UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1995
[ ] 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 1-9498
ALLEGHENY LUDLUM CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1364894
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Six PPG Place, Pittsburgh,PA 15222-5479
--------------------------------- ----------
(Address of principal executive offices) (Zip Code)
412-394-2800
------------
(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
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--- ---
Number of shares of Common Stock outstanding as of August 11,
1995
69,115,774
<PAGE>
ALLEGHENY LUDLUM CORPORATION
SEC FORM 10-Q
FISCAL QUARTER ENDED JULY 2, 1995
INDEX
Page No.
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Condensed Consolidated Balance Sheets 5
Condensed Consolidated Statement of Cash Flows 7
Notes to Condensed Consolidated Financial
Statements 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 11
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of
Security Holder 13
Item 6. Exhibits 14
Signatures 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands of dollars except per share amounts)
Fiscal Fiscal Fiscal Fiscal
Quarter Quarter Six Mos. Six Mos.
Ended Ended Ended Ended
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
-------- -------- ------- --------
NET SALES $390,468 $172,187 $785,800 $486,119
Costs and expenses:
Cost of products sold 301,306 191,283 615,048 437,000
Research, development
and technology 12,067 9,094 23,284 19,205
Commercial and
administrative 14,323 11,761 28,356 24,646
Depreciation and
amortization 9,630 9,462 19,496 18,936
------- ------- ------- -------
337,326 221,600 686,184 499,787
------- ------- ------- -------
INCOME (LOSS) FROM STEEL
OPERATIONS 53,142 (49,413) 99,616 (13,668)
Operating earnings from
assets held for sale 4,254 - 7,268 -
Other income (expense):
Interest expense - net (119) (1,157) (876) (2,534)
Loss from limited
partnership - - - (2,590)
Other -- net 860 84 1,153 (131)
------- ------- ------- -------
4,995 (1,073) 7,545 (5,255)
------- ------- ------- -------
Income (loss) before income
taxes 58,137 (50,486) 107,161 (18,923)
Income taxes 23,667 (21,307) 43,837 (7,862)
------- ------- ------- -------
NET INCOME (LOSS) $ 34,470 $(29,179) $ 63,324 $(11,061)
======== ======= ======= =======
3
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands of dollars except per share amounts)
-Continued-
Fiscal Fiscal Fiscal Fiscal
Quarter Quarter Six Mos. Six Mos.
Ended Ended Ended Ended
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
-------- -------- -------- --------
Per common share:
Primary $.49 $(.41) $.90 $(.15)
======== ======= ======== ========
Fully diluted $.47 N.D. $.86 N.D.
======== ======= ======== ========
Dividends declared
per common share $.12 $.12 $.24 $.24
======== ======= ======== ========
N.D. Non-Dilutive
See notes to condensed consolidated financial statements
4
<PAGE>
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands of dollars)
July 2, January 1,
1995 1995
--------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 69,555 $ 11,185
Trade receivables--net 156,223 141,042
Inventories (Note 2) 187,303 232,379
Prepaid expenses and other current
assets 15,843 11,035
--------- ---------
TOTAL CURRENT ASSETS 428,924 395,641
Properties, plants and equipment--net 451,437 464,977
Cost in excess of net assets
acquired 132,146 133,862
Deferred income taxes 43,476 49,027
Assets held for sale 42,868 37,738
Other assets 12,721 13,453
--------- ---------
TOTAL ASSETS $1,111,572 $1,094,698
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,005 $ 1,993
Accounts payable 83,149 96,417
Accrued compensation and benefits 62,885 46,115
Income taxes payable and deferred 4,674 7,123
Other accrued expenses 28,827 18,632
--------- ---------
TOTAL CURRENT LIABILITIES 181,540 170,280
Long-term debt, less current portion 131,807 133,097
Pensions 126,418 135,758
Postretirement benefit liability 263,488 267,136
Other 27,058 26,721
--------- ---------
TOTAL LIABILITIES 730,311 732,992
5
<PAGE>
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands of dollars)
-Continued-
July 2, January 1,
1995 1995
--------- ----------
SHAREHOLDERS' EQUITY:
Preferred stock, par value $1:
authorized--50,000,000 shares;
issued--none
Common stock, par value $ .10:
authorized--250,000,000 shares;
issued--72,878,242 shares 7,288 7,288
Additional capital 271,277 270,571
Retained earnings 182,772 136,027
Equity adjustment related to
minimum liability for pension plans (20,682) (20,682)
Common stock in treasury at cost--
3,562,701 and 2,227,671 shares (59,394) (31,498)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 381,261 361,706
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,111,572 $1,094,698
========= =========
See notes to condensed consolidated financial statements
6
<PAGE>
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(in thousands of dollars)
Fiscal Fiscal
Six Months Six Months
Ended Ended
July 2,1995 July 3,1994(1)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 63,324 $(11,061)
Adjustment to reconcile net income
to cash flow from operating activities:
Depreciation and amortization 19,496 18,936
Net reinvested earnings of assets
held for sale (5,130) -
Limited partnership loss - 2,590
Deferred taxes 3,015 (790)
Change in operating assets and liabilities:
Long-term retirement liabilities (12,988) (9,899)
Trade receivables (15,181) 43,616
Inventories 45,076 46,684
Trade payables (13,268) (39,889)
Net change in other current assets
and current liabilities 20,275 (10,650)
Other changes 3,163 (5,238)
------- -------
CASH FROM OPERATING ACTIVITIES 107,782 34,299
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of properties, plants
and equipment--net (10,227) (24,156)
Sales of short-term investments - 16,089
Long-term investments 346 -
Increase in notes receivable (12) (401)
------- -------
CASH USED BY INVESTING ACTIVITIES (9,893) (8,468)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on senior secured debt
assumed in the 1993 acquisition - (25,000)
Payments on long-term debt and
capital leases (1,278) (2,269)
Dividends paid (8,480) (16,996)
Purchases of treasury stock (30,023) (7,539)
Employee stock option plans 262 118
------- -------
CASH USED BY FINANCING ACTIVITIES (39,519) (51,686)
7
<PAGE>
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(in thousands of dollars)
-Continued-
Fiscal Fiscal
Six Months Six Months
Ended Ended
July 2,1995 July 3,1994(1)
------------ ------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 58,370 (25,855)
Balance of cash and cash equivalents at
beginning of period 11,185 48,107
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $69,555 $22,252
====== ======
(1)Reclassified to conform to 1995 presentation
See notes to condensed consolidated financial statements
8
<PAGE>
ALLEGHENY LUDLUM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--FINANCIAL STATEMENTS
This financial information should be read in conjunction with the
financial statements and notes thereto for the fiscal year ended
January 1, 1995. The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal accruals)
considered necessary for a fair presentation have been included.
Operating results for the fiscal quarter and six months ended
July 2, 1995 are not necessarily indicative of results of
operations that may be expected for the fiscal year ending December
31, 1995.
Net income per common share was computed based on the weighted
average number of shares of common stock outstanding during the
periods: 69,959,030 and 70,263,501 shares for the fiscal quarter
and six months, respectively, ended July 2, 1995 and 70,792,035 and
70,865,486 shares for the fiscal quarter and six months,
respectively, ended July 3, 1994.
The Company's fiscal year and fiscal quarters end on the Sunday
closest to the last day of the calendar month.
NOTE 2--INVENTORIES
Inventories consisted of the following:
July 2, January 1,
1995 1995
-------- ---------
(in thousands of dollars)
Raw materials $ 35,944 $ 52,332
Work-in-process and finished products 213,844 213,282
Supplies 16,610 16,048
------- -------
Total inventories at current cost 266,398 281,662
Less allowances to reduce current
cost values to LIFO basis 79,095 49,283
------- -------
$187,303 $232,379
======= =======
Substantially all of the Company's inventories are determined by
the LIFO method.
9
<PAGE>
NOTE 3--LITIGATION
A jury found in favor of the Company in a case brought by Allegheny
International, Inc. (AI) to recover a $5.5 million refund plus
interest. The refund was received by the Company in 1989 with
respect to a federal income tax overpayment. The case, which was
brought in the United States District Court for the Western
District of Pennsylvania, arose out of the 1980 management-led
buyout of the Company from AI and was pursued by Sunbeam
Corporation, the successor to AI following AI's bankruptcy
reorganization. Immediately prior to the commencement of the
trial, Sunbeam withdrew with prejudice its related claims for
reimbursement of various alleged insurance coverage costs in the
amount of $.5 million plus interest. Sunbeam has indicated that it
may contest the jury verdict. The Company intends to vigorously
defend the favorable verdict.
On June 28, 1995, the U.S. Department of Justice commenced an
action against the Company in the United States District Court for
the Western District of Pennsylvania, asserting, in 64 claims,
multiple violations of the federal Clean Water Act occurring at
various times since 1987. The complaint seeks injunctive relief
and assessment of penalties of up to $25,000 per day of violation.
While it is too early to predict the outcome of the case, the
Company believes that any costs or penalties should not be material
to the financial condition of the Company or its results of
operations.
10
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the
information in the Condensed Consolidated Financial Statements and
Notes to the Condensed Consolidated Financial Statements.
The 1994 periods include the effects of a 10-week labor strike
that began April 1, 1994.
RESULTS OF OPERATIONS
Net sales by product line were as follows:
Fiscal Quarter Fiscal Six Months
Ended Ended
---------------------- -------------------
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
------- ------- -------- --------
(millions) (millions)
Stainless steel $324.6 $136.2 $646.6 $382.2
Silicon electrical steel 32.8 18.0 68.5 60.9
Other specialty alloys 33.1 18.0 70.7 43.0
----- ----- ----- -----
Total net sales $390.5 $172.2 $785.8 $486.1
===== ===== ===== =====
Net sales in the 1995 periods far exceeded the 1994 periods
due to the labor strike in 1994. Shipments were 145,176 tons and
310,559 tons in the 1995 second quarter and six months,
respectively, compared to 72,115 tons and 217,176 tons in the 1994
periods.
Market demand for stainless steel and other specialty alloy
products was strong in the 1995 first half. Historically, orders
and shipments tend to be lower in the second half of the year.
Effective July 2, 1995, the Company has implemented a price
increase of approximately 5% on plate products which are sold into
capital goods markets where market demand remains strong. Selling
price surcharges based on nickel, molybdenum and chromium costs are
expected to continue into the third quarter of 1995.
Stainless steel sales increases in the 1995 periods also
reflect price increases, selling price surcharges implemented in
1995 to cover rising raw material costs and improved product mix.
The Company anticipates that the reduction in its shipments of
lower priced commodity stainless steel for exhaust systems will
continue in the second half of 1995.
Silicon electrical steel sales in the 1995 periods also
benefited from higher prices for most products. Silicon sales in
1995 have not returned to pre-strike levels.
11
<PAGE>
Other specialty alloy sales in the 1995 periods also reflect
increased shipments of high alloy plate and tool steel products,
price increases and selling price surcharges.
Cost of products sold as a percentage of net sales in the 1995
periods was significantly below the strike-affected 1994 periods.
The 1994 periods were affected by reduced sales, continuing fixed
costs, the expense for the hourly signing bonus resulting from the
new contract and a related bonus for salaried employees. While
prices for certain raw materials have recently declined from the
high levels reached in the first half of 1995, selling price
surcharges based on nickel, molybdenum and chromium costs are
expected to continue into the third quarter of 1995.
Research, development and technology costs increased in the
second quarter and first six months of 1995 compared to the 1994
periods. In the 1994 periods these costs were reduced as a result
of the labor strike. The 1995 periods also reflect higher expense
for incentive compensation plans related to Company financial
results and higher common stock values.
Commercial and administrative expenses increased in the 1995
periods compared to the 1994 periods primarily due to increased
expense for compensation plans related to Company financial results
and higher common stock values.
Earnings from assets held for sale are attributable primarily
to two non-specialty steel companies that were acquired in 1993.
As previously reported, the results of these businesses have been
included as a separate line item in the results of the Company's
operations since the beginning of the 1995 fiscal year. The
results of these businesses continue to reflect the Company's
successful efforts to improve the productivity and reduce the costs
of these businesses as well as strong market conditions. See
"FINANCIAL CONDITION AND LIQUIDITY."
The effective tax rates of 40.7% and 40.9% in the 1995 second
quarter and first six months, respectively, compare to effective
tax rates for 42.2% and 41.5% in the 1994 periods. The primary
cause of the decrease is a reduction in Pennsylvania's effective
tax rates in 1995.
FINANCIAL CONDITION AND LIQUIDITY
Working capital increased to $247.4 million at the end of the
first half of 1995 compared to $225.4 million at the end 1994. The
current ratio increased to 2.4 from 2.3 in the same periods. The
increase in working capital is primarily reflected in higher
balances of cash and cash equivalents which increased from $11.2
million to $69.6 million and somewhat higher trade receivables as
well as lower balances in accounts payable and taxes, which were
partially offset by lower inventories and increased liabilities for
compensation and benefits.
12
<PAGE>
In the first six months of 1995, cash on hand of $11.2 million
at the beginning of the year and cash from operations of $108.6
million was used to repurchase $30.0 million in common stock,
invest $10.2 million in capital equipment, pay dividends of $8.5
million and pay down $1.3 million in debt. These transactions
resulted in a cash position of $69.6 million at the end of the
first half of 1995.
On June 30, 1995, the Company entered into a new Credit
Agreement with a group of banks which replaced the Company's 1990
credit agreement. The new Credit Agreement provides for borrowings
of up to $100 million on a revolving credit basis and extends
total maturities to three years. The Company believes that the new
Credit Agreement provides more favorable prices and more flexible
covenants and conditions than the 1990 agreement.
Investment bankers have been retained to handle the sale of
the two non-specialty steel companies that are held for sale. The
Company anticipates that these companies will be sold by the end of
the 1995 fiscal year. See "RESULTS OF OPERATIONS."
The Company continues to estimate that capital expenditures
for 1995 will be approximately $30 million.
The Company anticipates that internally generated funds,
current cash on hand and borrowing from existing credit lines will
be adequate to meet foreseeable needs.
OTHER MATTERS
For a discussion of certain litigation filed by the Department
of Justice against the Company, see NOTE 3 of the Notes to
Condensed Consolidated Financial Statements (Unaudited), PART I.,
Item 1 of this filing which is incorporated herein by reference.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information concerning certain litigation filed by the
Department of Justice against the Company set forth in NOTE 3 of
the Notes to Condensed Consolidated Financial Statements
(Unaudited), PART I., Item 1 of this filing is incorporated
herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1995 annual meeting of shareholders was held on
May 19, 1995. At that meeting the four nominees for director named
in the proxy statement for the meeting were elected, having
received the following number of votes:
13
<PAGE>
Name No. of Votes For No. of Votes Withheld
---- ---------------- ---------------------
Paul S. Brentlinger 60,847,413 300,958
Thomas Marshall 60,847,361 301,010
James L. Murdy 60,850,205 298,166
Charles J. Queenan, Jr. 60,485,800 662,571
In addition, the shareholders voted on and approved the
ratification of the selection of Ernst & Young LLP as independent
auditors of the Company and its subsidiaries for the 1995 fiscal
year. The number of votes cast for approval was 60,990,239 and
against was 58,775 and there were no broker non-votes in connection
with the ratification of the selection of Ernst & Young LLP.
Item 6. Exhibits
(a) Exhibits
(4) Credit Agreement Dated as of June 30, 1995
(11) Computation of Per Share Earnings
(27) Financial Data Schedule
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ALLEGHENY LUDLUM CORPORATION
By /s/ J.L. Murdy
----------------------------
J. L. Murdy
Senior Vice President - Finance
and Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
August 15, 1995
15
<PAGE>
EXHIBIT INDEX
Exhibit
Number
-------
4 Credit Agreement dated as of June 30, 1995
11 Computation of Per Share Earnings
27 Financial Data Schedule
16
<PAGE>
Exhibit 4
CREDIT AGREEMENT
Dated as of
June 30, 1995
By and Among
ALLEGHENY LUDLUM CORPORATION
as the Borrower
PNC BANK, NATIONAL ASSOCIATION
BANK OF AMERICA ILLINOIS
MELLON BANK, N.A.
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
INTEGRA BANK
as the initial Lenders hereunder
and
PNC BANK, NATIONAL ASSOCIATION
as the Agent
BF 28949.8
<PAGE>
TABLE OF CONTENTS
Page
TABLE OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . iv
ARTICLE I. DEFINITIONS. . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . 1
1.2 GAAP Definitions . . . . . . . . . . . . . . . 17
1.3 Other Definitional Conventions and Rules of
Construction . . . . . . . . . . . . . . . . . 17
ARTICLE II. THE LOANS . . . . . . . . . . . . . . . . . . . 17
2.1 The Revolving Credit . . . . . . . . . . . . . 17
2.2 Bid Rate Loans . . . . . . . . . . . . . . . . 19
2.3 Interest Rates, Interest Payment and Certain
Provisions Relating to Interest and Fees . . . 24
2.4 Yield-Protection, Capital Adequacy and
Miscellaneous Provisions Relating to Euro-
Rate . . . . . . . . . . . . . . . . . . . . . 27
2.5 Facility Fee . . . . . . . . . . . . . . . . . 30
2.6 Calculation of Interest and Facility Fee . . . 30
2.7 Extension of Termination Date . . . . . . . . 31
2.8 Substitution or Replacement of a Lender . . . 31
2.9 Loan Repayment . . . . . . . . . . . . . . . . 32
2.10 Additional Payments by the Borrower . . . . . 32
2.11 Voluntary Reduction of Availability . . . . . 33
2.12 Loan Account . . . . . . . . . . . . . . . . . 33
2.13 Payment from Accounts Maintained by Borrower . 33
2.14 Time, Place and Manner of Payments . . . . . . 34
ARTICLE III. REPRESENTATIONS AND WARRANTIES . . . . . . . . 34
3.1 Corporate Existence . . . . . . . . . . . . . 34
3.2 Corporate Authority . . . . . . . . . . . . . 34
3.3 Enforceability . . . . . . . . . . . . . . . . 35
3.4 No Restrictions . . . . . . . . . . . . . . . 35
3.5 Financial Statements . . . . . . . . . . . . . 35
3.6 Absence of Litigation . . . . . . . . . . . . 35
3.7 Tax Returns and Payments . . . . . . . . . . . 36
3.8 Pension Plans . . . . . . . . . . . . . . . . 36
3.9 Compliance with Applicable Laws . . . . . . . 36
3.10 Environmental Matters . . . . . . . . . . . . 37
3.11 Governmental Approval . . . . . . . . . . . . 37
3.12 Regulations G, T, U and X . . . . . . . . . . 37
3.13 Investment Company Act . . . . . . . . . . . . 37
3.14 Public Utility Holding Company Act . . . . . . 37
3.15 Disclosure . . . . . . . . . . . . . . . . . . 37
-i-
<PAGE>
ARTICLE IV. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . 38
4.1 Use of Proceeds . . . . . . . . . . . . . . . 38
4.2 Furnishing Information . . . . . . . . . . . . 38
4.3 Visitation . . . . . . . . . . . . . . . . . . 39
4.4 Preservation of Existence; Qualification . . . 39
4.5 Compliance with Laws and Contracts . . . . . . 40
4.6 Payment of Taxes and Other Liabilities . . . . 40
4.7 Insurance . . . . . . . . . . . . . . . . . . 40
4.8 Maintenance of Properties . . . . . . . . . . 41
4.9 Plans and Benefit Arrangements . . . . . . . . 41
4.10 Senior Debt Status . . . . . . . . . . . . . . 41
ARTICLE V. NEGATIVE COVENANTS . . . . . . . . . . . . . . . 41
5.1 Indebtedness . . . . . . . . . . . . . . . . . 41
5.2 Encumbrances . . . . . . . . . . . . . . . . . 42
5.3 Leverage Ratio . . . . . . . . . . . . . . . . 42
5.4 Interest Coverage Ratio . . . . . . . . . . . 42
5.5 Sales of Assets . . . . . . . . . . . . . . . 42
5.6 Merger . . . . . . . . . . . . . . . . . . . . 43
5.7 Regulation G, T, U and X Compliance . . . . . 43
5.8 ERISA . . . . . . . . . . . . . . . . . . . . 43
5.9 Change of Fiscal Year . . . . . . . . . . . . 43
ARTICLE VI. CONDITIONS PRECEDENT TO ALL DISBURSEMENTS . . . 44
6.1 All Disbursements . . . . . . . . . . . . . . 44
6.2 Conditions Precedent to the Initial
Disbursement Under the Commitment . . . . . . 44
ARTICLE VII. DEFAULTS . . . . . . . . . . . . . . . . . . . 46
7.1 Payment Default . . . . . . . . . . . . . . . 46
7.2 Nonpayment of Other Indebtedness . . . . . . . 46
7.3 Insolvency . . . . . . . . . . . . . . . . . . 46
7.4 Termination of Existence . . . . . . . . . . . 47
7.5 Failure to Comply with Covenants . . . . . . . 47
7.6 Misrepresentation . . . . . . . . . . . . . . 47
7.7 Adverse Judgments, Etc . . . . . . . . . . . . 47
7.8 Invalidity or Unenforceability . . . . . . . . 47
7.9 ERISA . . . . . . . . . . . . . . . . . . . . 48
7.10 Change of Control . . . . . . . . . . . . . . 48
7.11 Consequences of an Event of Default . . . . . 48
7.12 Remedies Upon Default . . . . . . . . . . . . 49
ARTICLE VIII. AGREEMENT AMONG LENDERS . . . . . . . . . . . 49
8.1 Appointment and Grant of Authority . . . . . . 49
8.2 Non-Reliance on Agent . . . . . . . . . . . . 50
-ii-
<PAGE>
8.3 Responsibility of Agent and Other Matters . . 50
8.4 Action on Instructions . . . . . . . . . . . . 51
8.5 Indemnification . . . . . . . . . . . . . . . 51
8.6 Agent's Rights as a Lender . . . . . . . . . . 52
8.7 Payment to Lenders . . . . . . . . . . . . . . 52
8.8 Pro Rata Sharing . . . . . . . . . . . . . . . 52
8.9 Successor Agent. . . . . . . . . . . . . . . . 53
ARTICLE IX. GENERAL PROVISIONS . . . . . . . . . . . . . . . 53
9.1 Amendments and Waivers . . . . . . . . . . . . 53
9.2 Expenses . . . . . . . . . . . . . . . . . . . 55
9.3 Notices . . . . . . . . . . . . . . . . . . . 55
9.4 Tax Withholding . . . . . . . . . . . . . . . 56
9.5 Successors and Assigns . . . . . . . . . . . . 57
9.6 Assignments and Participations . . . . . . . . 57
9.7 Severability . . . . . . . . . . . . . . . . . 60
9.8 Survival . . . . . . . . . . . . . . . . . . . 60
9.9 Governing Law . . . . . . . . . . . . . . . . 60
9.10 Non-Business Days . . . . . . . . . . . . . . 60
9.11 Integration . . . . . . . . . . . . . . . . . 60
9.12 Headings . . . . . . . . . . . . . . . . . . . 60
9.13 Set-Off . . . . . . . . . . . . . . . . . . . 60
9.14 Forum . . . . . . . . . . . . . . . . . . . . 61
9.15 Waiver of Jury Trial . . . . . . . . . . . . . 61
9.16 Termination of Prior Credit Agreement . . . . 62
9.17 Counterparts . . . . . . . . . . . . . . . . . 62
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<PAGE>
TABLE OF EXHIBITS
Name of Exhibit
Exhibit A - Revolving Credit Note
Exhibit B - Bid Rate Note
Exhibit C - Bid Rate Quote Request
Exhibit D - Invitation for Bid Rate Quotes
Exhibit E - Bid Rate Quote
Exhibit F - Compliance Certificate
Exhibit G - Opinion of Counsel
Exhibit H - Form of Assignment and Assumption Agreement
Schedules
3.8 Plans
5.1 Existing Indebtedness
5.2 Existing Encumbrances Securing Indebtedness
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<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 30, 1995, by
and among ALLEGHENY LUDLUM CORPORATION, a Pennsylvania
corporation (the "Borrower"), PNC BANK, NATIONAL ASSOCIATION,
BANK OF AMERICA ILLINOIS, MELLON BANK, N.A., THE CHASE MANHATTAN
BANK (NATIONAL ASSOCIATION), and INTEGRA BANK and each other
financial institution which, from time to time, becomes a party
hereto in accordance with Subsection 9.6a (individually, a
"Lender" and collectively, the "Lenders") and PNC BANK, NATIONAL
ASSOCIATION, a national banking association, as agent for the
Lenders (in such capacity the "Agent").
WITNESSETH:
WHEREAS, the Borrower desires to obtain a Commitment
(as defined below) from each of the Lenders pursuant to which
Loans, in a maximum aggregate principal amount at any one time
outstanding not to exceed $100,000,000, will be made to the
Borrower from time to time prior to the Termination Date (as
defined below); and
WHEREAS, the Lenders are willing, on the terms and
subject to the conditions hereinafter set forth, to extend such
Commitment and make such Loans to the Borrower.
NOW, THEREFORE, in consideration of mutual promises
contained herein and other valuable consideration and with the
intent to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I. DEFINITIONS.
1.1 Defined Terms. As used herein the following terms
shall have the meaning specified unless the context otherwise
requires:
"Absolute Rate Auction" means a solicitation of Bid
Rate Quotes setting forth Bid Rate Absolute Rates pursuant to
Subsection 2.2c.
"Adjusted Euro-Rate" means the interest rate relating
to the Euro-Rate Option as described in item (ii) of Subsection
2.3b.
"Agent" has the meaning set forth in the preamble to
this Agreement.
"Agent's Fees" means those certain fees for the sole
<PAGE>
account of the Agent set forth in that certain letter agreement
by and between the Agent and the Borrower dated June 23, 1995.
"Agreement" means this Credit Agreement together with
the exhibits and schedules hereto and all extensions, renewals,
amendments, modifications, substitutions and replacements hereto
and hereof.
"Applicable Euro-Rate Margin" means for each Euro-Rate
Portion, the percentage (expressed in basis points) determined
from time to time based upon the Senior Ratings then in effect
from Moody's and S&P set forth under the relevant column heading
below:
Applicable Euro-
Senior Ratings Rate Margin
Level I
Senior Ratings are equal to or better than
A- from S&P or A3 from Moody's 20.0 Basis Points
Level II
Senior Ratings are BBB+ from S&P or Baa1
from Moody's 22.5 Basis Points
Level III
Senior Ratings are BBB from S&P or Baa2
from Moody's 25.0 Basis Points
Level IV
Senior Ratings are equal to or less than
BBB- from S&P and Baa3 from Moody's 27.5 Basis Points
; provided, however, that (i) in the event the Senior Ratings of
S&P and Moody's do not coincide, the Applicable Euro-Rate Margin
shall be determined utilizing the higher of such Senior Ratings;
(ii) in the event only one Senior Rating is in effect, the
Applicable Euro-Rate Margin set forth opposite such Senior Rating
shall apply and (iii) in the event no Senior Ratings are in
effect at such date of determination, the percentage (expressed
in basis points) determined from time to time based upon the
Leverage Ratio then in effect set forth under the relevant column
heading below shall apply:
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Applicable Euro-
Leverage Ratio Rate Margin
Level I
Ratio of Consolidated Total Indebtedness
to Consolidated Total Capitalization,
expressed as a percentage, is less than or
equal to 30% 20.0 Basis Points
Level II
Ratio of Consolidated Total Indebtedness
to Consolidated Total Capitalization,
expressed as a percentage, is greater than
30% but less than or equal to 40% 22.5 Basis Points
Level III
Ratio of Consolidated Total Indebtedness
to Consolidated Total Capitalization,
expressed as a percentage, is greater than
40% but less than or equal to 50% 25.0 Basis Points
Level IV
Ratio of Consolidated Total Indebtedness
to Consolidated Total Capitalization,
expressed as a percentage is greater than
50% 27.5 Basis Points
"Applicable Facility Fee Percentage" means the
percentage (expressed in basis points) determined from time to
time based upon the Senior Ratings then in effect from Moody's
and S&P set forth under the relevant column heading below:
Applicable
Facility Fee
Senior Ratings Percentage
Level I
Senior Ratings are equal to or better than
A- from S&P or A3 from Moody's 12.5 Basis Points
Level II
Senior Ratings are BBB+ from S&P or Baa1
from Moody's 15.0 Basis Points
Level III
Senior Ratings are BBB from S&P or Baa2
from Moody's 20.0 Basis Points
Level IV
Senior Ratings are equal to or less than
BBB- from S&P and Baa3 from Moody's 25.0 Basis Points
-3-
<PAGE>
; provided, however, that (i) in the event the Senior Ratings of
S&P and Moody's do not coincide, the Applicable Facility Fee
Percentage shall be determined utilizing the higher of such
Senior Ratings; (ii) in the event only one Senior Rating is in
effect, the Applicable Facility Fee Percentage set forth opposite
such Senior Rating shall apply and (iii) in the event no Senior
Ratings are in effect at such date of determination, the
percentage (expressed in basis points) determined from time to
time based upon the Leverage Ratio then in effect set forth under
the relevant column heading below shall apply:
Applicable
Facility Fee
Leverage Ratio Percentage
Level I
Ratio of Consolidated Total Indebtedness
to Consolidated Total Capitalization,
expressed as a percentage, is less than or
equal to 30% 12.5 Basis Points
Level II
Ratio of Consolidated Total Indebtedness
to Consolidated Total Capitalization,
expressed as a percentage, is greater than
30% but less than or equal to 40% 15.0 Basis Points
Level III
Ratio of Consolidated Total Indebtedness
to Consolidated Capitalization, expressed
as a percentage, is greater than 40% but
less than or equal to 50% 20.0 Basis Points
Level IV
Ratio of Consolidated Total Indebtedness
to Consolidated Total Capitalization,
expressed as a percentage, is greater than
50% 25.0 Basis Points
"Assignment and Assumption Agreement" means an
Assignment and Assumption Agreement in the form of Exhibit "H"
hereto.
"Authorized Officer" means the President, any Vice
President, the Chief Financial Officer, the Treasurer or the
Controller of the Borrower. The Agent and the Lenders shall be
entitled to rely on the incumbency certificate delivered pursuant
to Subsection 6.2 (v) for the initial designation of each
Authorized Officer. Additions or deletions to the list of
Authorized Officers may be made by the Borrower at any time by
delivering to the Agent for redelivery to each Lender a revised
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<PAGE>
incumbency certificate.
"Bank Indebtedness" means the liability of the Borrower
to pay the Loans, the Facility Fee, the Agent's Fees, interest
thereon, and the other amounts, including, without limitation,
expenses, due hereunder.
"Base Rate" means, for any day, the higher of (a) the
sum of (A) the Federal Funds Rate for such day plus (B) fifty
(50) basis points (1/2%) per annum and (b) the Prime Rate, as of
such day.
"Base Rate Option" means the interest rate option
described in item (i) of Subsection 2.3b.
"Base Rate Portion" means a Revolving Credit Loan or a
portion thereof which bears, or is to bear, interest at the Base
Rate.
"Bid Rate" means the rate or rates of interest from
time to time in effect pursuant to agreements reached between the
Borrower and any or all of the Lenders pursuant to Section 2.2.
"Bid Rate Absolute Rate" has the meaning set forth in
Subsection 2.2c(iii)(B)(4).
"Bid Rate Interest Period" means any individual period
of one (1) to two hundred seventy (270) days, all determined in
accordance with Section 2.2, commencing on the date of the
extension of the relevant Bid Rate Loan; provided, however, that
no Bid Rate Interest Period shall extend beyond the Termination
Date.
"Bid Rate Loan" means a Disbursement by any Lender
pursuant to Section 2.2.
"Bid Rate Loan Request" means the written request of
the Borrower for a Bid Rate Loan delivered to the Agent in
accordance with the provisions of Subsection 2.2c, which request
shall be substantially in the form of Exhibit "C" hereto.
"Bid Rate Margin" has the meaning set forth in
Subsection 2.2c(iii)(B)(3).
"Bid Rate Notes" means any one or all of the several
promissory notes of the Borrower evidencing Indebtedness of the
Borrower under the Bid Rate Option, which notes are substantially
in the form of Exhibit "B" to this Agreement, together with all
extensions, renewals, amendments, modifications, substitutions
and replacements thereto and thereof.
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<PAGE>
"Bid Rate Option" means the interest rate option that
may be agreed upon between the Borrower and one or more of the
Lenders pursuant to Section 2.2 hereof.
"Bid Rate Quote" means each offer by a Lender to make a
Bid Rate Loan which offer is substantially in the form of Exhibit
"E".
"Bid Rate Quote Request" means each request by the
Borrower of offers to make Bid Rate Loans, which request is
substantially in the form of Exhibit "C".
"Borrower" has the meaning given it in the preamble to
this Agreement.
"Borrowing Date" means the date on which any
Disbursements are to be made hereunder.
"Business Day" means, any day other than a Saturday or
Sunday or a legal holiday on which commercial banks are
authorized or required to be closed for business in Pittsburgh,
Pennsylvania and, if the applicable Business Day relates to any
Disbursement to which the Euro-Rate Option or the Bid Rate Margin
applies, such day must also be a day on which dealings are
carried on in the London interbank market.
"Capital Adequacy Event" shall have the meaning given
it in Subsection 2.4b.
"Capital Compensation Amount" shall have the meaning
given it in Subsection 2.4b.
"Closing" means the execution and delivery of this
Agreement which execution and delivery shall occur at the offices
of Tucker Arensberg, P.C. in Pittsburgh, Pennsylvania, at 10:00
A.M. (eastern time) on June 30, 1995, or such other date and time
as is mutually agreeable to the parties hereto.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor legislation thereto,
together with all regulations promulgated and rulings issued
thereunder.
"Commitment" means, as to each Lender, the obligation
of such Lender to make Loans available to the Borrower pursuant
to Section 2.1 in an aggregate principal amount not to exceed the
amount set opposite such Lender's name on the signature pages
hereto (as the same may be reduced at any time or from time to
time pursuant to Subsection 2.1f and Section 2.11) and, as to all
Lenders, the obligation of the Lenders to make Loans available to
-6-
<PAGE>
the Borrower in a maximum aggregate amount not to exceed
$100,000,000 as set forth in Section 2.1.
"Commitment Percentage" means, as to each Lender, the
percentage of the Commitment set forth opposite such Lender's
name on the signature pages hereto.
"Compliance Certificate" means a Compliance Certificate
substantially in the form of Exhibit "F".
"Consolidated" means the consolidation of the accounts
of any two or more Persons in accordance with GAAP.
"Consolidated EBIT" means for any period Consolidated
Net Income for such period (x) excluding therefrom (A) any
extraordinary items of gain or loss and (B) any gain or loss of
any other Person accounted for on the equity method, except to
the extent of cash distributions received during the relevant
period (y) plus the aggregate amounts deducted in determining
Consolidated Net Income for such period in respect of (i)
Consolidated Interest Expense and (ii) income taxes.
"Consolidated Interest Expense" means, for the relevant
period, on a Consolidated basis, the sum of all interest due and
payable by the Borrower and its Consolidated Subsidiaries with
regard to Indebtedness for such period.
"Consolidated Net Income" means the net income (or
deficit) of the Borrower and its Consolidated Subsidiaries, for
the period in question, after deducting all operating expenses,
provisions for all taxes and reserves (including reserves for all
deferred income taxes) and all other proper deductions, all
determined on a Consolidated basis in accordance with GAAP,
consistently applied.
"Consolidated Shareholders' Equity" means the total of
those items enumerated under the heading "Shareholders' Equity"
in the Borrower's relevant balance sheets determined on a
Consolidated basis in accordance with GAAP, consistently applied.
"Consolidated Subsidiary" means any Subsidiary (whether
now existing or hereafter organized or acquired) which shall,
during the applicable period, be Consolidated with the Borrower
in any consolidated financial statement furnished to the Lenders.
"Consolidated Tangible Net Worth" means the
Consolidated Shareholders' Equity in the Borrower and its
Consolidated Subsidiaries, except that there shall be deducted
therefrom (if not otherwise deducted or eliminated) good will,
corporate organization expenses (other than initial organization
-7-
<PAGE>
expenses and fees), unamortized debt discount and expense,
patents, trademarks, licenses, copyrights, franchises, research
and development expenses, any amounts for treasury stock and
other intangibles not approved in writing by the Required
Lenders, all determined on a consolidated basis and in accordance
with GAAP, consistently applied.
"Consolidated Total Assets" means as of any date of
determination on a Consolidated basis, the value of all
properties and all right, title and interest in such properties
which would be classified as assets, determined in accordance
with GAAP exclusive of all write-ups above depreciated costs
(other than write-ups resulting from foreign currency
translations, write-ups to market value of marketable securities
and of swaps, hedges and futures and write-ups of assets of a
going concern business made within twelve months after the
acquisition of such business) subsequent to January 1, 1995 in
the book value of any asset owned by the Borrower or a
Consolidated Subsidiary.
"Consolidated Total Capitalization" means as of any
date of determination the sum of (i) Consolidated Total
Indebtedness plus (ii) Consolidated Shareholders' Equity
(calculated before taking into effect adjustments required by FAS
Statement No. 87).
"Consolidated Total Indebtedness" means the
Indebtedness of the Borrower and its Consolidated Subsidiaries
determined on a Consolidated basis in accordance with GAAP,
consistently applied.
"Disbursement" means each advance of funds by a Lender
hereunder whether as a Revolving Credit Loan or a Bid Rate Loan.
"Dollars" or "$" means the legal tender of the United
States of America.
"Encumbrance" means any encumbrance, mortgage, lien,
charge, pledge, security interest, priority payment, conditional
sales agreement right, or other title retention agreement right
(including any right under a lease which, in accordance with
GAAP, would be treated as a capitalized item) in, upon or against
any asset of any Person.
"Environmental Law(s)" means any and all statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions of any Federal, state or local
governmental authority relating to the environment or the release
of any materials into the environment, whether now in existence
-8-
<PAGE>
or hereafter enacted, agreed to, issued or otherwise becoming
effective.
"ERISA" means the Employee Retirement Income Security
Act of 1974, together with the regulations thereunder, as now in
effect and as hereafter from time to time amended.
"ERISA Affiliate" means, as of any date, any member of
a controlled group of corporations of which the Borrower or any
Subsidiary is a member, which, in any event together with the
Borrower are treated as of such date as a single employer under
Section 414 of the Code.
"Euro-Rate" means, with respect to the Loans comprising
any Disbursement to which the Euro-Rate Option or the Bid Rate
Margin applies for any Interest Period, the interest rate per
annum determined by the Agent by dividing (the resulting quotient
rounded upward to the nearest 1/16th of 1% per annum) (i) the
rate of interest determined by the Agent in accordance with its
usual procedures (which determination shall be conclusive absent
manifest error) to be the average of the London interbank offered
rates set forth on the "LIBO" page of the Reuters Monitor Money
Rate Service (or appropriate successor or, if Reuters or its
successor ceases to provide such quotes, a comparable replacement
determined by the Agent) at approximately 11:00 a.m. London time
two (2) Business Days prior to the first day of such Interest
Period for an amount comparable to such Disbursement and having a
borrowing date and a maturity comparable to such Interest Period
by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by following
formula:
Average of London interbank offered rates on LIBO page
Euro-Rate = of Reuters Monitor Money Rate Service or appropriate
successor
-------------------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted automatically with respect to any
Euro-Rate Portion outstanding on the effective date of any change
in the Euro-Rate Reserve Percentage, as of such effective date.
"Euro-Rate Auction" means a solicitation of Bid Rate
Quotes setting forth Bid Rate Margins pursuant to Subsection
2.2c.
"Euro-Rate Interest Period" means, subject to the
provisions of Subsection 2.3c, any individual period of one (1),
two (2), three (3) or six (6) months selected by the Borrower
commencing on the Borrowing Date, conversion date or renewal date
-9-
<PAGE>
of a Euro-Rate Portion or a Bid Rate Loan to which the Bid Rate
Margin applies, in either case, to which such period shall apply.
"Euro-Rate Option" means the interest rate option
described in item (ii) of Subsection 2.3b.
"Euro-Rate Portion" means a Revolving Credit Loan, or
portion thereof, which bears, or is to bear, interest at the
Adjusted Euro-Rate.
"Euro-Rate Reserve Percentage" means the maximum
effective percentage (expressed as a decimal, rounded upward to
the nearest 1/100 of 1%), as determined in good faith by the
Agent (which determination shall be conclusive), which is in
effect on such day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the
reserve requirements (including, without limitation,
supplemental, marginal and emergency reserve requirements) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities").
"Event of Default" has the meaning given it in Article
VII.
"Extension Agreement" has the meaning given it in
Section 2.7.
"Extension Date" has the meaning given it in Section
2.7.
"Facility Fee" means the fee described in Subsection
2.5.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upward, if necessary, to the nearest 1/100 of 1%)
equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System
arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day, as
so published on the next succeeding Business Day, and (ii) if no
such rate is published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the rates quoted to the
Agent on such day on such transactions as determined by the
Agent.
"Fiscal Quarter" means the approximately three month
fiscal period of the Borrower ending on the Sunday which is
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<PAGE>
closest to each successive March 31, June 30, September 30 and
December 31 and beginning on the Monday immediately succeeding
the Sunday on which the previous fiscal quarter ends.
"Fiscal Year" means the 52-week period of the Borrower
ending on the Sunday nearest December 31; provided however that
every seventh Fiscal Year shall encompass 53 weeks. The
Borrower's Fiscal Year 1994 ended January 1, 1995.
"GAAP" means generally accepted accounting principles
which shall include, but not be limited to, the official
interpretations thereof as defined by the Financial Accounting
Standards Board, its predecessors and its successors.
"Governmental Authority" means the government of the
United States or the government of any state or locality therein,
any political subdivision or any governmental, quasi-
governmental, judicial, public or statutory instrumentality,
authority, body or entity, or other regulatory bureau, authority,
body or entity of the United States or any state or locality
therein, including the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency and the Board of
Governors of the Federal Reserve System, and any central bank of
any other country or any comparable authority.
"Governmental Rule" means any law, statute, rule,
regulation, ordinance, order, judgment, guideline or decision of
any Governmental Authority.
"Guaranty" or "Guarantee" means any obligation, direct
or indirect, by which a Person undertakes to guaranty, assume or
remain liable for the payment or performance of another Person's
obligations, including but not limited to (i) endorsements of
negotiable instruments, (ii) discounts with recourse, (iii)
agreements to pay or perform upon a second Person's failure to
pay or perform, (iv) remaining liable on obligations assumed by a
second Person, (v) agreements to maintain the capital, working
capital solvency or general financial condition of a second
Person and (vi) agreements for the purchase or other acquisition
of products, materials, supplies or services, if in any case
payment therefor is to be made regardless of the non-delivery of
such products, materials or supplies or the non-furnishing of
such services.
"Hazardous Substances" means any (i) hazardous, toxic
or polluting substances or wastes as defined by any Environmental
Law or (ii) petroleum products.
"Indebtedness" as applied to any Person means, without
duplication, all liabilities of such Person for borrowed money
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<PAGE>
(other than trade accounts payable arising in the ordinary course
of business), direct or contingent, whether evidenced by a bond,
note, debenture, capitalized lease obligation, deferred purchase
price arrangement, title retention device, reimbursement
agreement, Guaranty, book entry or otherwise.
"Interest Period" means any or all of a Euro-Rate
Interest Period or a Bid Rate Interest Period.
"Invitation for Bid Rate Quotes" means the written
solicitation by the Agent for Bid Rate Quotes delivered to the
Lenders in accordance with the provisions of Subsection 2.2c,
which solicitation shall be substantially in the form of Exhibit
"D" hereto.
"Lender" has the meaning given in the preamble to this
Agreement.
"Loan" means with respect to any Lender as of any date,
the aggregate amount of all Disbursements then outstanding from
such Lender to the Borrower hereunder as of such date.
"Loan Account" means the individual loan account
maintained by each Lender as more fully described in Section
2.12.
"Loan Documents" means collectively this Agreement, the
Notes and any other documents furnished in connection herewith.
"Margin Stock" is defined herein as defined in
Regulation U.
"Material Adverse Effect" means, with respect to any
Person relative to any occurrence of whatever nature (including,
without limitation, any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), a
materially adverse effect on (i) the assets of or the business,
revenues, financial condition or operations of the affected
Person, or (ii) the ability of the affected Person to perform any
of its obligations under or with respect to any Loan Document to
which it is a party.
"Moody's" means Moody's Investors Service, Inc.
"Note" means any one or all of the several Revolving
Credit Notes or Bid Rate Notes.
"Notice of Bid Rate Borrowing" has the meaning set
forth in Subsection 2.2c(v).
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<PAGE>
"Option" means any one or more of the Base Rate Option,
the Euro-Rate Option or the Bid Rate Option.
"Participant" means any financial institution or other
Person to which a Lender sells a Participation in its Loan.
"Participation" means the sale by a Lender to any
Participant of an undivided interest in all or any part of such
Lender's Loan.
"PBGC" means the Pension Benefit Guaranty Corporation
or any successor Person.
"Permitted Encumbrance" shall mean, as to any Person,
any of the following:
(i) Encumbrances for taxes, assessments,
governmental charges or levies on any of such Person's
properties, which taxes, assessments, governmental charges or
levies are at the time due and payable or if they can thereafter
be paid without penalty or are being contested in good faith by
appropriate proceedings diligently conducted and with respect to
which the affected Person has created adequate reserves;
(ii) Pledges or deposits to secure payment of
workers' compensation obligations, unemployment insurance,
deposits or indemnities to secure public or statutory obligations
or for similar purposes;
(iii) Encumbrances arising out of judgments or
awards against such Person but only to the extent that the
creation of any such encumbrance shall not be an event or
condition which, with or without notice or lapse of time or both,
would cause the Borrower to be in violation of Section 7.7;
(iv) Mechanics', carriers', workmen's, repairmen's
and other similar statutory Encumbrances incurred in the ordinary
course of such Person's business, so long as the obligation
secured is not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings diligently conducted;
(v) Security interests in favor of lessors of
personal property, which property is the subject of a true lease
between such lessor and such Person;
(vi) Encumbrances securing Indebtedness existing
on the Closing and listed on Schedule 5.2 without enlargement or
extension of the Indebtedness secured thereby or the assets
encumbered thereby;
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(vii) Encumbrances created against production
contracts to secure Indebtedness incurred to acquire equipment
and facilities required to produce the items being sold pursuant
to such production contracts, provided that the Indebtedness
secured thereby together with all other outstanding Indebtedness
permitted by such item does not exceed the limitation set forth
in item (iii) of Section 5.1;
(viii) Encumbrances created in the ordinary
course of business in favor of lenders granting an extension of
credit to the Borrower in the form of bankers acceptances,
provided that the Indebtedness secured thereby, together with the
principal amount of all Loans then outstanding does not exceed
the aggregate Commitment of the Lenders, and provided further,
that such Encumbrances shall be limited to the goods (or
documents evidencing the goods) the purchase or shipment of which
shall have been financed by such bankers' acceptances;
(ix) Easements, rights-of-way, restrictions,
leases or subleases to others or other similar Encumbrances
created in the ordinary course of business which Encumbrances do
not interfere in any material respect with the ordinary conduct
of the business of the Borrower and its Subsidiaries; and
(x) Encumbrances in favor of any Governmental
Authority created pursuant to production contracts with such
Governmental Authority.
"Person" means any individual, partnership,
corporation, trust, joint venture, banking association,
unincorporated organization or any other entity or enterprise or
government or department or agency thereof.
"Plan" means an employee pension benefit plan (other
than a multiemployer plan) which is maintained by the Borrower or
any ERISA Affiliate for employees of the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 302 of ERISA and
Section 412 of the Code.
"Portion" means either the Base Rate Portion, the Euro-
Rate Portion, or any or all of the foregoing, as the case may be.
"Potential Default" means an event which, with the
passage of time or the giving of notice or both, shall be an
Event of Default.
"Prime Rate" means the interest rate per annum
announced from time to time by the Agent as its prime rate, which
rate may not be the lowest rate of interest then being charged by
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the Agent to its commercial borrowers.
"Purchase Money Indebtedness" means Indebtedness
incurred by a Person solely for the acquisition of an asset,
which Indebtedness is secured by an Encumbrance only on the asset
so acquired, additions and accessions thereto and any proceeds
thereof and which Indebtedness does not exceed ninety percent
(90%) of the purchase price of such asset.
"Purchasing Lender" has the meaning given it in
Subsection 9.6a.
"Register" has the meaning given it in Subsection 9.6b.
"Regulation D" means Regulation D promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
204 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Regulation G" means Regulation G promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
207 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Regulation T" means Regulation T promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
220 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Regulation U" means Regulation U promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
221 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Regulation X" means Regulation X promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R. Part
224 et seq.) as such regulation is now in effect and as may
hereafter be amended.
"Reportable Event" means any one or more event, defined
in Section 4043(b) of ERISA and in 29 C.F.R. Part 2615, other
than an event for which the requirement for the thirty (30) day
notice to the PBGC is waived.
"Required Lenders" means as of a particular date (i)
prior to the termination of the Commitments, the Lenders whose
Commitment Percentages aggregate at least sixty-six and two-
thirds percent (66-2/3%) of the aggregate Commitment Percentages
of all the Lenders and (ii) after the termination of the
Commitments, sixty-six and two-thirds percent (66-2/3%) of the
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aggregate principal amount of the Loans at the particular time
outstanding.
"Revolving Credit" has the meaning assigned to it in
Section 2.1, as the same may be reduced pursuant to Section 2.11.
"Revolving Credit Loans" means Disbursements by a
Lender pursuant to Section 2.1.
"Revolving Credit Notes" means any one or all of the
several promissory notes of the Borrower evidencing Indebtedness
of the Borrower under the Revolving Credit which notes are
substantially in the form of Exhibit "A" to the Agreement,
together with all extensions, renewals, amendments,
modifications, substitutions and replacements thereto and
thereof.
"S&P" means Standard & Poor's Rating Group, a division
of McGraw-Hill, Inc.
"Senior Ratings" means (i) if the Borrower has a long
term senior unsecured public debt rating, such long term senior
unsecured public debt rating in effect from time to time as
assigned by Moody's and S&P and (ii) if the Borrower has no long
term senior unsecured public debt rating in effect but has a long
term subordinated unsecured public debt rating in effect, a
rating level two levels above such long term subordinated
unsecured public debt ratings in effect from time to time as
assigned by Moody's and S&P. For the purposes of this definition
a level of rating is the smallest increment of adjustment used by
Moody's or S&P. By way of example, the difference between a Baa1
and Baa2 rating by Moody's or a BBB+ and a BBB rating by S&P
represents one level of rating.
"Subsidiary" means, as to any Person, 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 is at the time
directly or indirectly owned or controlled by such Person and/or
by one or more Subsidiaries of such Person.
"Termination Date" means June 30, 1998, or such later
date as is determined pursuant to Section 2.7.
"Termination Proceedings" means any action taken by the
PBGC under ERISA to terminate any plan.
"Transfer Effective Date" has the meaning given it in
each respective Assignment and Assumption Agreement.
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"Transferor Lender" has the meaning given it in
Subsection 9.6a.
1.2 GAAP Definitions. Accounting terms used herein but not
defined herein shall have the meanings ascribed to them under
GAAP in effect at the time of the execution of this Agreement.
1.3 Other Definitional Conventions and Rules of
Construction. (i) The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall,
unless otherwise expressly specified, refer to this Agreement, as
a whole and not to any particular provision of this Agreement,
and Article, Section and Subsection references are to this
Agreement unless otherwise expressly specified.
(ii) All terms defined in this Agreement in the
singular shall have comparable meanings when used in plural, and
vice versa, unless otherwise specified.
(iii) The word "or" as used herein shall mean and
connote nonexclusive alternatives, unless expressly stated or the
context clearly requires otherwise.
(iv) Captions, headings and Articles, Section and
Subsection references used in this Agreement are for convenience
only and shall not, and are not intended to, in any way or manner
affect the scope or intent of this Agreement or of any provisions
or subdivisions hereof.
ARTICLE II. THE LOANS.
2.1 The Revolving Credit.
2.1a Revolving Credit Loans. The Lenders hereby severally
establish, upon the terms and conditions hereinafter set forth
and relying upon the representations and warranties herein set
forth, a revolving credit in favor of the Borrower in the maximum
aggregate amount of ONE HUNDRED MILLION AND NO/100 DOLLARS
($100,000,000.00) (the "Revolving Credit"). The Borrower shall
have the right to borrow, repay and reborrow from the Lenders
from the date hereof until the Termination Date pursuant to draws
upon the Revolving Credit the principal amount of which, together
with the principal amount of Bid Rate Loans then outstanding,
shall not exceed $100,000,000 in the aggregate at any one time
outstanding.
2.1b Commitment of Each Lender. Each Lender agrees, for
itself only, and subject to the terms and conditions of this
Agreement, to make Revolving Credit Loans to the Borrower from
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time to time not to exceed an aggregate principal amount at any
one time outstanding equal to the amount of its respective
Commitment Percentage of the Revolving Credit.
2.1c Notes. The obligation of the Borrower to repay, on or
before the Termination Date, the aggregate unpaid principal
amount of all Revolving Credit Loans shall be evidenced by the
several Revolving Credit Notes, each substantially in the form of
Exhibit "A" hereto, drawn by the Borrower to the order of a
Lender in the maximum amount of such Lender's Commitment. The
principal amount actually due and owing to a Lender at any time
shall be the then aggregate unpaid principal amount of all
Revolving Credit Loans made by such Lender as shown on the Loan
Account established and maintained by such Lender in accordance
with Section 2.12. Each Revolving Credit Note shall be dated the
date hereof and shall be delivered to the Lenders on such date.
2.1d Disbursements. The amount (i) of any Disbursement
consisting of a Base Rate Portion shall be in the minimum
aggregate principal amount of $1,000,000 or an integral multiple
thereof and (ii) of any disbursement consisting of a Euro-Rate
Portion shall be in the minimum aggregate principal amount of
$5,000,000; provided, however that each incremental unit in
excess of $5,000,000 shall be $1,000,000 or an integral multiple
thereof.
2.1e Method of Making Disbursements. (i) Each request for
Disbursements under the Commitment shall be made by an Authorized
Officer to the Agent orally or in writing (A) in the case of
Disbursements to bear interest at the Base Rate, by 11:00 A.M.
(eastern time) on the Borrowing Date, and (B) in the case of
Disbursements to bear interest at the Adjusted Euro-Rate, by
11:00 A.M. (eastern time) at least three (3) Business Days prior
to the Borrowing Date. Each such request shall (i) specify the
Borrowing Date, (ii) specify the amount of the Disbursements and
each Lender's ratable share thereof, (iii) select the Option or
Options therefor and (iv) in the case of Disbursements which will
bear interest at the Adjusted Euro-Rate, the Interest Period
therefor. Any oral request for Disbursements hereunder shall be
followed by the Borrower's written confirmation of such request
immediately thereafter. A request from the Borrower with respect
to any Disbursements bearing interest at an Adjusted Euro-Rate
shall irrevocably commit the Borrower to take such Disbursements
on the Borrowing Date specified in the request. The Borrower
may, without liability or cost hereunder, cancel any request for
Disbursements bearing interest at the Base Rate at any time prior
to the funding thereof by each of the Lenders by delivering
notice of such cancellation to the Agent.
(ii) Notification of Proposed Disbursement. The Agent
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shall promptly notify the Lenders of each request for a
Disbursement.
(iii) Not later than 2:00 P.M. (eastern time) on
the Borrowing Date, each Lender shall make available to the Agent
in immediately available funds at the principal office of the
Agent such Lender's pro-rata share of the Disbursements, for the
account of the Borrower. No Lender's obligation to make a
Disbursement shall be affected by any other Lender's failure to
make funds available for the same or any other Disbursement.
Nothing in this Subsection 2.1e shall be deemed to relieve any
Lender from its obligation to fulfill its obligations to the
Borrower under this Agreement or to prejudice any rights which
the Borrower may have against any Lender as a result of any
default by such Lender under this Agreement.
2.1f Temporary Reduction of Available Commitment. While
each Bid Rate Loan advanced pursuant to Section 2.2 is
outstanding, the principal amount available to be borrowed under
the Commitment shall be reduced by an amount equal to the
principal amount of each such Bid Rate Loan then outstanding.
The foregoing notwithstanding, each Lender shall remain
responsible for funding its Commitment Percentage of the
Revolving Credit Loans. Such reduction shall not affect the
calculation of the Facility Fee.
2.2 Bid Rate Loans.
2.2a Bid Rate. Subject to the provisions of this Section
2.2, each Lender severally agrees that the Borrower may request
that Bid Rate Loans, in an aggregate amount at any one time
outstanding not to exceed $100,000,000 less the principal amount
of all Revolving Credit Loans then outstanding, bear interest at
the Bid Rate Option and that, in selecting a Bid Rate Option from
any Lender, such Lender may make an advance in excess of such
Lender's Commitment.
2.2b Limitations on and Evidence of Bid Rate Loans. Except
as provided under Subsection 2.2c(vi), each Bid Rate Loan or
repayment of a Bid Rate Loan must be in the minimum principal
amount of $5,000,000 or, if in excess of $5,000,000 in integral
multiples of $1,000,000. The obligation of the Borrower to
repay, prior to the Termination Date, the aggregate unpaid
principal amount of such Bid Rate Loans advanced by each Lender
shall be evidenced by the Bid Rate Notes substantially in the
form of Exhibit "B" hereto, one made payable to each Lender in
the amount of $100,000,000. The principal amount actually due
and owing each Lender shall be the aggregate unpaid principal
amount of all Disbursements of Bid Rate Loans made by such
Lender, all as shown on such Lender's Loan Account established
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pursuant to Section 2.12.
2.2c Bid Rate Loan Procedure.
(i) Bid Rate Loan Request. When the Borrower wishes
to request offers to make Bid Rate Loans under this Section, it
shall transmit to the Agent by telex or facsimile transmission a
Bid Rate Quote Request substantially in the form of Exhibit "C"
hereto so as to be received no later than 11:00 A.M. (eastern
time) on (x) the fifth Business Day prior to the date of
Disbursement proposed therein, in the case of a Euro-Rate Auction
or (y) the Business Day next preceding the date of Disbursement
proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the
Agent shall have mutually agreed and shall have informed the
Lenders of not later than the date of the Bid Rate Quote Request
for the first Euro-Rate Auction or Absolute Rate Auction for
which such change is to be effective) specifying:
(A) the proposed date of Disbursement, which
shall be a Business Day,
(B) the aggregate amount of such Disbursement,
which shall be $5,000,000 or a larger multiple of
$1,000,000,
(C) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(D) whether the Bid Rate Quotes requested are to
set forth a Bid Rate Margin or a Bid Rate Absolute Rate.
The Borrower may request offers to make Bid Rate Loans for more
than one Interest Period in a single Bid Rate Quote Request.
(ii) Invitation for Bid Rate Quotes. Promptly upon
receipt of a Bid Rate Quote Request, the Agent shall send to the
Lenders by telex or facsimile transmission an Invitation for Bid
Rate Quotes, which shall constitute an invitation by the Borrower
to each Lender to submit Bid Rate Quotes offering to make the Bid
Rate Loans to which such Bid Rate Quote Request relates in
accordance with this Subsection.
(iii) Submission and Contents of Bid Rate Quotes.
(A) Each Lender may submit a Bid Rate Quote containing an offer
or offers to make Bid Rate Loans in response to any Bid Rate
Quote Request. Each Bid Rate Quote must comply with the
requirements of this paragraph (iii) and must be submitted to the
Agent by telex or facsimile transmission at its offices specified
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in or pursuant to Section 9.3 not later than (x) 2:00 P.M.
(eastern time) on the fourth Business Day prior to the proposed
date of Disbursement, in the case of a Euro-Rate Auction or (y)
9:45 A.M. (eastern time) on the proposed date of Disbursement, in
the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have
mutually agreed and shall have informed the Lenders of not later
than the date of the Bid Rate Quote Request for the first Euro-
Rate Auction or Absolute Rate Auction for which such change is to
be effective).
(B) Each Bid Rate Quote shall be in substantially the
form of Exhibit "E" hereto and shall in any case specify:
(1) the proposed date of Disbursement and the
Interest Period therefor,
(2) the principal amount of the Bid Rate Loan for
which each such offer is being made, which principal
amount (w) may be greater than or less than the
Commitment of the quoting Lender, (x) must be
$5,000,000 or a larger multiple of $1,000,000, (y) may
not exceed the principal amount of Bid Rate Loans for
which offers were requested and (z) may be subject to
an aggregate limitation as to the principal amount of
Bid Rate Loans for which offers being made by such
quoting Lender may be accepted,
(3) in the case of a Euro-Rate Auction, the
margin above or below the applicable Euro-Rate (the
"Bid Rate Margin") offered for each such Bid Rate Loan,
expressed as a percentage (specified to the nearest
1/10,000th of 1%) to be added to or subtracted from
such base rate,
(4) in the case of an Absolute Rate Auction, the
rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the "Bid Rate Absolute Rate")
offered for each such Bid Rate Loan, and
(5) the identity of the quoting Lender.
A Bid Rate Quote may set forth up to three separate offers by the
quoting Lender with respect to each Interest Period specified in
the related Bid Rate Quote Request.
(C) Any Quote shall be disregarded if it:
(1) is not substantially in conformity with
Exhibit "E" hereto or does not specify all of the
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information required by paragraph (iii)(B) immediately
above;
(2) contains qualifying, conditional or similar
language or, in particular, is conditioned on
acceptance by the Borrower of all or some specified
minimum principal amount of the Bid Rate Loan for which
such Bid Rate Quote is being made;
(3) proposes terms other than or in addition to
those set forth in the applicable Bid Rate Quote
Request; or
(4) arrives after the time set forth in paragraph
(iii)(A) above.
(iv) Notice to Borrower. The Agent shall notify the
Borrower promptly, and in the case of an Absolute Rate Auction no
later than 45 minutes after receipt by the Agent, of the terms
(x) of any Bid Rate Quote submitted by a Lender that is in
accordance with paragraph (iii) above and (y) of any Bid Rate
Quote that amends, modifies or is otherwise inconsistent with a
previous Bid Rate Quote submitted by such Lender with respect to
the same Bid Rate Quote Request. Any such subsequent Bid Rate
Quote shall be disregarded by the Agent unless such subsequent
Bid Rate Quote is submitted solely to correct a manifest error in
such former Bid Rate Quote. The Agent's notice to the Borrower
shall specify (A) the aggregate principal amount of Bid Rate
Loans for which offers have been received for each Interest
Period specified in the related Bid Rate Quote Request, (B) the
respective principal amounts and Bid Rate Margins or Bid Rate
Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Bid
Rate Loans for which offers in any single Bid Rate Quote may be
accepted.
(v) Acceptance and Notice by Borrower. Not later than
11:00 A.M. (eastern time) on (x) the third Business Day prior to
the proposed date of Disbursement, in the case of a Euro-Rate
Auction or (y) the proposed date of Disbursement, in the case of
an Absolute Rate Auction (or, in either case, such other time or
date as the Borrower and the Agent shall have mutually agreed and
shall have informed the Lenders of not later than the date of the
Bid Rate Quote Request for the first Euro-Rate Auction or
Absolute Rate Auction for which such change is to be effective),
the Borrower shall notify the Agent of its acceptance or non-
acceptance of the offers so presented to it pursuant to
Subsection (iv). In the case of acceptance, such notice (a
"Notice of Bid Rate Borrowing") shall specify the aggregate
principal amount of offers for each Interest Period that are
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accepted. The Borrower may accept any Bid Rate Quote in whole or
in part; provided that:
(A) the aggregate principal amount of each Bid Rate
Disbursement may not exceed the applicable amount set forth
in the related Bid Rate Quote Request,
(B) the principal amount of each Bid Rate borrowing
must be $5,000,000 or a larger multiple of $1,000,000,
provided that if the aggregate principal amount of the Bid
Rate Quotes received by the Agent pursuant to any single Bid
Rate Quote Request is less than $5,000,000, such Bid Rate
Disbursement may be less than $5,000,000,
(C) acceptance of offers may only be made on the basis
of ascending Bid Rate Margins or Bid Rate Absolute Rates, as
the case may be, and
(D) the Borrower may not accept any offer that is
described in subsection (iii)(C) or that otherwise fails to
comply with the requirements of this Agreement.
(vi) Allocation by Agent. If offers are made by two or
more Lenders with the same Bid Rate Margins or Bid Rate Absolute
Rates, as the case may be, for a greater aggregate principal
amount than the amount in respect of which such offers are
accepted for the related Interest Period, the principal amount of
Bid Rate Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Lenders as nearly as
possible (in multiples of $1,000,000, as the Agent may deem
appropriate) in proportion to the aggregate principal amounts of
such offers. Determinations by the Agent of the amounts of Bid
Rate Loans shall be conclusive in the absence of manifest error.
(vii) Bid Rate Loan Prepayment. No Bid Rate Loan
shall be prepaid prior to the end of the relevant Bid Rate
Interest Period without the prior consent of the Lender extending
such Bid Rate Loan.
2.2d Bid Rate Loan Interest. Interest on the Bid Rate Loans
shall accrue at the rate per annum agreed upon between the Lender
or Lenders making such Bid Rate Loans and the Borrower pursuant
to the Bid Rate selection procedures set forth in Subsection 2.2c
above.
2.2e Base Rate Option Borrowing in Event of Cancelled Bid
Rate Loan Request. In the event of cancellation by the Borrower
of a Bid Rate Loan Request pursuant to paragraph (v) of
Subsection 2.2c, the Borrower may, before 1:00 P.M. (eastern
time) on the day of such cancellation, submit to the Agent a
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request for a Disbursement under the Commitment to be made on the
day of such cancellation and to bear interest at the Base Rate
Option. The Lenders shall use their best efforts to make their
respective pro rata shares of such Disbursement available at the
office of the Borrower prior to 2:00 P.M. (eastern time) on the
date of such Disbursement in accordance with the procedures set
forth in Subsection 2.1e(iii).
2.3 Interest Rates, Interest Payment and Certain Provisions
Relating to Interest and Fees.
2.3a Payments of Interest. The Borrower shall pay interest
on the principal amount of the Loans from time to time
outstanding hereunder, from the date thereof until payment in
full, at the rates of interest determined pursuant to this
Section 2.3. The Borrower shall pay accrued interest on the
unpaid principal balance of the Loans in arrears: (i) with
respect to each Base Rate Portion, at the Base Rate on the last
Business Day of each month during the term thereof; (ii) with
respect to each Euro-Rate Portion, at the Adjusted Euro-Rate on
the last day of each Euro-Rate Interest Period as provided for in
Subsection 2.3c (provided, however, if the Euro-Rate Interest
Period chosen for a Euro-Rate Portion exceeds three (3) months,
interest on that Euro-Rate Portion shall be due and payable on
the last day of every third month during such Euro-Rate Interest
Period and on the last day of such Euro-Rate Interest Period);
(iii) with respect to each Bid Rate Loan, at the Bid Rate on the
last day of each Bid Rate Interest Period as provided for in
Subsection 2.3c (provided, however, if the Bid Rate Interest
Period chosen for a Bid Rate Loan exceeds ninety (90) days,
interest on that Bid Rate Loan shall be due and payable every
ninety (90) days during such Bid Rate Interest Period and on the
last day of such Bid Rate Interest Period); and (iv) with respect
to all such Portions, at the applicable interest rate (A) when
due, whether at maturity of such Note, by acceleration or
otherwise, and (B) after maturity, on demand until paid in full.
2.3b Interest Rate Options. The unpaid principal amount of
the Revolving Credit Loans shall bear interest, for each day
until due, at one or more rates of interest selected by the
Borrower from among the Options set forth below; it being
understood that, subject to the provisions of this Agreement, the
Borrower may select different Options to apply simultaneously to
different Portions of the Revolving Credit Loans and may select
different Interest Periods to apply simultaneously to different
Portions of the Euro-Rate Portions of the Revolving Credit Loans.
(i) Base Rate Option: A rate of interest per annum
(computed upon the basis of a year of 365 or 366 days, as the
case may be, and the actual number of days elapsed) equal to the
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Base Rate. The rate of interest per annum under the Base Rate
Option shall be adjusted automatically, from time to time, upon
each change in the Base Rate.
(ii) Euro-Rate Option: A rate of interest per annum
(computed on the basis of a year of 360 days and the actual
number of days elapsed) equal to the sum of (A) the Euro-Rate
plus (B) the Applicable Euro-Rate Margin (the "Adjusted Euro-
Rate"). The Applicable Euro-Rate Margin for each Euro-Rate
Portion then outstanding shall be adjusted automatically, from
time to time, effective upon each change in the Senior Ratings.
2.3c Interest Periods; Limitations on Elections. At any
time when the Borrower shall select, convert to or renew at the
Euro-Rate Option with respect to all or any Portion of the
outstanding Revolving Credit Loans or select, convert or renew a
Bid Rate Loan to which the Bid Rate Margin applies, it shall fix
one or more Interest Periods during which such Option(s) shall
apply. All of the foregoing, however, is subject to the
following:
(i) any Euro-Rate Interest Period which would
otherwise end on a day which is not a Business Day shall be
extended to the next Business Day unless such Business Day falls
in the succeeding calendar month in which case such Euro-Rate
Interest Period shall end on the next preceding Business Day; and
(ii) any Euro-Rate Interest Period which begins on the
last day of a calendar month or on a day for which there is no
numerically corresponding day in the subsequent calendar month
during which such Euro-Rate Interest Period is to end shall end
on the last Business Day of such subsequent month.
In addition, elections by the Borrower of the Euro-Rate
Option shall be subject to the following further limitations:
(i) If a Euro-Rate Interest Period is elected with
regard to amounts outstanding under the Revolving Credit and such
Interest Period would end after the Termination Date, such
Interest Period shall end on the Termination Date; and
(ii) At no time may there be more than six (6) Euro-
Rate Interest Periods in effect relating to Revolving Credit
Loans; provided, however if a Base Rate Portion is outstanding
there shall be not more than five (5) Euro-Rate Interest Periods
in effect relating to Revolving Credit Loans.
2.3d Election, Conversion or Renewal of Interest Rate
Options. Elections of or conversions to the Base Rate Option
shall continue in effect until converted to the Euro-Rate Option
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as hereinafter provided. Elections of, conversions to or
renewals of the Euro-Rate Option shall expire as to each Euro-
Rate Portion at the expiration of the applicable Interest Period.
Elections of Bid Rate Loans shall expire as to each such Bid Rate
Loan at the end of the applicable Bid Rate Interest Period.
At any time, with respect to any Base Rate Portion, or
at the expiration of the applicable Interest Period, with respect
to any Euro-Rate Portion, the Borrower (subject to Subsection
2.3c) may cause all or any part of the principal amount of such
Portion to be converted to and/or (in the case of a Euro-Rate
Portion) to be renewed under the Euro-Rate Option by notice to
each of the Lenders as hereinafter provided. Such notice (i)
shall be irrevocable; (ii) shall be given not later than 11:00
A.M. (eastern time) in the case of a conversion to or renewal
of, either in whole or in part, the Euro-Rate Option on the third
Business Day prior to the proposed effective date for the
conversion or renewal; and (iii) shall set forth:
(A) the effective date of such conversion or renewal,
which shall be a Business Day;
(B) the new Euro-Rate Interest Period(s) selected; and
(C) with respect to each such Interest Period, the
aggregate principal amount of the corresponding Euro-Rate
Portion.
At the expiration of each Euro-Rate Interest Period,
any part (including the whole) of the principal amount of the
corresponding Euro-Rate Portion as to which no notice of
conversion or renewal has been received as provided above, shall
automatically be converted to the Base Rate Option.
2.3e Notification of Election of an Interest Rate Option.
The Borrower, by an Authorized Officer, shall notify the Agent of
(i) each election or renewal of an Option and each conversion
from one Option to another, (ii) the Portion of the Revolving
Credit Loans then outstanding to be allocated to each Option and
(iii) where relevant, the Interest Periods applicable to each
Option, by communication as provided for in this Agreement. Any
such communication may be oral or written and if oral, it shall
be followed immediately by written confirmation of such Option
election executed by an Authorized Officer.
2.3f Interest After Maturity. After the principal amount of
all or any part of the Base Rate Portions of the Revolving Credit
Loans shall have become due and payable, whether by acceleration
or otherwise, all Base Rate Portions shall bear interest at a
rate per annum which shall be two hundred (200) basis points (2%)
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per annum above the rate otherwise in effect under the Base Rate
Option, such interest rate to change automatically from time to
time, effective as of the effective date of each change in the
Base Rate. After the principal amount of all or any part of the
Euro-Rate Portions of the Revolving Credit Loans or Bid Rate
Loans shall have become due and payable, whether by acceleration
or otherwise, all such Euro-Rate Portions and Bid Rate Loans
shall bear interest (i) until the end of the then current
Interest Period, at a rate per annum which shall be two hundred
(200) basis points (2%) per annum above the rate otherwise in
effect under the Euro-Rate Option and the Bid Rate Option, as the
case may be, and (ii) at the end of the then current Interest
Period, and thereafter at the sum of (A) the Base Rate plus (B)
two hundred (200) basis points (2%) per annum.
2.4 Yield-Protection, Capital Adequacy and Miscellaneous
Provisions Relating to Euro-Rate.
2.4a Yield Protection. Notwithstanding other provisions of
this Section 2.4:
(i) If any Governmental Rule (including, without
limitation, Regulation D), or if any change therein on or after
the date hereof, or in the interpretation thereof by any
Governmental Authority charged with the administration thereof,
shall:
(A) subject any Lender to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind with
respect to payments of principal or interest or other
amounts due hereunder (other than any tax imposed or based
upon the income of a Lender and payable to any Governmental
Authority in the United States of America or any state
thereof); or
(B) change the basis of taxation of any Lender with
respect to payments of principal or interest or other
amounts due hereunder (other than any change which affects,
and only to the extent that it affects, the taxation by the
United States or any state thereof of the total net income
of such Lender); or
(C) impose, modify or deem applicable any reserve,
special deposit or similar requirements against assets held
by any Lender applicable to the Commitment or Loans made
hereunder (other than such requirements which are included
in the determination of the applicable rate of interest
hereunder); or
(D) impose upon any Lender any other obligation or
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condition with respect to this Agreement,
and the result of any of the foregoing is to increase the cost to
the affected Lender, reduce the income receivable by the affected
Lender, reduce the rate of return on the affected Lender's
capital, or impose any expenses upon the affected Lender, all
with respect to any of the Loans (or any portion thereof) by an
amount which the affected Lender reasonably deems material, and
if the affected Lender is then demanding similar compensation for
such occurrences from other borrowers who are similarly situated
and who have a similar relationship with the affected Lender and
from which the affected Lender has the right to demand such
compensation, then and in any such case:
(1) the affected Lender shall promptly notify the
Borrower of the happening of such event;
(2) the Borrower shall pay to the affected
Lender, on demand, such amount as will compensate the
affected Lender for such reduction in its rate of
return; and
(3) the Borrower may pay the affected portion of
the affected Lender's Loans in full without the payment
of any additional amount, including prepayment
penalties, other than amounts payable on account of the
affected Lender's out-of-pocket losses (including
funding loss, if any, as provided in Section 2.10)
which are not otherwise provided for in subparagraph
(2) immediately above.
(ii) A certificate as to the increased cost or reduced
amount as a result of any event mentioned in this Subsection 2.4a
shall be promptly submitted by the affected Lender to the
Borrower in accordance with the provisions hereof. Such
certificate shall be prima facie evidence as to the amount of
such increased cost or reduced amount.
2.4b Capital Adequacy. If, after the date hereof, (i) any
adoption of or any change in or in the interpretation of any
Governmental Rule, or (ii) compliance with any Governmental Rule
of any Governmental Authority exercising control over banks or
financial institutions generally or any court of competent
jurisdiction, requires that the Commitment (including, without
limitation, obligations in respect of any Revolving Credit Loans
or Bid Rate Loans) hereunder be treated as an asset or otherwise
be included for purposes of calculating the appropriate amount of
capital to be maintained by any Lender or any corporation
controlling any Lender (a "Capital Adequacy Event"), the result
of which is to reduce the rate of return on a Lender's capital as
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a consequence of its Commitment to a level below that which the
affected Lender could have achieved but for such Capital Adequacy
Event, taking into consideration the Lender's policies with
respect to capital adequacy, by an amount which the affected
Lender reasonably deems to be material, the affected Lender shall
promptly deliver to the Borrower a statement of the amount
necessary to compensate the affected Lender or the reduction in
the rate of return on its capital attributable to its Commitment
(the "Capital Compensation Amount"). The affected Lender shall
determine the Capital Compensation Amount in good faith, using
reasonable attribution and averaging methods. Each affected
Lender shall from time to time notify the Borrower of the amount
so determined. Each such notification shall be prima facie
evidence of the amount of the Capital Compensation Amount set
forth therein, and such Capital Compensation Amount shall be due
and payable by the Borrower to the affected Lender thirty (30)
days after such notice is given. As soon as practicable after
any Capital Adequacy Event, the affected Lender shall submit to
the Borrower estimates of the Capital Compensation Amounts that
would be payable as a function of the affected Lender's
Commitment hereunder. Notwithstanding the foregoing, however, no
Lender shall demand Capital Compensation Amounts hereunder unless
it is demanding similar compensation from other borrowers who are
similarly situated and who have a similar relationship with such
Lender and from which such Lender has the right to demand such
compensation.
2.4c Euro-Rate Unascertainable. If, on any date on which
the Adjusted Euro-Rate would otherwise be set, the Agent
reasonably shall have determined (which determination shall be
final and conclusive) that by reason of circumstances affecting
the interbank Eurodollar market, adequate and reasonable means do
not exist for ascertaining the Euro-Rate, the Agent shall give
prompt notice of such determination to the Borrower and the
Lenders and, until the Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such determination
no longer exist, the right of the Borrower to borrow under,
convert to or renew the Euro-Rate Option shall be suspended. Any
notice of borrowing under, conversion to or renewal of the Euro-
Rate Option which was to become effective during the period of
such suspension shall be treated as a request to borrow under,
convert to or renew at the Base Rate Option with respect to the
principal amount therein specified.
2.4d Illegality. If a Lender shall determine in good faith
(which determination shall be final and conclusive) that
compliance by such Lender with any applicable law, treaty or
other Governmental Rule, (whether or not having the force of
law), or the interpretation or application thereof by any
Governmental Authority, has made it unlawful for such Lender to
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make or maintain the Revolving Credit Loans under the Euro-Rate
Option or Bid Rate Loans to which the Bid Rate Margin applies
(including but not limited to acquiring Eurodollar liabilities to
fund such Loans), such Lender shall give notice of such
determination to the Borrower and the other Lenders.
Notwithstanding any provision of this Agreement to the contrary,
unless and until the affected Lender shall have given notice to
the Borrower and the other Lenders that the circumstances giving
rise to such determination no longer apply:
(i) with respect to any Interest Periods thereafter
commencing, interest on the Revolving Credit Loans bearing
interest at the Adjusted Euro-Rate (whichever one or more have
been determined by the affected Lender to be unlawful) shall,
unless the Borrower shall have selected a different Option which
is then available, be computed and payable under the Base Rate
Option; and
(ii) on such date, if any, as shall be required by law,
any Loans bearing interest at the Adjusted Euro-Rate or any Bid
Rate Loan to which the Bid Rate Margin applies then outstanding
shall be automatically converted to the Base Rate Option, and the
Borrower shall pay to the affected Lender the accrued and unpaid
interest on such Loans to (but not including) the date of such
conversion at the applicable interest rate or rates in effect for
such Loans prior to such conversion.
2.5 Facility Fee. The Borrower agrees to pay to the
Lenders, on a pro rata basis, beginning on September 30, 1995,
and continuing quarterly in arrears thereafter on the last day of
each December, March, June and September during the term hereof
to and including the Termination Date, a Facility Fee calculated
at the Applicable Facility Fee Percentage, on the daily (computed
at the opening of business) average amount of the Commitment for
the quarter then ending; provided, however, the first payment
under this Subsection 2.5a shall be only for the actual number of
days elapsed between the actual execution of this Agreement and
September 30, 1995 and the last payment under this Subsection
2.5a shall be only for the actual number of days elapsed between
the last quarterly payment date and the Termination Date. The
Applicable Facility Fee Percentage shall be adjusted
automatically, from time to time, effective upon each change in
the Senior Ratings.
2.6 Calculation of Interest and Facility Fee. The
calculation of the amount of interest due and owing to each
Lender shall be made by each Lender and shall be evidenced by
such Lender posting the amount of interest due under such
Lender's Revolving Credit Loans and Bid Rate Loans to the Loan
Account established by such Lender. The Facility Fee shall be
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calculated on the basis of a 360 day year and actual number of
days elapsed. The calculation of the amount of the Facility Fee
due and owing to each Lender shall be made by each Lender and
shall be evidenced by posting such amount due under the Loan
Account established by such Lender.
2.7 Extension of Termination Date. The Termination Date
may be extended, in the manner set forth in this Section 2.7, on
June 30, 1996 and on each anniversary of such date (an "Extension
Date") for successive periods of one year each. If the Borrower
wishes to request an extension of the Termination Date on any
Extension Date, it shall give written notice to that effect to
the Agent not less than sixty (60) nor more than seventy-five
(75) days prior to such Extension Date. Each Lender will use its
best efforts to respond to such request, whether affirmatively or
negatively, within thirty (30) days after receipt of such notice
from the Agent. If the Borrower shall have received affirmative
responses from the Required Lenders, then, subject to receipt by
the Borrower of counterparts of an agreement duly completed and
signed by the Borrower and each such Lender (an "Extension
Agreement"), the Termination Dates of such Lenders (but not of
any Lender which does not so respond affirmatively) shall be
extended, effective on such Extension Date, for a period of one
year to the date stated in such Extension Agreement. If the
Borrower shall not have received affirmative responses from the
Required Lenders the Termination Date shall not be extended. For
purposes of this Section 2.7, the failure of any Lender to
respond shall be deemed to be a negative response from such
Lender.
2.8 Substitution or Replacement of a Lender. The Borrower
shall have the right (provided that at such time, no Event of
Default and no Potential Default has occurred and is continuing),
in its sole discretion, to either:
(i) repay, (A) at any time if either no Loans are
outstanding or if Loans bearing interest under the Base Rate
Option are the only Loans outstanding, (B) upon three (3) days
prior notice if the Loans outstanding include Revolving Credit
Loans bearing interest under the Euro-Rate Option or the Bid Rate
Option, the outstanding Loans of such Lender in whole, together
with interest thereon and any other amount due such Lender
pursuant to the terms of this Agreement, and to terminate the
Commitment of such Lender; or
(ii) seek a substitute lending institution or
institutions (which may be one or more of the other Lenders) to
purchase the Notes and assume the Loans, the Commitment and the
other obligations of such Lender under this Agreement,
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if any of the following conditions occur:
(i) the obligation of any Lender to make Revolving
Credit Loans which bear or are to bear interest under the Euro-
Rate Option has been suspended pursuant to or Subsection 2.4d; or
(ii) any Lender has responded negatively to a request
for extension of the Termination Date pursuant to Section 2.7.
Any proposed substitute lending institution, which is
not a Lender prior to the Borrower's selection thereof, must be
acceptable to the Agent, whose consent shall not be unreasonably
withheld.
2.9 Loan Repayment. Each repayment of the Loans shall be
in the minimum amount of $1,000,000, in the aggregate, or an
integral multiple thereof. The Borrower, upon (i) oral or
written notice to Agent by 11:00 A.M. (eastern time) on the day
of the proposed repayment, in the case of Revolving Credit Loans
bearing interest at the Base Rate or (ii) three (3) Business
Days' prior oral or written notice to the Agent, in the case of
Revolving Credit Loans bearing interest at the Adjusted Euro-Rate
or Bid Rate Loans, followed immediately thereafter by the
Borrower's written confirmation to the Agent of any oral notice,
may repay the outstanding amount of the Loans in whole or in part
with accrued interest, fees and other amounts then due and
payable on the amount repaid to the date of such repayment. The
Borrower may repay any Portion of the Revolving Credit Loans
bearing interest at the Base Rate without premium or penalty.
Any repayment of the Loans shall increase, by the
amount of that repayment, the unborrowed balance of the
Commitment; it being contemplated that the Borrower may repay and
reborrow from time-to-time under the Commitment until the
Termination Date.
2.10 Additional Payments by the Borrower. If (i) the
Borrower shall fail to make any payment due hereunder on the due
date thereof, (ii) the Borrower shall make a payment, prepayment
or conversion of any Euro-Rate Portion of the Revolving Credit
Loans or any Bid Rate Loan on a day other than the last day of
the applicable Interest Period, (iii) the Borrower shall convert
any Portion to the Base Rate Option from another Option pursuant
to Subsection 2.3d on a day other than the last day of the
relevant Interest Period, or (iv) the Borrower shall fail on the
date specified therefor to consummate any borrowing, conversion
or renewal after giving a request for a Disbursement or notice of
conversion or renewal, and, as a result of any such action or
inaction, a Lender reasonably incurs any losses and expenses
which it would not have incurred but for such action or inaction,
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the Borrower shall pay such additional amounts as will compensate
the affected Lender for such losses and expenses, including the
cost of reemployment of any funds prepaid at rates lower than the
cost to the affected Lender of such funds. Such losses and
expenses, which the affected Lender shall exercise reasonable
efforts to minimize, shall be specified in writing (setting
forth, in reasonable detail, the basis of calculation) to the
Borrower by the affected Lender, which writing shall be prima
facie evidence of the amounts set forth therein, and such amounts
shall be payable within thirty (30) days of demand therefor.
2.11 Voluntary Reduction of Availability. At any time and
from time to time upon no less than three (3) Business Days prior
written notice to the Agent, the Borrower may terminate, in whole
or in part, without penalty, the then unused portion of the
Commitments, thereby causing a corresponding abatement of the
Facility Fee. Each such reduction shall be in a minimum
principal amount of $10,000,000 or in integral multiples thereof.
The Facility Fee shall cease to accrue with respect to any unused
portion of the commitments so terminated on either (i) the date
five (5) Business Days after receipt of such notice or (ii) the
date so designated in the written notice if such written notice
is given to the Agent more than five (5) Business Days prior to
the effective date of such termination. Notice of termination
once given shall be irrevocable and the portion of the
Commitments so terminated shall not be available for borrowing
once such notice has been given under the terms hereof. The
Agent shall promptly notify each Lender of its pro rata share of
such terminated unused portion and the date of each such
termination.
2.12 Loan Account. Each Lender shall open and maintain on
its books a Loan Account in the name of the Borrower with respect
to Disbursements made, repayments, prepayments, the computation
and payment of interest and the Facility Fee and the computation
of other amounts due and sums paid and payable to such Lender
pursuant to this Article II. Such Loan Account shall be prima
facie evidence as to the amount at any time due to such Lender
from the Borrower pursuant to this Article II; provided, however,
that the failure of a Lender to make notations, or to make
accurate notations, on its Loan Account shall not limit, expand
or otherwise affect any obligations of the Borrower hereunder.
2.13 Payment from Accounts Maintained by Borrower. In the
event that any payment of principal, interest, Facility Fee or
any other amount due to the Lenders or the Agent under the
Agreement, the Notes or the other Loan Documents is not paid when
due, the Agent is hereby authorized to effect such payment by
debiting any demand deposit account of the Borrower maintained
with the Agent (excluding however any special purpose fiduciary
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accounts, which are designated as such at the time of their
creation, and mandated by applicable statutes, regulations or
rules) and distributing such payment to the party to whom such
amounts are due. This right of debiting accounts of the Borrower
is in addition to any right of set-off accorded the Lenders or
the Agent hereunder or by operation of the law.
2.14 Time, Place and Manner of Payments. All payments to be
made by the Borrower under the Notes (other than those provided
for in Sections 2.4 and 2.10 hereof), and of all fees and any
other amounts due hereunder shall be made at the principal office
of the Agent. The Agent will promptly pay each such payment
received to each Lender or its order. All payments due a Lender
by reason of Sections 2.4 or 2.10 hereof shall be paid at the
principal office of the Lender which invoices the Borrower for
such payment. All payments to be made by the Borrower under this
Agreement shall be paid in immediately available funds no later
than 12:00 Noon (eastern time) on the date such payment is due.
ARTICLE III. REPRESENTATIONS AND WARRANTIES.
To induce the Lenders to enter into this Agreement and
to make the Loans herein provided for, the Borrower warrants to
the Lenders that:
3.1 Corporate Existence. The Borrower and each of its
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective state of
incorporation and it is duly qualified and in good standing as a
foreign corporation authorized to do business in each
jurisdiction where, because of the nature of its respective
properties or businesses, such qualification is required or, if
not so qualified or in good standing in any state, the lack of
such qualification or good standing will not materially affect
the Agent's or the Lender's ability to enforce this Agreement,
the Notes or the other Loan Documents or will not have a Material
Adverse Effect on the Borrower's or such Subsidiary's ability to
carry on its business or the Borrower's ability to comply with
this Agreement, the Notes or the other Loan Documents.
3.2 Corporate Authority. The Borrower is duly authorized
to execute and deliver this Agreement, the Notes and the other
Loan Documents to which it is or will become a party; all
necessary corporate action to authorize the execution and
delivery of this Agreement, the Notes and the other Loan
Documents to which it is or will become a party has been properly
taken; and it is and will continue to be duly authorized to
borrow hereunder and to perform all of the other terms and
provisions of this Agreement, the Notes and the other Loan
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Documents to which it is or will become a party.
3.3 Enforceability. This Agreement and the Notes have each
been, and each other Loan Document to which it will become a
party will be, duly and validly executed and delivered by the
Borrower and each constitutes or will constitute a valid and
legally binding agreement of the Borrower enforceable in
accordance with its terms.
3.4 No Restrictions. Neither the execution and delivery of
this Agreement, the Notes and the other Loan Documents to which
it is or will become a party, the consummation of the
transactions herein contemplated nor compliance with the terms
and provisions hereof of the Notes, will conflict with or result
in a breach of any of the terms, conditions or provisions of the
articles of incorporation or the by-laws of the Borrower or of
any law or of any regulation, order, writ, injunction or decree
of any court or governmental agency or of any agreement,
indenture or other instrument to which the Borrower or any
Subsidiary is a party or by which it is bound or to which it is
subject, or constitute a default thereunder or result in the
creation or imposition of any Encumbrance of any nature
whatsoever upon any of the property or assets of the Borrower
pursuant to the terms of any agreement, indenture or other
instrument, except those restrictions which, individually or in
the aggregate, would not have a Material Adverse Effect upon the
Borrower and its Consolidated Subsidiaries taken as a whole.
3.5 Financial Statements. The Borrower has furnished to
the Lenders and the Agent its consolidated balance sheets and the
related consolidated statements of income, shareholders' equity
and changes in financial position of the Borrower and its
Consolidated Subsidiaries as at and for the Borrower's Fiscal
Year ended January 1, 1995 and Fiscal Quarter ended April 2,
1995. All such financial statements, including the related
notes, have been prepared in accordance with GAAP and fairly
present the financial position and consolidated financial
position of the Borrower and its Consolidated Subsidiaries as at
the dates thereof and the results and consolidated results of
their operations and the changes in their financial position and
in their consolidated financial position for the periods ended on
such dates. There were no material liabilities of the Borrower
and its Consolidated Subsidiaries, taken as a whole, contingent
or otherwise, not reflected in such financial statements. Except
as has been fully disclosed in writing to the Lenders and the
Agent, prior to the date hereof, there has been no material
adverse change in the business, condition or operations
(financial or otherwise) of the Borrower since April 2, 1995.
3.6 Absence of Litigation. Except as set forth in the
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Borrower's Form 10-K for the Fiscal Year ended January 1, 1995 or
its Form 10-Q for the Fiscal Quarter ended April 2, 1995 there
are no actions, suits, investigations, litigation or governmental
proceedings pending or, to the Borrower's knowledge, threatened
against the Borrower or any Consolidated Subsidiary or any of
their respective properties, which would have a Material Adverse
Effect on the Borrower and the Consolidated Subsidiaries, taken
as a whole, or which purport to affect the legality, validity or
enforceability of this Agreement or the Notes.
3.7 Tax Returns and Payments. As of the date hereof, the
Borrower and its Subsidiaries have filed all tax returns required
by law to be filed and have paid all material taxes, material
assessments and other material governmental charges levied upon
the Borrower and its Subsidiaries, taken as a whole, or any of
the respective properties, assets, income or franchises of the
Borrower and its Consolidated Subsidiaries, taken as a whole,
which are due and payable, other than those currently payable or
deferrable without penalty or interest or those which are being
contested in good faith and by appropriate proceedings diligently
conducted. As of the date hereof, the charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in
respect of Federal, state and local income taxes for all fiscal
periods are adequate, and the Borrower knows of no unpaid assess-
ments for additional Federal, state or local income taxes for any
such fiscal period or any basis therefor.
3.8 Pension Plans. Except as otherwise noted on Schedule
3.8, (i) each Plan has been and will be maintained and funded, in
all material respects, in accordance with its terms and with all
provisions of ERISA and the Code applicable thereto; (ii) no
Reportable Event has occurred and is continuing with respect to
any Plan; (iii) no liability to PBGC has been incurred with
respect to any Plan, other than for premiums due and payable;
(iv) no Plan has been terminated, no proceedings have been
instituted to terminate any Plan, and there exists no intent to
terminate or institute proceedings to terminate any Plan, which
has caused or would cause the Borrower or any ERISA Affiliate to
incur any liability to the PBGC under Title IV of ERISA; and (v)
no withdrawal, either complete or partial, has occurred or
commenced with respect to any multiemployer Plan, and there
exists no intent to withdraw either completely or partially from
any multiemployer Plan and (vi) the Borrower is not subject to
any liability for unpaid penalties or taxes imposed under Section
502(i) of ERISA or Section 4975 of the Code, and has not engaged
in a prohibited transaction as defined in Section 406 of ERISA
and Section 4975 of the Code.
3.9 Compliance with Applicable Laws. The Borrower and each
Consolidated Subsidiary (i) is not in default with respect to any
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order, writ, injunction or decree of any court or of any Federal,
state, municipal or other Governmental Authority; and (ii) is
substantially complying with all applicable statutes and
regulations of each Governmental Authority having jurisdiction
over its activities; except for those orders, writs, injunctions,
decrees, statutes and regulations, non-compliance with which
would not have a Material Adverse Effect upon the Borrower and
its Consolidated Subsidiaries taken as a whole.
3.10 Environmental Matters. To the Borrower's knowledge,
except as set forth on the most recent Borrower's Form 8-K and
Form 10-K filed with Securities and Exchange Commission prior to
the Closing, the Borrower and its Subsidiaries are in compliance
with all applicable Environmental Laws; except for matters which
do not have a Material Adverse Effect on the financial condition
of the Borrower and its Consolidated Subsidiaries, taken as a
whole.
3.11 Governmental Approval. No order, authorization,
consent, license, validation or approval of, or notice to,
filing, recording, or registration with, any Governmental
Authority, or exemption by any Governmental Authority, is
required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Agreement or the
Notes or (ii) the legality, binding effect or enforceability of
this Agreement or the Notes.
3.12 Regulations G, T, U and X. The Borrower is not engaged
in the business of purchasing or selling Margin Stock or
extending credit to others for the purpose of purchasing or
carrying Margin Stock and no part of the proceeds of the Loans
will be used to purchase or carry any Margin Stock or for any
other purpose which would violate or be inconsistent with
Regulations G, T, U or X.
3.13 Investment Company Act. The Borrower is not an
"investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of
1940, as amended.
3.14 Public Utility Holding Company Act. The Borrower is
not a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
3.15 Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to the Lenders or
the Agent by or on behalf of the Borrower pursuant to this
Agreement contains any untrue statement of a material fact.
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There is no fact known to the Borrower which materially and
adversely affects or in the future may (so far as the Borrower
now foresees) have a Material Adverse Effect on the business,
operations, affairs, condition, prospects, properties or assets
of the Borrower and its Consolidated Subsidiaries, taken as a
whole, which has not been set forth in this Agreement or in the
other documents, certificates and statements (financial or
otherwise) furnished to the Lenders or the Agent or otherwise
disclosed in writing to the Lenders or the Agent by or on behalf
of the Borrower prior to or on the date hereof.
ARTICLE IV. AFFIRMATIVE COVENANTS.
From the date hereof and thereafter until the
termination of the Commitments and until all of the Bank
Indebtedness is paid in full, the Borrower agrees that:
4.1 Use of Proceeds. The proceeds of the Loans will be
used by the Borrower for general corporate purposes and working
capital purposes of the Borrower.
4.2 Furnishing Information. The Borrower shall:
(i) deliver to the Lenders, as soon as available but
not later than forty-five (45) days after the last day of each of
the first three Fiscal Quarters of each Fiscal Year, the
Borrower's quarterly report to shareholders, if any, and its
quarterly report on Form 10-Q as filed with the Securities and
Exchange Commission and, within ninety (90) days after the end of
each Fiscal Year, the Borrower's annual report to shareholders
and its annual report on Form 10-K as filed with the Securities
and Exchange Commission, in each case accompanied by a completed
Compliance Certificate substantially in the form of Exhibit "F"
attached hereto duly executed by an Authorized Officer stating
that (A) such Authorized Officer has reviewed the terms of the
Agreement and of the Notes and has made, or caused to be made
under his supervision, a review of the transactions and condition
of the Borrower during the accounting period covered by such
financial statements and that such review has not disclosed the
existence during such accounting period, and that the signer does
not have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event which
constitutes, a Potential Event of Default or an Event of Default
or, if an Event of Default did exist, a statement describing such
Event of Default and the action the Borrower has taken or
proposes to take with respect thereto and (B) the Borrower was in
compliance with the covenants set forth in Sections 5.3 and 5.4
of this Agreement;
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(ii) deliver to the Lenders promptly upon their
becoming available, copies of all financial statements, reports,
notices and information statements sent or made available
generally by the Borrower to its security holders (including,
without limitation, proxy materials) and copies of all other
regular and periodic reports (including, without limitation, Form
8-K) filed by the Borrower with the Securities and Exchange
Commission or any Governmental Authority succeeding to any of its
functions, and of all press releases and other statements made
available generally by the Borrower to the public concerning
material developments in the business of the Borrower and any of
its Subsidiaries, taken as a whole;
(iii) promptly after receipt thereof, by the
Borrower or the administrator of any Plan, deliver to the Lenders
a copy of any notice from the PBGC that the PBGC is instituting
Termination Proceedings;
(iv) promptly and in any event within 30 days after the
Borrower or the administrator of any Plan knows or has reason to
know that any Reportable Event has occurred which would cause the
PBGC to institute termination proceedings, if the liability of
the Borrower to the PBGC would exceed five percent (5%) of the
Consolidated Tangible Net Worth of the Borrower at the time of
notice thereof, give notice thereof to the Lenders;
(v) promptly, but not later than five (5) Business
Days, after any Authorized Officer obtains knowledge of the
happening of any event which constitutes an Event of Default or a
Potential Default, give written notice thereof to the Lenders;
and
(vi) promptly, deliver to the Lenders such other
publicly available information and data with respect to the
Borrower or any of its Subsidiaries as from time to time may be
reasonably requested by any Lender.
4.3 Visitation. The Borrower will permit the Lenders and
the Lender's designated employees and agents to have access, at
any time and from time to time, upon reasonable notice and during
normal business hours at any reasonable time, to visit any of the
properties of the Borrower, to examine and make copies of any of
its books of record and account and such reports and returns as
the Borrower may file with any Governmental Authority and discuss
the Borrower's affairs and accounts with, and be advised about
them, by any Authorized Officer.
4.4 Preservation of Existence; Qualification. At its own
cost and expense, the Borrower will do all things necessary to
preserve and keep in full force and effect its and each of its
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Consolidated Subsidiaries' corporate existence and qualification
under the laws of their respective states of incorporation and
each state where, due to the nature of their respective
activities or the ownership of their respective properties,
qualification to do business is required except where (i) the
lack of corporate existence of a Subsidiary or (ii) the failure
to be so qualified would not have a Material Adverse Effect upon
the Borrower and its Consolidated Subsidiaries taken as a whole
or except as permitted by Sections 5.6 and 7.4.
4.5 Compliance with Laws and Contracts. The Borrower shall
and shall cause each Subsidiary to comply with all applicable
Governmental Rules (including, but not limited to, Environmental
Laws), except where failure to comply would not have a Material
Adverse Effect on the Borrower and its Consolidated Subsidiaries
taken as a whole.
4.6 Payment of Taxes and Other Liabilities. The Borrower
shall and shall cause each Subsidiary to promptly pay and
discharge all obligations, accounts and liabilities to which it
is subject or which are asserted against it and which
obligations, accounts and liabilities are, to the Borrower and
the Subsidiaries taken as a whole, material, including but not
limited to all taxes, assessments and governmental charges and
levies upon it or upon any of its income, profits, or property
prior to the date on which penalties attach thereto; provided,
however, that for purposes of this Agreement, neither the
Borrower nor the relevant Subsidiary shall be required to pay any
tax, assessment, charge or levy (i) the payment of which is being
contested in good faith by appropriate and lawful proceedings
diligently conducted and (ii) as to which the Borrower shall have
set aside on its books reserves for such claims as are determined
to be adequate pursuant to the accounting procedures employed by
the Borrower, but only to the extent that failure to discharge
any such liabilities would not result in any additional liability
which would have a Material Adverse Effect upon the Borrower and
its Consolidated Subsidiaries taken as a whole.
4.7 Insurance. The Borrower will keep and maintain, and
cause each Subsidiary to keep and maintain, insurance with
responsible insurance companies, satisfactory to the Agent, on
such of their respective properties, in such amounts and against
such risks as is customarily maintained by similar businesses
similarly situated and owning, leasing or operating similar
properties. The Borrower may satisfy the requirements of the
preceding sentence with self insurance and deductibles consistent
with customary and prudent industry standards. The Borrower will
furnish to the Agent at the Closing and together with the annual
reports delivered pursuant to Subsection 4.2(ii) hereof, a
certificate of an Authorized Officer of the Borrower certifying
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that such insurance is in force, is adequate in nature and amount
and complies with the Borrower's and each Subsidiary's
obligations under this Section 4.7.
4.8 Maintenance of Properties. The Borrower shall and
shall cause its Subsidiaries to maintain, preserve, protect and
keep their respective properties in good repair, working order
and condition (ordinary wear and tear excepted), and make all
necessary and proper repairs, renewals and replacements so that
their business carried on in connection therewith may be properly
and advantageously conducted at all times, except where the
failure to maintain, preserve, protect or keep such properties
would not have a Material Adverse Effect upon the Borrower and
its Consolidated Subsidiaries taken as a whole.
4.9 Plans and Benefit Arrangements. The Borrower shall,
and shall cause each ERISA Affiliate to, comply with ERISA, the
Code and all other applicable laws which are applicable to Plans,
except where the failure to do so, alone or in conjunction with
any other failure to do so, would not have a Material Adverse
Effect upon the Borrower and its Consolidated Subsidiaries taken
as a whole.
4.10 Senior Debt Status. The Bank Indebtedness will rank at
least pari passu in priority of payment with all other
Indebtedness of the Borrower, except Indebtedness of the Borrower
which may be secured by Encumbrances pursuant to Section 5.2.
ARTICLE V. NEGATIVE COVENANTS.
From the date hereof and thereafter until the
Commitments are terminated and until the Bank Indebtedness is
paid in full, the Borrower agrees that:
5.1 Indebtedness. The Borrower shall not and shall not
permit any Consolidated Subsidiary to create, incur, assume,
cause, permit or suffer to exist or remain outstanding any
Consolidated Indebtedness except for:
(i) Bank Indebtedness;
(ii) Existing Indebtedness set forth on Schedule 5.1
hereof;
(iii) Additional Indebtedness (including additional
Purchase Money Indebtedness) provided such additional
Indebtedness, when added to the Borrower's then outstanding
Consolidated Indebtedness, would not cause the Borrower to be in
violation of Sections 5.3 and 5.4 hereof.
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In addition, Indebtedness incurred pursuant to item (iii) may not
contain covenants more restrictive than or in addition to those
contained herein.
5.2 Encumbrances. The Borrower shall not and shall not
permit any Consolidated Subsidiary to create, assume, incur,
permit or suffer to exist upon any of their respective assets and
properties, whether tangible or intangible and whether now owned
or in existence or hereafter acquired or created and wherever
located, any Encumbrance except for:
(i) Permitted Encumbrances (including without
limitation those listed on Schedule 5.2).
(ii) Encumbrances which secure additional Purchase
Money Indebtedness;
(iii) Encumbrances on assets acquired by the
Borrower or any Consolidated Subsidiary provided those
Encumbrances existed prior to the acquisition of such assets and
the lien thereof is limited to the assets then being acquired and
additions or accessions to such assets and identifiable proceeds
thereof;
(iv) Encumbrances which secure Indebtedness of the
Borrower and its Consolidated Subsidiaries, provided however
Encumbrances permitted pursuant to this item (iv), shall not, at
any time, secure Indebtedness which exceeds in the aggregate
$30,000,000 at any one time outstanding.
5.3 Leverage Ratio. At no time shall its Consolidated
Total Indebtedness be more than fifty-five percent (55%) of its
Consolidated Total Capitalization.
5.4 Interest Coverage Ratio. At no time shall the ratio of
its Consolidated EBIT for the four (4) most recently completed
Fiscal Quarters, taken as a single accounting period, to its
Consolidated Interest Expense for the four (4) most recently
completed Fiscal Quarters, taken as a single accounting period,
be less than 3.0 to 1.0.
5.5 Sales of Assets. The Borrower shall not enter into any
arrangement, direct or indirect, pursuant to which the Borrower
or any Consolidated Subsidiary shall sell or otherwise transfer
or dispose of any property, real, personal or mixed, whether now
owned or hereafter acquired, except (i) sales, transfers or
dispositions in the ordinary course of business, (ii) the sale,
transfer or other disposition of the stock or assets of its two
Subsidiaries, Green River Steel Corporation and Reynolds
Fasteners, Inc. and (iii) sales, transfers or dispositions not in
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the ordinary course of business provided that the aggregate
proceeds of all such sales, transfers and dispositions permitted
by this item (iii) shall not, in the aggregate in any one Fiscal
Year exceed ten percent (10%) of the Borrower's Consolidated
Total Assets as at the end of the immediately preceding Fiscal
Year.
5.6 Merger. The Borrower shall not merge or consolidate
with any other Person except a merger or consolidation in which
(i) the Borrower is the surviving Person, (ii) no Event of
Default or Potential Default occurs as a result of such a merger
or consolidation, and (iii) the Borrower's corporation's
Consolidated net worth immediately after such merger or
consolidation is not less than the Borrower's Consolidated net
worth immediately prior to such merger or consolidation.
5.7 Regulation G, T, U and X Compliance. The Borrower
shall not and shall not permit any Subsidiary to use the proceeds
of a Loan to purchase or carry Margin Stock or otherwise act so
as to cause any Lender, in extending credit hereunder, to be in
contravention of Regulations G, T, U or X.
5.8 ERISA. The Borrower shall not and shall not permit any
ERISA Affiliate to permit any Plan to:
(i) engage in any "prohibited transaction", as such
term is defined in Section 406 of ERISA and Section 4975 of the
Code;
(ii) incur any "accumulated funding deficiency", as
such term is defined in Section 302 of ERISA, whether or not
waived; Code;
(iii) be terminated in a manner which could result
in liability to the PBGC under Title IV of ERISA or the
imposition of a lien on the property of the Borrower or any ERISA
Affiliate pursuant to Section 4068 of ERISA; or
(iv) partially or completely withdraw from any Plan,
which withdrawal shall subject the Borrower or any ERISA
Affiliate to multiemployer withdrawal liability pursuant to
Section 4201 of ERISA.
5.9 Change of Fiscal Year. The Borrower shall not change
its Fiscal Year.
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ARTICLE VI. CONDITIONS PRECEDENT TO ALL DISBURSEMENTS.
6.1 All Disbursements. The obligation of the Lenders to
make any Disbursements is subject to the satisfaction of each of
the following conditions precedent:
6.1a No Default. The Borrower shall have performed and
complied, in all material respects with all agreements and
conditions herein required to be performed or complied with by it
prior to any Disbursements and, at the time of such
Disbursements, no Potential Default or Event of Default shall
exist.
6.1b Representations Correct. The representations and
warranties contained in Article III hereof shall be correct in
all material respects (i) when made and (ii) at the time of each
Disbursement except for such representations and warranties which
relate solely to an earlier date (in which case such
representations and warranties shall have been true and correct
in all material respects as of such date); provided, however,
that for purposes of clause (ii) of this Subsection 6.1b, the
representations and warranties contained in Section 3.6 shall be
deemed updated if, and to the extent that, an action, suit,
investigation, litigation or governmental investigation is set
forth in any Form 10-K or 10-Q filed by the Borrower in respect
of any period subsequent to the date hereof or in any Form 8-K
filed by the Borrower subsequent to the date hereof.
6.1c Disbursement Requirements. The Borrower shall have
complied with the requirements of Section 2.1 or Section 2.2 with
respect to the requested Disbursements.
Each request for Disbursements shall constitute, as at the time
made, a representation and warranty by the Borrower that the
matters set forth in Subsections 6.1a and 6.1b above are true and
correct.
6.2 Conditions Precedent to the Initial Disbursement Under
the Commitment. The obligation of the Lenders to make the
initial Disbursements is subject to the satisfaction of each of
the following conditions precedent in addition to the applicable
conditions precedent set forth in Section 6.1 above:
(i) Receipt by the Agent on behalf of each Lender of a
counterpart original of this Agreement executed by the other
Lenders and the Borrower.
(ii) Receipt by the Agent on behalf of each Lender of a
Revolving Credit Note, substantially in the form of Exhibit "A"
attached hereto, made payable to it in the amount of such
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Lender's Commitment and otherwise properly completed and executed
by the Borrower.
(iii) Receipt by the Agent on behalf of each Lender
of a Bid Rate Note substantially in the form of Exhibit "B"
attached hereto, made payable to it and otherwise properly
completed and executed by the Borrower.
(iv) Receipt by the Agent of a copy of a certified copy
(certified by the appropriate governmental official) of the
Borrower's Articles of Incorporation which certification is dated
not more than 30 days prior to the Closing.
(v) Receipt by the Agent of a certificate, duly
certified as of the date of the Closing by the secretary or
assistant secretary of the Borrower, as to (A) the By-Laws of the
Borrower in effect as of the Closing, (B) the resolutions of the
Borrower's Board of Directors authorizing the borrowings
hereunder and the execution and delivery of this Agreement, the
Notes, and all documents supplemental hereto and (C) the names of
the officers of the Borrower authorized to sign this Agreement,
the Notes, and all supplemental documentation and which contains
a true signature of each such officer.
(vi) Receipt by the Agent of good standing certificates
for the Borrower from the Secretary of State of the Commonwealth
of Pennsylvania and the States of Connecticut, Illinois, Indiana,
New York and Oklahoma each dated not more than 30 days prior to
the Closing.
(vii) Receipt by the Agent of the certificate of
the Borrower required pursuant to Section 4.7 of the Agreement.
(viii) Receipt by the Agent of written instructions
addressed to the Agent and executed by an Authorized Officer of
the Borrower relating to the initial Disbursement.
(ix) Receipt by the Agent of written notice from each
of the lenders under the Amended and Restated Credit Agreement
dated as of December 28, 1990, that upon payment of fees, if any,
due thereunder, such Agreement will be cancelled and the Notes
issued pursuant thereto shall be returned to the Borrower marked
"paid".
(x) Receipt by the Agent on behalf of each Lender of a
signed favorable opinion of Mary W. Snyder, Corporate Counsel and
Assistant Secretary, substantially in the form of Exhibit "G"
attached hereto.
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ARTICLE VII. DEFAULTS.
Each of the events or occurrences described in Sections
7.1 to and including 7.10 below shall constitute an "Event of
Default" hereunder.
7.1 Payment Default. Default in the payment of (i)
principal of the Bank Indebtedness when due, or (ii) interest on
any Loan, the Facility Fee, or any other amount due hereunder,
and continuance of any such nonpayment of such interest, Facility
Fee or other amount for five (5) Business Days.
7.2 Nonpayment of Other Indebtedness. The Borrower or any
Subsidiary shall fail to pay any Indebtedness of the Borrower or
such Subsidiary, as the case may be, other than the Bank
Indebtedness, in an aggregate amount as to the Borrower and its
Subsidiaries collectively of $5,000,000 or more, as and when the
same shall become due, or the occurrence of any default under any
agreement or instrument under or pursuant to which such
Indebtedness is incurred or issued and continuance of such
default beyond the period of grace, if any, allowed with respect
thereto.
7.3 Insolvency.
7.3a Involuntary Proceedings. A proceeding shall have been
instituted in a court having jurisdiction seeking a decree or
order for relief in respect of the Borrower or a Subsidiary in an
involuntary case under the Federal bankruptcy laws, or any other
similar applicable Federal or state law, now or hereafter in
effect, or for the appointment of a receiver, liquidator,
trustee, sequestrator or similar official for the Borrower or any
of its Subsidiaries or for a substantial part of its or their
property, or for the winding up or liquidation of its or their
affairs, and the same (i) is not controverted with a period
fifteen (15) days or (ii) shall remain undismissed or unstayed
and in effect for a period of sixty (60) days.
7.3b Voluntary Proceedings. The Borrower or a Subsidiary
shall institute proceedings to be adjudicated a voluntary
bankrupt, or any of them shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under the Federal
bankruptcy laws, or any other similar applicable Federal or state
law now or hereinafter in effect, or shall consent to the filing
of any such petition or shall consent to the appointment of a
receiver, liquidator, trustee, sequestrator or similar official
for the Borrower or any of its Subsidiaries or for a substantial
part of its or their property, or shall make an assignment for
the benefit of creditors, or shall admit in writing its or their
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inability to pay its or their debts generally as they become due,
or corporate action shall be taken by the Borrower or any of its
Subsidiaries in furtherance of any of the aforesaid purposes.
7.4 Termination of Existence. The Borrower shall terminate
its existence or cease to exist or any Subsidiary (other than any
Subsidiary the capital of which is less than $10,000,000 on the
date hereof) shall terminate its existence or cease to exist
except by reason of a merger or liquidation into or a
consolidation with the Borrower or a Consolidated Subsidiary.
7.5 Failure to Comply with Covenants.
7.5a Failure to Comply with Article V Covenants. The
Borrower shall default in the observance or performance of any
covenant contained in Article V.
7.5b Failure to Comply with Other Covenants. The Borrower
shall default in the due performance or observance of any other
covenant, condition or provision set forth herein and such
default shall not be remedied for a period of thirty (30) days
after such default is known to any Authorized Officer of the
Borrower or notice thereof has been given to the Borrower by the
Agent.
7.6 Misrepresentation. Any representation or warranty made
by the Borrower herein proves to have been untrue in any material
respect as of the date when made, or any certificate or other
document furnished by the Borrower to the Agent pursuant to the
provisions hereof proves to have been untrue in any material
respect on the date as of which the facts set forth therein are
stated or certified.
7.7 Adverse Judgments, Etc. Entry or filing of any one or
more judgments, writs or warrants of attachment or of any similar
process in an aggregate amount, as to the Borrower and its
Subsidiaries collectively, of $5,000,000 or more in excess of any
third-party insurance protecting against such liability against
the Borrower and its Subsidiaries or against any of their
respective properties and failure of the Borrower or its
Subsidiaries to vacate, pay, bond, stay or contest in good faith
such judgments, writs, warrants of attachment or other process
within a period of thirty (30) days.
7.8 Invalidity or Unenforceability. This Agreement, the
Notes or any other Loan Document ceases to be valid and binding
on the Borrower or is declared null and void, or the validity or
enforceability thereof is contested by the Borrower or the
Borrower denies it has any or further liability under this
Agreement, any Note or under the other Loan Documents to which it
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is a party.
7.9 ERISA. (i) A trustee shall be appointed by a court of
competent jurisdiction to administer any Plan of the Borrower or
any ERISA Affiliate; (ii) the PBGC shall terminate any Plan of
the Borrower or any ERISA Affiliate or appoint a trustee to
administer any such Plan; or (iii) the Borrower or any ERISA
Affiliate shall incur any liability to the PBGC in connection
with any Plan, which, in any such case, likely would have a
Material Adverse Effect on the Borrower and the Consolidated
Subsidiaries, taken as a whole.
7.10 Change of Control.
7.10a Change of Beneficial Ownership. Any Person or
group of Persons (within the meaning of Sections 13(a) or 14(a)
of the Securities and Exchange Act of 1934), other than the then
current officers or directors of the Borrower or an underwriter
which obtains such ownership as a result of effecting a firm
committed underwriting of a secondary offering of the Borrower's
voting stock on behalf of such officers or directors, shall have
acquired beneficial ownership of (within the meaning of Rule 13d-
3 promulgated by the Securities and Exchange Commission under
said Act) thirty percent (30%) or more of the voting stock of the
Borrower. For purposes of calculating the acquisition of
beneficial ownership, any transfer of voting stock of the
Borrower by any Person or group of Persons to a Permitted
Transferee shall be deemed not to constitute a conveyance and
acquisition of such stock. A "Permitted Transferee" includes any
of the following with respect to any then current officer or
director of the Borrower: (i) spouse; (ii) lineal descendants of
all generations and spouses of such lineal descendants; (iii) a
charitable corporation or trust established by such then current
officer or director or by a person described in (i) or (ii)
preceding; (iv) a trust (or in the case of a minor, a custodial
account under a Uniform Gifts or Transfers to Minors Act) of
which the beneficiar(ies) are one or more Persons described in
(i), (ii) or (iii) preceding; and (v) an executor or
administrator upon the death of such then current officer or
director or any Person described in (i) or (ii) preceding.
7.10b Change of Composition of Board of Directors.
Within a period of twelve (12) consecutive calendar months
individuals who were directors of the Borrower on the first day
of such period shall cease to constitute a majority of the board
of directors of the Borrower.
7.11 Consequences of an Event of Default. If one or more of
the Events of Default occur then (a) if such Event of Default is
set forth in Sections 7.3 or 7.4, the Commitments shall
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automatically terminate and the Notes then outstanding shall
become immediately due and payable, without necessity of demand,
presentation, protest, notice of dishonor or notice of default;
or (b) if such Event of Default is set forth in any of the
remaining Sections of this Article VII, then the Agent, at the
request of the Lenders, and without notice to the Borrower, shall
declare the Borrower in default hereunder, and upon such
declaration, shall, at the request of the Lenders, terminate the
Commitment and/or declare the Notes then outstanding immediately
due and payable, without necessity of any further demand,
presentation, protest, notice of dishonor or further notice of
default.
7.12 Remedies Upon Default. Upon the termination of the
Commitments and acceleration of the Notes following the
occurrence of an Event of Default, the Lenders shall, unless such
termination and acceleration subsequently have been rescinded,
have the full panoply of rights and remedies granted to them
under this Agreement and all those rights and remedies granted by
law to creditors, and the Agent, at the direction of the Required
Lenders, shall proceed to protect and enforce the Lenders' rights
by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement
contained herein in the Notes or in any of the other Loan
Documents, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law. No right, power or remedy
conferred by this Agreement, in the Notes, or by any other Loan
Document, upon the Agent or the Lenders shall be exclusive of any
other right, power or remedy referred to herein or therein or now
or hereafter available at law, in equity, by statute or
otherwise. No exercise of any one right or remedy shall be
deemed a waiver of other rights or remedies. The rights and
remedies of the Agent and the Lenders specified herein are for
the sole and exclusive benefit, use and protection of the Agent
and the Lenders, and the Agent and the Lenders shall be entitled,
but shall have no duty or obligation, to exercise or to refrain
from exercising any right or remedy reserved to the Agent or the
Lenders hereunder.
ARTICLE VIII. AGREEMENT AMONG LENDERS.
8.1 Appointment and Grant of Authority. Each of the
Lenders hereby appoints PNC Bank, National Association, and PNC
Bank, National Association hereby agrees to act as, the Agent
under this Agreement, the Notes and the other Loan Documents. As
such Agent, PNC Bank, National Association shall have and may
exercise such powers under this Agreement as are specifically
delegated to the Agent, by the terms hereto, of the Notes or of
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the other Loan Documents, together with such other powers as are
incidental thereto. Without limiting the foregoing, the Agent,
on behalf of the Lenders, is authorized to execute all of the
Loan Documents (other than this Agreement) and to accept all of
the Loan Documents and all other agreements, documents or
instruments reasonably required to carry out the intent of the
parties to this Agreement.
8.2 Non-Reliance on Agent. Each Lender agrees that it has,
independently and without reliance on the Agent, based on such
documents and information as it has deemed appropriate, made its
own credit analysis and evaluation of the Borrower and its
operations and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent, and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement.
Except as otherwise provided herein, the Agent shall have no duty
to keep the Lenders informed as to the performance or observance
by the Borrower of this Agreement or any other document or
instrument referred to or provided for herein or to inspect the
properties or books of the Borrower. The Agent, in the absence
of gross negligence or willful misconduct, shall not be liable to
any Lender for its failure to relay or furnish to the Lender any
information. The preceding provisions of this Section 8.2 to the
contrary notwithstanding, the Agent shall notify each of the
Lenders as soon as practicable after it receives a notice of an
Event of Default from the Borrower.
8.3 Responsibility of Agent and Other Matters.
8.3a Ministerial Nature of Duties. As among the Lenders and
the Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement, the Notes or in the other
Loan Documents, and those duties and responsibilities shall be
subject to the limitations and qualifications set forth in this
Article VIII. The duties of the Agent shall be ministerial and
administrative in nature.
8.3b Limitation of Liability. As among the Lenders and the
Agent, neither the Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or
omitted (whether or not such action taken or omitted is within or
without the Agent's responsibilities and duties expressly set
forth in this Agreement) under or in connection with this
Agreement or any other instrument or document in connection
herewith except for gross negligence or willful misconduct.
Without limiting the foregoing, neither the Agent nor any of its
directors, officers or employees shall be responsible for, or
have any duty to examine (i) the genuineness, execution,
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validity, effectiveness, enforceability, value or sufficiency of
(A) this Agreement, the Notes or any of the other Loan Documents
or (B) any other document or instrument furnished pursuant to or
in connection with this Agreement, (ii) the collectibility of any
amounts owed by the Borrower to the Lenders, (iii) the
truthfulness of any recitals, statements, representations or
warranties made to the Agent or the Lenders in connection with
this Agreement, (iv) any failure of any party to this Agreement
to receive any communication sent, including any telegram,
teletype, facsimile transmission or telephone message or any
writing, application, notice, report, statement, certificate,
resolution, request, order, consent letter or other instrument or
paper or communication entrusted to the mails or to a delivery
service, or (v) the assets, liabilities, financial condition,
results of operations or business, or creditworthiness of the
Borrower.
8.3c Reliance. The Agent shall be entitled to act, and
shall be fully protected in acting upon, any telegram, teletype,
facsimile transmission or any writing, application, notice,
report, statement, certificate, resolution, request, order,
consent, letter or other instrument, paper or communication
believed by the Agent in good faith to be genuine and correct and
to have been signed or sent or made by a proper Person. The
Agent may consult counsel and shall be entitled to act, and shall
be fully protected in any action taken in good faith, in
accordance with advice given by counsel. The Agent may employ
agents and attorneys-in-fact and shall not be liable for the
default or misconduct of any such agents or attorneys-in-fact
selected by the Agent with reasonable care. The Agent shall not
be bound to ascertain or inquire as to the performance or obser-
vance of any of the terms, provisions or conditions of this
Agreement or any of the other Loan Documents on the part of the
Borrower or any other party thereto.
8.4 Action on Instructions. The Agent shall be required to
act and shall be fully protected in so acting and shall be
entitled to refrain from acting, and shall be fully protected in
refraining from so acting, under this Agreement, the Notes, the
other Loan Documents or any other instrument or document executed
or delivered in connection herewith or therewith, in accordance
with written instructions from the Required Lenders or, in the
case of the matters set forth in items (A) through (G) of Section
9.1, from all of the Lenders.
8.5 Indemnification. To the extent the Borrower does not
reimburse and save harmless the Agent according to the terms
hereof for and from all costs, expenses and disbursements in
connection herewith, such costs, expenses and disbursements shall
be borne by the Lenders ratably in accordance with their
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respective Commitment Percentages. Each Lender hereby agrees on
such basis (i) to reimburse the Agent for such Lender's pro rata
share of all such reasonable costs, expenses and disbursements on
request and (ii) to the extent of each such Lender's pro rata
share, to indemnify and save harmless the Agent against and from
any and all losses, obligations, penalties, actions, judgments
and suits and other costs, expenses and disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or
asserted against the Agent, other than as a consequence of gross
negligence or willful misconduct on the part of the Agent,
arising out of or in connection with this Agreement, the Notes,
the other Loan Documents or any other agreement, instrument or
document executed or delivered in connection herewith or
therewith, or any request of the Required Lenders or all of the
Lenders, as the case may be, including without limitation the
reasonable costs, expenses and disbursements in connection with
defending themselves against any claim or liability, or answering
any subpoena or other process related to the exercise or
performance of any of their powers or duties under this
Agreement, the other Loan Documents, or any of the other
agreements, instruments or documents executed or delivered in
connection herewith or the taking or refraining from any action
under or in connection with any of the foregoing.
8.6 Agent's Rights as a Lender. With respect to the
Commitment of the Agent as a Lender hereunder, and any Loans of
the Agent under this Agreement, the other Loan Documents and any
other agreements, instruments and documents delivered pursuant
hereto and any other amounts due to the Agent under this
Agreement, the Agent shall have the same rights and powers,
duties and obligations under this Agreement, the Notes, the other
Loan Documents or other agreement, instrument or document as any
Lender and may exercise such rights and powers and shall perform
such duties and fulfill such obligations as though it were not
the Agent. The Agent may accept deposits from, lend money to,
and generally engage, and continue to engage, in any kind of
business with the Borrower as if it were not the Agent.
8.7 Payment to Lenders. Promptly after receipt from the
Borrower of any principal repayment of the Loans, interest due on
the Loans and any Facility Fees owing to the Lenders or other
amounts due under any of the Loan Documents (except for such
amounts which are payable for the sole account of any Lender or
the Agent), the Agent shall distribute to each Lender that
Lender's share of the funds so received.
8.8 Pro Rata Sharing. All interest and principal payments
on the Revolving Credit Loans and all Facility Fees are to be
divided pro rata among the Lenders in accordance with their
respective Commitment Percentages. Any sums obtained from the
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Borrower by any Lender by reason of the exercise of its rights of
set-off, banker's lien or in collection shall be shared (net of
costs) pro rata among the Lenders on the basis of the principal
amount of Loans outstanding. Nothing in this Section 8.8 shall
be deemed to require the sharing among the Lenders of collections
specifically relating to, or of the proceeds of any collateral
securing, any other Indebtedness of the Borrower to any Lender.
8.9 Successor Agent.
8.9a Resignation of Agent. The Agent may resign as Agent
hereunder by giving ninety (90) days' prior written notice to the
Lenders and the Borrower. If such notice shall be given, the
Lenders shall appoint a successor agent for the Lenders, during
such ninety (90) day period, which successor agent shall be
reasonably satisfactory to the Borrower, to serve as agent
hereunder and under the several Loan Documents. If at the end of
such ninety (90) day period, the Lenders have not appointed such
a successor, the Agent shall use reasonable commercial efforts to
procure a successor reasonably satisfactory to the Lenders and
the Borrower, to serve as agent for the Lenders hereunder and
under the several Loan Documents. Any such successor agent shall
succeed to the rights, powers and duties of the Agent.
8.9b Rights of the Former Agent. Upon the appointment of
such successor agent or upon the expiration of such ninety (90)
day period (or any longer period to which the Agent has agreed),
the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part
of such former Agent or any of the parties to this Agreement.
After any retiring Agent's resignation hereunder as Agent
hereunder, the provisions of this Article VIII shall inure to the
benefit of such retiring Agent as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
ARTICLE IX. GENERAL PROVISIONS
9.1 Amendments and Waivers.
9.1a Amendments to Agreement, Notes and the Other Loan
Documents. Subject to the remaining provisions of this Section
9.1, the Agent, the Lenders and the Borrower may, from time to
time, enter into amendments, extensions, renewals, modifications,
supplements and replacements to and of this Agreement, the Notes
or the other Loan Documents and the Lenders or the Required
Lenders, as the case may be, may, from time to time, waive
compliance with a provision thereof. No amendment, renewal,
modification, extension, supplement, replacement or waiver of any
provision of the Agreement, the Notes or the other Loan
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Documents, consent to any departure therefrom by the Borrower
shall be effective unless it is in writing and is signed by the
Required Lenders (or the Agent with the written consent of the
Required Lenders), and then such waiver or consent shall be
effective only for the specific instance and for the specific
purpose for which it is given; provided, however, that no
amendment, renewal, modification, waiver or consent, unless in
writing and signed by all of the Lenders (or the Agent with the
written consent of all of the Lenders), shall do any of the
following:
(A) increase the Commitment of any Lender or subject
any Lender to any additional obligations hereunder;
(B) except for changes permitted by Section 2.11
hereof or changes made pursuant to an Assignment and
Assumption Agreement, change any Lender's Commitment
Percentage or the aggregate or individual unpaid principal
amount of the Notes, or forgive the payment of the principal
or interest payable on the Notes;
(C) waive an Event of Default in the payment of
principal and/or interest due hereunder and under any of the
Notes;
(D) decrease the interest rate relating to the
Revolving Credit Loans;
(E) postpone any date fixed for any payment of
principal of, interest on the Revolving Credit Loans, the
Facility Fee, or any other obligations of the Borrower set
forth in Article II;
(F) reduce the Facility Fee; or
(G) amend the definition of the term "Required
Lenders" or amend or waive the provisions of this Section
9.1.
Any such supplemental agreement shall apply equally to the
Borrower and each of the Lenders and shall be binding upon the
Borrower, the Lenders, the Agent and all future holders of the
Notes. In the case of any waiver, the Borrower, the Lenders and
the Agent shall be restored to their former positions and rights,
and any Event of Default waived shall be deemed to be cured and
not continuing, but no such waiver shall extend to any subsequent
or other Event of Default, or impair any right consequent
thereon.
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9.2 Expenses. The Borrower shall pay:
(i) All reasonable costs and expenses of the Agent
(including without limitation the reasonable fees and
disbursements of the Agent's special counsel, Tucker Arensberg,
P.C.), incurred in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Loan
Documents and any and all other documents and instruments
prepared in connection herewith, including but not limited to all
amendments, extensions, modifications, replacements, waivers,
consents and other documents and instruments prepared or entered
into from time to time;
(ii) All reasonable costs and expenses of the Agent and
the Lenders (including without limitation the reasonable fees and
disbursements of the Agent's and the Lenders' counsels, which may
be in house counsel) in connection with (A) the enforcement of
this Agreement and the other Loan Documents arising pursuant to a
breach by the Borrower of any of the terms, conditions,
representations, warranties or covenants of any Loan Document to
which it is a party, and (B) defending or prosecuting any
actions, suits or proceedings relating to any of the Loan
Documents.
All of such costs and expenses shall be payable by the Borrower
to the Lenders or the Agent, as the case may be, upon demand or
as otherwise agreed upon by the Lenders or the Agent and the
Borrower, and shall constitute Bank Indebtedness under this
Agreement. The Borrower further agrees to pay, and save the
Agent and the Lenders harmless from any and all liability for,
any stamp or other taxes which may be payable with respect to the
execution or delivery of this Agreement or the issuance of the
Notes. The Borrower's obligation to pay such costs and expenses
shall survive the termination of this Agreement and the repayment
of the Bank Indebtedness.
9.3 Notices.
9.3a Notice to the Borrower. All notices required to be
delivered to the Borrower pursuant to this Agreement shall be in
writing and shall be sent to the following address, by hand
delivery, recognized national overnight courier service, telex,
telegram, facsimile transmission or other means of electronic
data communications or by the United States mail, first class,
postage prepaid:
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If by U.S. Mail: If by other means:
If by United States Mail: If by other means:
Allegheny Ludlum Corporation Allegheny Ludlum Corporation
1000 Six PPG Place 1000 Six PPG Place
Pittsburgh, Pennsylvania 15222 Pittsburgh, Pennsylvania 15222
Attn: Vice President, Treasurer Attn: Vice President, Treasurer
Telecopier: (412) 394-2805
Telephone: (412) 394-2822
9.3b Notice to the Agent. All notices required to be
delivered to the Agent pursuant to this Agreement shall be in
writing and shall be sent to the following address, by hand
delivery, recognized national overnight courier service, telex,
telegram, facsimile transmission or other means of electronic
data communications or by the United States mail, first class,
postage prepaid:
If by U.S. Mail: If by other means:
PNC Bank, National Association PNC Bank, National Association
Multi-Bank Loan Administration Multi-Bank Loan Administration
One PNC Plaza - 19th Floor One PNC Plaza - 19th Floor
Pittsburgh, Pennsylvania 15265 Pittsburgh, Pennsylvania 15265
Attention: Arlene M. Ohler Attention: Arlene M. Ohler
Telephone: (412) 762-3627
Telecopier: (412) 762-7568
with a copy to:
PNC Bank, National Association PNC Bank, National Association
Pittsburgh Group Pittsburgh Group
One PNC Plaza, Second Floor One PNC Plaza, Second Floor
Pittsburgh, Pennsylvania 15222 Pittsburgh, Pennsylvania 15222
Attention: Lawrence W. Jacobs Attention: Lawrence W. Jacobs
Vice President Vice President
Telephone: (412) 762-2524
Telecopier: (412) 762-6484
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9.3c Notice to the Lenders. All notices required to be
delivered to the Lenders pursuant to this Agreement shall be in
writing and shall be sent to the address set forth on the
signature pages of the Agreement, by hand delivery, recognized
national overnight courier service, telex, telegram, facsimile
transmission or other means of electronic data communication or
by the United States mail, first class, postage prepaid.
9.3d Receipt of Notices. All such notices shall be
effective three (3) days after mailing, the date of electronic
transmission or when received, whichever is earlier. The
Borrower, the Lenders and the Agent may each change the address
for service of notice upon it by a notice in writing to the other
parties hereto.
9.4 Tax Withholding. At least five (5) Business Days prior
to the first date on which interest or fees are payable hereunder
for the account of each Lender, each Lender that is not
incorporated under the laws of the United States of America or a
state thereof agrees that it will deliver to the Agent and the
Borrower two (2) duly completed copies of either (i) IRS Form W-
9, 1001 or 4224 or such other applicable form prescribed by the
IRS, certifying in each case that such Lender is entitled to
receive payments under this Agreement or its Notes without
deduction or withholding of United States federal income taxes,
or is subject to such tax at a reduced rate under an applicable
tax treaty or (ii) IRS Form W-8 or such other applicable form
prescribed by the IRS or a certificate of such Lender indicating
that no such exemption or reduced rate of taxation is allowable
with respect to such payments. Each Lender which delivers an IRS
Form W-8, W-9, 4224 or 1001 further undertakes to deliver to the
Agent and the Borrower two (2) additional copies of any such form
(or any successor form) on or before the date on which that form
expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it,
and such amendments thereto or extensions or renewals thereof as
may be reasonably requested by the Borrower or the Agent, either
certifying that such Lender is entitled to receive payments under
this Agreement or its Notes without deduction or withholding of
any United States federal income taxes or is subject to such tax
at a reduced rate under an applicable tax treaty or stating the
date on which that no such exemption or reduced rate is
allowable. The Agent shall be entitled to withhold, from each
payment hereunder or under the Notes payable to it, United States
federal income taxes at the full withholding rate unless each
Lender referred to in the first sentence of this Section 9.4
establishes an exemption or at the applicable reduced rate
established pursuant to the above provisions.
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9.5 Successors and Assigns. This Agreement shall be
binding upon the Borrower, the Agent and the Lenders and their
respective successors and assigns, and shall inure to the benefit
of the Borrower, the Agent and the Lender and the successors and
assigns of the Agent and the Lender.
9.6 Assignments and Participations.
9.6a Assignments. Subject to the remaining provisions of
this Subsection 9.6a, any Lender (a "Transferor Lender"), at any
time, in the ordinary course of its commercial banking business
and in accordance with applicable law, may sell to one or more
banks (individually a "Purchasing Lender"), a portion or all of
its rights and obligations under this Agreement and the Notes
then held by it, pursuant to as Assignment and Assumption
Agreement substantially in the form of Exhibit "H" executed by
the Transferor Lender, such Purchasing Lender and the Agent;
subject, however to the following requirements:
(i) Each such assignment must be in a minimum amount
of $5,000,000, or, if in excess thereof, in integral multiples of
$1,000,000;
(ii) During the first ninety (90) days following the
Closing Date, each assignment made shall become effective only on
a date which coincides with the expiration date of any Euro-Rate
Interest Period then in effect, unless the Agent agrees to waive
this provision;
(iii) The Borrower and the Agent shall consent to
each such assignment, which consent shall not be unreasonably
withheld; and
(iv) The Transferor Lender shall pay to the Agent a
$2,000 service fee for each such transfer at the time of each
such transfer;
provided, however the restrictions set forth in item (i) above
shall not apply in the case of any assignment by any Transferor
Lender upon the occurrence and during the continuation of an
Event of Default.
Upon the execution, delivery, acceptance and recording of any
such Assignment and Assumption Agreement, from and after the
Transfer Effective Date determined pursuant to such Assignment
and Assumption Agreement, all parties hereto agree that (a) the
Purchasing Lender thereunder shall be a party hereto as a Lender
and, to the extent provided in such Assignment and Assumption
Agreement, shall have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (b) the
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Transferor Lender thereunder shall, to the extent provided in
such Assignment and Assumption Agreement, be released from its
obligations as a Lender under this Agreement. Such Assignment
and Assumption Agreement shall be deemed to amend this Agreement
(without further action) to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender as a
Lender and the resulting adjustment of Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such Transferor Lender
under this Agreement and its Notes. On or prior to the Transfer
Effective Date, the Borrower shall execute and deliver to the
Agent, in exchange for the surrendered Notes held new Notes to
the order of such Purchasing Lender in an amount equal to the
Commitment or the Loans assumed by it and purchased by it
pursuant to such Assignment and Assumption Agreement, and new
Notes to the order of the Transferor Lender in an amount equal to
the Commitment or the Loans retained by it hereunder.
In addition to the assignments permitted above, any Lender may
assign and pledge all or any portion of its Loans and Notes to
any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve
System and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Lender from
its obligations and duties hereunder.
9.6b Assignment Register. The Agent shall maintain, at its
address referred to in Subsection 9.3b, a copy of each Assignment
and Assumption Agreement delivered to it and a register (the
"Register") for the recordation of the names and addresses of the
Lenders and the amount of the Loans owing to each Lender from
time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Agent and
the Lenders may treat each Person whose name is recorded in the
Register as the owner of the Loans recorded therein for all
purposes of this Agreement. The Register shall be available at
the office of the Agent set forth in Subsection 9.3b for
inspection by either Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
9.6c Participations. Each Lender, in the ordinary course of
its commercial banking business and in accordance with applicable
law, may sell to one or more Participants a participating
interest in any Loan owing to such Lender, the interest of such
Lender in any Notes or the Commitment of such Lender. In the
event of any such sale by a Lender of a participating interest to
a Participant, such Lender's obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of its Notes for all
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purposes under this Agreement (including voting rights
hereunder), and the Borrower, the other Lenders and the Agent
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement or its Notes.
9.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
9.8 Survival. All representations, warranties, covenants
and agreements of the Borrower contained herein in the Notes or
in the other Loan Documents or made in writing in connection
herewith or therewith shall survive the issuance of the Notes and
shall continue in full force and effect so long as the Borrower
may borrow hereunder and so long thereafter until payment in full
of all the Notes and the Bank Indebtedness.
9.9 Governing Law. This Agreement, each Note and each
other Loan Document shall be a contract made under, governed by
and construed in accordance with the laws of the Commonwealth of
Pennsylvania without reference to the provision thereof regarding
conflicts of law except where such law is superseded by
applicable Federal law.
9.10 Non-Business Days. Except as otherwise specifically
required pursuant to the terms of this Agreement, whenever any
payment hereunder or under the Notes is due and payable on a day
which is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in each
such case be included in computing interest in connection with
such payment.
9.11 Integration. This Agreement constitutes the entire
agreement between the parties relating to this financing
transaction and it supersedes all prior understandings and
agreements, whether written or oral, between the parties hereto
concerning the subject matter of this Agreement.
9.12 Headings. Article, Section and other headings used in
this Agreement are intended for convenience only and shall not
affect the meaning or construction of this Agreement.
9.13 Set-Off. The Borrower hereby gives to the Lenders a
lien and security interest for the amount of any Bank
Indebtedness upon and in any property, credits, securities or
money of the Borrower which may at any time be delivered to, or
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be in the possession of, or owed by any Lender in any capacity
whatever, including the balance of any deposit account but
excluding and trust or fiduciary accounts, in each case
maintained by the Borrower with such Lender. The Borrower hereby
authorizes each Lender in case of an Event of Default, at such
Lender's option, at any time and from time to time, to apply, at
the discretion of such Lender, to the payment of Bank
Indebtedness, any and all such property, credits, securities or
money now or hereafter in the hands of such Lender belonging or
owed to the Borrower. Nothing herein shall restrict any Lender's
ability to set off any property, credits, securities or money of
the Borrower which may at any time be delivered to, or be in
possession or owed to any Lender in any capacity whatever to
satisfy an independent obligation of the Borrower to the Lender.
9.14 Forum. The parties hereto agree that any action or
proceeding arising out of or relating to this Agreement, the
Notes or the other Loan Documents shall be commenced only in the
Court of Common Pleas of Allegheny County, Pennsylvania, or in
the District Court of the United States for the Western District
of Pennsylvania and each party agrees that a summons and
complaint commencing an action or proceeding in either of such
courts shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to the
party at its respective address set forth in Section 9.3, or as
otherwise provided under the laws of the Commonwealth of
Pennsylvania. Further, the parties hereby specifically consent
to the personal jurisdiction of the Court of Common Pleas of
Allegheny County, Pennsylvania, and the District Court of the
United States for the Western District of Pennsylvania, and waive
and hereby acknowledge that the parties are estopped from raising
any claim that any such court lacks personal jurisdiction over
such party so as to prohibit either such court from adjudicating
any issues raised in a complaint filed with any such court
against the Borrower or the Lenders concerning this Agreement.
9.15 Waiver of Jury Trial. Each of the Agent, the Lenders
and the Borrower hereby knowingly, voluntarily and intentionally
waive any rights they may have to a trial by jury in respect of
any litigation based hereon, or arising out of, under, or in
connection with, this Agreement or any other Loan Document, or
any course of conduct, course of dealing, statements (whether
verbal or written) or actions of the Agent, the Lenders or the
Borrower relating hereto or thereto. The Borrower acknowledges
and agrees that it has received full and sufficient consideration
for this provision (and each other provision of each other Loan
Document to which it is a party) and that this provision is a
material inducement for the Lenders to enter into this Agreement
and each such other Loan Document.
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9.16 Termination of Prior Credit Agreement. It is the
intent of the parties hereto (A) that at the Closing the Borrower
shall comply with each of items (i) through (vii) inclusive and
item (x) of Section 6.2 and (B) that each of the lenders party to
the Amended and Restated Credit Agreement dated as of December
28, 1990 shall comply with item (ix) of Section 6.2. Upon
satisfaction of all of the provisions of Section 6.2, other than
item (viii), the Amended and Restated Credit Agreement dated as
of December 28, 1990 shall be terminated.
9.17 Counterparts. This Agreement and any amendment,
modification, extension or renewal hereto or hereof may be
executed in several counterparts and by each party on a separate
counterpart, each of which, when so executed and delivered, shall
be an original, but all of which together shall constitute but
one and the same instrument. In proving this Agreement or any
amendment, modification, extension or renewal, it shall not be
necessary to produce or account for more than one such
counterpart signed by the other party against whom enforcement is
sought.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the
date first written above.
ATTEST: ALLEGHENY LUDLUM CORPORATION
/s/ M.W. Snyder By /s/ R.S. Park
---------------- -------------
Name M.W. Snyder Robert S. Park
Title Assistant Secretary Treasurer
PNC BANK, NATIONAL ASSOCIATION, in
its capacity as the Agent hereunder
By /s/ Lawrence W. Jacobs
----------------------
Lawrence W. Jacobs
Vice President
BF 28949.8
06/28/95:10
000011-009728
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<PAGE>
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY LUDLUM CORPORATION, THE LENDERS PARTY HERETO and
PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed by
its duly authorized officers as of the date first above written.
Commitment: PNC BANK, NATIONAL ASSOCIATION
$40,000,000
Commitment Percentage:
40% By /s/ Lawrence W. Jacobs
----------------------
Lawrence W. Jacobs
Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
PNC Bank, National Association PNC Bank, National Association
Multi-Bank Loan Administration Multi-Bank Loan Administration
One PNC Plaza - 19th Floor One PNC Plaza - 18th Floor
Pittsburgh, Pennsylvania 15265 Pittsburgh, Pennsylvania 15265
Attention: Arlene M. Ohler Attention: Arlene M. Ohler
Telephone: (412) 762-3627
Telecopier: (412) 762-7658
With a copy to:
PNC Bank, National Association
Pittsburgh Group
One PNC Plaza - 2nd Floor
Pittsburgh, Pennsylvania 15222
Attention: Lawrence W. Jacobs
Vice President
Telephone: (412) 762-2524
Telecopier: (412) 762-6484
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Address for Euro-Rate Loan Funding if different from above:
____________________________
____________________________
____________________________
____________________________
Telephone: _______________
Telecopier: _______________
Telex: ____________________
BF 28949.8
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IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY LUDLUM CORPORATION, THE LENDERS PARTY HERETO and
PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed by
its duly authorized officers as of the date first above written.
Commitment: BANK OF AMERICA ILLINOIS
$26,000,000
Commitment Percentage: By /s/ John M. Dillon
26% ------------------
Name John M. Dillon
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
Attention: Michael Gates, A.A. Attention: Michael Gates, A.A.
231 South La Salle Street 231 South La Salle Street
Mail Code 20019 Mail Code 20019
Chicago, Illinois 60697 Chicago, Illinois 60697
Telephone: (312) 828-6207
Telecopier: (312) 974-9626
Telex:
Address for Eurodollar Rate Loan Funding if different from above:
N/A
Telephone:
Telecopier:
Telex:
BF 28949.8
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IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY LUDLUM CORPORATION, THE LENDERS PARTY HERETO and
PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed by
its duly authorized officers as of the date first above written.
Commitment: MELLON BANK, N.A.
$13,000,000
Commitment Percentage: By /s/ Martin T. Hanning
13% ---------------------
Name Martin T. Hanning
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
One Mellon Bank Center One Mellon Bank Center
Room #151-4401 Room #151-4401
Pittsburgh, PA 15258 Pittsburgh, PA 15258
Telephone: (412) 236-5914
Telecopier: (412) 234-8888
Telex:
Address for Eurodollar Rate Loan Funding if different from above:
Three Mellon Bank Center
Room 2303
Pittsburgh, PA 15259
Telephone: (412) 234-8347
Telecopier: (412) 234-5049
Telex: 199103 MELBNKPGH
BF 28949.8
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IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY LUDLUM CORPORATION, THE LENDERS PARTY HERETO and
PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed by
its duly authorized officers as of the date first above written.
Commitment: THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
$12,000,000
Commitment Percentage: By /s/ Nicholas J. Chierkos
12% ------------------------
Name Nicholas J. Chierkos
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
Attn: Vilma Francis Attn: Vilma Francis
Two Chase Manhattan Plaza Two Chase Manhattan Plaza
5th Floor 5th Floor
New York, NY 10081 New York, NY 10081
Telephone: (212) 552-7883
Telecopier: (212) 552-1368
Telex:
Address for Eurodollar Rate Loan Funding if different from above:
N/A
Telephone:
Telecopier:
Telex:
BF 28949.8
-68-
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound
hereby, the undersigned Lender has caused this Agreement by and
among ALLEGHENY LUDLUM CORPORATION, THE LENDERS PARTY HERETO and
PNC BANK, NATIONAL ASSOCIATION, as the Agent to be executed by
its duly authorized officers as of the date first above written.
Commitment: INTEGRA BANK
$9,000,000
Commitment Percentage: By /s/ Paul A. Sakalik
9% -------------------
Name Paul A. Sakalik
Title Vice President
Addresses for notice purposes:
If by United States Mail: If by other means:
Attn: William Stewart Attn: William Stewart
4th Avenue & Wood Street 4th Avenue & Wood Street
Loan Operations Loan Operations
Pittsburgh, PA 15278 Pittsburgh, PA 15278
Telephone: (412) 644-8215
Telecopier: (412) 655-6224
Telex:
Address for Eurodollar Rate Loan Funding if different from above:
N/A
Telephone:
Telecopier:
Telex:
BF 28949.8
-69-
<PAGE>
Exhibit 11
Allegheny Ludlum Corporation
Computation of Per Share Earnings
(Dollars and Shares in Thousands
Except Per Share Amounts)
Fiscal Quarter Ended Six Months Ended
-------------------- -------------------
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
-------- --------- -------- ---------
PRIMARY
Net (loss) income $ 34,470 $(29,179) $ 63,324 $(11,061)
------- -------- ------- --------
Weighted average number of
common shares 69,959 70,792 70,264 70,865
Per share of common stock:
Net (loss) income $.49 $(.41) $.90 $(.15)
====== ======= ======= ========
FULLY DILUTED (1)
-------------
Net income $ 34,470 $ 63,324
Tax effected interest related
to 5-7/8% convertible
subordinated debentures 877 1,729
------- -------
Adjusted Net Income $ 35,347 $ 65,053
Weighted average number of
common shares 69,959 70,264
Weighted average number
of convertible
subordinated debenture
common shares on an
"if converted" basis 4,938 4,938
Weighted average number
of common shares
related to employee
stock plans (2) 441 441
------- -------
75,338 75,643
Net income per share of
common stock $.47 $.86
======= =======
(1) Anti-dilutive in the 1994 periods.
(2) Not used in primary calculation due to dilution being
less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
registrant's consolidated statement of income for the fiscal six months ended
July 2, 1995 and consolidated balance sheet as of July 2, 1995 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> JUL-02-1995
<CASH> 69,555
<SECURITIES> 0
<RECEIVABLES> 159,975
<ALLOWANCES> 3,753
<INVENTORY> 187,303
<CURRENT-ASSETS> 428,924
<PP&E> 667,431
<DEPRECIATION> 215,994
<TOTAL-ASSETS> 1,111,572
<CURRENT-LIABILITIES> 181,540
<BONDS> 131,807
<COMMON> 7,288
0
0
<OTHER-SE> 373,973
<TOTAL-LIABILITY-AND-EQUITY> 1,111,572
<SALES> 785,800
<TOTAL-REVENUES> 785,800
<CGS> 615,048
<TOTAL-COSTS> 615,048
<OTHER-EXPENSES> 62,715
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 876
<INCOME-PRETAX> 107,161
<INCOME-TAX> 43,837
<INCOME-CONTINUING> 63,324
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,324
<EPS-PRIMARY> .90
<EPS-DILUTED> .86
</TABLE>
