each class of Common Stock in
accordance with the Plan.
Subsidiary: A subsidiary corporation, as defined
in Section 424 of the Code, which is designated by the
Committee as a Subsidiary for purposes of the Plan.
ARTICLE III
Administration
Section 1. Subject to the authority of the Board
as described herein, the Plan shall be administered by a
committee designated by the Board, which shall be composed
of at least three members. The Committee is authorized to
interpret the Plan and may from time to time adopt such
rules and regulations for carrying out the Plan as it deems
best. All determinations by the Committee shall be made by
the affirmative vote of a majority of its members, but any
determination reduced to writing and signed by a majority of
its members shall be fully as effective as if it had been
made by a majority vote at a meeting duly called and held.
Subject to any applicable provisions of the Company's bylaws
or of the Plan, all determinations by the Committee or the
Board pursuant to the provisions of the Plan, and all
related orders or resolutions of the Committee or the Board,
shall be final, conclusive and binding on all persons,
including the Company and its shareholders and Eligible
Employees and Participants under the Plan.
Section 2. All authority of the Committee
provided for in, or pursuant to, this Plan, including that
referred to in Section 1 of this Article III, may also be
exercised by the Board. In the event of any conflict or
inconsistency between determinations, orders, resolutions or
other actions of the Committee and the Board taken in con-
nection with this Plan, the actions of the Board shall
control.
ARTICLE IV
Number of Shares to be Offered
Section 1. Subject to the provisions of Section 2
of this Article IV, the maximum number of shares of Common
Stock which may be issued or allocated pursuant to the Plan
shall be (a) in the case of Pittston Services Group Common
Stock, 750,000 shares and (b) in the case of Pittston
Minerals Group Common Stock, 250,000 shares.
Section 2. In the event of any dividend payable
in any class of Common Stock or any split or combination of
any class of Common Stock, (a) the number of shares of such
class which may be issued under this Plan shall be
proportionately increased or decreased, as the case may be,
(b) the number of shares of such class (including shares
subject to rights to purchase which have not been exercised)
thereafter deliverable shall be proportionately increased or
decreased, as the case may be, and (c) the aggregate
Purchase Price of shares of such class shall not be changed.
In the event of any other recapitalization, reorganization,
extraordinary dividend or distribution or restructuring
transaction (including any distribution of shares of stock
of any Subsidiary or other property to holders of shares of
any class of Common Stock) affecting any class of Common
Stock, the number of shares of such class issuable under
this Plan shall be subject to such adjustment as the
Committee or the Board may deem appropriate, and the number
of shares of such class thereafter deliverable (including
shares subject to rights to purchase which have not been
exercised) and/or the Purchase Price shall be subject to
such adjustment as the Committee or the Board may deem
appropriate. In the event of a merger or share exchange in
which the Company will not survive as an independent,
publicly owned corporation, or in the event of a con-
solidation or of a sale of all or substantially all of the
Company's assets, provision shall be made for the protection
and continuation of any outstanding rights to purchase by
the substitution, on an equitable basis, of such shares of
stock, other securities, cash, or any combination thereof,
as shall be appropriate.
ARTICLE V
Eligibility and Participation
Section 1. An Eligible Employee who shall have
satisfied all eligibility requirements on or before any
Offering Date may become a Participant for the Offering
Period commencing on such Offering Date by filing with the
office or offices designated by the Committee an enrollment
form prescribed by the Committee authorizing payroll deduc-
tions not less than ten business days prior to such Offering
Date. By enrolling in the Plan, a Participant shall be
deemed to elect to purchase the maximum number of shares
(including the right to fractional shares calculated to the
fourth decimal place) of the class of Common Stock that can
be purchased with the amount of the Participant's Compen-
sation which is withheld and designated for such class
during the Offering Period.
Section 2. A Participant shall automatically
participate in each successive Offering Period until the
time of such Participant's withdrawal from the Plan as
hereinafter provided. A Participant shall not be required
to file any additional enrollment forms for any such succes-
sive Offering Period in order to continue participation in
the Plan.
Section 3. Each Participant shall designate on
the enrollment form the percentage of Compensation which he
or she elects to have withheld for the purchase of Common
Stock, which may be any whole percentage from 1% up to and
including 10% of such Participant's Compensation. A
Participant may reduce (but not increase) the rate of pay-
roll withholding during an Offering Period by filing with
the Committee a form to be prescribed by it, at any time
prior to the end of such Offering Period for which such
reduction is to be effective. Not more than one reduction
may be made in any Offering Period unless otherwise
determined by nondiscriminatory rules adopted by the
Committee. Each Participant shall also designate on the
enrollment form a percentage (in multiples of 10%) of the
Compensation withheld during an Offering Period that is to
be used to purchase Pittston Services Group Common Stock
and/or a percentage (in multiples of 10%) of such Compen-
sation that is to be used to purchase Pittston Minerals
Group Common Stock; provided, however, that 100% of withheld
Compensation shall be allocated between the two classes of
Common Stock. In the event a Participant elects to reduce
the rate of payroll withholding during an Offering Period,
such reduction shall be applied ratably to the allocation of
his or her withheld Compensation between the two classes of
Common Stock. During an Offering Period, a Participant may
not change the allocation of his or her Compensation to be
withheld during such Offering Period although such
allocation may be changed for any subsequent Offering Period
by filing an appropriate form not less than ten business
days prior to the Offering Date for such subsequent Offering
Period. A Participant may increase or decrease the rate of
payroll deduction for any subsequent Offering Period by
filing, at the appropriate office provided for in Section 1
of this Article V, a new authorization for payroll
deductions not less than ten business days prior to the
Offering Date for such subsequent Offering Period. An
Executive Officer who reduces the rate of payroll with-
holding during an Offering Period to zero may not resume
participation the Plan until the first Offering Period
commencing after the expiration of six months from the
effective date of such reduction.
Section 4. The Purchase Price for each share of
Common Stock to be purchased under the Plan in respect of
any Offering Period shall be 85% of the Fair Market Value of
such share on either (a) the Offering Date in respect
thereof or (b) the Purchase Date in respect thereof, which-
ever is less.
Section 5. The aggregate Purchase Price shall be
accumulated throughout the Offering Period solely by payroll
deductions which shall be applied automatically to purchase
shares of the appropriate class of Common Stock on the
Purchase Date for such Offering Period. Payroll deductions
shall commence on the first payday following the applicable
Offering Date and shall continue to the end of the Offering
Period subject to prior decrease, withdrawal or termination
as provided in the Plan.
Section 6. The Company will maintain a Plan
Account on its books in the name of each Participant. On
each payday the amount deducted from each Participant's
Compensation will be credited to such Participant's Plan
Account and such aggregate amount will be allocated between
amounts to be used to purchase Pittston Services Group
Common Stock and amounts to be used to purchase Pittston
Minerals Group Common Stock. No interest shall accrue on
any such payroll deductions. As of the Purchase Date with
respect to each Offering Period, the amount then in such
Plan Account and allocated to each class of Common Stock
shall be applied to the purchase of the number of shares
(including the right to fractional shares computed to the
fourth decimal place) of the appropriate class of Common
Stock determined by dividing such amount by the applicable
Purchase Price of each class of Common Stock.
Section 7. The shares of Common Stock (including
the right to fractional shares) purchased on behalf of a
Participant shall initially be registered in the name of a
Nominee. Stock certificates shall not be issued to
Participants for the Common Stock held on their behalf in
the name of the Nominee, but all rights accruing to an owner
of record of such Common Stock, including, without limita-
tion, voting and tendering rights, shall belong to the
Participant for whose account such Common Stock is held.
Notwithstanding the foregoing, a Participant may
elect, as of the first day of any calendar quarter, to have
some or all of the full shares of either class of Common
Stock previously purchased and registered in the name of the
Nominee on his or her behalf registered in the name of such
Participant by giving written notification of such election
to the Company, specifying the number of full shares (if
fewer than all) to be registered in the name of such
Participant. In such case, the number of full shares of
each class of Common Stock held by the Nominee on behalf of
such Participant and so specified in the Participant's
notice shall be transferred to and registered in the name of
such Participant as soon as administratively practicable.
Upon the termination of the Plan pursuant to
Article X, any full shares of either class of Common Stock
purchased for the benefit of any Participant under the Plan
which are registered in the name of the Nominee shall be
transferred to and registered in the name of each such
Participant as soon as administratively practicable. In
addition, each such Participant shall receive a cash payment
in lieu of fractional shares equal to the Fair Market Value
of any fractional shares of Common Stock held by the Nominee
on the date of the termination of the Plan for the benefit
of such Participant.
Section 8. A Participant may elect to cease
active participation in the Plan with respect to either or
both classes of Common Stock at any time up to the end of an
Offering Period by filing with the Committee a form to be
prescribed by it. As promptly as practicable after such
filing, all payroll deductions credited to such
Participant's Plan Account and allocated for the purchase of
the class of Common Stock with respect to which the
Participant is ceasing participation shall be returned to
such Participant in cash, without interest. A Participant
who elects to cease participation in the Plan may not resume
participation in the Plan until after the expiration of one
full Offering Period (following cessation of participation).
Thereafter, any such Participant may enroll in the Plan by
filing an enrollment form as provided in Section 1 of this
Article V.
Section 9. In the event that the aggregate number
of shares of either class of Common Stock which all
Participants elect to purchase during an Offering Period
shall exceed the number of shares of such class remaining
available for issuance under the Plan, the number of shares
which each Participant shall become entitled to purchase
during such Offering Period shall be determined by multi-
plying the number of such shares available for issuance by a
fraction whose numerator shall be the number of such shares
such Participant has elected to purchase and whose
denominator shall be the sum of the number of such shares
which all Participants have elected to purchase. Any
amounts deducted from a Participant's Compensation in excess
of the amount that may be used to acquire shares of Common
Stock shall be refunded to the Participant as soon as
practicable.
Section 10. By executing an enrollment form, a
Participant shall have authorized the Nominee to receive and
collect all cash dividends or other distributions paid with
respect to shares of Common Stock held on the Participant's
behalf and to use such funds to purchase all additional
shares of Pittston Minerals Group Common Stock and Pittston
Services Group Common Stock, including the right to
fractional shares, on behalf of the Participant, that could
be purchased by dividing the amount of such dividend or
other distribution by the Fair Market Value of the class of
Common Stock giving rise to the distribution on the Dividend
Date. The cash value of any distribution in property shall
be determined by the Committee. Any stock dividend on
shares of Common Stock shall be held by the Nominee for the
benefit of the Participant on whose behalf the shares of
Common Stock giving rise to the dividend are held. The
Nominee shall distribute to any Participant, as soon as
practical, any dividends received on shares of Common Stock,
if the maximum share limitations set forth in Section 1 of
Article IV prevent further issuances of such shares. A
Participant who elects to hold shares of Common Stock previ-
ously registered in the name of the Nominee in his or her
own name will cease to have the benefit of this Section 10
with respect to such shares when they are registered in his
or her own name.
Section 11. Each Participant is entitled to
direct the Nominee as to the manner in which any Common
Stock held by the Nominee on behalf of such Participant is
to be voted. Participants may vote fractional shares
credited to their Plan Accounts. The combined fractional
shares shall be voted to the extent possible to reflect the
directions of the Participants holding fractional shares.
Shares of Common Stock (including fractional shares) as to
which the Nominee shall not have received timely written
voting directions by a Participant shall be voted propor-
tionately with Common Stock of the same class as to which
directions by Participants were so received.
Each Participant (or, in the event of his or her
death, his or her beneficiary) is entitled to direct the
Nominee in writing as to the manner in which the Nominee
shall respond to a tender or exchange offer with respect to
full shares of such Common Stock, and the Nominee shall
respond in accordance with such directions. If the Nominee
shall not have received timely written directions as to the
response to such offer, the Nominee shall not tender or
exchange any Common Stock allocated to such Plan Accounts.
ARTICLE VI
Effect of Termination of Employment
In the event of the termination of a Participant's
employment for any reason, including retirement or death, or
the failure of a Participant to remain an Eligible Employee,
all full shares of each class of Common Stock then held for
his or her benefit by the Nominee shall be registered in
such individual's name and an amount equal to the Fair
Market Value (on the date of registration of full shares of
Common Stock in the name of the Participant) of any frac-
tional share then held by the Nominee for the benefit of
such Participant shall be paid to such individual, in cash,
as soon as administratively practicable, and such individual
shall thereupon cease to own the right to any such frac-
tional share. Any amounts credited to such individual's
Plan Account shall be refunded, without interest, to such
individual, or in the event of his or her death, to his or
her legal representative. A transfer by a Participant from
the Company to a Subsidiary, from one Subsidiary to another,
or from a Subsidiary to the Company shall not be considered
to be a termination of employment.
ARTICLE VII
Rights Not Transferable
The rights and interests of any Participant in the
Plan, including any right to purchase shares of Common
Stock, or in any Common Stock or moneys to which he or she
may be entitled under the Plan shall not be transferable
otherwise than by will or the applicable laws of descent and
distribution and any such right to purchase shall be exer-
cisable, only during the lifetime of such Participant, and
then only by such Participant. If a Participant shall in
any manner attempt to transfer, assign or otherwise encumber
his or her rights or interests under the Plan, other than by
will, such attempt shall be deemed to constitute a cessation
of participation in the Plan and the provisions included in
Section 8 of Article V shall apply.
ARTICLE VIII
Limitation on Stock Ownership
Notwithstanding any provision herein to the
contrary, no Participant shall have a right to purchase
shares of any class of Common Stock pursuant to Article V if
(a) such Participant, immediately after electing to purchase
such shares, would own Common Stock possessing 5% or more of
the total combined voting power or value of all classes of
stock of the Company or of any Subsidiary, or (b) the rights
of such Participant to purchase Common Stock under the Plan
would accrue at a rate that exceeds $15,000 of Fair Market
Value of such Common Stock (determined at the time or times
such rights are granted) for each calendar year for which
such rights are outstanding at any time. For purposes of
the foregoing clause (a), ownership of Common Stock shall be
determined by the attribution rules of Section 424(d) of the
Code and Participants shall be considered to own any Common
Stock which they have a right to purchase under the Plan or
any other stock option or purchase plan.
ARTICLE IX
Miscellaneous Provisions
Section 1. Nothing in the Plan shall be construed
to give any Eligible Employee or Participant the right to be
retained in the employ of the Company or a Subsidiary or to
affect the right of the Company or any Subsidiary or a
Participant to terminate such employment at any time with or
without cause.
Section 2. A Participant shall have no rights as
a shareholder with respect to any shares of any class of
Common Stock which he or she may have a right to purchase
under the Plan until the date such shares are registered in
the name of a Nominee on behalf of such Participant.
Section 3. Each right to purchase shares of any
class of Common Stock under the Plan shall be subject to the
requirement that if at any time the Committee shall
determine that the listing, registration or qualification of
such right to purchase or the shares of any class of Common
Stock subject thereto upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, such right to purchase
or the issue of any class of Common Stock pursuant thereto,
then, anything in the Plan to the contrary notwithstanding,
no such right to purchase may be exercised in whole or in
part, and no shares of such class of Common Stock shall be
issued, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained
free from any conditions not reasonably acceptable to the
Committee.
Section 4. All instruments evidencing
participation in the Plan shall be in such form, consistent
with the Plan and any applicable determinations or other
actions of the Committee and the Board, as the Company shall
determine.
Section 5. The Committee may establish
appropriate procedures with a view toward obtaining infor-
mation regarding any disqualifying disposition by any person
of shares of any class of Common Stock which may make avail-
able to the Company a tax deduction in respect of such
disposition.
ARTICLE X
Amendment or Termination of the Plan
Section 1. The Plan shall become effective as of
July 1, 1994, provided that the Plan shall receive
shareholder approval (that is, the approval by the vote of
the holders of a majority of the outstanding shares of all
classes of Common Stock present and voting at the 1994
annual meeting of shareholders of the Company, or any
adjournment thereof). In the event shareholder approval of
the Plan is not received at the 1994 annual meeting, all
payroll deductions withheld prior to the date of such meet-
ing shall be returned to the Participants in cash, without
interest, and the Participants shall have no interest in the
Plan. The Plan shall in any event terminate on June 30,
1997, unless the shareholders shall theretofore have
approved an extension of such termination date.
Section 2. The Board may, at any time and from
time to time, amend (including, but not limited to, amend-
ments to the Plan to increase the Purchase Price described
in Section 4 of Article V), modify or terminate the Plan,
but no such amendment or modification without the approval
of the shareholders shall:
(a) increase the maximum number (determined as
provided in the Plan) of shares of any class of Common
Stock which may be issued pursuant to the Plan;
(b) permit the issuance of any shares of any class
of Common Stock at a Purchase Price less than that
provided in the Plan as approved by the shareholders;
(c) extend the term of the Plan; or
(d) cause the Plan to fail to meet the
requirements of an "employee stock purchase plan" under
Section 423 of the Code.
<TABLE>
THE PITTSTON COMPANY AND SUBSIDIARIES EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
FULLY DILUTED EARNINGS PER COMMON SHARE: (a)
- - --------------------------------------------
<CAPTION>
Quarter Ended March 31,
-----------------------
1994 1993
-------- --------
PITTSTON SERVICES GROUP:
<S> <C> <C>
Net income attributed to common shares $ 10,511 5,414
======== ========
Average common shares outstanding 37,662 36,558
Incremental shares of stock options 656 223
-------- --------
Pro forma common shares outstanding 38,318 36,781
======== ========
Fully diluted earnings per common share: $ 0.27 0.15
======== ========
PITTSTON MINERALS GROUP:
Income (loss) before preferred stock
dividend requirements $(74,079) 2,742
Preferred stock dividends (1,006) -
-------- --------
Net income (loss) attributed to common shares $(75,085) 2,742
======== ========
Average common shares outstanding 7,541 7,312
Incremental shares of stock options (b) - 44
-------- --------
Pro forma common shares outstanding (b) 7,541 7,356
======== ========
Fully diluted earnings (loss) per common share: $ (9.96) .37
======== ========
</TABLE>
(a) On July 26, 1993, the outstanding shares of The Pittston
Company's common stock were redesignated as Pittston Services
Group common stock on a share-for-share and a second class of
stock, designated as Pittston Minerals Group common stock
("Minerals Stock") was distributed on a basis of one-fifth of one
share of Minerals Stock for each share of The Pittston Company's
common stock. Accordingly, all common share, stock options and
per share data prior to the redesignation has been restated to
reflect the new equity structure of The Pittston Company.
(b) The effect of stock options and convertible preferred stock are
excluded from the computations when they are antidilutive.
Primary Earnings Per Share:
- - ---------------------------
Primary earnings per share can be computed from the information on the
face of the Consolidated Statements of Operations.
