<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission File Number 1-12744
MARTIN MARIETTA MATERIALS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
North Carolina 56-1848578
- -------------------------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2710 Wycliff Road, Raleigh, NC 27607-3033
- -------------------------------------------------- ------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 919-781-4550
------------------------------------------
</TABLE>
Former name: None
--------------------------------------------------------
Former name, former address and former fiscal year,
if changes since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding as of July 31, 1996
- ------------------------------- -------------------------------
Common Stock, $.01 par value 46,079,300
Page 1 of 76
Exhibit Index is on Page 24
<PAGE> 2
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I.Financial Information:
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of
Earnings Three Months and Six Months
Ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 9
Part II.Other Information:
Item 1. Legal Proceedings. 21
Item 4. Submission of Matters to a Vote of Security Holders. 21
Item 5. Other Information. 21
Item 6. Exhibits and Reports on Form 8-K. 22
Signatures 23
Exhibit Index 24
</TABLE>
Page 2 of 76
<PAGE> 3
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
(Dollars in Thousands)
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable, net $ 132,382 $ 94,759
Affiliates receivable 7,472 89,712
Inventories, net 114,785 113,402
Deferred income tax benefit 12,586 12,622
Other current assets 3,835 3,860
--------- ---------
Total Current Assets 271,060 314,355
--------- ---------
Property, plant and equipment 942,223 919,862
Allowances for depreciation, depletion and
amortization (548,515) (527,639)
--------- ---------
Net property, plant and equipment 393,708 392,223
Other noncurrent assets 21,388 18,248
Noncurrent affiliates receivable -- 3,333
Cost in excess of net assets acquired 37,656 37,245
Other intangibles 22,556 23,967
--------- ---------
Total Assets $ 746,368 $ 789,371
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Book overdraft $ 4,552 $ 2,927
Accounts payable 28,717 26,211
Affiliates payable 29,307 6,822
Accrued salaries, benefits and payroll taxes 15,831 15,426
Accrued insurance and other taxes 9,211 5,551
Income taxes 10,952 2,192
Current maturities of long-term debt 792 103,740
Other current liabilities 6,459 10,467
--------- ---------
Total Current Liabilities 105,821 173,336
Long-term debt 124,871 124,986
Pension, postretirement, and postemployment benefits 50,490 47,483
Other noncurrent liabilities 8,720 9,415
Noncurrent deferred income taxes 11,914 10,606
--------- ---------
Total Liabilities 301,816 365,826
--------- ---------
Shareholders' equity:
Common stock, par value $.01 per share 461 461
Additional paid-in capital 331,303 331,303
Retained earnings 112,788 91,781
--------- ---------
Total Shareholders' Equity 444,552 423,545
--------- ---------
Total Liabilities and
Shareholders' Equity $ 746,368 $ 789,371
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3 of 76
<PAGE> 4
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1996 1995 1996 1995
---- ---- ---- ----
(Dollars in Thousands, Except Per Share Data)
<S> <C> <C> <C> <C>
Net sales $ 200,438 $ 175,914 $ 336,985 $ 305,856
Cost of sales 145,108 129,664 257,850 230,533
---------- ---------- ---------- ----------
Gross Profit 55,330 46,250 79,135 75,323
Selling, general & administrative expense 14,997 14,710 29,733 28,814
Research and development 477 448 952 893
---------- ---------- ---------- ----------
Earnings from Operations 39,856 31,092 48,450 45,616
Interest expense (2,522) (2,382) (5,696) (4,494)
Other income and expenses, net 3,192 2,312 4,362 2,575
---------- ---------- ---------- ----------
Earnings before Taxes on Income 40,526 31,022 47,116 43,697
Taxes on income 13,719 11,065 15,972 15,511
---------- ---------- ---------- ----------
Net Earnings $ 26,807 $ 19,957 $ 31,144 $ 28,186
========== ========== ========== ==========
Net earnings per share $ 0.58 $ 0.43 $ 0.68 $ 0.61
========== ========== ========== ==========
Average number of shares outstanding 46,079,300 46,079,300 46,079,300 46,079,300
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 4 of 76
<PAGE> 5
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1996 1995
---- ----
(Dollars in Thousands)
<S> <C> <C>
Operating activities:
Net earnings $ 31,144 $ 28,186
Adjustments to reconcile earnings to cash
provided by operating activities:
Depreciation, depletion and amortization 30,000 27,037
Other items, net (1,380) (1,389)
Changes in operating assets and liabilities:
Accounts receivable (37,623) (20,137)
Affiliates receivable (1,809) 2,127
Inventories (1,458) (24,716)
Accounts payable 512 5,831
Other assets and liabilities, net 7,413 20,638
--------- -------
Net cash provided by operating activities 26,799 37,577
--------- -------
Investing activities:
Additions to property, plant and equipment (33,432) (34,053)
Acquisitions, net -- (142,861)
Transactions with Lockheed Martin Corporation 87,383 31,813
Note receivable from Lockheed Martin Corporation -- 53,000
Other investing activities, net 6,346 2,563
--------- -------
Net cash provided by (used for) investing activities 60,297 (89,538)
--------- -------
Financing activities:
Repayments and extinguishments of long-term debt, net (103,064) (1,564)
Dividends (10,137) (10,137)
Loan payable to Lockheed Martin Corporation 24,480 62,681
--------- -------
Net cash (used for) provided by financing activities (88,721) 50,980
--------- -------
Net decrease in cash (1,625) (981)
Book overdraft, beginning of period (2,927) (2,218)
--------- -------
Book overdraft, end of period $ (4,552) $(3,199)
========= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 5 of 76
<PAGE> 6
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements of
Martin Marietta Materials, Inc. (the "Corporation") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to the Quarterly Report on
Form 10-Q and to Article 10 of Regulation S-X. The Corporation has
continued to follow the accounting policies set forth in the audited
consolidated financial statements and related notes thereto included in
the Corporation's Annual Report on Form 10-K for the year ended December
31, 1995, filed with the Securities and Exchange Commission on March 27,
1996. In the opinion of management, the interim financial information
provided herein reflects all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of the results of operations
for the interim periods. The results of operations for the six months
ended June 30, 1996, are not necessarily indicative of the results to be
expected for the full year.
The Corporation is a subsidiary of Lockheed Martin Corporation ("Lockheed
Martin") which was formed as a result of a business combination in March
1995 between the Martin Marietta Corporation ("Martin Marietta") and the
Lockheed Corporation. Lockheed Martin, directly and indirectly through a
subsidiary, currently owns approximately 81% of the Corporation's
outstanding Common Stock. However, Lockheed Martin has stated its
intention to dispose of its ownership of the Corporation's Common Stock
in the latter half of 1996 by means of a split-off. The split-off
proposed by Lockheed Martin would be accomplished through an exchange
offering whereby Lockheed Martin stockholders will be given an
opportunity to exchange some or all of their shares of Lockheed Martin
common stock for a certain number of shares of the Corporation's Common
Stock (the "Exchange Offer") held by Lockheed Martin. For a more
detailed discussion of this transaction, see the "Overview" section of
the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on page 9. For purposes of these financial
statements and the related notes thereto, all references to Lockheed
Martin are meant to include Martin Marietta Corporation and its
consolidated subsidiaries, except where otherwise specified.
2. Inventories:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -----------
(Dollars in Thousands)
<S> <C> <C>
Finished products $ 88,390 $ 86,086
Product in process and raw materials 13,591 15,427
Supplies and expendable parts 19,980 19,259
-------- --------
121,961 120,772
Less allowances (7,176) (7,370)
-------- --------
Total $114,785 $113,402
======== ========
</TABLE>
Page 6 of 76
<PAGE> 7
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. Long-Term Debt:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------- -----------
(Dollars in Thousands)
<S> <C> <C>
7% Debentures, due 2025 $124,181 $124,177
8-1/2% Notes, due 1996 -- 100,000
Acquisition notes, interest rates
ranging from 6% to 10% 695 3,675
Other notes 787 874
-------- --------
125,663 228,726
Less current maturities (792) (103,740)
-------- --------
Total $124,871 $124,986
======== ========
</TABLE>
The 8-1/2% Notes were redeemed by the holders upon their maturity on
March 1, 1996. During the period these Notes were outstanding,
Lockheed Martin reimbursed the Corporation for the portion of the
interest in excess of 5% per annum.
In addition to the above stated long-term debt, as of June 30, 1996,
the Corporation had borrowed, from a subsidiary of Lockheed Martin, $23
million under the terms of a credit agreement and $1.5 million under
the terms of a cash management agreement. For financial reporting
purposes, these amounts are classified with affiliates payable in the
accompanying financial statements. The proceeds of these borrowings
were used primarily to help finance the repayment of the 8-1/2 % Notes
and to assist funding the Corporation's working capital requirements
during the first half of 1996. As of August 1, 1996, $12 million was
outstanding under the terms of these agreements.
The Corporation's interest payments were approximately $7.3 million in
1996 and $3.7 million in 1995 for the six months ended June 30.
Page 7 of 76
<PAGE> 8
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Income Taxes
The Corporation's effective income tax rate for the first six months was
33.9% in 1996 and 35.5% in 1995. The effective rate for the first half
of 1996 was lower than the current federal corporate income tax rate of
35%, due to the effect of several partially offsetting factors. The
Corporation's year-to-date 1996 effective tax rate reflects the effect of
state income taxes which has been more than offset by the favorable
impact of differences in book and tax accounting arising from the
permanent benefits associated with the depletion allowances for mineral
reserves, foreign subsidiaries' operating earnings, and equity earnings
in nonconsolidated investments.
Currently, the results of operations of the Corporation are included in a
consolidated federal income tax return with Lockheed Martin. However,
assuming consummation of the split-off from Lockheed Martin, as discussed
in Note 1 and in the "Overview" section of the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on page 9,
the Corporation will file consolidated federal income tax returns
independently from Lockheed Martin following the consummation date of the
split-off. For years ended prior to January 1, 1995, the Corporation's
results of operations were included in a consolidated federal income tax
return with Martin Marietta Corporation. Income taxes allocable to the
operations of the Corporation are calculated as if it had filed separate
income tax returns for the periods presented herein.
The Corporation's income tax payments were approximately $4.6 million in
1996 and $7.7 million in 1995, for the six months ended June 30.
5. Contingencies
In the opinion of management and counsel, it is unlikely that the outcome
of litigation and other proceedings, including those pertaining to
environmental matters, relating to the Corporation and its subsidiaries,
will have a material adverse effect on the results of the Corporation's
operations or its financial position.
6. Other Matters
In February 1994, the Corporation was authorized by its shareholders and
the Board of Directors to repurchase up to 2,000,000 shares of the
Corporation's Common Stock for issuance under the Corporation's Omnibus
Securities Award Plan. On May 3, 1994, the Board of Directors authorized
the repurchase of an additional 500,000 shares for general corporate
purposes. As of August 1, 1996, there have been 68,200 shares of Common
Stock repurchased by the Corporation under these authorizations.
Page 8 of 76
<PAGE> 9
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 1996 and 1995
The following discussion and analysis presents management's assessment of
Materials' business environment, factors affecting the results of operations,
liquidity and capital resources as of and for the second quarter ended June 30,
1996. This information should be read in conjunction with the Corporation's
condensed consolidated financial statements and related notes thereto on pages
3 through 8.
OVERVIEW
Materials achieved record quarterly sales and earnings, including earnings
from operations, for the quarter ended June 30, 1996, principally through
continued pricing and profitability improvements, coupled with the positive
impact of its previous acquisition activities. Financial results for the first
half of 1996 yielded earnings from operations of $48.5 million. These operating
earnings were up $2.8 million from the year-earlier period on net sales of
$337.0 million. Comparatively, earnings from operations for the first six
months of 1995 were $45.6 million on net sales of $305.9 million. The
Corporation's net earnings for the six-month period ended June 30, 1996, of
$31.1 million, or $0.68 a share, represent an increase of 10% over net earnings
for the first six months of 1995 of $28.2 million, or $0.61 a share.
On July 26, 1996, the Corporation filed a registration statement with the
Securities and Exchange Commission in connection with Lockheed Martin's
intention to distribute all of its shares of the Corporation's Common Stock to
its own stockholders by offering to exchange shares of the Corporation's Common
Stock for each share of Lockheed Martin common stock tendered, subject to
certain conditions (the "Exchange Offer"). If Lockheed Martin completes the
Exchange Offer and if a sufficient number of shares of Lockheed Martin common
stock are not exchanged for the Corporation's Common Stock such that Lockheed
Martin continues to own shares of the Corporation's Common Stock, Lockheed
Martin has announced that it will "spin-off" as soon as practicable the
remaining shares of the Corporation's Common Stock it owns as a pro rata
distribution to the holders of Lockheed Martin common stock remaining after
consummation of the Exchange Offer ( the "Spin-Off" and, together with the
Exchange Offer, the "Transaction").
As a result of the Transaction, all of Lockheed Martin's approximately 81%
interest in the Corporation's Common Stock will be exchanged with Lockheed
Martin stockholders who participate in the Exchange Offer or, if applicable,
distributed to the Lockheed Martin stockholders in the Spin-Off. Neither
consummation of the Exchange Offer nor effectuation of the Spin-Off will impact
the Corporation's financial position or its results of operations as of the
consummation date of the
Page 9 of 76
<PAGE> 10
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
Transaction and for the period then ended. For additional discussion in
connection with the Transaction, see "Other Matters" on page 19.
Materials continues to maintain a level of capital resources which
management believes is adequate to operate, compete and grow in an increasingly
challenging and competitive environment. At June 30, 1996, total shareholders'
equity reached $444.6 million, and the Corporation's ratio of debt to total
capitalization was 25%, compared with a debt-to-capitalization ratio of 35% at
year-end 1995. Total debt at year-end reflected a temporary increase in
long-term debt associated with the December 1995 sale of the Corporation's $125
million 7% Debentures. The proceeds from the sale of these Debentures were
used ultimately to repay the $100 million aggregate principal amount of the
Corporation's 8 1/2% Notes upon their maturity on March 1, 1996.
The management of Materials continues to remain committed to achieving its
current and long-term strategic and financial goals, which include a plan for
disciplined growth through acquisitions in the Corporation's core businesses
and an ongoing program for development of new aggregates quarry locations,
known as greensiting.
BUSINESS ENVIRONMENT
Materials conducts its operations through two divisions: Aggregates and
Magnesia Specialties. The Aggregates division is the second largest producer
of construction aggregates in the United States, based on tons shipped, and its
products are used primarily for construction of highways and other
infrastructure projects and in commercial and residential construction. The
Magnesia Specialties division sells a majority of its products to customers in
the steel industry, and also serves customers in other industrial, agricultural
and environmental markets.
The Corporation's aggregates business is characterized by a high level of
dependence upon private and public sector construction spending and a
sensitivity to national, as well as regional and local, economic cycles.
Historically, these characteristics have made the construction aggregates
industry highly cyclical. In addition, the aggregates business is seasonal,
due primarily to the effect of weather conditions on construction activity in
the markets served.
The public sector portion of construction spending levels, which accounts
for approximately one-half of the division's annual shipments, has been
historically more stable than the levels of construction spending for the
commercial and residential portions. Consequently, management believes that
the division's broad mix of public sector construction activity and its
emphasis on infrastructure-related projects lessen somewhat the Corporation's
exposure to fluctuations in commercial and residential spending levels. Over
time, these spending levels have been sensitive primarily to the effects of
changes in regional and local economics, as well as to fluctuations in interest
rates.
The current federal highway program expires September 30, 1997. However,
management expects a new federal program will be enacted without interruption,
with construction spending to continue at levels comparable with current
spending levels. In addition, it is expected that
Page 10 of 76
<PAGE> 11
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
construction spending associated with the state- and local-level highway
programs in markets in which the Corporation does business will continue at
levels comparable to current spending levels. If construction spending
reductions occur in state- and local-level highway programs, or if, as part of
the federal budget deliberations, construction spending reductions occur in the
current or a successor federal highway program, the division's operations could
be adversely affected, if such reductions occur within the division's
respective markets. However, it should be noted that the Highway Trust Fund
and a significant portion of the state and local highway programs within the
Corporation's markets are funded from sources such as dedicated portions of
gasoline tax revenues, which management believes should not be adversely
affected by federal and state-level budget reductions. In fact, current
federal legislation is pending that would transfer 4.3 cents per gallon of a
non-dedicated portion of the federal gasoline tax -- funds that are now
channeled to the general treasury for use in reducing the federal budget
deficit -- to the Highway Trust Fund. While this proposed legislation is
receiving bipartisan support currently, there is no assurance that passage of
the legislation will be successful.
Against the backdrop of what is described by some economists as a soft
takeoff in economic and construction activity in the current year following a
soft landing back in 1995, a modest increase in the total value of construction
awards is expected for the full year 1996. While the increase in 1996
construction awards is expected to be concentrated in commercial income and
residential construction properties, the level of public works construction
awards is expected to be flat through 1996.
Because of the concentration of the Aggregates division's operations in
the southeastern, midwestern and central regions of the country, the division's
and, consequently, the Corporation's operating performance is dependent on the
strength of these specific regional economies. Therefore, the division's
performance could be adversely affected by the future economic conditions of
these regions.
In connection with the Aggregates division's geographic expansion
strategy, the Corporation has made strategic acquisitions that not only widened
its geographic exposure but also added significant distribution flexibility.
In this regard, the division now has significant water transportation
distribution capabilities in addition to truck and rail. The acquisition of
the Dravo construction aggregates business in 1995 complemented the division's
operations by adding operating facilities, including barges and distribution
yards, along the Ohio and Mississippi River systems, as well as on the Gulf of
Mexico and the Southeastern Atlantic coast. New quarry and mineral reserve
locations resulting from the acquisition of the former Dravo operations in the
Bahamas and from a separate acquisition in Nova Scotia have added important
markets outside the United States in Canada, the Caribbean islands and South
America. These quarries add significant long-term mineral reserve capacity
that position the Corporation to be able to compete for construction aggregate
and chemical stone business along the east coast and near major Eastern
metropolitan markets which are accessible by water transportation.
Page 11 of 76
<PAGE> 12
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
Finally, it should be noted that with respect to the seasonal nature of
the aggregates business, levels of construction activity in the division's
markets are affected significantly by regional weather conditions.
Accordingly, production and shipment levels coincide with general construction
activity levels, most of which occur in the division's markets typically during
the spring, summer and fall seasons.
The Aggregates division achieved record quarterly production and shipment
levels during the period ended June 30, 1996, reflecting the benefits of the
Corporation's growth strategy. Net volume increased by 12%, with growth
experienced in each of the division's operating regions despite continued
adverse weather conditions in the northern sections of the country during most
of the quarter. Consistent with prior periods and the previous year,
construction for infrastructure programs accounted for approximately one-half
of the division's sales thus far in 1996. Currently, management believes that
the Corporation will see improvement in the division's annual production and
shipment levels for the full year 1996, compared with the prior year, without
taking into account any acquisitions the Corporation may consummate during the
balance of the year. In the longer term, the Aggregates division's business
and financial results will continue to follow the national, as well as regional
and local, general economic trends. At this time, some industry analysts are
predicting an economic downturn beginning in the 1998 or 1999 time period. If
this downturn occurs, the pattern for total construction activity over the
economic cycle beginning in 1998 would represent a sharp change from those
cycles of previous periods in the early 1990s.
The Aggregates division's raw material reserves are sufficient to permit
production at present operating levels for the foreseeable future. Based upon
1995 annual shipment levels, the Corporation's raw material reserves exceed 50
years of production activity.
The Magnesia Specialties division's products, which include refractory and
dolomitic lime, are used principally within the steel industry. Sales to the
steel industry continue to account for approximately 74% of the Magnesia
Specialties division's current period sales. Accordingly, the division's
profitability is highly dependent on the manufacture of steel and its related
marketplace. Prices of its refractory products are directly affected by
current economic trends within the steel industry, which continues to
experience price weaknesses. To mitigate this exposure, the management of
Magnesia Specialties has taken steps to emphasize new product development and
concentrate on additional products for use in environmental, agricultural and
other industrial applications. As a result, the division's financial results
have benefited from increased sales of its higher-margin chemical and lime
products, coupled with successful cost reduction programs at its manufacturing
facilities.
The June 1995 strike at an operating facility in Manistee, Michigan, which
adversely affected the division's earnings for 1995, was settled successfully
and a new four-year agreement reached in early August 1995. During the current
period, another labor union contract at a separate operating location in
Woodville, Ohio, was renegotiated successfully without work interruption.
The Corporation is involved in various environmental and reclamation
matters. Among the variables that management must assess in evaluating costs
associated with these issues are evolving
Page 12 of 76
<PAGE> 13
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
environmental regulatory standards. The nature of these matters makes it
difficult to estimate the timing and amount of any costs that may be necessary
for future remedial measures. The Corporation incurs certain
environmental-related costs in connection with its operations, including land
reclamation costs, pollution control facility operating and maintenance costs,
and environmental program compliance and monitoring costs. For financial
reporting purposes, the Corporation treats these costs as normal ongoing
operating expenses of its businesses and records them as costs of sales in the
period in which they are incurred.
The Corporation records appropriate financial statement accruals for
environmental matters in the period in which liability is established and the
appropriate amount can be estimated reasonably. The Corporation currently has
no material provisions for estimated costs in connection with
environmental-related expenditures, because it is impossible to quantify with
certainty the potential impact of all actions regarding environmental matters,
particularly the extent and cost of future remediation and other compliance
efforts. However, in the opinion of management, it is unlikely that any
additional liability the Corporation may incur for known environmental issues
or that compliance with present environmental protection laws would have a
material adverse effect on the Corporation's consolidated financial position or
on its results of operations.
BUSINESS COMBINATION WITH DRAVO
In January 1995, Materials purchased substantially all of the assets of
the construction aggregates business of Dravo for an acquisition price of
approximately $121 million in cash plus certain assumed liabilities. In
addition, the Company recorded a provision of approximately $7 million for
estimated costs to consummate the transaction and integrate the operations.
The acquisition was accounted for under the purchase method of accounting,
wherein approximately $7 million in goodwill was recognized by the Corporation
after recording approximately $8 million in other intangibles (representing the
estimated fair market value of certain assets) and other purchase adjustments
necessary to allocate the purchase price to the value of assets acquired and
liabilities assumed. As of June 30, 1996, approximately $6.7 million (of the
$7 million of costs originally estimated to consummate the transaction and
integrate the operations) has been expended and charged against the liability.
Management expects the balance of the estimated costs will be incurred during
the remainder of 1996. Goodwill and other intangibles are being amortized over
20-year periods.
RESULTS OF OPERATIONS
Net sales for the quarter were $200.4 million, a 14% increase over 1995
second quarter sales of $175.9 million. Net sales for the first six months of
1996 were $337.0 million, an increase of 10% over net sales for the
year-earlier period of $305.9 million. Earnings from operations were up $8.8
million, or 28%, to $39.9 million for the second quarter of 1996 over the same
period in 1995, with earnings from operations up $2.8 million, to $48.5 million
for the first six months of 1996, compared with the first six months of 1995.
Consolidated net earnings for the quarter increased 34% to $26.8 million, or
$0.58 per share, from 1995 second quarter net earnings of $20.0 million, or
$0.43 per share. For the six-month period ended June 30, 1996, consolidated
net earnings were $31.1 million,
Page 13 of 76
<PAGE> 14
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
or $0.68 per share. This represents an increase of 10% over net earnings for
the first six months of 1995 of $28.2 million, or $0.61 per share.
Sales for the Aggregates division increased 15% to $167.7 million for the
second quarter, compared with the year-earlier period. The division's sales
increased 11% to $271.3 million for the first six months of 1996, compared with
the first six months of 1995. This increase in sales reflects record
year-to-date aggregates shipments of 46 million tons and an increase in the
division's average net selling price, when compared to the same period in 1995.
The division's second quarter operating profits were $37.6 million, an increase
of 23% over operating profits for the year-earlier period of $30.6 million. The
division's operating profits for the first six months of 1996 increased slightly
to $43.2 million from $42.4 million for the first six months of 1995, reflecting
the lingering effect of adverse weather conditions within most of the markets
served by the division during most of the first quarter of 1996. The
Corporation's aggregates business is highly seasonal, due primarily to the
effect of weather conditions on the level of construction activity, the most of
which occurs typically in the spring, summer, and early fall. The severe winter
weather conditions experienced during the first quarter of 1996 contributed to
overall higher production costs during the first six months of the year.
Management continues to believe that the Corporation's annual production and
shipments, excluding any acquisition activities, will see some improvement for
the full year ending December 31, 1996, compared with the prior year.
The Magnesia Specialties division had second quarter 1996 sales of $32.8
million, an increase of 10% over the second quarter of 1995, and had six month
1996 sales of $65.7 million, an increase of 6% in the first six months of 1996
over 1995. Even though shipments of refractory products for the first six
months of 1996 were relatively flat when compared with the year-earlier period,
overall prices were up somewhat. Because of a more favorable customer and
product sales mix during the first half of the year, the division realized a
softening of pricing pressures during the period. However, the division's
management continues to expect price weaknesses in this sector for the
foreseeable future due to the fixed market limitations inherent within the
steel industry. Chemical product sales for the first half of 1996 were above
those for the comparable period in 1995, principally due to strong industrial
products and magnesium hydroxide sales. Additionally, sales of the division's
lime products, used in the steel industry's basic oxygen furnaces, continued to
strengthen through the first half of the year.
Compared to the year-earlier period, the division's earnings from
operations for the first six months of 1996 increased to $5.3 million from $3.2
million in 1995. While the division's lower operating earnings for the first
half of 1995 principally reflected the effect of costs incurred during a 1995
labor strike, the improvement in the operating margin for the first half of
1996 is attributable to the benefits realized by the division's efforts to
build a more competitive operating cost structure, despite the somewhat
negative impact of an explosion and resulting fire in an electrical substation
at the division's Woodville, Ohio, lime plant.
The labor union contract covering the employees at the Magnesia
Specialties lime operation at Woodville, Ohio, expired in June 1996. A new
labor union agreement was renegotiated successfully without work interruption.
Page 14 of 76
<PAGE> 15
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
The following tables present net sales, gross profit, selling, general and
administrative expense, and earnings from operations data for the Corporation
and each of its divisions for the three and six months ended June 30, 1996 and
1995. In each case the data is stated as a percentage of net sales of the
Corporation or the relevant division, as the case may be:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------------------------------
(Dollars in Thousands)
1996 1995
-------------------- ---------------------
% of % of
Amount Net Sales Amount Net Sales
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Net sales:
Aggregates $167,660 100.0 $146,013 100.0
Magnesia Specialties 32,778 100.0 29,901 100.0
------- ----- ------- -----
Total $200,438 100.0 $175,914 100.0
Gross profit:
Aggregates $48,359 28.8 $40,581 27.8
Magnesia Specialties 6,971 21.3 5,669 19.0
------- ----- ------- -----
Total $55,330 27.6 $46,250 26.3
Selling, general & administrative
expense:
Aggregates $10,784 6.4 $ 9,945 6.8
Magnesia Specialties 4,213 12.9 4,765 15.9
------- ----- ------- -----
Total $14,997 7.5 $14,710 8.4
Earnings from operations:
Aggregates $37,576 22.4 $30,637 21.0
Magnesia Specialties 2,280 7.0 455 1.5
------- ----- ------- -----
Total $39,856 19.9 $31,092 17.7
</TABLE>
Page 15 of 76
<PAGE> 16
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------------------
(Dollars in Thousands)
1996 1995
-------------- ---------------
% of % of
Amount Net Sales Amount Net Sales
------- --------- ------ ---------
<S> <C> <C> <C> <C>
Net sales:
Aggregates $271,302 100.0 $243,862 100.0
Magnesia Specialties 65,683 100.0 61,994 100.0
-------- ----- -------- -----
Total $336,985 100.0 $305,856 100.0
Gross profit:
Aggregates 64,399 23.7 $ 61,632 25.3
Magnesia Specialties 14,736 22.4 13,691 22.1
-------- ----- -------- -----
Total $ 79,135 23.5 $ 75,323 24.6
Selling, general & administrative
expense:
Aggregates 21,240 7.8 $ 19,259 7.9
Magnesia Specialties 8,493 12.9 9,555 15.4
-------- ----- -------- -----
Total $ 29,733 8.8 $ 28,814 9.4
Earnings from operations:
Aggregates $ 43,160 15.9 $ 42,374 17.4
Magnesia Specialties 5,290 8.1 3,242 5.2
-------- ----- -------- ----
Total $ 48,450 14.4 $ 45,616 14.9
</TABLE>
Other income and expenses, net, for the six months ended June 30, were
$4.4 million in income in 1996 and $2.6 million in income in 1995. In addition
to several offsetting amounts, the 1996 amount included nonrecurring pretax
gains of approximately $1.8 million associated with the selling of certain
assets and a foreign investment along with approximately $1.1 million of
interest income from affiliates loans. The 1995 amount also included a
nonrecurring pretax gain of approximately $1.4 million related to certain asset
dispositions in connection with one of the Corporation's equity investments and
$0.6 million of interest income from loans to affiliates.
Interest expense was approximately $1.2 million, or 27%, higher in the
first six months of 1996 over 1995. The increase in 1996 resulted from the net
effect of the additional long-term borrowings by the Corporation in December
1995, when the Corporation publicly offered and sold its
Page 16 of 76
<PAGE> 17
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
$125 million 7% Debentures, offset by the reduction of long-term debt during
the period caused by the repayment of the 8 1/2% Notes on March 1, 1996, and
the reduced amounts outstanding during the period that were due to Lockheed
Martin under the credit agreement.
The Corporation's estimated effective income tax rate for the first six
months was 33.9% in 1996 and 35.5% in 1995. See Note 4 of the Notes to
Condensed Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's net working capital at June 30, 1996, was $165.2
million, which reflects an increase of $24.2 million over the year-end net
working capital. Shareholders' equity reached $444.6 million as of the end of
the second quarter of 1996, an increase of $21.0 million over total
shareholders' equity at year-end 1995. The ratio of long-term debt to total
capitalization was 25% at June 30, 1996, compared with 35% at year-end, which
reflected the impact of the December 1995 sale of $125 million of long-term
debentures. The primary use of the proceeds from the sale of these debentures
was ultimately for the repayment of a portion of certain related party debt and
the $100-million aggregate principal amount of the Corporation's 8 1/2% Notes.
These notes matured on March 1, 1996, at which time they were paid in full upon
redemption by their holders. Accordingly, the Corporation's
debt-to-capitalization ratio dropped to 25% following repayment of the 8 1/2%
Notes in March, an action which had a significant and favorable impact on the
Corporation's capital structure. In addition to the above-stated debentures,
as of June 30, 1996, $1.5 million was outstanding under the terms of a cash
management agreement and $23 million was outstanding under the terms of a
credit agreement, each with its majority shareholder, Lockheed Martin. As of
August 1, 1996, $12 million was outstanding under the terms of these
agreements.
Net cash flow provided by operating activities during the first six months
of 1996 was $26.8 million, compared with $37.6 million in the comparable period
of 1995. The cash flow from operating activities for both 1995 and 1996 was
principally from earnings, before deducting depreciation, depletion and
amortization, offset by increased demand for working capital. Working capital
increases during the first half of 1996 were principally due to an increase in
accounts receivable balances due to timing and growth in aggregates demand, as
well as more moderate increases in amounts due from affiliates and in certain
inventory balances. The increased demand on working capital during the first
half of 1995 was primarily the result of increases in inventory and accounts
receivable balances, both of which were offset somewhat by increased trade
accounts payable and other liabilities balances. The seasonal nature of the
construction aggregates business impacts quarterly net cash provided by
operating activities when compared with the year. Accordingly, full year 1995
net cash provided by operating activities was $128.6 million, compared with the
$37.6 million provided by operations in the first half of 1995.
Capital expenditures, excluding acquisitions, for the first half of 1996
were $33.4 million, compared with $34.1 million for the same period in 1995.
Capital expenditures are expected to be approximately $82 million for 1996,
exclusive of acquisitions. Comparable capital expenditures, were $71.6 million
in 1995, $47.0 million in 1994 and $45.9 million in 1993. Capital expenditures
Page 17 of 76
<PAGE> 18
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
for 1995 and 1996 include increased spending requirements for capital
improvements and investments relating to the addition of the former Dravo
businesses.
The Corporation relies, for its liquidity requirements, upon internally
generated funds, access to capital markets, and funds obtained under its cash
management agreement and credit agreement, each with its majority shareholder,
Lockheed Martin. Prospectively, management may choose to borrow from
third-party lenders or through the Corporation's access to capital markets.
The above-referenced credit agreement with Lockheed Martin, which includes a
revolving credit provision that expires December 31, 1996, but may be extended
by mutual consent of both parties, provides for borrowings of up to $55
million. Loans outstanding under the credit agreement bear interest at a
published prime interest rate or at LIBOR plus a graduated rate.
During the latter half of 1996, management expects to establish a
revolving credit facility with a syndicate of banks to replace the current
credit agreements with Lockheed Martin. It should be noted, however, that the
Corporation has not determined the specific timing when, or method by which, it
may establish and access such a banking credit facility. Further, while any
such borrowings may be used initially to provide necessary working capital
funds, it is anticipated that the Corporation will repay the funds borrowed
under its credit agreement with Lockheed Martin with such bank borrowings.
Additionally, management may choose further access to the public debt markets
through the issuance of commercial paper or other debt securities. Again, it
should be noted that the Corporation has not determined the method or methods
by which it may further access the public market.
With respect to the Corporation's ability to access the public market, it
has an effective shelf registration on file with the Securities and Exchange
Commission for the offering of up to $175 million of debt securities, which
may be issued from time to time. The Corporation's ability to issue such debt
securities at any time is dependent, among other things, upon market
conditions. Additionally, limitations under the amended and restated credit
agreement and certain other agreements in effect currently with Lockheed Martin
may restrict the Corporation's ability to borrow funds from the public market
and third-party lenders.
Based on prior performance and current expectations, the Corporation's
management believes that cash flows from internally generated funds and its
access to capital markets are expected to continue to be sufficient to provide
the capital resources necessary to fund the operating needs of its existing
businesses, cover debt service requirements, and allow for payment of dividends
in 1996. The Corporation may be required to obtain additional levels of
financing in order to fund certain strategic acquisitions if any such
opportunities arise. Currently, the Corporation's senior unsecured debt is
rated "A" by Standard & Poor's and "A3" by Moody's. While Standard & Poor's
continues to keep the Corporation's debt rating on CreditWatch -- an action
that was taken in March 1996 as a result of its 81% ownership by Lockheed
Martin -- Standard & Poor's announced in July that, upon consummation of the
proposed Transaction by Lockheed Martin, the Corporation's "A" senior debt
rating will be affirmed and removed from CreditWatch. In a related July press
release following the announcement of the proposed split-off transaction,
Moody's confirmed the Corporation's "A3" senior debt rating and expects the
Corporation's financial position and debt protection measurements
Page 18 of 76
<PAGE> 19
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
to remain consistent with such rating. While management believes its credit
ratings will remain at an investment-grade level, no assurance can be given
that these ratings will remain at the above-mentioned levels.
As of August 1, 1996, the Board of Directors has approved regular
quarterly dividends on the Corporation's Common Stock totalling $0.34 a share
through the first three quarters of 1996. Dividends were authorized and paid
at a rate of $0.11 a share in each of the first two quarters of the year, and
in July the Board of Directors declared an increase in the Corporation's
regular quarterly dividend to $0.12 a share for the third quarter of 1996.
This third quarter dividend is payable September 30, 1996, to shareholders of
record as of the close of business on August 30, 1996. The Corporation's
amended and restated credit agreement with Lockheed Martin, in effect
currently, contains certain covenants that may, in certain circumstances,
restrict the Corporation's ability to pay dividends.
The Corporation may repurchase up to 2.5 million shares of its common
stock under authorizations from the Corporation's Board of Directors for use in
the Omnibus Securities Award Plan and for general corporate purposes. As of
August 1, 1996, there have been 68,200 shares repurchased under these
authorizations.
OTHER MATTERS
In connection with the Transaction, the Corporation's Board of Directors
has adopted a shareholder rights plan that will become effective, and certain
terms of which will be established, upon consummation of the Transaction, at
the discretion of the Executive Committee of the Board of Directors. The
shareholder rights plan provides, among other things, that if any person or
group of persons becomes the beneficial owner of 15% or more of the
Corporation's Common Stock, all holders of rights issued pursuant to the plan
(other than such person or group of persons and their affiliates, associates
and transferees) will have the right to acquire shares of the Corporation's
Common Stock at 50% of the then current market value.
Also in connection with the Transaction, the Board of Directors has
adopted, and has recommended that the shareholders of the Corporation approve
at a special meeting to be called for such purpose, certain amendments to the
Corporation's Articles of Incorporation. The proposed amendments are intended
to reduce the vulnerability of the Corporation to an unsolicited takeover
proposal, particularly one that is made at an inadequate price or does not
contemplate the acquisition of all of the Corporation's Common Stock. The
special meeting of the shareholders to approve such amendments will be held
prior to the consummation of the Transaction, and Lockheed Martin, which
beneficially owns 81% of the Corporation's Common Stock, has indicated that it
intends to vote its shares in favor of such amendments. Accordingly, if
Lockheed Martin votes its shares as it has indicated, such amendments will be
adopted without the vote of any other shareholder of the Corporation.
The Corporation adopted Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("FAS 121"),
Page 19 of 76
<PAGE> 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Second Quarter and Six Months Ended June 30, 1996 and 1995
as of January 1, 1996. The pronouncement requires that certain long-lived
assets be reviewed for impairment when circumstances indicate that the carrying
amount of such assets may not be recoverable. Additionally, FAS 121 requires
that certain long-lived assets held for disposition be reported at the lower of
the carrying amount or fair value less any selling costs. The impact of the
adoption of this pronouncement did not have a material effect on the
Corporation's consolidated financial position or on its results of operations.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS
123"), in 1995, which will be effective for financial statements in the current
year. FAS 123 introduces a fair-value based method of accounting for
stock-based compensation and encourages, but does not require, compensation
expense recognition for grants of stock, stock options and other equity
instruments to employees based on the new fair-value accounting rules.
Companies that choose not to adopt the new rules will continue to apply the
existing accounting rules contained in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"). However, it should
be noted that although expense recognition for employee stock-based
compensation is not mandatory, FAS 123 requires companies that choose not to
adopt the fair-value accounting rules to disclose pro forma net income and
earnings per share under the new method. Currently, management intends to
continue applying the accounting rules in APB 25 for purposes of recognizing
compensation expense for stock option grants to employees of the Corporation
and will adopt the disclosure provisions of FAS 123 as required in the fourth
quarter of 1996.
The impact of inflation on Materials' businesses has become less
significant with the benefit of lower inflation rates in recent years. When
the Corporation incurs higher costs to replace productive facilities and
equipment, increased depreciation generally is countered by increased capacity
and productivity, increased selling prices, and various other offsetting
factors.
Page 20 of 76
<PAGE> 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Part II Item 1. Legal Proceedings of the Martin Marietta
Materials, Inc. Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
Reference is made to Part II. Item 4. Submission of Matters to a Vote of
Security Holders of the Martin Marietta Materials, Inc. Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1996.
Item 5. Other Information.
On July 26, 1996, the Corporation filed a registration statement (Form S-4) in
connection with the proposed Spin-Off from Lockheed Martin Corporation. The
registration statement sets forth Lockheed Martin's plan to dispose of its 81%
ownership of the Corporation's Common Stock by way of a Spin-Off. The proposed
transaction would be achieved through an exchange offering whereby Lockheed
Martin stockholders would be given an opportunity to exchange some or all of
their Lockheed Martin common stock for the Corporation's Common Stock currently
held by Lockheed Martin. Specific terms of the Transaction will be provided to
Lockheed Martin stockholders by means of an Offering Circular - Prospectus at
the commencement of the Exchange Offer.
On July 26, 1996, the Corporation announced that the Board of Directors had
declared an increase in the regular quarterly cash dividend on the
Corporation's Common Stock from $0.11 to $0.12 a share, payable September 30,
1996, to shareholders of record at the close of business on August 30, 1996.
Page 21 of 76
<PAGE> 22
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
PART II - OTHER INFORMATION
(Continued)
Item 6. Exhibits and Reports on Form 8-K .
(a) Exhibits
Exhibit
No. Document
- ------- --------
10.01 Cash Management Agreement by and between Martin Marietta Materials, Inc.
and Martin Marietta Technologies, Inc. (now known as Lockheed Martin
Corporation), dated February 17, 1994, as amended
10.02 Amended and Restated Credit Agreement by and between Martin Marietta
Materials, Inc. and Martin Marietta Technologies, Inc. (now known as
Lockheed Martin Corporation), dated as of January 2, 1995, as amended
11.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries
Computation of Earnings Per Share for the Quarter and Six Months Ended
June 30, 1996 and 1995
12.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries
Computation of Ratio of Earnings to Fixed Charges for the Six Months
ended June 30, 1996
27.01 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K filed in the second quarter of 1996.
None
Page 22 of 76
<PAGE> 23
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
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.
MARTIN MARIETTA MATERIALS, INC.
(Registrant)
Date: August 13, 1996 By: /s/ JANICE K. HENRY
---------------- ---------------------
Janice K. Henry
Vice President, Chief Financial
Officer and Treasurer
Page 23 of 76
<PAGE> 24
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 1996
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document Page
----------- -------- ----
<S> <C> <C>
10.01 Cash Management Agreement by and between 25
Martin Marietta Materials, Inc. and Martin Marietta
Technologies, Inc. (now known as Lockheed
Martin Corporation), dated February 17, 1994, as amended
10.02 Amended and Restated Credit Agreement by and 33
between Martin Marietta Materials, Inc. and Martin Marietta
Technologies, Inc. (now known as Lockheed Martin
Corporation) dated as of January 2, 1995, as amended
11.01 Martin Marietta Materials, Inc. and Consolidated 74
Subsidiaries Computation of Earnings Per Share
for the Quarter and Six Months Ended June 30, 1996
and 1995
12.01 Martin Marietta Materials, Inc. and Consolidated 75
Subsidiaries Computation of Ratio of Earnings to
Fixed Charges for the Six Months ended June 30, 1996
27.01 Financial Data Schedule (for SEC use only) 76
</TABLE>
Page 24 of 76
<PAGE> 1
EXHIBIT 10.01
CASH MANAGEMENT AGREEMENT
CASH MANAGEMENT AGREEMENT, dated as of February 17, 1994, between
MARTIN MARIETTA MATERIALS, INC., a North Carolina corporation ("Materials"),
and MARTIN MARIETTA TECHNOLOGIES, INC., a Maryland corporation ("MMTI").
1. Definitions. The following terms, as used herein,
shall have the following respective meanings:
"Advance" means any amount advanced by MMTI to
Materials pursuant to Section 5(a) hereof.
"Bankruptcy Event" means, with respect to either
party hereto, such party or any material Subsidiary thereof (i) shall commence
a voluntary case or other proceeding or an involuntary case or other proceeding
shall be commenced against it seeking liquidation, reorganization or other
relief with respect to it or its debt under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or, in the case of an involuntary case or
other proceeding commenced against it, it shall consent to any such relief or
to the appointment of or taking possession by any such official, or it shall
make a general assignment for the benefit of creditors, or it shall fail
generally to pay its debts as they become due, or it shall take any corporate
action to authorize any of the foregoing, or an order for relief shall be
entered against it under the federal bankruptcy laws as now or hereafter in
effect; provided, however, that, any such involuntary case or proceeding shall
not be a Bankruptcy Event unless it shall remain undismissed and unstayed for a
period of 60 days.
"Concentration Account" means the account established
and maintained by Materials in accordance with Section 3(a) hereof at Morgan
Guaranty Trust Company of New York or at such other bank that MMTI in its sole
discretion may from time to time designate, which account shall be, initially,
Account No. 001-60-571 of Materials at Morgan Guaranty Trust Company of New
York.
"Federal Funds Rate" means, for any day, the interest
rate per annum equal for such day to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published in the Federal Reserve System
statistical release H-15.
"Investment" means any amount held by MMTI for the
benefit of Materials pursuant to Section 4(a) hereof.
Page 25 of 76
<PAGE> 2
"Revolving Credit Agreement" means the Revolving
Credit Agreement of even date herewith between the parties hereto as the same
may be amended from time to time.
"Subsidiary" means, as to any Person, any
corporation, association, partnership, joint venture or other business entity
of which more than 50% of the voting capital stock or other voting ownership
interests is owned or controlled directly or indirectly by such Person or by
one or more of the Subsidiaries of such Person or by a combination thereof,
and, as to Materials, "Subsidiary" shall also mean American Stone Company.
2. Agreement of MMTI. In consideration for the
compensation described in Section 8 below, MMTI agrees that it will, in
accordance with Sections 4 and 5 below, cause cash to be transferred to or from
the Concentration Account in amounts sufficient to cause the Concentration
Account balance to be zero at the end of each banking day.
3. Agreements of Materials. In order for MMTI to
fulfill its obligations described in Section 2, Materials agrees that it will:
(a) establish and maintain the Concentration
Account;
(b) collect all cash receipts of any nature
payable to Materials or its Subsidiaries through lockbox services or
other collection services provided by banks approved by MMTI and cause
all such cash receipts and all other amounts collected by Materials to
be transferred each banking day to the Concentration Account by means
of a banking settlement system approved by MMTI;
(c) notify MMTI of the settlement date, amount
(if known), payee bank, address, routing and transit number, payee
account number and payee name for all payments made by electronic
funds transfer, at least one day prior to such payment and confirm and
authorize such payment by telecopy no later than 1:00 p.m. (Eastern
Time) on the date of such transfer;
(d) provide MMTI with a monthly projection of
cash flow and any additional related reports reasonably requested by
MMTI; and
(e) promptly notify MMTI of the occurrence of any
default or of any event that with notice or passage of time would
constitute a default by Materials under any financial or credit
agreement or arrangement.
Nothing in this Agreement is intended to limit the purposes for which
Materials may make payments or restrict its ability to make investments.
- 2 -
Page 26 of 76
<PAGE> 3
4. Investments. (a) If on any banking day Materials'
net cash balance in the Concentration Account is greater than zero, MMTI will
cause the cash balance to be transferred from the Concentration Account to an
account of MMTI. That amount will, first, be deemed a repayment of principal
of Base Rate Loans outstanding under the Revolving Credit Agreement, and,
second, to the extent not applied to repay Base Rate Loans, be deemed a
repayment of outstanding Advances and, third, to the extent not applied to
repay loans or Advances, be deemed an Investment held by MMTI for the benefit
of Materials.
(b) MMTI will pay Materials interest on the
aggregate principal amount of Investments at a rate per annum equal to the
Federal Funds Rate.
5. Advances. (a) If on any banking day Materials' net
cash balance in the Concentration Account is negative, MMTI will, subject to
Section 5(c) hereof, advance by a deposit of funds into the Concentration
Account the amount necessary to cause the balance in the Concentration Account
to be zero. The amount so advanced will, first, be deemed a repayment of any
Investments outstanding on the date thereof and, second, to the extent not
applied to repay Investments, be deemed an Advance by MMTI to Materials.
(b) Materials will pay MMTI interest on Advances
at a per annum rate equal to the Federal Funds Rate.
(c) The maximum principal amount of Advances to
be made by MMTI hereunder shall be $2.0 million outstanding at any time.
6. Interest. All interest to be paid with respect to
Investments or Advances will be calculated on the basis of a 365/366 day year
and the actual number of days elapsed. Interest will be calculated on each
banking day and will be payable monthly in arrears. MMTI will notify
Materials, not later than ten days after the end of each month, of the net
interest amount payable by or to Materials hereunder with respect to
Investments and Advances, which amount will be payable by the applicable party
within five banking days of the date of such notice.
7. Additional Accounts. Materials may establish petty
cash accounts and local depository accounts at local banks to ensure that funds
are available to cover minor operating expenses. Such accounts, however, shall
be subject to a limit on the maximum balances therein reasonably approved by
MMTI and shall be replenished only to the extent vouchers and receipts are
available.
8. Compensation. MMTI shall be compensated for
providing services hereunder in accordance with the Intercompany Services
Agreement, dated the date hereof (the "Services Agreement"), between the
parties hereto. No additional compensation shall be due hereunder to MMTI.
- 3 -
Page 27 of 76
<PAGE> 4
9. Limitation of Liability. Except as may be provided
in Sections 10 and 11 below, MMTI, its affiliates, directors, officers,
employees, agents or permitted assigns (each a "MMTI Party") shall not be
liable to Materials or any of Materials' affiliates, directors, officers,
employees, agents or permitted assigns (each a "Materials Party") for, and each
Materials Party shall not be liable to any MMTI Party for, any liabilities,
claims, damages, losses or expenses, including, but not limited to, any
special, indirect, incidental or consequential damages arising in connection
with this Agreement.
10. MMTI Indemnification. MMTI shall indemnify, defend
and save harmless the Materials Parties from and against all liabilities,
claims, damages, losses and expenses, including, but not limited to, court
costs and reasonable attorneys' fees, of any kind or nature, caused by or
arising in connection with the gross negligence or willful misconduct of MMTI
hereunder, unless such gross negligence or willful misconduct is caused by the
acts or omissions of any Materials Party. Notwithstanding the foregoing, MMTI
shall not be liable for any special, indirect, incidental or consequential
damages relating to such third party claims.
11. Materials Indemnification. Materials shall
indemnify, defend and save harmless the MMTI Parties from and against all
liabilities, claims, damages, losses and expenses, including, but not limited
to, court costs and reasonable attorneys' fees, of any kind or nature, caused
by or arising in connection with Materials' failure to fulfill Materials'
obligations hereunder; unless such failure is caused by the acts or omissions
of any MMTI Party. Notwithstanding the foregoing, Materials shall not be
liable for any special, indirect, incidental or consequential damages relating
to such claims.
12. Term of Agreement. This Agreement is effective
February 17, 1994, and shall continue in full force and effect until February
17, 1997, unless sooner terminated by either party. Either party may terminate
this Agreement prior to February 17, 1997 (a) at any time after the first
anniversary of the date this Agreement is effective by giving not less than 90
days' prior written notice to the other party of its election to terminate
(which notice may be given up to 90 days prior to the first anniversary), or
(b) at any time by giving written notice to the other party of its election to
terminate if (i) such other party has failed to make any payments hereunder
within five days of when due or (ii) a Bankruptcy Event has occurred with
respect to such other party.
13. Information. Each of MMTI and Materials hereby
covenants and agrees to provide the other with all information regarding itself
and other assistance necessary for the other to comply with all applicable,
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
- 4 -
Page 28 of 76
<PAGE> 5
14. Assignment. Neither party may assign or transfer any
of its rights or duties under this Agreement to any person or entity without
the prior written consent of the other party; provided, however, that MMTI may
make any such assignment or transfer to an affiliate of MMTI without the prior
written consent of Materials.
15. Notices. Any notice, instruction, direction or
demand under the terms of this Agreement required to be in writing will be duly
given upon delivery, if delivered by hand or intercompany mail, or five days
after posting if sent by certified mail, return receipt requested to the
following addresses:
MMTI:
----
Martin Marietta Technologies, Inc.
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Treasurer
Telephone: 301-897-6453
Telecopy: 301-897-6929
Materials:
---------
Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Attention: Treasurer
Telephone: 919-781-4550
Telecopy: 919-783-4552
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 15.
16. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Maryland.
17. Suspension. The obligations of any party to perform
any acts hereunder may be suspended if such performance is prevented by fires,
strikes, embargoes, riot, invasion, governmental interference, inability to
secure goods or materials, or other circumstances outside the control of the
parties.
18. Severability. If any provision of this Agreement
shall be invalid or unenforceable, such invalidity or unenforceability shall
not render the entire Agreement invalid. Rather, the Agreement shall be
construed as if not containing the particular invalid or unenforceable
provision, and the rights and obligations of each party shall be construed and
enforced accordingly.
19. Rights Upon Orderly Termination. Upon termination or
expiration of this Agreement or any portion of the services described herein,
each party shall, upon request, forthwith return
- 5 -
Page 29 of 76
<PAGE> 6
to the other party all reports, paper, material and other information required
to be provided to the other party by this Agreement. In addition, each party
will assist the other in the orderly termination of this Agreement or any
portion of the services described herein.
20. Amendment. This Agreement may only be amended by a
written agreement executed by all of the parties hereto.
21. Entire Agreement. This Agreement, including any
exhibits, together with the Revolving Credit Agreement and the Services
Agreement, constitutes the entire agreement between the parties, and supersedes
all prior agreements, representations, negotiations, statements or proposals
related to the subject matter thereof.
22. Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which, when taken together, shall constitute one agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their duly authorized representatives.
MARTIN MARIETTA
TECHNOLOGIES, INC.
By: /s/ JANET L. McGREGOR
----------------------------
Janet L. McGregor
Treasurer
MARTIN MARIETTA MATERIALS, INC.
By: /s/ STEPHEN P. ZELNAK, JR.
-----------------------------
Stephen P. Zelnak, Jr.
President
- 6 -
Page 30 of 76
<PAGE> 7
AMENDMENT NO. 1 TO CASH MANAGEMENT AGREEMENT
AMENDMENT NO. 1, dated as of July 22, 1996 (this "Amendment"), to the
Cash Management Agreement, dated as of February 17, 1994 (the "Agreement"),
between Martin Marietta Materials, Inc., a North Carolina corporation
("Materials"), and Lockheed Martin Corporation, as successor to Martin Marietta
Technologies, Inc., a Maryland corporation ("Lockheed Martin").
WHEREAS, Lockheed Martin expects to commence an exchange offer
pursuant to which it is offering holders of shares of Lockheed Martin common
stock an opportunity to exchange their shares of Lockheed Martin common stock
for shares of Materials common stock (the "Exchange Offer");
WHEREAS, in the event that, upon consummation of the Exchange Offer,
Lockheed Martin continues to own shares of Materials common stock, Lockheed
Martin intends to distribute those shares of Materials common stock to the
remaining Lockheed Martin stockholders such that, upon consummation of the
distribution, Lockheed Martin no longer will own any shares of Materials common
stock;
WHEREAS, in light of the Exchange Offer, Materials has requested that
certain amendments be made to the Agreement, and Lockheed Martin has agreed to
make such amendments.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree, intending to be legally bound, as
follows:
1. The name of the Agreement shall be the "Cash Advance Agreement. "
2. Section 12 of the Agreement is amended to read in full as follows:
"Term of Agreement. This Agreement is effective February
17,1994, and shall continue in full force and effect until
December 31, 1996, unless otherwise extended by mutual
agreement of the parties hereto."
Except as expressly amended hereby, no other changes, additions or
deletions are intended to be made, and the Agreement remains in full force and
effect on the date hereof.
Page 31 of 76
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first written above.
LOCKHEED MARTIN CORPORATION
/s/ Walter Skowronski
----------------------------
Walter Skowronski
MARTIN MARIETTA MATERIALS, INC.
/s/ Janice K. Henry
-----------------------------
Janice K. Henry
Vice President, Chief Financial Officer
and Treasurer
Page 32 of 76
<PAGE> 1
EXHIBIT 10.02
===============================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
between
MARTIN MARIETTA MATERIALS, INC.
as Borrower
and
MARTIN MARIETTA TECHNOLOGIES, INC.
as Lender
_________________________
Dated as of January 2, 1995
_________________________
===============================================================================
Page 33 of 76
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. INTERPRETATIONS AND DEFINITIONS.
-------------------------------
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. THE LOANS.
---------
2.1 Commitment to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Method of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Repayment and Prepayment of the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Evidence of the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.7 Reduction and Cancellation of the Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.8 General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.9 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.10 No Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3. CONDITIONS OF LENDING.
---------------------
3.1 All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4. REPRESENTATIONS AND WARRANTIES.
------------------------------
4.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Corporate Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 No Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Licenses and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.9 No Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.10 Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.16 Completeness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5. AFFIRMATIVE COVENANTS.
---------------------
5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Notices, Litigation, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Maintenance of Existence, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
(i)
Page 34 of 76
<PAGE> 3
<TABLE>
<S> <C>
5.4 Obligations and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.8 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6. NEGATIVE COVENANTS.
------------------
6.1 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Minimum Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Prohibition of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Prohibition of Sale-Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5 Mergers, Consolidations, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.6 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7. EVENTS OF DEFAULT.
-----------------
SECTION 8. MISCELLANEOUS.
-------------
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Amendments and Waivers; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4 Expenses and Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.6 Headings; Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.7 Governing Law; Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SCHEDULES
Schedule 4.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
</TABLE>
(ii)
Page 35 of 76
<PAGE> 4
AMENDED AND RESTATED
CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of January 2, 1995,
between MARTIN MARIETTA MATERIALS, INC., a North Carolina corporation (the
"Borrower"), and MARTIN MARIETTA TECHNOLOGIES, INC., a Maryland corporation
(the "Lender"), which amends and restates that certain Revolving Credit
Agreement, dated as of February 17, 1994 (the "Original Credit Agreement"),
between the Borrower and the Lender.
WHEREAS, the Borrower has requested that certain amendments be made to
the Original Credit Agreement and the Lender has agreed, in accordance with
that request, to make certain revisions and to provide a term loan facility to
the Borrower;
NOW, THEREFORE, the parties do hereby amend and restate the Original
Credit Agreement, the Original Credit Agreement is superseded hereby and, in
consideration of the mutual agreements herein contained, the parties agree as
follows:
SECTION 1. INTERPRETATIONS AND DEFINITIONS.
1.1 Definitions. The following terms, as used herein,
shall have the following respective meanings:
"Agreement" means this Amended and Restated Credit
Agreement, as amended, restated, extended or otherwise modified from time to
time in accordance with the terms hereof.
"Attributable Debt" means, for a lease, the carrying
value of the capitalized rental obligation determined under Generally Accepted
Accounting Principles, whether or not such obligation is required to be shown
on the balance sheet as a liability. In the case of any lease which, in
accordance with Generally Accepted Accounting Principles, is classified as a
capital lease, the amount of Attributable Debt created through such capital
lease shall equal the amount required to be shown under Generally Accepted
Accounting Principles as a liability of such lessee for such capital lease. In
the case of any other lease, the amount of Attributable Debt created through
such lease shall be calculated in a manner consistent with the determination of
the net present value of the Operating Lease Rental Obligations made as part of
the determination of the Interest Portion of Operating Lease Rental Expense.
"Base Rate" means a fluctuating per annum rate of
interest as shall be in effect from time to time, which rate shall at all times
be equal to the higher of:
(a) the per annum rate of interest publicly
announced from time to time by Morgan Guaranty
- 1 -
Page 36 of 76
<PAGE> 5
Trust Company of New York in New York as its
"prime" rate. Any change in the Base Rate
due to a corresponding change in Morgan
Guaranty Trust Company of New York's "prime"
rate shall take effect on the day specified
in the public announcement of such change; or
(b) .5 of 1% per annum above the Federal Funds
Rate. Any change in the Base Rate due to a
change in the Federal Funds Rate shall be
effective as of the effective date of such
change in the Federal Funds Rate.
"Base Rate Loan" means a Loan as to which the
Borrower, in the applicable notice of borrowing given pursuant to Section
2.2(a) or notice of conversion or continuation given pursuant to Section
2.3(f), shall have requested the Base Rate as the applicable rate of interest.
"Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York, New York are
authorized or directed to close.
"CERCLA" means the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended.
"Capital Lease Obligations" means, as applied to any
Person, all monetary obligations of such Person, under any leasing or similar
arrangement which, in accordance with Generally Accepted Accounting Principles,
is classified as a capital lease, as all such obligations are reported by such
Person in its financial statements prepared in accordance with Generally
Accepted Accounting Principles.
"Cash Management Agreement" means the Cash Management
Agreement among Martin Marietta Technologies, Inc. and Martin Marietta
Materials, Inc. dated as of February 17, 1994.
"Code" means the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Consolidated" refers to the results obtained by the
consolidation of the accounts of the Borrower and its Subsidiaries in
accordance with Generally Accepted Accounting Principles.
"Consolidated Subsidiaries" means the Subsidiaries of
Borrower which are consolidated with Borrower for financial reporting purposes.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services,
- 2 -
Page 37 of 76
<PAGE> 6
except trade accounts payable arising in the ordinary course of business, (iv)
all obligations of such Person as lessee under capital leases, (v) all Debt of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person, and (vi) all Debt of others Guaranteed by such
Person.
"Default" means any event or condition which
constitutes an Event of Default or which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Depreciation and Amortization Expense" means all
amounts reported by the Borrower in its Consolidated financial statements as
expense for depreciation, depletion and amortization, plus amortization of
goodwill and intangibles, during the relevant period.
"Dollars" and the sign "$" mean lawful money of
United States.
"Earnings from Continuing Operations" means earnings
from continuing operations of the Borrower and its Consolidated Subsidiaries
before adjustments for extraordinary items, the cumulative effect of accounting
changes and all taxes on or measured by income, all as reported by the Borrower
in its Consolidated financial statements in accordance with Generally Accepted
Accounting Principles.
"Environmental Laws" means federal, state or local
statutes, laws, ordinances, codes, rules, regulations, consents, decrees and
administrative orders relating to protection of the environment, such as
CERCLA, the Resource Conservation and Recovery Act and analogous state laws and
regulations.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as in effect from time to time, and the regulations and rules
promulgated and issued thereunder.
"ERISA Affiliate" means any Person which would be a
member of a "controlled group," within the meanings of Sections 414(b), (c),
(m) and (o) of the Code, of which the Borrower would also be a member;
provided, however, that "ERISA Affiliate" will not include any Person of which
the Borrower does not have any direct or indirect ownership.
"ERISA Event" means: (a) the occurrence of any
reportable event described in Section 4043(b) of ERISA or the regulations
thereunder (other than any such event as to which the PBGC has waived the
thirty-day notice requirements), (b) a withdrawal from a Plan described in
Sections 4063, 4203 or 4205 of ERISA by the Borrower or any ERISA Affiliate,
(c) a cessation of operations described in Section 4062(e) of ERISA by the
Borrower or any ERISA Affiliate, (d) the termination of a Plan or the filing of
a notice of intent to terminate such Plan, in either case, under Section 4041
of ERISA, or the receipt of notice by the Borrower of
- 3 -
Page 38 of 76
<PAGE> 7
the occurrence of an event described in Section 4041A of ERISA which
constitutes a termination of a Plan, unless such termination occurs in
connection with an acquisition of a Person other than an ERISA Affiliate or the
Borrower, and the Borrower is taking reasonable steps to eliminate any material
adverse effect arising therefrom within a reasonable period of time, (e)
proceedings under Section 515 of ERISA to collect delinquent contributions to a
Plan result in a judgment against the Borrower or any ERISA Affiliate, (f) the
institution of proceedings by the PBGC to terminate a Plan or to appoint a
trustee to administer a Plan or the receipt of notice by the Borrower that such
action has been taken with respect to a Plan or that such Plan is in
reorganization or insolvent under Sections 4241 or 4245 of ERISA, (g) any
substantial accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA is incurred by the Borrower or any ERISA
Affiliate, and for which no waiver of that deficiency has been obtained from
the Internal Revenue Service, (h) the Internal Revenue Service determines that
a Plan that is intended to be qualified under Section 401 of the Code fails to
meet the applicable requirements of the Code and disqualifies the Plan, (i) any
Plan (other than a multiemployer plan within the meaning of Section 3(37) of
ERISA) fails to be maintained in substantial compliance with its documents or
with the requirements of any applicable statutes, regulations, rules, and
orders, including, without limitation, ERISA and the Code, (j) a failure by the
Borrower or any ERISA Affiliate to pay contributions or premiums required with
respect to a Plan within the time permitted by law, including extensions,
unless such payment is waived by an appropriate regulatory authority or is
being contested in good faith by appropriate proceedings, or (k) an amendment
to a Plan resulting in a significant underfunding as described in Code Section
401(a)(29) or ERISA Section 307.
"Events of Default" shall have the meaning given to
that term in Section 7 hereof.
"Federal Funds Rate" means, for any day, the interest
rate per annum equal for such day to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published in the Federal Reserve System
statistical release H-15.
"Fixed Charge Coverage Ratio" will have the meaning
given that term in Section 6.2.
"Fixed Charges" means, for any period, the sum of
(a) Interest Expense during such period, plus
(b) Preferred Dividends during such period, plus
(c) Interest Portion of Operating Lease Rental
Expense for such period.
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<PAGE> 8
"Funded Debt" means, without duplication, the sum of
(i) all debt for borrowed money which would be reported on the Consolidated
balance sheet of the Borrower as a liability (expressly including, without
limitation, all purchase money obligations and Consolidated Capital Lease
Obligations of the Borrower and its Subsidiaries), (ii) all debt for borrowed
money created, incurred, assumed or guaranteed by, or otherwise existing as a
liability of, any association, partnership, joint venture or other business
entity not in corporate form (expressly including, without limitation, all
purchase money obligations and Capital Lease Obligations of such association,
partnership, joint venture or such other entity) with respect to which the
Borrower or any of its Subsidiaries is liable as a primary obligor, and (iii)
all guaranties by the Borrower or its Subsidiaries of, and all reimbursement
obligations of the Borrower or its Subsidiaries (whether or not matured) with
respect to surety bonds, letters of credit, bankers' acceptances or other
similar instruments but only to the extent such instruments are in support of,
debt of any Person for borrowed money (expressly including, without limitation,
all purchase money obligations and Capital Lease Obligations of such person).
"Generally Accepted Accounting Principles" means
generally accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and promulgations of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such other entity as may be in general use by significant
segments of the U.S. accounting profession, which are applicable to the
circumstances as of the date of determination.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation or entity whose stock or capital
ownership is owned or controlled by any of the foregoing.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing any
Debt of any other Person or in any manner providing for the payment of any Debt
of any other Person or otherwise protecting the holder of such Debt against
loss (whether by agreement to keep-well, to purchase assets, goods, securities
or services, or to take-or-pay or otherwise), provided that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary course
of business.
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<PAGE> 9
"Hazardous Materials" means:
(a) any "hazardous substance," as defined by
CERCLA;
(b) any "hazardous waste," as defined by the
Resource Conservation and Recovery Act, as
amended;
(c) any waste oil or petroleum product; or
(d) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, waste, substance
or material within the meaning of the
Environmental Laws.
"Interest Expense" means the amount reported by the
Borrower in its Consolidated financial statements as interest expense during
the relevant period, increased (to the extent not duplicative) by the amount of
any amortization of discount and of capitalized financing costs on indebtedness
of the Borrower and its Subsidiaries, and reduced (to the extent not
duplicative) by the amount of any amortization of premium and of capitalized
interest on indebtedness of the Borrower and its Subsidiaries.
"Interest Portion of Operating Lease Rental Expense"
means, for any period, the portion of rents representative of an interest
factor during such period calculated in a manner consistent with the portion of
rents representative of an interest factor as reported by the Borrower in its
Annual Report on Form 10-K (including attachments thereto) (the "Form 10-K
Report") or Quarterly Report on Form 10-Q (including attachments thereto) (the
"Form 10-Q Report") filed with the Securities and Exchange Commission for such
period; provided, however, that if at any time the Borrower is no longer
required to report, and does not in fact report, the portion of rents
representative of an interest factor in such Form 10-K Report and Form 10-Q
Report, "Interest Portion of Operating Lease Rental Expense" shall mean the
portion of rents representative of an interest factor of the Borrower and its
subsidiaries calculated in a manner consistent with the portion of rents
representative of an interest factor as reported in the most recent Form 10-K
Report or Form 10-Q Report where the portion of rents representative of an
interest factor was reported.
"Leverage Ratio" will have the meaning given that
term in Section 6.1.
"LIBOR" means, with respect to any applicable period
of duration for a LIBOR Loan, the London inter-bank offered rate for deposits
in United States dollars for an approximately equivalent period, determined as
of approximately 11:00 a.m. (London time) as set forth on the display
designated as the "LIBO" page on the Reuter Monitor Money Rates Service, or
such other well recognized source or service as the parties hereto may agree in
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<PAGE> 10
writing, on the Business Day immediately preceding the day on which such period
commences. If such rate is not so quoted and the parties do not agree in
writing to an alternative source or service, "LIBOR" shall be reasonably
determined by the Lender on such day by reference to the rate quoted for the
offering by leading banks (reasonably selected by the Lender) in the London
inter-bank market of dollars for deposit.
"LIBOR Loan" means a Loan as to which the Borrower,
in the applicable notice of borrowing given pursuant to Section 2.2(a) or
notice of conversion or continuation given pursuant to Section 2.3(f), shall
have requested a rate based on LIBOR for the applicable period as the
applicable rate of interest.
"Lien" means with respect to any property or asset
(or any income or profits therefrom) of any Person (in each case whether the
same is consensual or nonconsensual or arises by contract, operation of law,
legal process or otherwise) (a) any mortgage, lien, pledge, attachment, levy or
other security interest of any kind thereupon or in respect thereof, but not
including the interest of a third party in receivables sold by such Person to
such third party on a non-recourse basis or (b) any other arrangement, express
or implied, under which the same is subordinated, transferred, sequestered or
otherwise identified so as to subject the same to, or make the same available
for, the payment or performance of any liability in priority to the payment of
the ordinary, unsecured liabilities of such Person. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a loan, whether a Revolving Credit Loan
or Term Loan and whether a Base Rate Loan or a LIBOR Loan, made by the Lender
to Borrower pursuant to Section 2, or all such Loans, as the context may
require.
"Material Adverse Effect" shall mean a material
adverse effect on (a) the ability of the Borrower to perform its obligations
under this Agreement, (b) the validity or enforceability of this Agreement, (c)
the rights and remedies of the Lender under this Agreement, or (d) the timely
payment of the principal of or interest on the Loans or other amounts payable
in connection therewith.
"Net Worth" means, at any date, the excess of
(a) the Consolidated total assets of the Borrower
over
(b) the Consolidated total liabilities of the
Borrower,
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<PAGE> 11
as each would be reported on a Consolidated balance sheet of the Borrower as of
such date and calculated in accordance with Generally Accepted Accounting
Principles, consistently applied.
"Obligation" means as applied to any Person, any law,
decree, regulation or similar enactment, any instrument, agreement or other
obligation or any judgment, injunction or other order or award of any judicial,
administrative or governmental authority or arbitrator by which such Person or
any of its Properties is bound.
"Operating Lease Rental Obligations" means all
monetary obligations of the Borrower and its Subsidiaries for scheduled rental
payments under any leasing or similar arrangement which, in accordance with
Generally Accepted Accounting Principles, is not classified as a capital lease.
"Person" means an individual, a corporation, a
partnership, a limited liability company, an association, a business trust or
any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) and any multiemployer plan (as defined in Section 3(37)
of ERISA) (i) which is contributed to, participated in or sponsored or
maintained by the Borrower, or any ERISA Affiliate or (ii) to which the
Borrower or any ERISA Affiliate is obligated to make, or at any time during the
five calendar years preceding the date of this Agreement has made, or was
obligated to make, contributions; provided, however, that "Plan" shall not
include any such plan sponsored by Martin Marietta Corporation or any
Subsidiary thereof unless it is sponsored by the Borrower or an ERISA
Affiliate.
"Preferred Dividends" means, with respect to any
period, the aggregate amount of all dividends accrued by the Borrower on its
preferred shares during such period.
"Principal Payment Date" means December 31, in each
year beginning December 31, 1995 and ending December 31, 1999, provided that if
any Principal Payment Date would otherwise fall on a day that is not a Business
Day, that Principal Payment Date will be the immediately preceding Business
Day.
"Property" means any estate or interest in any kind
of property or asset, whether real, personal or mixed, and whether tangible or
intangible.
"Real Properties" means collectively, any and all
parcels of real property owned or operated by the Borrower or any Subsidiary of
the Borrower.
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<PAGE> 12
"Registration Statement" means the Borrower's
Registration Statement on Form S-1 (Reg. No. 33- 72648), as declared effective
by the Securities and Exchange Commission on February 16, 1994.
"Release" means a "release" as such term is defined
in CERCLA.
"Revolving Credit Commitment" means $25 million as
such amount may be reduced from time to time pursuant to Section 2.7 hereof.
"Revolving Credit Loan" has the meaning given that
term in Section 2.1(b).
"Revolving Credit Period" means the period commencing
on the date of the Original Credit Agreement and ending on December 31, 1997 or
such later date as may be agreed to by the Lender in accordance with Section
2.1(d).
"Sale-Leaseback Transaction" means an arrangement
whereby the Borrower or any Subsidiary of the Borrower now owns or hereafter
acquires Property, transfers it to a Person and leases it back from that
Person.
"Subsidiary" means, as to any Person, any
corporation, association, partnership, joint venture or other business entity
of which more than 50% of the voting capital stock or other voting ownership
interests is owned or controlled directly or indirectly by such Person or by
one or more of the Subsidiaries of such Person or by a combination thereof,
and, as to the Borrower, "Subsidiary" shall also mean American Stone Company.
"Tax" means all taxes, levies, imposts, stamp taxes,
sales tax, goods and services tax, duties, charges to tax, fees, deductions,
withholdings and any restrictions or conditions resulting in a charge to tax,
in each case imposed by or payable to a government or governmental agency, and
all penalty, interest and other payments on or in respect thereof.
"Term Loan" has the meaning given that term in
Section 2.1(a).
"Term Loan Commitment Termination Date" means January
31, 1995.
"Term of this Agreement" means the period from the
date hereof to and including the Termination Date.
"Termination Date" means December 31, 1999.
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<PAGE> 13
SECTION 2. THE LOANS.
2.1 Commitment to Lend.
(a) The Lender agrees, on the terms and
conditions contained in this Agreement, to make one or more Loans to the
Borrower at any time prior to the Term Loan Commitment Termination Date in an
aggregate principal amount not exceeding $75 million. Each Loan made pursuant
to this Section 2.1(a) is herein called a "Term Loan."
(b) During the Revolving Credit Period the Lender
agrees, on the terms and conditions contained in this Agreement, to make Loans
to the Borrower at any time in an aggregate principal amount not exceeding at
any one time outstanding the Revolving Credit Commitment in effect at the time
the Loans are made. The Borrower shall repay Loans in accordance with Section
2.3 and may reborrow under this Section 2.1(b) at any time. Each Loan made
pursuant to this Section 2.1(b) is herein called a "Revolving Credit Loan."
Loans outstanding as of January 2, 1995 are deemed to be Revolving Credit Loans
for purposes of this Agreement.
(c) Any other provision of this Agreement to the
contrary notwithstanding, the Lender shall not be obligated to make a Loan to
the Borrower at any time that the Borrower is, or after giving effect to the
making of the Loan the Borrower would be, in violation of (i) any of the terms,
conditions, covenants or provisions of this Agreement including, without
limitation, the terms and conditions contained in Section 3 hereof or (ii) any
of the terms, conditions, covenants or provisions of the Cash Management
Agreement.
(d) The Borrower may at any time in writing
request that the Lender extend the Revolving Credit Period. The Lender may, in
its sole discretion, agree to any such request which agreement will be
evidenced in writing. The Revolving Credit Period will not be extended beyond
the Termination Date.
2.2 Method of Borrowing.
(a) With respect to each Loan made pursuant to
Section 2.1 hereof, except as provided in paragraph (c) below, the Borrower
shall give the Lender a notice of borrowing notifying the Lender of its request
to borrow hereunder which notice will specify (i) the date of the Loan, which
date shall be a Business Day, (ii) prior to the Term Loan Commitment
Termination Date, whether the Loan will be a Term Loan or a Revolving Credit
Loan, (iii) whether the Loan will be a Base Rate Loan or a LIBOR Loan, (iv) the
principal amount of the Loan, which in the case of a Term Loan shall be $5
million or a greater multiple thereof and which in the case of a Revolving
Credit Loan which is a LIBOR Loan shall be $500,000 or a greater multiple
thereof, and (v) in the case of a LIBOR Loan, the duration thereof which shall
be one, two, three or six months, subject to the provisions of paragraph (d)
below and
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<PAGE> 14
provided that a LIBOR Loan of six months duration will be available if and only
if, on the Business Day preceding the day on which the six-month period
commences, a six-month LIBOR rate is quoted on the Reuter Monitor Money Rates
Service or such other source or service as the parties hereto have agreed in
writing in accordance with the definition of "LIBOR." The notice of borrowing
shall be written, provided that it may be given orally (to be confirmed in
writing if the Lender so requests) if the principal amount of the Loan is less
than $500,000.
(b) If the Borrower gives the notice required by
Section 2.2(a) with respect to any Loan before 1:00 p.m. (Eastern Time), the
Lender will disburse the proceeds of the Loan to the Borrower in immediately
available funds on the Business Day following the date of such notice. Unless
the parties have agreed otherwise in writing prior to the delivery of the
applicable notice of borrowing, the Lender will disburse all Loans to the
Borrower by deposit in the Concentration Account (as that term is defined in
the Cash Management Agreement). If the Cash Management Agreement shall no
longer be in effect, the Lender will disburse all Loans by deposit in such
account as shall be designated by the Borrower in the applicable notice of
borrowing.
(c) On any Business Day that there would be
outstanding (if not for the limitation as to the principal amount of advances
set forth in Section 5(c) of the Cash Management Agreement) advances from the
Lender to the Borrower under the Cash Management Agreement in an aggregate
amount (the "Covered Amount") that is greater than $2.0 million, the Borrower
shall be deemed to have given the Lender a notice of borrowing requesting a
Revolving Credit Loan hereunder. The principal amount of the Loan so requested
shall be the amount by which the Covered Amount exceeds $2.0 million. The
Lender will make the proceeds thereof available to the Borrower on the day the
Borrower is deemed to give such notice. Each Loan made pursuant to this
paragraph (c) shall be a Base Rate Loan.
(d) If in any notice of borrowing given pursuant
to paragraph (a) above the Borrower designates a period of duration for a LIBOR
Loan which would otherwise end on a day which is not a Business Day, that
period shall end on the next preceding Business Day. With respect to a LIBOR
Loan that is a Revolving Credit Loan, any such period of duration which begins
during the Revolving Credit Period and would otherwise end after the last day
of the Revolving Credit Period at the time in effect shall end on such last day
of the Revolving Credit Period. With respect to a LIBOR Loan that is a Term
Loan, any such period of duration which begins prior to the Termination Date
and would otherwise end after the Termination Date shall end on the Termination
Date.
2.3 Repayment and Prepayment of the Loans.
(a) The Borrower agrees that it shall repay each
Revolving Credit Loan that is a LIBOR Loan at the end of the period
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<PAGE> 15
of duration applicable thereto and it shall repay all Revolving Credit Loans no
later than the Termination Date.
(b) The Borrower agrees that it shall repay the
principal amount of the Term Loans in five equal annual installments, one such
installment to be payable on each Principal Payment Date.
(c) The Lender may, in its sole discretion, set
off any amounts due and owing to it by the Borrower hereunder (and not
otherwise paid by the Borrower) against amounts owed by the Lender to the
Borrower.
(d) The Borrower may repay or prepay the
outstanding principal amount of Loans in whole or in part on any Business Day
upon irrevocable notice to the Lender given not later than 1:00 p.m. (Eastern
Time) on the Business Day prior to the proposed payment date, provided,
however, that the Borrower may make repayments pursuant to Section 4(a) of the
Cash Management Agreement, which repayments the Lender and the Borrower agree
will be applied to Revolving Credit Loans that are Base Rate Loans, without
giving such notice. Notice hereunder shall specify (i) the date of the
repayment or prepayment, (ii)the principal amount to be repaid or prepaid
(which amount, in the case of a LIBOR Loan, shall be a multiple of $500,000)
(iii) whether such payment relates to Revolving Credit Loans or Term Loans, and
(iv) whether such payment relates to Base Rate Loans or LIBOR Loans and, if the
latter, identifying the LIBOR Loan or Loans to which such payment applies.
Each such repayment or prepayment shall be made on the dates specified and
shall be accompanied by payment of all accrued interest thereon and, subject to
compliance with the foregoing procedures, may be made at any time without cost
or penalty of any kind; provided, however, that, if the Borrower prepays any
LIBOR Loan in whole or in part, the accrued interest on the principal amount to
be prepaid will be recalculated from the date the applicable LIBOR Loan was
borrowed as if that amount had been borrowed as a Base Rate Loan. Each
prepayment of Term Loans will be applied to installments of principal payable
by the Borrower on Principal Payment Dates in inverse order of maturity;
provided, however, that, if the Borrower makes a prepayment of Term Loans
within one calendar month prior to a Principal Payment Date, the Borrower may
elect by written notice to the Lender to apply the amount so prepaid (but not
more than the amount of principal payable on the next following Principal
Payment Date) to the principal payable on the next following Principal Payment
Date.
(e) Subject to the conditions of Section 2.2(a),
(b) and (d) and this Section 2.3(e), a Revolving Credit Loan that is a LIBOR
Loan may, on the last day of the applicable period of duration thereof, be
converted into a Base Rate Loan or a new LIBOR Loan and a Revolving Credit Loan
that is a Base Rate Loan may, on any Business Day, be converted into a LIBOR
Loan. The applicable notice of borrowing given pursuant to Section 2.2(a)
shall designate any part of the Loan requested thereby that is to be made
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<PAGE> 16
by conversion of an existing Loan rather than by advancing a new Loan. To the
extent that a Loan is made by conversion of an existing Loan, the conditions of
lending set forth in Section 3.1 hereof will not apply. Notwithstanding the
provisions of this Section 2.3(e), during a Default the Lender may notify the
Borrower that Base Rate Loans may not be converted into LIBOR Loans and that
LIBOR Loans may not be converted into new LIBOR Loans.
(f) Subject to the conditions of this Section
2.3(f), a Term Loan that is a LIBOR Loan may, on the last day of the applicable
period of duration thereof, be converted into a Base Rate Loan or continued as
a LIBOR Loan with a new period of duration and a Term Loan that is a Base Rate
Loan may, on any Business Day, be converted into a LIBOR Loan. With respect to
each conversion or continuation made pursuant to this Section 2.3(f), the
Borrower shall give the Lender a notice of conversion or continuation notifying
the Lender of its request to convert or continue a Term Loan hereunder which
notice will specify (i) the date of the conversion or continuation, which date
shall be a Business Day, (ii) whether the Loan will be converted into or
continued as a LIBOR Loan or converted into a Base Rate Loan, (iii) the
principal amount of the Loan to be converted or continued, which shall be $5
million or a greater multiple thereof, and (iv) in the case of a LIBOR Loan,
the duration thereof which shall be one, two, three or six months, subject to
the provisions of paragraph (g) below and provided that a LIBOR Loan of six
months duration will be available if and only if, on the Business Day preceding
the day on which the six-month period commences, a six-month LIBOR rate is
quoted on the Reuter Monitor Money Rates Service or such other source or
service as the parties hereto have agreed in writing in accordance with the
definition of "LIBOR." Each notice of conversion or continuation shall be
given in writing not later than 1:00 p.m. (Eastern Time) on the Business Day
immediately preceding the date of the conversion or continuation. LIBOR Loans
may be converted or continued only on the last day of the applicable period of
duration thereof. Notwithstanding the provisions of this Section 2.3(f),
during a Default the Lender may notify the Borrower that Base Rate Loans may
not be converted into LIBOR Loans and that LIBOR Loans may not be continued as
LIBOR Loans.
(g) If in any notice of conversion or
continuation given pursuant to paragraph (f) above the Borrower designates a
period of duration for a LIBOR Loan which would otherwise end on a day which is
not a Business Day, that period shall end on the next preceding Business Day.
At all times the sum of (i) the principal amount of the Term Loans that are
LIBOR Loans with a period of duration ending on or prior to the next following
Principal Payment Date plus (ii) the principal amount of Term Loans that are
Base Rate Loans shall be equal to or greater than the amount of principal
payable by the Borrower on the next following Principal Payment Date. If
necessary to comply with the immediately preceding sentence, the Borrower may
designate a period of duration for a LIBOR Loan which is a Term Loan in a
principal amount which
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<PAGE> 17
is $5 million or a greater multiple thereof of less than one month, provided
that the interest rate applicable thereto will be one-month LIBOR.
2.4 Evidence of the Loans.
(a) The Loans made to the Borrower shall be
evidenced by this Agreement and by a loan account in the Borrower's name to be
maintained by the Lender. All Loans shall be payable by the Borrower to the
order of the Lender not later than the Termination Date.
(b) The Lender's loan account shall reflect
appropriate notations evidencing the date, the amount and the maturity of each
Loan and the date and amount of each payment of principal made by the Borrower
with respect thereto. The loan account shall be conclusive evidence, absent
manifest error, of the amount of the Loans, the interest accrued and payable
thereon and all interest and principal payments made thereon. Any failure to
record or any error therein shall in no way limit or otherwise affect the
obligations of the Borrower hereunder to pay any amount owing with respect to
the Loans.
2.5 Interest Rates and Payments. (a) Base Rate Loans
shall bear interest on the outstanding principal amount thereof at a rate per
annum equal to the Base Rate as in effect from time to time. Interest on Base
Rate Loans shall be payable monthly in arrears and, with respect to Revolving
Credit Loans that are Base Rate Loans, on the last day of the Revolving Credit
Period, and, with respect to Term Loans that are Base Rate Loans, on the
applicable Principal Payment Date on which the principal amount thereof is
payable. The Lender will notify the Borrower in writing, not later than ten
days after the end of each month, of the amount of interest payable hereunder
with respect to Base Rate Loans which notice will set forth in reasonable
detail the calculation of such amount. The Borrower agrees that it shall pay
each monthly installment of interest within five Business Days of the date on
which it receives such notice.
(b) LIBOR Loans shall bear interest on the
outstanding principal amount thereof, for the applicable duration thereof as
selected by the Borrower in the notice of borrowing given pursuant to Section
2.2(a) or the notice of conversion or continuation given pursuant to Section
2.3(f), at a rate per annum equal to LIBOR for such period as in effect one
Business Day before the beginning of the period plus .375 of 1%. Interest on
LIBOR Loans shall be payable, and the Borrower agrees that it shall pay such
interest without any requirement of notice from the Lender, with respect to the
period of duration of each LIBOR Loan on the last day thereof, provided,
however, that interest on a LIBOR Loan of six months duration shall be payable
three months from the first day of such LIBOR Loan with respect to the
three-month period then ending and again on the last day of such LIBOR Loan
with respect to the three-month period then ending.
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<PAGE> 18
(c) Overdue principal of and, to the extent
permitted by law, overdue interest on the Loans shall bear interest, payable on
demand of the Lender, for each day until paid at a rate per annum equal to the
Base Rate plus 2%.
2.6 Commitment Fee. During the Term of this Agreement,
the Borrower shall pay to the Lender a commitment fee computed at a rate per
annum equal to .125 of 1% on the unused amount of the Revolving Credit
Commitment. Such commitment fee shall accrue daily from the date hereof to and
including the Termination Date and shall be payable quarterly in arrears and on
the Termination Date. The Lender will notify the Borrower, not later than ten
days after the end of each March, June, September and December, of the amount
of the commitment fee payable hereunder. The Borrower agrees that it shall pay
the commitment fee within five Business Days of the date on which it receives
such notice.
2.7 Reduction and Cancellation of the Commitment. (a)
The Borrower shall have the right, after the first anniversary of the date of
this Agreement, upon at least 90 days' prior written notice (which notice can
be given up to 90 days prior to the first anniversary) to the Lender, to
terminate or reduce the unused portion of the Revolving Credit Commitment. Any
such reduction of the Revolving Credit Commitment shall be in the minimum
amount of $500,000 or a greater multiple thereof (except that any such
reduction may be in the full amount of the unused portion of the Revolving
Credit Commitment), provided that the Revolving Credit Commitment shall not be
reduced to an amount that is less than the principal amount of all Revolving
Credit Loans at the time outstanding. The accrued commitment fee with respect
to the terminated or reduced portion of the Revolving Credit Commitment shall
be payable on the effective date of such reduction or termination.
(b) The Revolving Credit Commitment shall
terminate on the Termination Date, and any Revolving Credit Loans then
outstanding (together with accrued interest thereon) shall be repaid in full on
such date.
2.8 General Provisions as to Payments. Subject to the
provisions of Section 2.3(b), the Borrower shall make each payment of principal
of, and interest on, the Loans and the Borrower shall make each payment of
commitment fees hereunder on the date when due in funds immediately available
in the account that the Lender shall designate. Whenever any payment of
principal of, or interest on, the Loans or of commitment fees shall be due on a
day which is not a Business Day, the date for payment thereof shall be extended
to the next succeeding Business Day. If the date for any payment of principal
is extended by operation of law or otherwise, interest shall be payable for
such extended time at a rate per annum equal to the Base Rate.
2.9 Computation of Interest and Fees. Interest on Base
Rate Loans and the commitment fee shall be computed for each day on
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<PAGE> 19
the basis of a year of 365 or 366 days, as the case may be. Interest on each
LIBOR Loan shall be computed for the applicable period of duration on the basis
of a year of 360 days and the actual number of days elapsed.
2.10 No Deduction. All amounts payable by the Borrower
under this Agreement are payable without deduction or set-off unless
specifically agreed to by the Lender in writing.
2.11 Use of Proceeds. The proceeds of Loans will be
employed by the Borrower for general corporate purposes including, without
limitation, as working capital for the Borrower and its Subsidiaries.
SECTION 3. CONDITIONS OF LENDING.
The obligation of the Lender to make each Loan hereunder is
subject to the performance by the Borrower of all its obligations under this
Agreement and to the satisfaction of the following further conditions:
3.1 All Loans. In the case of each Loan hereunder,
including the initial Loan:
(a) receipt by the Lender of a notice of
borrowing from the Borrower required by Section 2.2(a) hereof, except in the
case of a deemed notice of borrowing in accordance with Section 2.2(c);
(b) the fact that immediately after the making of
the Loan no Default or Event of Default shall have occurred and be continuing;
and
(c) the fact that the representations and
warranties contained in this Agreement are true and correct on and as of the
date of the Loan with the same force and effect as if made on and as of such
date.
Each notice of borrowing and each borrowing by the Borrower hereunder shall be
deemed to be a representation and warranty by the Borrower on the date of such
Loan as to the facts specified in (b) and (c) above. If the Lender reasonably
believes, acting in good faith, that the conditions set forth in (b) and (c)
above cannot or would not be satisfied, the Lender will have no obligation to
make the applicable Loan.
3.2 Initial Loan. In the case of the initial Loan
receipt by the Lender of a certificate of a duly authorized officer of the
Borrower as to the incumbency, and setting forth a specimen signature, of each
person who has signed this Agreement on behalf of the Borrower and who will,
until replaced by other persons duly authorized for that purpose, act as the
representatives of such
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<PAGE> 20
Borrower for the purpose of signing documents in connection with this Agreement
and the transactions contemplated hereby.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Lender
that:
4.1 Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has full power and authority to
carry on its business as now being conducted and to own its properties and is
duly licensed or qualified and in good standing as a foreign corporation in
each other jurisdiction in which failure to qualify would have a Material
Adverse Effect. The Borrower is in compliance with its charter and bylaws and
all other organizational or governing documents.
4.2 Corporate Authorization. The execution, delivery and
performance by the Borrower of this Agreement are within the Borrower's
corporate power and have been duly authorized by all necessary corporate
action.
4.3 Binding Effect. This Agreement constitutes the valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms.
4.4 No Contravention. The Borrower's execution and
delivery of, and performance of its obligations under, this Agreement do not,
and consummation of the transactions contemplated hereby will not, result in:
(a) a violation of or a conflict with any
provision of the charter, bylaws or any other organizational or governing
document of the Borrower;
(b) a material breach or default under any
provision of any contract, agreement, lease, commitment, license, franchise or
permit to which the Borrower is a party or by which any property of the
Borrower is bound;
(c) a violation of any statute, rule, regulation,
ordinance, order, judgment, writ, injunction, decree or award of any judicial,
administrative, governmental or other authority or of any arbitrator; or
(d) an imposition on the business of the Borrower
or on any of its properties of any Lien.
4.5 Financial Statements. The consolidated balance sheet
of Borrower and its Consolidated Subsidiaries as at December 31, 1993 and the
related consolidated statement of earnings and shareholders' equity and
consolidated statement of
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<PAGE> 21
cash flows of Borrower and its Consolidated Subsidiaries for the fiscal year
then ended, certified by Ernst & Young, certified public accountants, which are
set forth in the Registration Statement, fairly present in conformity with
Generally Accepted Accounting Principles, the Consolidated financial position
of the Borrower and its Consolidated Subsidiaries at such dates and the
Consolidated results of operations for the periods then ended.
4.6 Litigation. Except as disclosed in the Registration
Statement, there is no action, suit, litigation or proceeding at law or in
equity or by or before any Governmental Authority now pending against or, to
the knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries or any of their respective Properties an adverse decision in which
could reasonably be expected to have a Material Adverse Effect.
4.7 Licenses and Authorizations. The Borrower and the
Borrower's Subsidiaries have obtained all licenses, permits and certificates
and all other approvals, orders, authorizations and consents and have made all
declarations, filings and registrations which are necessary for the ownership
by the Borrower and the Borrower's Subsidiaries of their respective Properties
and for the conduct by the Borrower and the Borrower's Subsidiaries of their
respective businesses, except for those, which, if not obtained or made, could
not reasonably be expected to have a Material Adverse Effect. No approval of
or filing with any Governmental Authority is or will be necessary for the valid
execution, delivery or performance by the Borrower of this Agreement or for the
performance by the Borrower of any of the terms or conditions hereof or
thereof, except for such approvals as have been obtained.
4.8 No Default. None of the Borrower or the Borrower's
Subsidiaries (i) is in breach or violation of any of the terms, covenants,
conditions or provisions of any of its Obligations such as reasonably could be
expected to have a Material Adverse Effect; or (ii) has done or omitted to do
anything which, with the giving of notice or lapse of time, or both, would
constitute a material default under any of its Obligations or reasonably could
be expected to have a Material Adverse Effect.
4.9 No Event of Default. No Event of Default or other
material event which, with the giving of notice or lapse of time, or both,
would constitute an Event of Default has occurred and is continuing.
4.10 Adverse Change. There have been no material adverse
changes in the financial condition, results of operations or business of the
Borrower and its Subsidiaries taken as a whole since December 31, 1993.
4.11 Liens. The Borrower and the Borrower's Subsidiaries
have good and marketable title to each of their respective Properties, free and
clear of all material Liens, except for Liens, if any, now existing in the
nature of those that are, or would be,
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<PAGE> 22
permitted under Section 6.3 of this Agreement. The obligations of the Borrower
under this Agreement rank at least pari passu to all other debt of the
Borrower.
4.12 ERISA.
(a) Schedule 4.12 attached to this Agreement (as
the schedule shall be modified from time to time pursuant to Section 5.7
hereof) sets forth a true and complete list of all ERISA Affiliates and of all
Plans.
(b) No ERISA Event or Events have occurred or
reasonably could be expected to occur which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
4.13 Taxes. All federal, state and other income tax
returns of the Borrower and each of the Borrower's Subsidiaries required by law
to be filed have been duly filed, and all federal, state and other taxes,
assessments and other governmental charges or levies upon the Borrower and each
of the Borrower's Subsidiaries and any of their respective Properties, income,
profits and assets, which are due and payable, have been paid, except as
permitted by Section 5.3.
4.14 Environmental Matters.
(a) Except as set forth in subsection (b) below,
except as could not reasonably be expected to have a Material Adverse Effect
(taking into account the probability of adverse determinations and, where
applicable, the availability of contributions by other potentially responsible
parties) and except for matters disclosed in the Registration Statement:
(i) the Real Properties and all
operations and facilities at the Real Properties are not contaminated
by, and, to the best knowledge of the Borrower, have not previously
been contaminated by, any Hazardous Materials in concentrations which
constitute or constituted a violation of, or could reasonably be
expected to give rise to liability under, any Environmental Law;
(ii) the Real Properties and all
operations and facilities at the Real Properties are in material
compliance with all Environmental Laws, and there is no contamination
at, under or about the Real Properties in concentrations that
constitute a violation of any Environmental Law which reasonably could
be expected to materially interfere with the continued operation of
any of the Real Properties or any operations or facilities at the Real
Properties;
(iii) neither the Borrower nor any of its
Subsidiaries have received any notice of violation, alleged violation,
noncompliance, liability or potential liability, or
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<PAGE> 23
responsibility regarding compliance with or liability under
Environmental Laws, nor, to the best knowledge of the Borrower, is any
such notice being threatened;
(iv) no Hazardous Materials have been
generated, treated, stored or disposed of, at, on or under any of the
Real Properties during the period of ownership or operation thereof by
the Borrower, or, to the best knowledge of the Borrower, any property
formerly owned or leased by the Borrower or any of the Borrower's
Subsidiaries, in violation of, or in a manner that would reasonably be
expected to give rise to liability under, any Environmental Law, nor
have any Hazardous Materials been transported or disposed of from any
of the Real Properties or, to the best knowledge of the Borrower, any
property formerly owned or leased by the Borrower or any of its
Subsidiaries, to any other location in violation of, or in a manner
that would reasonably be expected to give rise to liability under, any
Environmental Law;
(v) there are no judicial proceedings or
governmental or administrative actions pending or, to the best
knowledge of the Borrower, threatened under any Environmental Law to
which the Borrower or any of its Subsidiaries is or will be named as a
party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law
against the Borrower or any of its Subsidiaries; and
(vi) there has been no Release or threat
of Release of Hazardous Materials at or from any of the Real
Properties or any facilities at the Real Properties, or arising from
or related to operations in connection with the Real Properties, in
violation of, or in amounts or in a manner that could reasonably be
expected to give rise to liability under, any Environmental Law.
(b) To the best knowledge of the Borrower,
Schedule 4.14 sets forth the liabilities and potential liabilities of the
Borrower and its Subsidiaries under Environmental Laws, the existence of which
could have a material adverse effect on the financial condition or business of
the Borrower and its Subsidiaries taken as a whole or the ability of the
Borrower to perform its obligations under this Agreement.
4.15 Labor Matters. There are no strikes or other labor
disputes, grievances, charges or complaints with respect to any employee or
group of employees pending or, to the best knowledge of the Borrower,
threatened against the Borrower or any of the Borrower's Subsidiaries which
reasonably could be expected to have a Material Adverse Effect.
4.16 Completeness. None of the statements of the Borrower
contained in this Agreement or in any certificate or
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<PAGE> 24
written statement furnished by the Borrower to the Lender pursuant hereto when
made (as limited or qualified in such documents) contained any untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements contained therein not misleading. There is no fact known to the
Borrower which the Borrower has not disclosed to the Lender which reasonably
could be expected to have a Material Adverse Effect.
SECTION 5. AFFIRMATIVE COVENANTS.
So long as the Lender's commitment to make Loans hereunder
shall be in effect or any amount payable hereunder remains unpaid, unless
compliance shall have been waived in writing by the Lender, the Borrower agrees
that:
5.1 Financial Statements. The Borrower will:
(a) as soon as available and in any event within
120 days after the end of each fiscal year of the Borrower, deliver to the
Lender a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such year, and a consolidated statements of
earnings, shareholders' equity and cash flows of the Borrower and its
Consolidated Subsidiaries for such year, setting forth in each case in
comparative form corresponding consolidated figures from the preceding fiscal
year, all as filed with the Securities and Exchange Commission and audited by
an accounting firm of nationally recognized standing, together with the report
of the accountants thereon, which report shall include the unqualified opinion
of such accountants, prepared in accordance with Generally Accepted Accounting
Principles consistently applied;
(b) as soon as available and in any event within
45 days after the end of each of the first three quarters of each fiscal year
of the Borrower, deliver to the Lender a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at the end of such quarter and
the related consolidated statements of earnings, shareholders' equity and cash
flows of the Borrower and its Consolidated Subsidiaries for such quarter and
for the portion of the Borrower's fiscal year ended at the end of such quarter
setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the Borrower's previous
fiscal year; as filed with the Securities and Exchange Commission, prepared in
accordance with Generally Accepted Accounting Principles;
(c) simultaneously with the delivery of each set
of financial statements referred to in clauses (a) and (b) above, deliver to
the Lender, a certificate of the Borrower signed by an authorized officer of
the Borrower, (i) stating that, as of the date of such financial statements,
the representations and warranties set forth in Article IV of this Agreement
are true, correct and complete in all material respects as though made on and
as of the date, and (ii) stating whether, to the best of his or her
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<PAGE> 25
knowledge after due inquiry, there exists on the date of such certificate any
Default or Event of Default and, if any Default or Event of Default exists,
setting forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto, and (iii) setting forth in reasonable
detail a calculation of the Fixed Charge Coverage Ratio for the 12-month period
then ending and the Leverage Ratio as of the applicable day;
(d) deliver to the Lender copies of all financial
statements, reports and notices, if any, sent or distributed generally by the
Borrower to its stockholders, promptly upon such distribution and of all proxy
materials, registration statements, regular periodic reports (including interim
reports filed on Form 8-K) which the Borrower has filed with the Securities and
Exchange Commission, as soon as the same are available;
(e) promptly upon the chief financial officer,
treasurer, or chief accounting officer of the Borrower, or any other officer of
similar responsibility, becoming aware of the occurrence of any Default or
Event of Default, a certificate of the Borrower, signed by chief financial
officer or the chief accounting officer of the Borrower setting forth the
details thereof and the action which the Borrower is taking or proposes to take
with respect thereto; and
(f) promptly upon the reasonable request of the
Lender, deliver to the Lender, any other information reasonably requested by
the Lender.
5.2 Notices, Litigation, etc. The Borrower will promptly
give written notice to the Lender of the following:
(a) Any significant litigation or other proceeding before
any judicial, administrative or arbitral body to which the Borrower or any of
its Subsidiaries is a party or any dispute which may exist between the Borrower
or any of its Subsidiaries and any Governmental Authority which reasonably
could be expected to have a Material Adverse Effect;
(b) Any significant work stoppage which reasonably could
be expected to have a Material Adverse Effect; and
(c) The occurrence of any ERISA Event or Events (other
than those of which the Borrower is given notice by the Lender in accordance
with Section 4(h) of the Intercompany Services Agreement, of even date herewith
between the Lender and the Borrower) which, individually or in the aggregate,
reasonably could be expected to have a Material Adverse Effect, together with a
statement as to the reasons therefore and the action, if any, which the
Borrower proposes to take with respect thereto.
5.3 Maintenance of Existence, etc. The Borrower will,
and will cause its Subsidiaries to:
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<PAGE> 26
(a) do or cause to be done all things necessary
to preserve and keep in full force and effect its or their existence and all
rights, privileges and franchises currently existing other than those rights,
privileges and franchises that the failure to have or maintain could not
reasonably be expected to have a Material Adverse Effect;
(b) comply with all material requirements of all
applicable laws, decrees, regulations and similar enactments and with all
applicable judgments, injunctions and other orders and awards of judicial,
administrative, governmental and other authorities and arbitrators the
violation of which, individually or in the aggregate, reasonably could be
expected to have a Material Adverse Effect or unless they are being contested
in good faith and, if appropriate, by legal proceedings;
(c) maintain and preserve all of its or their
Properties in good working order and condition and maintain, preserve and
replace all plant and equipment necessary in the proper conduct of its or their
business; and
(d) with respect to the business of the Borrower
and its Subsidiaries, taken as a whole, remain in, and continue to operate
substantially in, the business being conducted by the Borrower and its
Subsidiaries on the date of this Agreement.
5.4 Obligations and Taxes. The Borrower shall, and shall
cause its Subsidiaries to, (i) pay or discharge or cause to be paid and
discharged promptly all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits before the same shall become in
default, and (ii) pay all of their material liabilities and obligations when
due and prior to the date on which penalties attach thereto, except, in each
case with respect to clauses (i) and (ii), such as are being contested in good
faith or which, if taken in the aggregate, reasonably could not be expected to
have a Material Adverse Effect.
5.5 Books and Records. The Borrower shall, and shall
cause its Subsidiaries to, (i) keep adequate records and books of account in
which complete entries will be made in accordance with Generally Accepted
Accounting Principles so that Consolidated financial statements can be prepared
in accordance with Generally Accepted Accounting Principles and (ii) permit
employees or agents of the Lender, at its risk and expense, during working
hours, with reasonable advance notice to inspect their respective properties,
and to examine the books, accounts and records relating to their financial
condition.
5.6 Insurance. The Borrower shall, and shall cause its
Subsidiaries to, (i) maintain and keep in full force and effect general
business insurance in such amounts and against such risks as is customary for
businesses similarly situated, with responsible insurance companies or, to the
customary extent, self-insurance, including reasonable protection against loss
of use and occupancy,
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and, (ii) furnish the Lender upon request with full information as to the
insurance carried.
5.7 ERISA.
(a) The Borrower shall promptly notify the Lender
in writing of (i) any changes in the information reported on Schedule 4.12 by
delivering to the Lender an amended schedule making specific reference to
Section 4.12 and (ii) the occurrence of any ERISA Event not previously reported
to the Lender.
(b) The Borrower shall, and shall cause its ERISA
Affiliates to, make payment of contributions to the Plans required of them to
meet the minimum funding standards set forth in ERISA and the Code within the
time permitted by law, including any extensions, unless such payment is waived
by an appropriate regulatory authority or is being contested in good faith by
appropriate proceedings.
5.8 Environmental Compliance. The Borrower shall, and
shall cause its Subsidiaries to:
(a) use and operate all of its facilities and
properties in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material compliance
therewith,
(b) handle all Hazardous Materials in material
compliance with all applicable Environmental Laws, and
(c) promptly address or respond and defend
against any actions and proceedings relating to compliance with Environmental
Laws,
if the failure to do any of the foregoing reasonably could be expected to have
a Material Adverse Effect.
SECTION 6. NEGATIVE COVENANTS.
Until the later of the cancellation in full of the Lender's
commitment to lend and the payment in full of all sums due from the Borrower
pursuant to this Agreement, the Borrower covenants and agrees as follows:
6.1 Maximum Leverage Ratio. The Borrower shall not
permit the ratio (the "Leverage Ratio") (stated as a percentage) of
(a) Funded Debt to
(b) the sum of Net Worth plus its Funded Debt
to exceed at any time 55%.
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6.2 Minimum Fixed Charge Coverage Ratio. On and after
the Closing Date, the Borrower shall not permit the ratio (the "Fixed Charge
Coverage Ratio") of
(a) the sum of
(i) Earnings from Continuing Operations, plus
(ii) Interest Expense, plus
(iii) Depreciation and Amortization Expense,
plus
(iv) Interest Portion of Operating Lease
Rental Expense, to
(b) Fixed Charges,
to be less than 4.0 to 1.0, all of the foregoing determined, commencing on
December 31, 1994, for the preceding four quarters as of the last day of each
fiscal quarter, on a Consolidated basis consistently applied.
6.3 Prohibition of Liens. The Borrower shall not, nor
shall Borrower permit any of its Subsidiaries to create, assume or suffer to
exist any Lien securing Debt on any Property now owned or hereafter acquired by
it, except for:
(a) any Lien existing on any asset of any
corporation at the time such corporation becomes a Subsidiary and not created
in contemplation of such event;
(b) any Lien on any asset securing Debt incurred
or assumed for the purpose of financing all or any part of the cost of
acquiring such asset, provided that such Lien attaches to such asset
concurrently with or within 90 days after the acquisition thereof;
(c) any Lien on any asset of any corporation
existing at the time such corporation is merged into or consolidated with the
Borrower or a Subsidiary and not created in contemplation of such event;
(d) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary and not created in
contemplation of such acquisition;
(e) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any Lien permitted by
any of the foregoing clauses of this Section 6.3, provided that such Debt is
not increased and is not secured by any additional assets; and
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(f) any Lien arising pursuant to any order of
attachment, distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being contested in good
faith by appropriate proceedings.
6.4 Prohibition of Sale-Leaseback Transactions. The
Borrower shall not, nor shall the Borrower permit any of its Subsidiaries to,
enter into a Sale-Leaseback Transaction unless:
(a) the lease has a term of three years or less,
with no provision giving the lessee the absolute or conditional option to
extend the term of the lease or to renew the lease; or
(b) the Borrower or its Subsidiary under Section
6.3(b) could create a Lien on the applicable Property to secure Debt at least
equal in amount to the Attributable Debt for the lease.
6.5 Mergers, Consolidations, etc. The Borrower shall not
enter into any consolidation, merger or other combination with any other Person
or sell, lease or otherwise transfer all or any substantial part of its assets
to any other Person.
6.6 ERISA. Without the prior written consent of the
Lender, which consent will not be unreasonably withheld, the Borrower shall not
(a) adopt any Plan not listed on Schedule 4.12 on the date of this Agreement
(the "Original Schedule"), or (b) become subject to any obligation to
contribute to any Plan not listed on the Original Schedule, or (c) materially
increase its obligations under any Plan.
SECTION 7. EVENTS OF DEFAULT.
If any one or more of the following events ("Events of
Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay any interest on the
Loans or any commitment fee, in each case, within 30 days of the date when due
or the Borrower shall fail to pay any principal of the Loans when due; or
(b) any representation and warranty made by the Borrower
herein or in any document or instrument delivered pursuant hereto shall prove
to be incorrect or misleading in any material respect on the date when made or
deemed to be made; or
(c) the Borrower shall fail to perform or observe any of
the covenants contained in Sections 5.1(e), 5.2, 6.1, 6.2, 6.3 and 6.4 of this
Agreement; or
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<PAGE> 30
(d) the Borrower shall fail to pay or otherwise default
on any term, covenant or agreement contained herein (other than those specified
in clauses (a), (b) or (c) above) for 30 days after written notice thereof has
been given to such Borrower by the Lender; or
(e) the Borrower or any of its Subsidiaries shall (i)
fail to pay any indebtedness (other than under this Agreement) with an
aggregate principal amount in excess of $1,000,000 when due or to pay interest
thereon and, with respect to interest, such failure shall continue for more
than any applicable grace period, or (ii) fail to observe or perform any other
term, covenant or agreement contained in any agreement, instrument, agreements,
or instruments (other than this Agreement) by which it is bound evidencing,
securing or relating to indebtedness in an aggregate principal amount in excess
of $1,000,000, if the effect thereof is to permit (or, with the giving of
notice or lapse of time or both, would permit) the holder or holders thereof or
of any obligations issued thereunder or a trustee or trustees acting on behalf
of such holder or holders to cause acceleration of the maturity thereof or of
any such obligations; or
(f) the Borrower or any of its Subsidiaries shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(g) an involuntary case or other proceeding shall be
commenced against the Borrower or any of its Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for
a period of 60 days; or an order for relief shall be entered against the
Borrower or any of its Subsidiaries under the federal bankruptcy laws as now or
hereafter in effect;
(h) one or more judgments against the Borrower or any of
its Subsidiaries, or attachments against the Property of either, the operation
or result of which reasonably could be expected to have a Material Adverse
Effect, remain unpaid, unstayed on appeal, not being appealed in good faith,
undischarged, unbonded or undismissed for a period of 60 days; or
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(i) any ERISA Event or Events shall occur and the
aggregate amount of the liability of the Borrower and its ERISA Affiliates
resulting therefrom reasonably could be expected to have a Material Adverse
Effect; or
(j) the Borrower or any of its material Subsidiaries
shall voluntarily suspend for more than 30 days the transaction of all or
substantially all of its business (a shutdown due to strikes, labor disputes,
government action, or action arising from acts of God are not to be deemed
voluntary); or
(k) an Event of Default of the Borrower shall have
occurred under the Cash Management Facility; or
(l) the Borrower shall cease to be either a Subsidiary of
Martin Marietta Corporation (or a successor thereto resulting from merger or
transfer of assets) or a Subsidiary of a Person of which Martin Marietta
Corporation (or such successor) is a Subsidiary;
then, and in every such event, (1) in the case of any of the Events of Default
specified in paragraphs (f) or (g) above, the Revolving Credit Commitment shall
thereupon automatically be terminated and the principal of and accrued interest
on the Loans shall automatically become due and payable without presentment,
demand, protest or other notice or formality of any kind, all of which are
hereby expressly waived and (2) in the case of any other Event of Default
specified above, the Lender may, by notice in writing to the Borrower,
terminate the Revolving Credit Commitment and declare the Loans and all other
sums payable under this Agreement to be, and the same shall thereupon forthwith
become, due and payable.
SECTION 8. MISCELLANEOUS.
8.1 Notices. Unless otherwise specified herein, all
notices, requests, demands or other communications to or from the parties
hereto shall be made by personal delivery, mail or telecopy and shall be
effective upon receipt by such party. Any such notice, request, demand or
communication shall be delivered or addressed as follows:
(i) if to the Borrower, to it at:
Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Attention: Treasurer
Telephone: 919-781-4550
Telecopy: 919-783-4552
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(ii) if to the Lender, to it at:
Martin Marietta Technologies, Inc.
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Treasurer
Telephone: 301-897-6453
Telecopy: 301-897-6929
or at such other address or telex number or telecopy number as any party hereto
may designate by written notice to the other party hereto.
8.2 Amendments and Waivers; Cumulative Remedies.
(a) None of the terms of this Agreement may be
waived, altered or amended except by an instrument in writing duly executed by
the Borrower and the Lender; and
(b) No failure or delay on the part of the Lender
in exercising any right, power or privilege under this Agreement shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under this Agreement preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided and contemplated by this Agreement are cumulative and not
exclusive of any rights or remedies provided by law.
8.3 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the Borrower and the Lender and
their respective successors and assigns, provided that the Borrower may not
assign its rights and obligations hereunder without the prior written consent
of the Lender. The Lender shall notify the Borrower in writing promptly upon
any assignment by the Lender of its rights and obligations hereunder, including
any such assignment to Martin Marietta Corporation or any other Subsidiary
thereof.
8.4 Expenses and Withholding.
(a) The Borrower shall pay all out-of-pocket expenses
of the Lender in connection with the preparation and administration of this
Agreement and, if there is an Event of Default, all out-of-pocket expenses
incurred by the Lender (including reasonable fees and disbursements of counsel
and reasonable time charges of lawyers who may be employees of the Lender) in
connection with such Event of Default and collection and other enforcement
proceedings resulting therefrom.
(b) All payments to be made by or on behalf of
the Borrower under or in connection with this Agreement are to be made without
deduction or withholding for or on account of any Tax. If any Tax is deducted
or withheld from any payment, the Borrower shall promptly remit to the Lender,
the equivalent of the amount so
- 29 -
Page 64 of 76
<PAGE> 33
deducted or withheld together with relevant receipts, if available, addressed
to the Lender. If the Borrower is prevented by operation of law or otherwise
from paying, causing to be paid or remitting such Tax, the interest payable
under this Agreement shall be increased to such rates as are necessary to yield
and remit to the Lender the principal sum advanced together with interest at
the rates specified in this Agreement after provision for payment of such Tax.
The Borrower shall from time to time at the request of the Lender execute and
deliver any and all further instruments necessary or advisable to give full
force and effect to such increase in the rates of interest as are necessary to
yield to the Lender interest at the specified rates. The Borrower shall also
indemnify the Lender in respect of any claim or loss which it may suffer as a
result of the delay or failure of the Borrower to make any such payment
including penalties relating thereto or interest thereon.
8.5 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
8.6 Headings; Table of Contents. The section and
subsection headings used herein and the Table of Contents have been inserted
for convenience of reference only and do not constitute matters to be
considered in interpreting this Agreement.
8.7 Governing Law; Arbitration.
(a) This Agreement shall be construed in
accordance with and governed by the laws of the State of Maryland, without
reference to the conflict of law provisions of such laws.
(b) The Borrower (i) hereby irrevocably submits
to the jurisdiction of the courts of the State of Maryland over any suit,
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby and (ii) hereby agrees with the Lender that
the courts of the State of Maryland will have exclusive jurisdiction over any
such suits, actions or proceedings. Final judgment in any such suit, action or
proceeding in any such court shall be conclusive and binding upon the Borrower
and may be enforced in any court in which the Borrower is subject to
jurisdiction by suit upon such judgment provided that service of process is
effected as permitted by applicable law.
- 30 -
Page 65 of 76
<PAGE> 34
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
MARTIN MARIETTA
TECHNOLOGIES, INC.
By:/s/ JANET L. McGREGOR
---------------------------
Janet L. McGregor
Treasurer
MARTIN MARIETTA MATERIALS, INC.
By:/s/ STEPHEN P. ZELNAK, JR.
---------------------------
Stephen P. Zelnak, Jr.
President
- 31 -
Page 66 of 76
<PAGE> 35
AMENDMENT NO. 1
TO AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT NO. 1, dated as of January 31, 1995 (this "Amendment"), to the
Amended and Restated Credit Agreement, dated as of January 2, 1995 (the "Credit
Agreement"), between Martin Marietta Materials, Inc., a North Carolina
corporation (the "Borrower"), and Martin Marietta Technologies, Inc., a
Maryland corporation (the "Lender").
WHEREAS, the Borrower has requested that certain amendments be made to the
Credit Agreement, and the Lender has agreed to make such amendments;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereto agree, intending to be legally bound, as follows:
1. Section 1.1 of the Credit Agreement is amended by deleting the definition
of "Term Loan Commitment Termination Date" and inserting the following in its
place:
"Term Loan Commitment Termination Date" means March 31, 1995."
2. To induce the Lender to enter into this Agreement, the Borrower agrees to
pay to the Lender a commitment fee, at a rate per annum equal to .125 of 1% on
any undrawn portion of the Lender's commitment to make Term Loans pursuant to
Section 2.1(a) of the Credit Agreement. That commitment fee will accrue daily
from February 1, 1995, to including the Term Loan Commitment Termination Date
and will be payable in arrears on the Term Loan Commitment Termination Date,
provided that the Lender will have confirmed to the Borrower in writing the
amount of the commitment fee owed.
Except as expressly amended hereby, no other changes, additions, or deletions
are intended to be made, and the Credit Agreement remains in full force and
effect on the date hereof.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
MARTIN MARIETTA TECHNOLOGIES, INC.
By: /s/ Janet L. McGregor
------------------------------
Janet L. McGregor
Treasurer
MARTIN MARIETTA MATERIALS, INC.
By: /s/ Janice K. Henry
------------------------------
Janice K. Henry
Vice President and Chief
Financial Officer
Page 67 of 76
<PAGE> 36
AMENDMENT NO. 2
TO AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT NO. 2, dated as of March 31, 1995 (this "Amendment"), to the Amended
and Restated Credit Agreement, dated as of January 2, 1995, as amended by
amendment No. 1 dated as of January 31, 1995 (the "Credit Agreement"), between
Martin Marietta Materials, Inc., a North Carolina corporation (the "Borrower"),
and Martin Marietta Technologies, Inc., a Maryland corporation (the "Lender").
WHEREAS, the Borrower has requested that certain amendments be made to the
Credit Agreement, and the Lender has agreed to make such amendments;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereto agree, intending to be legally bound, as follows:
1. Section 1.1 of the Credit Agreement is amended by deleting
the definition of "Term Loan Commitment Termination Date" and
inserting the following in its place:
"Term Loan Commitment Termination Date" means June 30, 1995."
2. To induce the Lender to enter into this Agreement, the
Borrower agrees to pay to the Lender a commitment fee, at a rate per
annum equal to .125 of 1% on any undrawn portion of the Lender's
commitment to make Term Loans pursuant to Section 2.1(a) of the
Credit Agreement. That commitment fee will accrue daily from April
1, 1995, to and including the Term Loan Commitment Termination Date
and will be payable in arrears on the Term Loan Commitment
Termination Date, provided that the Lender will have confirmed to
the Borrower in writing the amount of the commitment fee owed.
Except as expressly amended hereby, no other changes, additions, or deletions
are intended to be made, and the Credit Agreement remains in full force and
effect on the date hereof.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
MARTIN MARIETTA TECHNOLOGIES, INC.
By: /s/ Janet L. McGregor
-------------------------------
Janet L. McGregor
Treasurer
MARTIN MARIETTA MATERIALS, INC.
By: /s/ Janice K. Henry
-------------------------------
Janice K. Henry
Vice President and Chief
Financial Officer
Page 68 of 76
<PAGE> 37
AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT NO. 3 dated as of March 14, 1996 (this "Amendment"), to the
Amended and Restated Credit Agreement, dated as of January 2, 1995, as amended
by Amendment No. 1 dated as of January 31, 1995, and Amendment No. 2 dated as
of March 31, 1995 (the "Credit Agreement"), between Martin Marietta Materials,
Inc., a North Carolina corporation (the "Borrower"), and Lockheed Martin
Corporation, as successor to Martin Marietta Technologies, Inc., a Maryland
corporation (the "Lender").
WHEREAS, the Borrower has requested that certain amendments be made to the
Credit Agreement, and the Lender has agreed to make such amendments.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree, intending to be legally bound, as
follows:
(1) Section 1.1 of the Credit Agreement is amended as follows:
""LIBOR Margin" means the percentage determined by reference to the
highest current rating of senior unsecured long-term debt of the
Borrower by a Rating Agency, as specified on Schedule I hereto.
"Rating Agency" means Standard & Poor's Corporation, Moody's
Investors Service, Inc. or other nationally recognized statistical
rating organization.
"Revolving Credit Commitment" means $55 million as such amount may
be reduced from time to time pursuant to Section 2.7 hereof."
(2) Section 2.1(d) is amended to add a new fourth sentence to read as
follows:
"The commitment of the Lender to make Revolving Credit loans to the
Borrower set forth in Section 2.1(b) may be canceled by the Lender
at any time by giving the Borrower not less than 120 days' prior
written notice of cancellation of the Revolving Credit Commitment."
(3) The first sentence of Section 2.5(b) of the Credit Agreement is
amended to read in full as follows:
"LIBOR loans shall bear interest on the outstanding principal
amount thereof, for the applicable duration thereof as selected by
the Borrower in the notice of borrowing given pursuant to Section
2.2(a) or the notice of conversion or continuation given pursuant
to Section 2.3(f), at a rate per annum equal to LIBOR for such
period as in effect one Business Day before the beginning of the
period plus the LIBOR Margin. Any change in the LIBOR Margin, as
applicable, shall become effective on the day on which the Rating
Agency shall publicly announce a change in such rating."
Page 69 of 76
<PAGE> 38
(4) A new Schedule I is added to read in full as follows:
SCHEDULE I
MARTIN MARIETTA MATERIALS, INC.
PRICING SCHEDULE
The LIBOR Margin shall be as specified below (in basis points per
annum).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
LEVEL 1 LEVEL 2 LEVEL 3
- --------------------------------------------------------------------------------------------
If Borrower is
If Borrower is rated BBB+ or If Borrower is
Basis for Pricing rated A- or better better by S & P or rated BBB or better
by S & P or A3 or Baa1 or better by by S & P or Baa2 or
better by Moody's Moody's better by Moody's
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIBOR plus 25.00 35.00 40.00
- --------------------------------------------------------------------------------------------
</TABLE>
(5) The amendments contained in this Amendment shall be effective as of
March 1, 1996.
Except as expressly amended hereby, no other changes, additions or
deletions are intended to be made, and the Credit Agreement remains in full
force and effect on the date hereof.
Page 70 of 76
<PAGE> 39
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first written above.
LOCKHEED MARTIN CORPORATION
/s/ Janet L. McGregor
-----------------------------------------
Janet L. McGregor
Vice President and Assistant Treasurer
MARTIN MARIETTA MATERIALS, INC.
/s/ Janice K. Henry
-----------------------------------------
Janice K. Henry
Vice President and Chief Financial Officer
Page 71 of 76
<PAGE> 40
AMENDMENT NO. 4 TO AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT NO. 4, dated as of July 22, 1996 (this "Amendment"), to the
Amended and Restated Credit Agreement, dated as of January 2, 1995, as amended
by Amendment No. 1 dated as of January 31, 1995, Amendment No. 2 dated as of
March 31, 1995, and Amendment No. 3 dated as of March 14, 1996 (the "Credit
Agreement"), between Martin Marietta Materials, Inc., a North Carolina
corporation (the "Borrower"), and Lockheed Martin Corporation, as successor to
Martin Marietta Technologies, Inc., a Maryland corporation (the "Lender").
WHEREAS, the Lender expects to commence an exchange offer pursuant to
which it is offering holders of shares of the Lender's common stock an
opportunity to exchange their shares of the Lender's common stock for shares of
common stock of the Borrower (the "Exchange Offer");
WHEREAS, in the event that, upon consummation of the Exchange Offer, the
Lender continues to own shares of common stock of the Borrower, the Lender
intends to distribute those shares of common stock of the Borrower to the
remaining stockholders of the Lender such that, upon consummation of the
distribution, the Lender no longer will own any shares of common stock of the
Borrower;
WHEREAS, the Borrower desires that the Credit Agreement terminate
subsequent to the consummation of the Exchange Offer, and the Lender has agreed
to such termination.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree, intending to be legally bound, as
follows:
(1) Section 1.1 of the Credit Agreement is amended as follows:
""Principal Payment Date" means December 31, 1996, unless
otherwise extended by mutual agreement of the parties hereto,
provided that if any Principal Payment Date would otherwise fall
on a day that is not a Business Day, that Principal Payment Date
will be the immediately preceding Business Day.
"Revolving Credit Period" means the period commencing on the
date of the Original Credit Agreement and ending on December 31,
1996, unless otherwise extended by mutual agreement of the
parties hereto.
"Termination Date" means December 31, 1996, unless otherwise
extended by mutual agreement of the parties hereto."
Page 72 of 76
<PAGE> 41
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of
the date first written above.
LOCKHEED MARTIN CORPORATION
/s/ Walter Skowronski
------------------------------------------
Walter Skowronski
MARTIN MARIETTA MATERIALS, INC.
/s/ Janice K. Henry
------------------------------------------
Janice K. Henry
Vice President and Chief Financial Officer
Page 73 of 76
<PAGE> 1
Exhibit 11.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
For the Quarter and Six Months Ended June 30
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings $ 26,807 $ 19,957 $ 31,144 $ 28,186
========== ========== ========== ==========
Weighted average number of
common shares outstanding 46,079,300 46,079,300 46,079,300 46,079,300
========== ========== ========== ==========
Net earnings per common share $ 0.58 $ 0.43 $ .68 $ 0.61
========== ========== ========== ==========
</TABLE>
Page 74 of 76
<PAGE> 1
Exhibit 12.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Six Months Ended June 30
(Dollars in Thousands)
EARNINGS:
<TABLE>
<S> <C>
Earnings before income taxes $47,116
(Earnings) losses of less than 50% owned associated companies, net (591)
Interest expense 5,696
Portions of rents representative of an interest factor 603
-------
Adjusted Earnings and Fixed Charges $52,824
=======
FIXED CHARGES:
Interest expense $ 5,696
Capitalized Interest 93
Portion of rents representative of an interest factor 603
-------
Total Fixed Charges $ 6,392
=======
Ratio of Earnings to Fixed Charges 8.26
=======
</TABLE>
Page 75 of 76
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996, AND THE RELATED
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.<F1>
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 136,882
<ALLOWANCES> 4,500
<INVENTORY> 114,785
<CURRENT-ASSETS> 271,060
<PP&E> 942,223
<DEPRECIATION> 548,515
<TOTAL-ASSETS> 746,368
<CURRENT-LIABILITIES> 105,821
<BONDS> 124,871
0
0
<COMMON> 461
<OTHER-SE> 444,091
<TOTAL-LIABILITY-AND-EQUITY> 746,368
<SALES> 336,985
<TOTAL-REVENUES> 336,985
<CGS> 257,850
<TOTAL-COSTS> 288,535
<OTHER-EXPENSES> (4,412)
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 5,696
<INCOME-PRETAX> 47,116
<INCOME-TAX> 15,972
<INCOME-CONTINUING> 31,144
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,144
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.68
<FN>
<F1>
Page 76 of 76
</FN>
</TABLE>
