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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) DECEMBER 4, 1998
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MARTIN MARIETTA MATERIALS, INC.
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(Exact name of registrant as specified in its charter)
NORTH CAROLINA 1-12744 56-1848578
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2710 WYCLIFF ROAD, RALEIGH, NORTH CAROLINA 27607-3033
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(Address of principal executive offices)
Registrant's telephone number, including area code (919) 781-4550
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to a Stock Purchase Agreement dated as of October 2, 1998 (the
"Stock Purchase Agreement") by and between Martin Marietta Materials, Inc. (the
"Registrant") and Redland International Limited ("Redland"), effective at 12:01
a.m. (Eastern Standard Time) on December 4, 1998, the Registrant acquired all of
the issued and outstanding shares of capital stock of Redland Stone Products
Company (the "Company"), all as more particularly described in the Stock
Purchase Agreement.
The purchase consideration was established by negotiation and consisted
of $272 million in cash plus normal balance sheet liabilities, subject to
certain post-closing adjustments related to working capital, plus approximately
$8 million estimated for certain other assumed liabilities and transaction
costs. The Registrant did not assume any long-term debt of the Company in the
Stock Purchase Agreement. The initial purchase consideration paid at closing was
$272 million. Pursuant to the Stock Purchase Agreement, Redland agreed to
indemnify the Registrant with regard to certain liabilities of the Company. The
Registrant paid the initial purchase consideration from funds obtained from the
issuance of United States commercial paper, a portion of which was repaid with
the proceeds obtained from a private placement of 5.875% Notes due December 1,
2008 issued in the aggregate principal amount of $200 million.
The Company's operations and business primarily relate to the
production, marketing, distribution and sale of construction aggregates products
and asphaltic concrete. The Registrant intends to operate the Company as a new
division of the Registrant with its headquarters in San Antonio, Texas.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The financial statements required by this item are not
included in this report and will be filed no later than 60
days from the date this report must be filed.
(b) Pro Forma Financial Information.
The pro forma financial information required by this item is
not included in this report and will be filed no later than 60
days from the date this report must be filed.
(c) Exhibits.
Exhibit 2 Stock Purchase Agreement dated as of October 2,
1998 by and between Martin Marietta Materials,
Inc. and Redland International Limited. Note: The
Registrant has not filed the exhibits and
schedules to the Stock Purchase Agreement on the
basis that these are not material for the purposes
of this filing; however, the Registrant agrees to
furnish such documents to the Securities and
Exchange Commission upon request.
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Exhibit 99.1 Press Release dated October 5, 1998
Exhibit 99.2 Press Release dated December 7, 1998
Exhibit 99.3 Revolving Credit Agreement dated as of December 3,
1998 among Martin Marietta Materials, Inc. and
Morgan Guaranty Trust Company of New York, as
Agent Bank.
Exhibit 99.4 Amendment No. 1 to the Credit Agreement dated as
of October 16, 1998 among Martin Marietta
Materials, Inc. and Morgan Guaranty Trust Company
of New York, as Agent Bank.
Exhibit 99.5 Amendment No. 2 to the Credit Agreement dated as
of December 3, 1998 among Martin Marietta
Materials, Inc. and Morgan Guaranty Trust Company
of New York, as Agent Bank.
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 hereunto duly authorized.
MARTIN MARIETTA MATERIALS, INC.
(Registrant)
By /s/ Bruce A. Deerson
--------------------------------------
Bruce A. Deerson
Vice President and General Counsel
Date: December 18, 1998
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EXHIBIT 2
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
DATED AS OF
OCTOBER 2, 1998
BETWEEN
REDLAND INTERNATIONAL LIMITED
AND
MARTIN MARIETTA MATERIALS, INC.
================================================================================
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS.........................................................2
1.1. Definitions...............................................2
1.2. Definitional Cross-References.............................8
ARTICLE II. PURCHASE AND SALE OF THE STOCK.....................................9
2.1. Sale and Transfer of the Stock............................9
2.2. Payment...................................................9
2.3. Closing...................................................9
2.4. Working Capital Statement................................10
2.5. Working Capital Adjustment...............................12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER.........................13
3.1. Corporate Organization and Qualification.................13
3.2. Corporate Authority......................................14
3.3. Conflicts and Defaults...................................14
3.4. Capital Stock............................................15
3.5. Consents and Approvals...................................17
3.6. Compliance with Applicable Laws..........................17
3.7. Litigation...............................................18
3.8. Taxes ...................................................18
3.9. Employee Plans and Benefit Arrangements..................19
3.10. Labor Relations.........................................24
3.11. Contracts...............................................24
3.12. Environmental Compliance................................25
3.13. Financial Statements....................................26
3.14. Absence of Certain Changes or Events....................27
3.15. Real Property...........................................27
3.16. Assets; Reserves........................................28
3.17. Brokers and Finders.....................................29
3.18. Transactions with Affiliates............................29
3.19. Repayment or Release of Indebtedness or Obligations.....30
3.20. Maintenance of Equipment................................31
3.21. Credit Union............................................31
3.22. Insurance...............................................31
3.23. Trademarks, Trade Names and Know-How....................32
3.24. Title Insurance.........................................33
3.25. Customers and Suppliers.................................34
3.26. Non-Conforming Rights...................................34
3.27. Dispositions and Acquisitions...........................34
(i)
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ACQUIROR........................35
4.1. Corporate Organization and Qualification.................35
4.2. Corporate Authority......................................35
4.3. Conflicts and Defaults...................................35
4.4. Consents and Approvals...................................36
4.5. Investment Only..........................................36
4.6. Representations and Warranties...........................36
4.7. Brokers and Finders......................................37
4.8. Funds for the Acquisition................................37
ARTICLE V. CERTAIN ADDITIONAL COVENANTS OF SELLER AND ACQUIROR................37
5.1. Conduct of the Company and Seller........................37
5.2. Disclosure Supplements...................................42
5.3. Satisfaction of Conditions...............................43
5.4. Public Announcements.....................................45
5.5. Further Assurances.......................................45
5.6. Environmental Inspection and Assessment;
Special Indemnity........................................45
5.7. Employee Communications..................................46
5.8. Access to Books, Records and Personnel...................46
5.9. Repayment or Release of Indebtedness or Obligations......47
5.10. Resignations............................................48
5.11. Title Commitments.......................................48
5.12. Obligations and Liabilities............................49
5.13. Undertaking to Deliver Real Property Descriptions.......49
ARTICLE VI. EMPLOYEE BENEFITS.................................................50
6.1. Maintenance of Benefits..................................50
6.2. Vacation and Sick Leave..................................54
6.3. WARN ....................................................54
ARTICLE VII. CONDITIONS TO THE TRANSFER.......................................54
7.1. Conditions to the Obligations of Each Party..............54
7.2. Conditions to the Obligations of Seller..................54
7.3. Conditions to the Obligations of Acquiror................55
ARTICLE VIII. TERMINATION.....................................................57
8.1. Termination..............................................57
8.2. Effect of Termination....................................58
ARTICLE IX. TAX MATTERS.......................................................59
9.1. Preparation of Tax Returns; Responsibility for Taxes.....59
9.2. Access to Information....................................63
9.3. Transfer Taxes...........................................64
9.4. FIRPTA Matters...........................................64
(ii)
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ARTICLE X. SURVIVAL; INDEMNIFICATION..........................................65
10.1. Limitation of Representations and Warranties............65
10.2. Survival of Representations and Warranties..............65
10.3. Indemnification by Seller...............................66
10.4. Indemnification by Acquiror.............................70
10.5. Procedures for Indemnification..........................71
10.6. Exclusive Remedy........................................74
ARTICLE XI. MISCELLANEOUS.....................................................75
11.1. Entire Agreement........................................75
11.2. Notices ................................................75
11.3. Amendments; No Waivers..................................76
11.4. Expenses................................................77
11.5. Successors and Assigns..................................77
11.6. Certain Interpretive Matters............................77
11.7. Governing Law...........................................78
11.8. Counterparts; Effectiveness.............................78
11.9. Knowledge...............................................78
11.10. Consent to Jurisdiction................................78
11.11. Confidentiality........................................79
11.12. Severability...........................................80
(iii)
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TABLE OF SCHEDULES
Schedule 1.1A. Beckmann Tract
Schedule 1.1B. Rogers Tract
Schedule 1.1C. Partnership Tract
Schedule 3.3. Conflicts and Defaults
Schedule 3.4(b). Redemption and Repurchase Obligations
Schedule 3.4(c). Subsidiaries
Schedule 3.4(d). Ownership of Subsidiaries
Schedule 3.4(f). Voting Trusts
Schedule 3.5. Consents and Approvals
Schedule 3.6. Compliance With Applicable Laws
Schedule 3.7. Litigation
Schedule 3.8. Taxes
Schedule 3.9. Employee Plans and Benefit Arrangements
Schedule 3.10. Labor Relations
Schedule 3.11. Contracts
Schedule 3.12 Compliance with Environmental Laws
Schedule 3.13(a). December 31, 1997 Audited Consolidated Financial Statements
Schedule 3.13(b). June 30, 1998 Unaudited Consolidated Financial Statements
Schedule 3.14. Absence of Certain Changes or Events
Schedule 3.15. Real Property
Schedule 3.16(a). Assets; Reserves
Schedule 3.16(b). Geological Reports
Schedule 3.18. Transactions with Affiliates
Schedule 3.21 Credit Union
Schedule 3.22. Insurance
Schedule 3.23. Trademarks, Trade Names and Trade Secrets
Schedule 3.24. Title Insurance
Schedule 3.25. Customers and Suppliers
Schedule 3.26(a). Map of Trusts
Schedule 3.26(b). Mining Activities
Schedule 3.27. Acquisitions and Dispositions
Schedule 5.1. Conduct of the Company and Seller
Schedule 5.2 Company Management
Schedule 10.3(f). Certain Assumptions
Schedule 10.3(h) Certain Losses
Schedule 11.9. Knowledge of Seller
TABLE OF EXHIBITS
Exhibit A. Conduct of the Business Since January 1, 1998
Exhibit B. Opinion Matters to be Addressed By Counsel to Seller
Exhibit C. Form of Guarantee
(iv)
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "AGREEMENT") dated as of October 2,
1998, between REDLAND INTERNATIONAL LIMITED, a corporation organized and
existing under the laws of England and Wales ("SELLER"), and MARTIN MARIETTA
MATERIALS, INC., a North Carolina corporation ("ACQUIROR").
RECITALS:
A. Seller owns 100 shares of the voting common stock (the "STOCK") of
Redland Stone Products Company, a Texas corporation (the "COMPANY"), which
constitutes all of the issued and outstanding capital stock of the Company.
B. The Company is engaged in the business (the "BUSINESS") of the
production and sale of limestone base and aggregate, silica sand, ready mix
concrete, asphaltic concrete, caliche base, and other aggregate based
construction materials. The Business does not include the business of processing
stone to produce and sell lime and lime products.
C. Seller and Acquiror have determined to enter into this Agreement
which, among other things, provides for Seller to sell, transfer and convey
("TRANSFER") to Acquiror, and Acquiror to purchase and receive from Seller, all
of the Stock.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in this Agreement, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Acquiror and Seller hereby agree as follows:
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ARTICLE I.
DEFINITIONS
1.1. Definitions. The following terms used in this Agreement shall have
the following meanings:
"ACQUIROR" means Martin Marietta Materials, Inc., a North Carolina
corporation.
"ACT" means the Securities Act of 1933, as amended.
"AFFILIATE" means, with respect to any Person, any other Person who is
directly or indirectly controlling, controlled by or under the common control
with such Person. For the purposes of this definition, the term "control," when
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" means this Stock Purchase Agreement, together with any
Schedules (including Supplemental Schedules) and Exhibits hereto.
"ANTITRUST DIVISION" means the Antitrust Division of the Department of
Justice.
"BALANCE SHEET DATE" means December 31, 1997.
"BECKMANN TRACT" means the real property described on Schedule 1.1A
hereto and outlined in red and identified as the "Reserve Tract" on the map
included in said Schedule.
"BENEFIT ARRANGEMENT" means any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy, fund,
program or contract or arrangement (whether or not written) that provides for
compensation, bonus, profit-sharing, stock option or other stock related rights
or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
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benefits, disability benefits, workers' compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance or other
benefits) that is not an Employee Plan.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY BYLAWS" means the bylaws of the Company as in effect on the
date hereof.
"COMPANY CHARTER" means the articles of incorporation of the Company as
in effect on the date hereof.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated
July 6, 1998 between (i) Dresdner Kleinwort Benson North America LLC, as
financial advisor to, and on behalf of Lafarge S.A. and Seller and their
respective subsidiaries and affiliates and (ii) Acquiror.
"EMPLOYEE PLAN" means any "employee benefit plan," as defined in
Section 3(3) of ERISA.
"EMPLOYEES" means the employees of the Company and its Subsidiaries
immediately prior to the Closing.
"ENVIRONMENTAL LAWS" means all federal, state, local and foreign laws
(as may be applicable) relating to environmental pollution or protection of the
environment and any regulation, code, plan, order, decree, judgment or
injunction related thereto in effect on or prior to the Closing Date, including
without limitation: (i) the Solid Waste Disposal Act, 42 U.S.C. ss. 6901; (ii)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 26 U.S.C. ss. 4611; 42 U.S.C. ss. 9601; (iii) the Superfund Amendments and
Reauthorization Act of 1986; (iv) the Clean Air Act, 42 U.S.C. ss. 7401; (v) the
Clean Water Act, 33 U.S.C. ss. 1251; (vi) the Safe Drinking Water Act, 72 U.S.C.
ss. 300f; (vii) the Toxic Substances Control
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Act, 15 U.S.C. ss. 2601; (viii) the Hazardous Materials Transportation Act, 49
U.S.C. ss. 1801 et seq.; (ix) the Endangered Species Act, 16 U.S.C. ss. 1531;
(x) the Endangered Species Conservation Act of 1969, 16 U.S.C. ss. 460 et seq.;
(xi) applicable state mining laws; (xii) applicable state or local laws
governing water including but not limited to laws regulating the use of water,
the withdrawal of water or acquifers or reservoir management; and (xiii) any
other similar federal, state, local or foreign (as applicable) Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"FINANCIAL STATEMENTS" means the audited consolidated balance sheet of
the Company as of the Balance Sheet Date, and the related consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
year ended on the Balance Sheet Date, copies of which are attached to this
Agreement as Schedule 3.13.
"FTC" means the Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"GOVERNMENTAL ENTITY" means any United States federal, state, county,
local, municipal or foreign government, court, administrative agency or
commission or other governmental or other regulatory authority or agency or any
arbitration tribunal or other non-governmental authority with, in the case of
such arbitration tribunal or non-governmental authority, the ability to issue
decisions that are legally binding on the Company or its Subsidiaries.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
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"HSR FILINGS" means any filings required under the HSR Act.
"LAFARGE S.A." means Lafarge S.A., a company organized and existing
under the laws of France, which indirectly owns all of the issued and
outstanding capital stock of Seller.
"LAWS" means all applicable statutes, laws, regulations, rules,
judgments, ordinances, orders and decrees of Governmental Entities.
"LIEN" means, with respect to any property or asset, any mortgage, deed
of trust, lien, pledge, charge, security interest, restriction on voting or
transfer, or other encumbrance.
"MATERIAL ADVERSE EFFECT" means, with respect to the Company, such
state of facts, event, change or effect as has had, or reasonably could
reasonably be expected to have, a material adverse effect (i) on the business,
assets, results of operations, prospects or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole, other than events, changes
or developments relating to the economy in general or resulting from
industry-wide developments affecting Persons in businesses similar to the
Business, (ii) on the business, assets (including the limestone reserves),
results of operations, prospects or condition (financial or otherwise) of the
Beckmann Tract, taken as a whole, or the Rogers Tract, taken as a whole, or
(iii) on the ability of Seller to enter into this Agreement or consummate the
transactions contemplated by this Agreement.
"PARTNERSHIP TRACT" means the real property owned by Redland Park
Development Limited Partnership and described on Schedule 1.1C hereto and
outlined in blue on the map included in Schedule 1.1A hereto.
"PERMIT" means any license, franchise, permit, concession, approval,
authorization, certification or registration from, of or with or issued by a
Governmental Entity, including,
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without limitation, all current environmental (including mining) licenses,
permits, authorizations, certifications, regulatory plans and compliance
schedules.
"PERMITTED LIENS" means (i) Liens listed or described on Schedule 3.15
or 3.16, (ii) easements, covenants, rights-of-way and other encumbrances or
restrictions or Liens or restrictions arising as a matter of Law which do not,
individually or in the aggregate (A) with respect to all Real Property that is
to be used for the purpose of mining, adversely affect the ability of the
Company to access, process, exploit or otherwise utilize at a particular quarry
the reserves as reported on the Reports (after giving effect to ordinary course
mining since the date of the relevant Report) in a commercially reasonable
manner, and (B) with respect to all Real Property that is to be used for a
purpose other than mining, materially detract from the value or impair the
present, continued and intended use or operation (including, without limitation,
maintenance) of, or access to, the property subject thereto, or impair the
operations of the Company or any of its Subsidiaries, (iii) Liens related to
Taxes not yet due or payable or which are being contested in good faith and for
which appropriate reserves have been taken and reflected in the Final Working
Capital, and (iv) Liens that are created by Acquiror; provided, however, that
for the avoidance of doubt the parties hereto agree that zoning laws do not
constitute "Permitted Liens".
"PERSON" means an individual, corporation, joint-venture, partnership,
limited liability company, association, trust or other entity or organization,
including without limitation, a Governmental Entity.
"PRE-CLOSING TAX PERIOD" means any taxable period ending on or before
the Closing Date and the portion ending on and including the Closing Date of any
Straddle Period.
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"ROGERS TRACT" means, collectively, the real property constituting the
approximately 440 acre so-called "NW Military Highway Tract" and the
approximately 95.5 acre "Triangle Tract" as described on Schedule 1.1B hereto.
"SELLER" means Redland International Limited, a corporation organized
and existing under the laws of England and Wales.
"STRADDLE PERIOD" means any taxable period that includes (but does
not end on) the Closing Date.
"STRADDLE TAX RETURN" means any Tax Return required to be filed by the
Company or any of its Subsidiaries covering a taxable period commencing prior to
the Closing Date and ending after the Closing Date.
"SUBSIDIARY" means any of the Company's subsidiaries set forth on
Schedule 3.4.
"TAX" means any and all federal, state, local, municipal or foreign
fiscal levies, fees, imposts, duties and other fiscal charges of whatever kind,
whether imposed on the Company, its Subsidiaries or their respective assets,
including, without limitation, taxes imposed on, or measured by, net income,
gross income or gross receipts, sales, goods and services, use, ad valorem,
value added, transfer, franchise, profits, withholding, payroll, employment,
excise, stamp, occupation, real or personal property, severance, customs,
capital stock, license, social security, workers' compensation, unemployment
compensation, utility, production, premium, windfall profits, transfer and gains
taxes, duties and all other types of fiscal levies, together with any interest,
penalties or additions to tax imposed or assessed with respect thereto.
"TAX RETURN" means any return, report, statement, information statement
or similar document (including any additional or supporting material) filed, or
required to be filed, in connection with the calculation, determination,
assessment or collection of any Tax and shall
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include any amended returns required as a result of examination adjustments made
by any Governmental Entity with respect to Taxes.
"WORKING CAPITAL" means the excess of current assets over current
liabilities (excluding any liability for Taxes payable by Seller pursuant to
Section 9.1(a)) based on the Closing Date Balance Sheet.
1.2. Definitional Cross-References. The definitions of the following
terms are set forth in the following provisions of this Agreement:
Defined Term Reference
------------ ---------
"ACCOUNTANTS" Section 2.4(c)
"ACQUIROR INDEMNITEES" Section 10.3
"ACQUIROR'S PLAN" Section 6.1(c)
"BUSINESS" Recital B
"CLOSING DATE BALANCE SHEET" Section 2.4(a)
"CLOSING DATE" Section 2.3
"CLOSING" Section 2.3
"COMPANY MANAGEMENT" Section 5.2(a)
"COMPANY" Recital A
"COMPANY'S BENEFITS" Section 3.9
"CREDIT UNION" Section 3.21
"DIRECTING PARTY" Section 9.1(f)
"FINAL WORKING CAPITAL" Section 2.5
"FIRPTA STATEMENT" Section 9.4
"LEASES" Section 3.15(b)
"LIABILITY SCHEDULES" Section 10.3(a)
"LIABILITY" Section 10.3(b)
"LISTED TITLE POLICIES" Section 3.24
"LOSSES" Section 10.3
"MULTIEMPLOYER PLAN" Section 3.9(a)
"NON-CURRENT LIABILITIES SCHEDULE" Section 10.3(a)
"OBJECTION NOTICE" Section 2.4(b)
"OBJECTION PERIOD" Section 2.4(b)
"PLAN SPONSOR" Section 6.1(c)
"POLICIES" Section 3.24
"PRE-CLOSING MATTERS" Section 10.3(b)
"PRE-CLOSING TAXES" Section 9.1(e)
"PROPERTY TAXES" Section 9.1(c)
"PURCHASE PRICE" Section 2.2
"REAL PROPERTY" Section 3.15
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Defined Term Reference
------------ ---------
"RECITAL" Section 3.24
"REDLAND PENSION PARTICIPANTS" Section 6.1(c)
"REDLAND PENSION PLAN" Section 6.1(c)
"REPORTS" Section 3.16(b)
"SELLER INDEMNITEES" Section 10.4
"SETTLEMENT PROPOSAL" Section 10.5(a)
"STOCK" Recital A
"SUPPLEMENTAL SCHEDULES" Section 5.2(c)
"THIRD PARTY CLAIM" Section 10.5(a)
"TITLE COMPANY" Section 5.11
"TITLE POLICIES" Section 3.24
"TRANSFER" Recital C
"TRIANGLE TRACT" Section 5.13
"VALUATION DATE" Section 6.1(c)
"WARN" Section 6.3
"WORKING CAPITAL STATEMENT" Section 2.4(a)
ARTICLE II.
PURCHASE AND SALE OF THE STOCK
2.1. Sale and Transfer of the Stock. Subject to the conditions to
Closing set forth in Article VII of this Agreement, at the Closing Seller will
Transfer to Acquiror, and Acquiror will purchase and accept from Seller, all of
the Stock.
2.2. Payment. In consideration of the Transfer of the Stock and the
other undertakings of Seller under this Agreement, at the Closing Acquiror will
pay to Seller $272.0 million (the "PURCHASE PRICE") via wire transfer of
immediately available funds to an account designated by Seller.
2.3. Closing. Unless this Agreement has been terminated and the
transactions contemplated under this Agreement have been abandoned pursuant to
Section 8.1 and subject to the fulfillment or, if permitted, waiver of the
conditions set forth in Article VII, the closing of the Transfer of the Stock
(the "CLOSING") will take place at the offices of Jones, Day, Reavis & Pogue,
Dallas, Texas at 9:00 a.m. on the fifth business day following the fulfillment
or, if
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permissible, waiver of the conditions set forth in Section 7.1, unless
another date or time is agreed to in writing by the parties to this Agreement
(the "CLOSING DATE"). The Closing will be effective as of 12:01 a.m. on the
Closing Date.
2.4. Working Capital Statement.
(a) As promptly as practicable and in any event within 90 days after
the Closing Date, Seller will prepare and deliver to Acquiror a consolidated
balance sheet of the Company as of the Closing Date prepared in accordance with
GAAP (except that any liability for Taxes which are the responsibility of Seller
pursuant to Section 9.1(a) shall be eliminated therefrom) (the "CLOSING DATE
BALANCE SHEET"), and a certificate of Seller (the "WORKING CAPITAL STATEMENT")
based on the Closing Date Balance Sheet setting forth Seller's calculation of
the Working Capital. Seller will afford one or more representatives of Acquiror
(including its auditors) the opportunity to review Seller's preparation of the
Closing Date Balance Sheet and the Working Capital Statement, including, without
limitation, the opportunity to observe any physical inventory count and other
accounting procedures. If Acquiror and Seller agree upon the accuracy of the
Closing Date Balance Sheet and the calculation of the Working Capital within 90
days after the delivery to Acquiror of the Closing Date Balance Sheet and
Working Capital Statement, Sections 2.4(b) and 2.4(c) will not apply; however,
if Acquiror and Seller do not so agree, then Sections 2.4(b) and 2.4(c) will
apply.
(b) If Acquiror disputes the accuracy of the Closing Date Balance Sheet
or otherwise disagrees with Seller's calculation of the Working Capital,
Acquiror may, within 90 days (the "OBJECTION PERIOD") after the delivery to
Acquiror of the Closing Date Balance Sheet and Working Capital Statement,
deliver a notice (the "OBJECTION NOTICE") to Seller disputing the accuracy of
the Closing Date Balance Sheet and the calculation of the
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Working Capital and setting forth Acquiror's proposed corrections to the Closing
Date Balance Sheet and the calculation of the Working Capital. Any Objection
Notice shall specify in reasonable detail those items or amounts as to which
Acquiror disagrees and the basis for the disagreement. Acquiror shall be deemed
to have agreed with all other items and amounts contained in the Closing Date
Balance Sheet and the Working Capital Statement to which no specific objection
has been made. If Acquiror does not deliver the Objection Notice within the
Objection Period, Acquiror shall be deemed to agree in all respects with
Seller's preparation of the Closing Date Balance Sheet and calculation of the
Working Capital.
(c) If an Objection Notice shall be properly and timely delivered,
Acquiror and Seller shall cause KPMG Peat Marwick, LLP (or, if they are unable
or unwilling to serve, a firm of independent accountants of nationally
recognized standing reasonably satisfactory to Acquiror and Seller (which shall
not have any material relationship with Acquiror, Seller or the Company or any
of their respective controlled affiliates)) (the "ACCOUNTANTS") to promptly
review this Agreement and the disputed items or amounts in the Closing Date
Balance Sheet and the Working Capital Statement for the purpose of calculating
the Working Capital. In making such calculation, the Accountants shall consider
only those items or amounts in the Closing Date Balance Sheet or in Seller's
calculation of the Working Capital as to which Acquiror has, in the Objection
Notice, disagreed and such other issues as may reasonably be affected by the
items as to which Acquiror has disagreed. The Accountants shall deliver to
Acquiror and Seller, as promptly as practicable, but no later than sixty (60)
days after the Accountants are engaged, a written report setting forth their
calculation of the disputed items. Absent manifest error, such report shall be
final and binding upon Acquiror and Seller. The cost of such review and report
shall be divided equally between Seller and Acquiror.
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(d) Each of Acquiror and Seller will cooperate and assist in the
preparation of the Closing Date Balance Sheet and the Working Capital Statement
and in the conduct of the reviews referred to in this Section 2.4, including,
without limitation, Acquiror making available to the extent necessary or helpful
books, records, work papers and personnel of the Company and access to the
assets of the Company and Seller making available to the extent necessary or
helpful books, records, work papers and personnel of Seller.
2.5. Working Capital Adjustment. If the Final Working Capital is
calculated to be in excess of $19.6 million, Acquiror shall pay to Seller within
five days of such final calculation the amount of such excess. If the Final
Working Capital is calculated to be less than $19.6 million, Seller shall pay to
Acquiror within five days of such final calculation the amount of such
deficiency. "FINAL WORKING CAPITAL" means the amount of the Working Capital as
finally determined pursuant to Section 2.4; provided, however, that in no event
shall the Final Working Capital be more than Seller's calculation of the Working
Capital delivered pursuant to Section 2.4(a) or less than Acquiror's calculation
of the Working Capital delivered pursuant to Section 2.4(b). The amount of any
payment to be made pursuant to this Section 2.5 will bear interest from the
Closing Date to the date of payment at a rate per annum equal to the lesser of
(i) the "Prime Rate" published by The Wall Street Journal, in the "Money Rates"
section thereof on the first business day following the Closing Date, or (ii)
the maximum rate permitted by applicable Law. Such interest shall be compounded
daily and shall be calculated on the basis of a 365-day year and the actual
number of days elapsed.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Acquiror as follows:
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<PAGE> 18
3.1. Corporate Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Each of the Subsidiaries has been duly
organized and is validly existing as a corporation or as a partnership, as the
case may be, and each of the Subsidiaries that is a corporation is in good
standing under the laws of its jurisdiction of incorporation. The Company and
each of its Subsidiaries that is a corporation is duly qualified as a foreign
corporation in each jurisdiction in which the properties owned, leased or
operated, or the business conducted, by it require such qualification. The
Company and each of its Subsidiaries has the requisite corporate or partnership
power, as the case may be, and authority to own and operate its properties and
carry on its businesses as it is now being conducted. Seller has heretofore made
available to Acquiror true, correct and complete copies of (i) the Company
Charter and the Company Bylaws, (ii) the charter and the bylaws of each
Subsidiary that is a corporation, (iii) the stock ledgers of the Company and its
Subsidiaries that are corporations, (iv) the partnership agreements of the
Subsidiaries that are partnerships, (iv) the minutes of the meetings of the
boards of directors of the Company and its Subsidiaries that are corporations
and any committees thereof and (vi) the minutes of the meetings of the partners
of the Subsidiaries that are partnerships.
3.2. Corporate Authority. Seller has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Seller and the consummation of the transactions contemplated to be performed
hereunder have been duly authorized by all necessary corporate actions. This
Agreement is a valid and binding obligation of Seller, enforceable against it in
accordance with the terms hereof except as such enforceability may be limited by
bankruptcy,
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<PAGE> 19
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally.
3.3. Conflicts and Defaults. Except as set forth on Schedule 3.3,
neither the execution and delivery of this Agreement by Seller nor the
performance by Seller of the transactions contemplated hereby will violate or
constitute an occurrence of default under any provision of, or conflict with, or
result in acceleration of any obligation under, or give rise to a right by any
party to terminate its obligations under, any contract, sales commitment,
purchase order, security agreement, mortgage, conveyance to secure debt, note,
deed, loan, Lien, lease, agreement, instrument, order, judgment, decree, or
other arrangement to which the Company, any of its Subsidiaries or Seller is a
party or is bound. Except as set forth on Schedule 3.3, the Company is not in
violation of the Company Charter or the Company Bylaws, the Subsidiaries that
are corporations are not in violation of their charter or bylaws and the
partnership agreements for the Subsidiaries that are partnerships are in full
force and effect and there are no defaults thereunder. The Company and its
Subsidiaries are not in breach of, or default under, any contract, sales
commitment, purchase order, security agreement, mortgage, conveyance to secure
debt, note, deed, loan, Lien, lease, agreement, instrument, order, judgment,
decree or other arrangement and there does not exist under any provision thereof
any event that, with the giving of notice or the lapse of time or both, would
constitute such a breach or default, except for such breaches, defaults and
events as to which requisite waivers or consents have been obtained.
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<PAGE> 20
3.4. Capital Stock.
(a) The authorized capital stock of the Company consists of one hundred
thousand (100,000) shares of voting common stock, of which one hundred (100)
shares are issued and outstanding. The Stock constitutes all of the issued and
outstanding capital stock of the Company. Seller is the registered and
beneficial owner of the Stock free and clear of any Lien. Upon consummation of
the transactions contemplated by this Agreement and registration of the Stock in
the name of Acquiror in the stock records of the Company, Acquiror will own all
of the issued and outstanding capital stock of the Company free and clear of any
Lien.
(b) The Stock has been duly authorized and validly issued and is fully
paid and non-assessable. There are no (i) securities of Seller or the Company
convertible into or exchangeable for shares of capital stock of the Company,
(ii) warrants, options or other rights to acquire from Seller or the Company, or
other obligations of Seller or the Company to issue, any capital stock or
securities convertible into or exchangeable for capital stock of the Company, or
(iii) bonds, debentures, notes or other obligations or securities of Seller or
the Company the holders of which have the right to vote with the stockholders of
the Company on any matter submitted to the vote of the Company's stockholders.
Except pursuant to the partnership agreements set forth on Schedule 3.4(b),
there are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any outstanding capital stock of the
Company or any outstanding equity interest of any of its Subsidiaries.
(c) Except as disclosed in Schedule 3.4(c), neither the Company nor any
of its Subsidiaries, either directly or indirectly, own of record or
beneficially any shares or other equity interests in any corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture, trust or other business entity.
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<PAGE> 21
(d) Except as set forth on Schedule 3.4(d), the Company is the
registered and beneficial owner of all of the issued and outstanding equity
interest of the Subsidiaries free and clear of any Lien. Except as set forth on
Schedule 3.4(d), no consent is required from any holder of a minority equity
interest in any Subsidiary in connection with the execution, delivery or
performance by Seller of its obligations under this Agreement.
(e) The outstanding capital stock of the Subsidiaries that are
corporations has been duly authorized and validly issued and is fully paid and
non-assessable. Neither the Company nor any of its Subsidiaries has any
obligation to make a payment to any Subsidiary that is a partnership in respect
of any partnership interest therein held by the Company or any of its
Subsidiaries. There are no (i) securities of Seller, the Company or any
Subsidiary convertible into or exchangeable for shares of capital stock or
evidence of any equity interest of any Subsidiary, (ii) warrants, options, or
other rights to acquire from Seller, the Company or any Subsidiary, or other
obligation of Seller, the Company or any Subsidiary to issue, any capital stock
or evidence of any equity interest or securities convertible into or
exchangeable for capital stock or evidence of any equity interest of any
Subsidiary, or (iii) bonds, debentures, notes or other obligations or securities
of Seller, the Company or any Subsidiary the holders of which have the right to
vote with the stockholders or partners, as the case may be, of any Subsidiary on
any matter submitted to the vote of such Subsidiary's stockholders or partners.
(f) Except pursuant to the partnership agreements set forth on Schedule
3.4(b) or as set forth on Schedule 3.4(f), there are no voting trusts or other
agreements or understandings with respect to the voting of the capital stock or
other equity interests of the Company or any of its Subsidiaries to which the
Company or any of its Subsidiaries is a party.
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<PAGE> 22
3.5. Consents and Approvals. Except as set forth on Schedule 3.5, other
than the filing of applicable HSR Filings and the expiration and termination of
the applicable waiting period thereunder, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity or Person is required with respect to Seller in connection with the
execution, delivery or performance by Seller of its obligations under this
Agreement.
3.6. Compliance with Applicable Laws. The Company and its Subsidiaries
have conducted their operations in accordance with, and all of the Company's and
its Subsidiaries' real property and personal property (regardless of whether the
same is owned or leased) are in compliance with, all Laws applicable thereto,
and neither the Company, any of its Subsidiaries nor Seller has received any
notice of any violation of Laws that remains a violation. Neither the Company,
any of its Subsidiaries nor Seller has been charged with, is in receipt of any
notice or warning of, or to Seller's knowledge, under investigation with respect
to, any failure or alleged failure to comply with any provision of any
applicable Laws which notice or warning remains unresolved. Except as set forth
on Schedule 3.6, without limiting the foregoing: (i) each of the Company and its
Subsidiaries has all Permits required to operate the Business as presently
conducted or as presently planned to be conducted at the Beckmann Tract and/or
the Rogers Tract through the first anniversary of the date hereof; (ii) all such
Permits are in full force and effect; and (iii) each of the Company and its
Subsidiaries is in compliance with its Permits.
3.7. Litigation. Except as disclosed in Schedule 3.7 there are no
civil, criminal or administrative claims, actions, proceedings or suits or, to
Seller's knowledge, investigations pending or threatened against the Company or
any of its Subsidiaries. Except as disclosed in Schedule 3.7, there are no
judgments, decrees or orders issued by any court, board or
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other Governmental Entity presently outstanding and unsatisfied against the
Company or any of its Subsidiaries or any of their respective assets.
3.8. Taxes.
(a) The Company is the common parent of an affiliated group of
corporations (within the meaning of Section 1504(a) of the Code) eligible to
file consolidated federal income Tax Returns. From May 28, 1998 through the
Closing Date, the Company has included (or, with respect to the taxable year
ending on the Closing Date, will include) each "includible corporation" (within
the meaning of Section 1504(b) of the Code) in its consolidated federal income
Tax Return as a member of the affiliated group of which the Company is the
common parent.
(b) Except as otherwise disclosed in Schedule 3.8, (i) the Company and
each of its Subsidiaries have filed (or joined in the filing of) when due all
Tax Returns required by applicable law to be filed with respect to the Company
and each of its Subsidiaries and all Taxes shown to be due on such Tax Returns
have been paid; (ii) all such Tax Returns were true, correct and complete in all
material respects as of the time of such filing; (iii) all Taxes relating to
periods ending on or before the Closing Date owed by the Company or any of its
Subsidiaries (whether or not shown on any Tax Return) at any time on or prior to
the Closing Date, if required to have been paid, have been paid (except for
Taxes which are being contested in good faith); (iv) there is no action, suit,
proceeding, investigation within the knowledge of Seller, audit or claim now
pending against, or with respect to, the Company or any of its Subsidiaries in
respect of any Tax or assessment, nor is any claim for additional Tax or
assessment asserted by any Tax authority; (v) since May 28, 1998, no claim has
been made by any Tax authority in a jurisdiction where the Company or any of its
Subsidiaries does not currently file a Tax Return that it is or may be subject
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<PAGE> 24
to Tax by such jurisdiction, nor to Seller's knowledge is any such assertion
threatened; (vi) there is no outstanding request for any extension of time
within which to pay any Taxes or file any Tax Returns; (vii) there are no
presently effective waivers or extensions of any applicable statute of
limitations for the assessment or collection of any Taxes of the Company or any
of its Subsidiaries; (viii) no property of the Company or any of its
Subsidiaries is "tax-exempt use property" within the meaning of Section 168(h)
of the Code; (ix) neither the Company nor any of its Subsidiaries is a party to
any lease made pursuant to former Section 168(f)(8) of the Internal Revenue Code
of 1954; (x) neither the Company nor any of its Subsidiaries has any deferred
gain or loss in excess of $500,000 arising from any particular intercompany
transaction, within the meaning of Treasury Regulations ss. 1.1502-13; (xi)
neither the Company nor any of its Subsidiaries is a party to any agreement,
whether written or unwritten, providing for the payment of Taxes, payment for
Tax losses, entitlements to refunds or similar Tax matters; and (xii) the
Company and each of its Subsidiaries have withheld and paid all material Taxes
required to be withheld in connection with any amounts paid or owing to any
employee, creditor, independent contractor or other third party.
3.9. Employee Plans and Benefit Arrangements. Schedule 3.9 identifies
each Employee Plan and Benefit Arrangement that is entered into, maintained,
administered or contributed to, as the case may be, by the Company or any of its
Subsidiaries or under which any of them has any material liability or obligation
(collectively, the "COMPANY'S BENEFITS"). Except as set forth on Schedule 3.9:
(a) None of the Employee Plans is a multiemployer plan, as defined in
Section 3(37) of ERISA ("MULTIEMPLOYER PLANS"), and neither the Company nor any
Subsidiary has withdrawn in a complete or partial withdrawal from any
Multiemployer Plan, nor has any of
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them incurred any liability due to the termination or reorganization of a
Multiemployer Plan, nor has any of them taken any action which has resulted or
could result in any liability with respect to any Multiemployer Plan.
(b) Each Employee Plan that is intended to qualify under Section 401 of
the Code and the trust maintained pursuant thereto is exempt from federal income
taxation under Section 501 of the Code, and nothing has occurred with respect to
the operation of any such Employee Plan that could cause the loss of such
qualification or exemption or the imposition of any liability, penalty or tax
under ERISA or the Code.
(c) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Employee Plans or by Law (without regard to any waivers granted under
Section 412 of the Code) to any funds or trust established thereunder or in
connection therewith have been made by the due date thereof (including any valid
extension). No accumulated funding deficiencies exist in any of the Employee
Plans subject to Section 412 of the Code.
(d) Each actuarial report provided to Acquiror pursuant to Section
3.9(h) accurately reflected, as of its date, the funding status of each Employee
Plan based on the actuarial assumptions set forth in such report.
(e) Neither the Company nor any Subsidiary has terminated any Employee
Plan subject to Title IV, or incurred any outstanding liability under Section
4062 of ERISA to the PBGC or to a trustee appointed under Section 4042 of ERISA.
All premiums due the PBGC with respect to the Employee Plans have been paid.
Neither the Company nor any Subsidiary has engaged in any transaction described
in Section 4069 of ERISA.
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(f) There has been no "reportable event" within the meaning of Section
4043 of ERISA with respect to any Employee Plans subject to Title IV of ERISA
which would require the giving of notice or any other event requiring disclosure
under Section 4041 (c)(3)(C) or 4063(a) of ERISA.
(g) There has been no material violation of ERISA or the Code with
respect to the filing of applicable reports, documents and notices regarding the
Employee Plans with the Secretary of Labor or the Secretary of the Treasury or
the furnishing of required reports, documents or notices to the participants or
beneficiaries of the Employee Plans.
(h) True, correct and complete copies of the following documents with
respect to each of the Employee Plans have been delivered to Acquiror by the
Company: (i) all plans and related trust documents, and amendments thereto; (ii)
the most recent Forms 5500, 990 and 1041 filed by the Company or any Subsidiary;
(iii) the last IRS determination letter; (iv) summary plan descriptions; (v) the
most recent actuarial report relating to the Employee Plans; (vi) written
descriptions of all non-written agreements relating to the Employee Plans; and
(vii) all third party employee benefits administrative contracts relating to any
Employee Plans. (As used in clause (iii), the "last IRS determination letter"
means the last IRS determination letter received in response to a determination
letter application on Form 5300, a complete copy of such application, and any
subsequent determination letters, including complete copies of the applications
for such determination letters ("application" includes any and all
correspondence relating to the applications between the Internal Revenue Service
and applicant or its representatives). The requirement to furnish the last IRS
determination letter applies with respect to each Employee Plan and any
predecessor thereto. In the case of the Redland Pension Plan, as defined in
Section 6.1(c), this requirement shall only apply to the predecessor or
predecessors of the Redland
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Pension Plan that covered Employees with respect to which benefit liabilities
are to be transferred to the Acquiror's Plan as contemplated by Section 6.1(c),
and in the case of the Redland Stone 401(k) Plan, this requirement shall only
apply to the predecessor or predecessors of the Redland North America 401(k)
Plan that covered Employees prior to the adoption of the Redland North America
401(k) Plan.)
(i) There are no pending actions, claims or lawsuits which have been
asserted or instituted against the Employee Plans, the assets of any of the
trusts under such plans or the plan sponsor or the plan administrator, or, to
the knowledge of Seller, against any fiduciary of the Employee Plans with
respect to the operation of such plans (other than routine benefit claims), nor
does Seller or the Company have knowledge of facts which could form the basis
for any such claim or lawsuit.
(j) All amendments and actions required to bring the Employee Plans
into conformity in all material respects with all of the applicable provisions
of ERISA, the Code and other applicable Law have been made or taken except to
the extent that such amendments or actions are not required by Laws to be made
or taken until a date after the Closing Date.
(k) Any bond required with respect to the Employee Plans in accordance
with applicable provisions of ERISA has been obtained and is in full force and
effect.
(l) The Employee Plans have been maintained in accordance with their
terms and with all provisions of ERISA and the Code (including rules and
regulations thereunder) and other applicable federal and state Laws, and neither
the Company, its Subsidiaries, nor, to the knowledge of Seller, any other "party
in interest" or "disqualified person" with respect to the Employee Plans has
engaged in a "prohibited transaction" within the meaning of Section 406 of ERISA
or 4975 of the Code. Neither the Company nor any of its Subsidiaries nor, to the
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knowledge of Seller, any other fiduciary has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any Employee Plan.
(m) None of the Employee Plans or Benefit Arrangements provides retiree
life, retiree health benefits or any other post-termination benefits except as
may be required under Section 4980B of the Code or Section 601 of ERISA and at
the expense of the participant or the participant's beneficiary. The Company and
the Subsidiaries have at all times complied with the notice and health care
continuation requirements of Section 4980B of the Code and Sections 601 through
608 of ERISA.
(n) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee (current, former or retired) of the Company
or the Subsidiaries, (ii) increase any benefits otherwise payable under any
Employee Plan or Benefit Arrangement, (iii) result in the acceleration of the
time of payment or vesting of any benefits under any Employee Plan or Benefit
Arrangement, (iv) qualify as a "change of control" or similar event under any
Employee Plan or Benefit Arrangement or (v) result in any payment becoming due
to any employee that may be nondeductible under Section 28OG of the Code.
(o) There has been no "mass layoff" or "plant closing" as defined by
WARN or any similar state or local "plant closing" law with respect, to the
current or former employees of the Company and its Subsidiaries.
3.10. Labor Relations. Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining or union contract. Except as set forth
on Schedule 3.10, (a) no union organizing campaign is in progress with respect
to the employees of the Company or any of
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its Subsidiaries; (b) there is no unfair labor practice charge or complaint
against the Company or any of its Subsidiaries pending or, to the knowledge of
Seller, threatened before the National Labor Relations Board; and (c) no charges
with respect to or relating to the Company or any Subsidiary are pending or, to
the knowledge of Seller, threatened before the Equal Employment Opportunity
Commission or any other federal or state agency responsible for the prevention
of unlawful employment practices.
3.11. Contracts. Schedule 3.11 constitutes a complete and accurate list
as of the date of this Agreement of each contract or agreement, whether oral or
written, to which the Company or any of its Subsidiaries is a party that (i)
requires a remaining payment to or by the Company or any of its Subsidiaries of
more than $250,000 in any consecutive twelve-month period, and (ii) is not
cancelable without material penalty or other charge by the Company or any of its
Subsidiaries on 60 days notice or less.
3.12. Environmental Compliance.
(a) Seller has delivered to Acquiror a true and correct copy of any
environmental assessment or audit of the Real Property prepared since January 1,
1993 and in the possession of the Company, any of its Subsidiaries or Seller,
other than any environmental assessment or audit commissioned by Acquiror.
(b) Each of the Company and its Subsidiaries has obtained all required
permits, kept all required records and made all filings required by applicable
Environmental Laws with respect to emissions, past or present, into the
environment (including solids, liquids and gases) and the proper disposal of
such materials (including solid waste materials), in each case excluding any
failure to obtain permits, keep records, or make filings if such failure has
been fully remedied (i.e., all required permits, records and filings have now
been obtained, maintained or
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<PAGE> 30
made, as the case may be, and any fines, penalties and/or other sanctions have
been paid or otherwise satisfied in full) by the Company and its Subsidiaries.
(c) Except as described on Schedule 3.12(c), none of the assets owned
or used by the Company or any of its Subsidiaries, including the Real Property,
have been contaminated since January 1, 1993 (provided that at the time of such
contamination the property was owned or operated by the Company or its
Subsidiaries) or are contaminated with any pollutant, contaminant, chemical,
hazardous wastes, hazardous substances, or other hazardous or toxic materials
(as defined in the Environmental Laws) so as to constitute a violation of any of
the Environmental Laws or so as to require any corrective or remedial action
under any of the Environmental Laws. Except as described on Schedule 3.12(c),
there are no transformers, capacitors or other equipment included in or located
on the assets owned or used by the Company or any of its Subsidiaries (including
the Real Property) which, with respect to such items owned by the Company or its
Subsidiaries contain or, with respect to such items owned by others to Seller's
knowledge, contain polychlorinated biphenyls in violation of any Law. Except as
described in Schedule 3.12(c), no portion of the Real Property is a wetland as
defined in 33 C.F.R. ss. 328.3. Except as set forth on Schedule 3.12(c), there
are no underground storage tanks located on or under any Real Property.
(d) Except as set forth in Schedule 3.12(d), each of the Company and
its Subsidiaries is in compliance with all Environmental Laws and all Permits
obtained pursuant thereto. Schedule 3.12(d) describes all citations received by
the Company or any of its Subsidiaries on or after January 1, 1993 relating to
violations of any Environmental Laws or Permits. There is no pending or, to the
knowledge of Seller, threatened civil or criminal litigation, notice of
violation or administrative proceeding in which the Company or any of its
Subsidiaries is
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a party relating in any way to the Environmental Laws, and to the knowledge of
Seller, there is no basis for any such litigation, notice or proceeding.
3.13. Financial Statements. The Financial Statements, copies of which
are attached to this Agreement as Schedule 3.13(a), present fairly, in
conformity with GAAP, the consolidated financial position of the Company as of
the dates thereof and its results of operations and cash flows for the fiscal
periods then ended. The unaudited consolidated balance sheet of the Company as
of June 30, 1998, and the related unaudited consolidated statements of
operations, stockholders' equity and cash flows for the six months ended June
30, 1998, copies of which are attached to this Agreement as Schedule 3.13(b),
present fairly, in conformity with GAAP (except as set forth therein), the
consolidated financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended.
3.14. Absence of Certain Changes or Events. Except as disclosed in
Schedule 3.14 or as otherwise contemplated by this Agreement, since the Balance
Sheet Date the Company and each of its Subsidiaries has conducted the Business
in the ordinary course, consistent with past practices, and except as disclosed
in Schedule 3.14, there have not been (a) any events, changes or developments
that constitute, individually or in the aggregate, a Material Adverse Effect or
(b) any action or inaction that would constitute a breach of the terms of
Exhibit A to this Agreement.
3.15. Real Property.
(a) Schedule 3.15 describes all real properties owned or leased by the
Company or any of its Subsidiaries (the "REAL PROPERTY"), the nature of the
interest of the Company or such Subsidiary in those properties and the
approximate acreage of each of these properties. The perimeter descriptions for
the Beckmann Tract, the Rogers Tract and the
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Partnership Tract attached hereto as Schedules 1.1A, 1.1B and 1.1C accurately
describe the property boundaries of the Beckmann Tract, the Rogers Tract and the
Partnership Tract, respectively, and there are no strips, gaps or gores within
the Real Property outlined in black on the map in Schedule 1.1A. The property
boundaries for the Beckmann Tract, the Rogers Tract and the Partnership Tract
are accurately depicted on the maps attached hereto as Schedules 1.1A, 1.1B and
1.1C, respectively. There is no real property (other than the Real Property) the
use or possession of which by the Company or any of its Subsidiaries is
necessary to carry on the Business. Except as described on Schedule 3.15, the
Company and each of its Subsidiaries has (i) such title to the Real Property as
is legally sufficient for the current use thereof in the Business as presently
conducted or as presently planned to be conducted through the second anniversary
of the date hereof, (ii) good and indefeasible title in fee simple (except for
Permitted Liens) to all Real Property shown in Schedule 3.15 as owned by it and
(iii) valid leaseholds (except for Permitted Liens) in all Real Property shown
in Schedule 3.15 as leased by it, in each case under valid and enforceable
leases. The Real Property is owned or leased by the Company and its Subsidiaries
free and clear of all Liens except for Permitted Liens.
(b) None of the leases identified in Schedule 3.15 (collectively, the
"LEASES") has been modified or amended in writing, and no notice of termination
has been delivered with respect thereto, except as set forth in Schedule 3.15.
Except as set forth on Schedule 3.15, (i) neither the Company nor any of its
Subsidiaries is in breach of or default under any Lease (and no event has
occurred which, with due notice or lapse of time or both, may constitute such a
breach or default), and (ii) no party to any Lease has given the Company or any
of its Subsidiaries written notice of or made a claim with respect to any breach
or default.
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(c) The buildings, driveways and all other structures and improvements
upon the Real Property are all within the boundary lines of the applicable
property or have the benefit of valid easements or other legal rights and there
are no encroachments thereon that would affect the use thereof.
3.16. Assets; Reserves.
(a) Except as described on Schedule 3.16(a) the Company and each of its
Subsidiaries has title to the assets necessary to carry on the Business free and
clear of all Liens, except for Permitted Liens. Schedule 3.16(a) sets forth a
copy of the fixed asset ledger maintained by the Company in the ordinary course
of business.
(b) Schedule 3.16(b) sets forth a list of all geological reports (the
"REPORTS") with respect to the Real Property prepared by or for the Company or
any of its Subsidiaries. Seller has furnished a true, correct and complete copy
of all such Reports to Acquiror or its representatives. Except where a later
dated Report may contradict an earlier dated Report or as set forth on Schedule
3.16(b), neither Seller nor the Company or any of its Subsidiaries have any
knowledge that such Reports contain any inaccuracy (including, without
limitation, with respect to the extent of the reserves or the ability to exploit
such reserves) and Seller, the Company and its Subsidiaries have no reason to
believe that such Reports are inaccurate. Except as set forth on Schedule
3.16(b), no Person (i) has commenced or, to the best of Seller's knowledge,
threatened to commence, any proceeding seeking to establish, or (ii) has
asserted or has any basis to assert any claim, in each case that such Person has
any right to the reserves set forth in the Reports (including, without
limitation, the right to exploit or utilize the reserves).
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3.17. Brokers and Finders. None of Seller or any of its directors,
officers or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commission or finders fees in connection with
the transactions contemplated hereby, except for fees and expenses of Dresdner
Kleinwort Benson North America LLC, which shall be paid by Seller.
3.18. Transactions with Affiliates. Except as set forth in Schedule
3.18, no officer, no director, no shareholder and no persons controlled by any
officer, director or shareholder of the Company or any of its Subsidiaries or
any entity in which any such officer, director or other affiliate or associate,
(a) owns any beneficial interest (other than a publicly held corporation whose
stock is traded on a national securities exchange or in the over-the-counter
market and less than 1% of the stock of which is beneficially owned by any such
person), or has any interest in: (i) any contract, arrangement or understanding
with, or relating to, the business or operations of the Company or any of its
Subsidiaries (other than a contract, arrangement or understanding relating to
any such person's ordinary course of employment with the Company or any of its
Subsidiaries); (ii) as of the Closing, any loan, arrangement, understanding,
agreement or contract for or relating to indebtedness of the Company or any of
its Subsidiaries; or (iii) any property (real, personal or mixed), tangible, or
intangible, used or currently intended to be used in, the business or operations
of the Company or any of its Subsidiaries, except for minor items of personal
property owned and/or used by employees in connection with their employment, or
(b) has sold or transferred any property or assets to or purchased or acquired
any property or assets from, or otherwise engaged in any other transactions with
the Company or any of its Subsidiaries, except that the Company and any of its
Subsidiaries may have engaged in any of the foregoing transactions in this
clause (b) in the ordinary course of business at prices and on terms and
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conditions no less favorable to the Company or such Subsidiary than could have
been obtained in an arm's-length basis from unrelated third parties.
3.19. Repayment or Release of Indebtedness or Obligations. As of the
Closing Date, all (i) outstanding indebtedness of the Company (on a consolidated
basis) owed to Seller or any of Seller's Affiliates and (ii) obligations of the
Company (on a consolidated basis) for borrowed money (and all obligations,
contingent or otherwise, of the Company or any of its Subsidiaries guaranteeing
or having the economic effect of guaranteeing any obligation for borrowed money
of any other Person) to any other Person, in each case will have been repaid or
released such that the Company (on a consolidated basis) will not have any of
such outstanding indebtedness and obligations, as the case may be, as of the
Closing.
3.20. Maintenance of Equipment. Since the Balance Sheet Date, the
Company and its Subsidiaries have maintained all of their equipment and other
personal property in the ordinary course of business consistent with past
practice.
3.21. Credit Union. Redland Employees Credit Union (the "CREDIT UNION")
is a Texas chartered credit union, validly existing and in good standing under
the laws of the State of Texas, and duly organized and in good standing under
all laws, rules, and regulations of the State of Texas and the laws of the
United States of America applicable to Texas credit unions and is an insured
credit union under the National Credit Union Share Insurance Fund. Schedule
3.21, sets forth all agreements, contracts, employee sharing agreement, or other
arrangements of any kind or nature, either oral or written, currently existing
between the Company and the Credit Union. The Company has no membership or
equity interest (direct or indirect) in the Credit Union. Except as set forth on
Schedule 3.21, there are no actions or proceedings pending or, to the knowledge
of Seller, threatened against the Credit Union by or before any federal or state
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regulatory authority, including, without limitation, the Texas Credit Union
Department, the National Credit Union Association and the IRS or any other
nation, state or subdivision thereof, or any other entity exercising executive,
legislative, judicial, regulatory or administrative function of or pertaining to
government.
3.22. Insurance. Schedule 3.22 lists the fidelity bonds (other than any
of such bonds that have been released or have expired or properly terminated)
and the aggregate coverage amount and type and generally applicable deductibles
of all policies of title, liability, fire, casualty, business interruption,
workers' compensation and other forms of insurance insuring the properties,
assets and operations of the business of the Company and its Subsidiaries in
effect on the date hereof as well as over the last 5 years. Seller has furnished
a true, complete and accurate copy of all such policies and bonds to Acquiror.
No action or omission by Seller, the Company or any of its Subsidiaries has
caused any of such policies or bonds not to be in full force and effect and not
to be sufficient for all applicable requirements of law. Such policies and bonds
will not in any way be affected by or terminated or lapsed by reason of the
consummation of the transactions contemplated by this Agreement. The Company and
its Subsidiaries are not in default under any provisions of any such policy of
insurance and have not received notice of cancellation of any such insurance.
Except as set forth on Schedule 3.22, there is no claim by the Company or any of
its Subsidiaries pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed (other than reservations of
rights) by the underwriters of such policies or bonds; provided, however, that
there is no reservation of rights with respect to the insurance covering the
first two items set forth on Schedule 3.7 as of the date hereof. Between the
Balance Sheet Date and the date hereof, except as set forth in Schedule 3.22,
neither the Company nor any of its Subsidiaries has received any written notice
from or on behalf of any
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insurance carrier issuing such policies, that insurance rates will hereafter be
substantially increased (except to the extent that insurance rates may be
increased for all similarly situated risks), that there will hereafter be a
cancellation, or an increase in a deductible (or an increase in premiums in
order to maintain an existing deductible) or non-renewal of existing policies,
or that alteration of any equipment or any improvements to real estate occupied
by or leased to or by the Company or its Subsidiaries, purchase of additional
equipment, or modification of any of the methods of doing business of the
Company or its Subsidiaries, will be required or suggested.
3.23. Trademarks, Trade Names and Know-How. Schedule 3.23 sets forth a
true and complete list of all United States and foreign patents, patent rights,
trademarks, service marks, trade names and trade secrets and proprietary
know-how previously identified by the Company as being such (either registered,
applied for, or common law) owned by, registered in the name of, licensed to, or
used in the business of each of the Company and its Subsidiaries (the
"INTANGIBLE ASSETS"). Such list includes a summary description of each such item
and specifies, where applicable, the date granted or applied for, the expiration
date and the current status thereof. Except as set forth on Schedule 3.23, there
is no restriction affecting the Company's or its Subsidiaries' use of any of the
Intangible Assets, and no license has been granted with respect thereto. None of
the Intangible Assets are currently being challenged, or are involved in any
pending or, to the knowledge of the Seller, threatened administrative or
judicial proceeding. The Company's and its Subsidiaries' respective rights in
and to the Intangible Assets are sufficient and adequate in all respects to
permit them to carry on the Business, and none of the products or operations of
any of the Company or its Subsidiaries involves any infringement of any
proprietary right of any other Person.
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3.24. Title Insurance. Schedule 3.24 sets forth a true, correct and
complete list and a summary description of the policies of title insurance
insuring the Company's and its Subsidiaries' interest in the Real Property
obtained since January 1, 1993 (collectively, the "LISTED TITLE POLICIES").
Seller has furnished a true, correct and complete copy of all such Listed Title
Policies to Acquiror. All policies of title insurance naming the Company's and
its Subsidiaries' interest in the Real Property are hereby defined as "TITLE
POLICIES". Except as set forth in Schedule 3.24, none of the Title Policies have
been terminated by virtue of an act or omission to act of the Seller and any of
its Affiliates (including the Company). There is no claim by the Company, any of
its Subsidiaries or any other Person pending under any of the Title Policies as
to which coverage has been questioned, denied or disputed by the underwriters or
issuers of such Title Policies.
3.25. Customers and Suppliers. Schedule 3.25 sets forth a complete and
correct list of: (a) all customers whose purchases from the Company or its
Subsidiaries exceeded 3% of the consolidated net sales of the Company during the
Company's last fiscal year; (b) the 10 largest suppliers by dollar volume of the
Company and its Subsidiaries and the aggregate dollar volume of purchases
(broken down by principal categories) by the Company or its Subsidiaries from
such suppliers during such fiscal year; and (c) all distributors of any products
of the Company or its Subsidiaries. Except as set forth in Schedule 3.25 or with
respect to termination or changes not attributable to an act or omission of the
Company or its Subsidiaries, none of such customers, suppliers or distributors
has or, to the best knowledge of Seller, intends to terminate or change
significantly its relationship with the Company or its Subsidiaries.
3.26. Non-Conforming Rights. Non-conforming rights have been
established under Chapter 35 of the United Development Code of the City of San
Antonio with respect to
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each of the portions of the Beckmann Tract and the Rogers Tract described on
Schedule 3.26(a) such that on and after the Closing Date the Company will be
permitted to carry-out mining activities as described on Schedule 3.26(b) on
each such tract regardless of the zoning designations, and the Company has the
right to construct and operate a tunnel connecting the Rogers Tract to the
Beckmann Tract regardless of the zoning designations.
3.27. Dispositions and Acquisitions. Except as set forth in Schedule
3.27, neither the Company nor any of its Subsidiaries has (i) any liability with
respect to indemnification payments in excess of $1 million individually or $5
million in the aggregate relating to any disposition of a business by the
Company or any of its Subsidiaries or (ii) any liabilities in excess of $1
million individually or $5 million in the aggregate assumed in connection with
any acquisition of a business by the Company or any of its Subsidiaries.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to Seller as follows:
4.1. Corporate Organization and Qualification. Acquiror is a
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina and is duly qualified as a foreign corporation in
each jurisdiction in which the properties owned, leased or operated, or the
businesses conducted, by it require such qualification.
4.2. Corporate Authority. Acquiror has the requisite corporate power
and authority to own and operate its properties and carry on its businesses as
they are now being conducted, and to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Acquiror and the consummation by it of the transactions
contemplated to be performed hereunder have been duly
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authorized by all necessary corporate actions. This Agreement is a valid and
binding obligation of Acquiror, enforceable against it in accordance with the
terms hereof except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally.
4.3. Conflicts and Defaults. Neither the execution and delivery of this
Agreement by Acquiror nor the performance by Acquiror of the transactions
contemplated hereby will violate or constitute an occurrence of default under
any provision of, or conflict with, or result in acceleration of any obligation
under, or give rise to a right by any party to terminate its obligations under,
any material contract, sales commitment, purchase order, security agreement,
mortgage, conveyance to secure debt, note, deed, loan, Lien, lease, agreement,
instrument, order, judgment, decree, or other arrangement to which Acquiror is a
party or is bound. The Acquiror is not in violation of any of its organizational
documents.
4.4. Consents and Approvals. Other than the filing of applicable HSR
Filings and the expiration or termination of the applicable waiting period
thereunder, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity or Person is required with
respect to Acquiror in connection with the execution, delivery or performance by
Acquiror of its obligations under this Agreement.
4.5. Investment Only. Acquiror is acquiring the Stock solely for the
purpose of investment and not with a view to, or for sale or other disposition
in connection with, any distribution thereof. Acquiror acknowledges that the
Stock is not registered under the Act, or any applicable state securities laws
and that the Stock may not be transferred, pledged or sold except pursuant to
the registration provisions of the Act and such laws or pursuant to applicable
exemptions therefrom. Acquiror has such knowledge, experience and skill in
evaluating and
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investing in common stocks and other securities, based on actual participation
in financial investment and business matters, so that it is capable of
evaluating the merits and risks of an investment in the Stock and has such
knowledge, experience and skill in financial and business matters that it is
capable of evaluating the merits and risks of the investment in the Company and
the suitability of the Stock as an investment and can bear the economic risk of
an investment in the Stock. No guarantees have been made or can be made with
respect to the future value, if any, of the Stock, or the profitability or
success of the businesses of the Company.
4.6. Representations and Warranties. Acquiror acknowledges that Seller
has made no representation or warranty as to the Company, or its businesses,
prospects, assets, results of operations or condition (financial or otherwise),
except as expressly set forth in this Agreement.
4.7. Brokers and Finders. None of Acquiror or any of its directors,
officers or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the transactions contemplated hereby.
4.8. Funds for the Acquisition. On or before the Closing Date, Acquiror
shall have sufficient unencumbered funds to pay in cash the Purchase Price and
all of its fees and expenses relating to this Agreement and the transactions
contemplated hereby.
ARTICLE V.
CERTAIN ADDITIONAL COVENANTS OF SELLER AND ACQUIROR
5.1. Conduct of the Company and Seller.
(a) Except as set forth on Schedule 5.1, without the prior written
consent of Acquiror, between the date hereof and the Closing Date, Seller shall
not permit the Company or any of its Subsidiaries to, except as required or
expressly permitted pursuant to the terms hereof:
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(i) make any material change in the conduct of the Business of
the Company or its Subsidiaries or enter into any transaction other
than in the ordinary course of business consistent with past practice;
(ii) make any change in the Company Charter or the Company
Bylaws or in the charter or bylaws of any Subsidiary which is a
corporation or in the partnership agreement of any Subsidiary that is a
partnership; issue any additional shares of capital stock or equity
securities or grant any option, warrant or right to acquire any capital
stock or equity securities or issue any security convertible into or
exchangeable for capital stock or alter in any way any of its
outstanding securities or make any change in outstanding shares of
capital stock or other ownership interests or the capitalization of the
Company or its Subsidiaries, whether by reason of a reclassification,
recapitalization, stock split or combination, exchange or readjustment
of shares, stock dividend or otherwise;
(iii) make any sale, assignment, transfer, abandonment or
other conveyance of the assets, properties or rights (other than cash)
of the Company or its Subsidiaries or any part thereof, except
transactions pursuant to the existing contracts set forth in the
Schedules hereto and dispositions of inventory or of worn-out or
obsolete equipment in the ordinary course of business consistent with
past practice;
(iv) subject any of the assets, properties or rights of the
Company or its Subsidiaries, or any part thereof, to any Lien or suffer
such to exist other than such Liens as may arise in the ordinary course
of business consistent with past practice by operation of law and that
will not, individually or in the aggregate, have a Material Adverse
Effect;
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(v) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any shares of the capital stock or any evidence of any
ownership interest of the Company or its Subsidiaries or declare, set
aside or pay any non-cash dividends or other non-cash distribution in
respect of such shares or ownership interest;
(vi) acquire or sell any raw materials, other than in the
ordinary course of business consistent with past practice;
(vii) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in, or by any
other manner, any business or any corporation, partnership, association
or other business organization or division thereof, in each case in
this clause (vii) which are material, individually or in the aggregate,
to the Company and its Subsidiaries taken as a whole;
(viii) enter into any new (or amend any existing) employee
benefit plan, program or arrangement or any new (or amend any existing)
employment, severance or consulting agreement, grant any general
increase in the compensation of officers or employees (including any
such increase pursuant to any bonus, pension, profit-sharing or other
plan or commitment) or grant any increase in the compensation payable
or to become payable to any employee, except in accordance with
pre-existing contractual provisions;
(ix) make or commit to make any capital expenditure in excess
of $500,000 individually;
(x) pay, lend or advance any amount to, or sell, transfer or
lease any properties or assets to, or enter into any agreement or
arrangement with, any of its Affiliates except for the distribution or
transfer of cash or the payment of debt;
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(xi) fail to keep in full force and effect insurance
comparable in amount and scope to coverage maintained on the date
hereof or such other insurance as may be required by law;
(xii) take any other action that would cause any of the
representations and warranties made by Seller in this Agreement not to
remain true and correct;
(xiii) make any change in any method of accounting or
accounting principle, method, estimate or practice except for any such
change required by reason of a concurrent change in GAAP, or write down
the value of any inventory or write off as uncollectible any accounts
receivable except in the ordinary course of business consistent with
past practice;
(xiv) make, change or revoke any election or method of
accounting with respect to Taxes inconsistent with any prior election
or method of accounting affecting or relating to the Company or its
Subsidiaries, provided that Acquiror's consent to this matter shall not
be unreasonably withheld or delayed;
(xv) enter into any closing or other agreement or settlement
with respect to Taxes affecting or relating to the Company or its
Subsidiaries, provided that Acquiror's consent to this matter shall not
be unreasonably withheld or delayed;
(xvi) release or forgive any claim or litigation or, except in
the ordinary course of business consistent with past practice, waive
any right thereto;
(xvii) make, enter into, modify, amend in any material respect
or terminate any contract, bid or expenditure, where such contract, bid
or expenditure is for (A) a contract entailing payments in excess of
$400,000 or (B) a contract having a term in
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excess of 9 months; provided, however, that with respect to this clause
(xvii), Acquiror's consent shall not be unreasonably withheld or
delayed;
(xviii) pay, discharge, settle or satisfy any claims,
litigation, liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise) involving amounts in
excess of $50,000 in the aggregate, other than the payment, discharge,
settlement or satisfaction of liabilities in the ordinary course of
business consistent with past practice and except for any settlement or
release that involves only the payment of money by the Company or any
of its Subsidiaries;
(xix) make any loans to any third party in excess of $10,000
in the aggregate except in the ordinary course of business; or
(xx) commit to do any of the foregoing.
(b) From and after the date hereof and until the Closing Date, the
Seller shall cause the Company and each of its Subsidiaries to:
(i) continue to maintain, in all material respects (1) the
assets, properties, rights, and operations of the Company and its
Subsidiaries in accordance with normal practice and (2) the Permits of
the Company and its Subsidiaries in accordance with normal practice;
(ii) continue to make capital expenditures substantially in
accordance with the financial plan for the Company and its
Subsidiaries;
(iii) file, when due or required, all Tax Returns and other
reports required to be filed and pay when due all Taxes lawfully levied
or assessed against them, unless the validity thereof is contested in
good faith and by appropriate proceedings diligently conducted;
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(iv) continue to conduct the businesses of the Company and its
Subsidiaries in the ordinary course consistent with past practice;
(v) keep its books of account, files and records in the
ordinary course and in accordance with existing practice; and
(vi) use their commercially reasonable efforts to (1) preserve
intact the operations, organization and reputation of the Company and
its Subsidiaries, (2) keep available the services of the Company's and
its Subsidiaries' present officers and key employees and (3) preserve
the goodwill and business relationships of the suppliers and customers
of the Company and its Subsidiaries.
5.2. Disclosure Supplements.
(a) Within 5 days after the execution of this Agreement, Seller shall
circulate this Agreement and the Schedules to this Agreement to the management
of the Company set forth on Schedule 11.9 or their successors ("COMPANY
MANAGEMENT") for their review and comment with respect to the accuracy of the
representations and warranties and the related Schedules. Seller shall cause the
Company Management to promptly report in writing to Bruce Vaio any inaccuracies
identified in such review. Seller shall promptly deliver each such written
notice and all reports sent by Bruce Vaio to Acquiror as such notices and
reports are received by Seller.
(b) No earlier than 10 days and no later than 5 days prior to the
Closing, Seller shall circulate this Agreement and the Schedules to this
Agreement to the Company Management for their review and comment with respect to
the accuracy of the representations and warranties and the related Schedules.
Seller shall cause the Company Management to promptly report in writing to Bruce
Vaio any inaccuracies identified in such
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review. Seller shall promptly deliver each such written notice and all reports
sent by Bruce Vaio to Acquiror as such notices and reports are received by
Seller but in any event no later than on the third day prior to the Closing.
(c) At least two days prior to the Closing, Seller shall deliver
updated Schedules to this Agreement (the "SUPPLEMENTAL Schedules"). The
Supplemental Schedules shall reflect only those changes to the Schedules to this
Agreement delivered on the date of the execution of this Agreement relating to
facts, events or circumstances that occurred during the period after the
execution of this Agreement but before the Closing Date.
(d) No written notice delivered pursuant to Section 5.2(a) or 5.2(b)
will be deemed to have (i) amended the Schedules delivered on the date hereof,
(ii) qualified the representations and warranties contained in Article III made
as of the date hereof, or (iii) cured any misrepresentation or breach of
warranty as of the date hereof. Acquiror's rights with respect to any breach of
warranty or misrepresentation contained in this Agreement as of the date hereof
will not be affected by any such notice.
(e) The Supplemental Schedules will be deemed only to qualify the
representations and warranties as of the Closing Date.
(f) In addition to the right to seek relief for misrepresentations or
breaches of warranty based on the contents of any Supplemental Schedule,
Acquiror will be entitled to seek relief, subject to the terms of this
Agreement, based on misrepresentations or breaches of warranty as of the date
hereof regardless of the content of any Supplemental Schedules or notices or
reports.
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5.3. Satisfaction of Conditions.
(a) Each party to this Agreement shall use reasonable efforts to
satisfy promptly all conditions precedent to the obligations of the other party
to consummate the transactions contemplated by this Agreement.
(b) In addition to the obligations set forth in Section 5.3(a),
Acquiror and Seller, at each of their respective expenses, will timely and
promptly make all filings which are required under the HSR Act. Acquiror and
Seller will furnish to each other such necessary information and reasonable
assistance as they may reasonably request in connection with the preparation of
necessary filings or submissions to any Governmental Entity, including, without
limitation, any HSR Filings. Acquiror and Seller will supply each other with
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof) between Acquiror or Seller or any of their
respective representatives, on the one hand, and the FTC or Antitrust Division
or any member of their respective staffs, on the other hand, with respect to
this Agreement or the transactions contemplated hereby. Each of Acquiror and
Seller, as the case may be, agrees to use its reasonable effort to obtain, as
promptly as practicable, the approval of the FTC or the Antitrust Division, as
the case may be, of the purchase and the sale of the Stock by Acquiror,
including by Acquiror agreeing to divest, hold separate or place in trust
pending divestiture or further governmental investigation, such operations of
Acquiror's business as may be required, requested or necessary to obtain the
approval of the appropriate governmental enforcement agency.
(c) Each of Acquiror and Seller shall use its reasonable efforts and
pay all expenses necessary to obtain any licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts as are required for
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Acquiror and Seller, as the case may be, to consummate the transactions
contemplated hereby, and to effect all necessary registrations and filings,
including without limitation, filings under the HSR Act. Subject to the terms
and conditions hereof, each of Acquiror and Seller agrees to use its reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as soon as
practicable. Each of Acquiror and Seller shall use its reasonable efforts to
defend any lawsuits or other legal proceedings, whether judicial or
administrative, whether brought derivatively or on behalf of third parties
(including governmental agencies, officials or other Governmental Entities),
challenging this Agreement or the consummation of the transactions contemplated
hereby.
5.4. Public Announcements. Except as may be required by applicable Law,
the rules of any applicable stock exchange or a Governmental Entity, Acquiror
and Seller will consult prior to the issuance of any press release or the making
of any such public statement relating to the transactions contemplated by this
Agreement.
5.5. Further Assurances. From and after the Closing, each of Seller and
Acquiror shall execute and deliver, in the name and on behalf of Seller or
Acquiror, as appropriate, any assignments or assurances and take and do, in the
name and on behalf of Seller or Acquiror, as appropriate, any other actions and
things reasonably necessary to carry out the intention of this Agreement.
5.6. Environmental Inspection and Assessment; Special Indemnity.
(a) At Acquiror's expense, Acquiror may cause an environmental
consulting firm reasonably acceptable to Seller to conduct an inspection and
environmental assessment of the Real Property. The scope of such inspection and
assessment would consist of a
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so-called "Phase I" preliminary environmental audit of the Real Property. If,
with respect to any Real Property, the "Phase I" for such Real Property
indicates the existence of any potential environmental problem, Acquiror will
have the right to conduct additional reasonable procedures, including without
limitation, taking of groundwater samples, soil test borings, effluent or other
discharge analyses. Acquiror will coordinate with Seller on the timing of the
physical inspection.
(b) Acquiror will indemnify, defend and hold Seller and the Company
harmless from and against any and all physical damages that may be suffered or
incurred by Seller or the Company as a result of any wrongful act or wrongful
omission of Acquiror, the environmental consultant engaged by Acquiror, or their
agents, subcontractors or representatives in the implementation of the
environmental inspection and assessment. Seller will indemnify, defend and hold
Acquiror harmless from and against any and all physical damages that may be
suffered or incurred by Acquiror, the environmental consultant engaged by
Acquiror, or their agents, subcontractors or representatives in the
implementation of the environmental inspection and assessment as a result of any
wrongful act or wrongful omission of Seller or the Company.
5.7. Employee Communications. Prior to the Closing, Acquiror shall not
communicate with Employees with respect to matters arising in connection with
the transactions contemplated by this Agreement without the prior consent of
Seller, which consent shall not be unreasonably withheld.
5.8. Access to Books, Records and Personnel.
(a) Prior to the Closing Date, Seller shall, and shall cause the
Company and its Subsidiaries and the employees of Seller and the Company and its
Subsidiaries to, upon reasonable request, fully cooperate with Acquiror and
afford to Acquiror and its counsel, accountants and other authorized
representatives, reasonable access during normal business hours
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to all books, records, data, facilities, properties and personnel (including the
review of any auditors' work papers made available by such auditor it being
understood that each of Seller and Acquiror will use their reasonable efforts to
cause such auditor to afford access to its work papers) to the extent that such
access may be reasonably requested by Acquiror (including, without limitation,
with respect to the disposition and operation of the business of processing
stone to produce lime and lime products); provided that no review of such
materials or contact with personnel by Acquiror shall disrupt the operations of
the Company or its Subsidiaries.
(b) Following the Closing, each of Seller and Acquiror shall, and each
of Seller and Acquiror shall cause its Affiliates and its employees and the
employees of its Affiliates to, upon reasonable request, fully cooperate with
Seller or Acquiror, as the case may be, and afford to Seller or Acquiror and
their counsel, accountants and other authorized representatives reasonable
access during normal business hours to all books, records, data, facilities,
properties and personnel (including the review of any auditors' work papers of
Seller, or with respect to period prior to the Closing the Company, made
available by such auditor it being understood that each of Seller and Acquiror
will use their reasonable efforts to cause such auditor to afford access to its
work papers) and permit Seller or Acquiror and their respective counsel,
accountants and other authorized representatives to reasonably make copies of
such books, records and other data, to the extent that such access may be
reasonably requested by Seller or Acquiror; provided, however, that no review of
such materials or contact with personnel by Seller or Acquiror shall disrupt the
operations of the Company; and provided, further, that this Section (i) shall
not apply in the context of any dispute or proceeding between Acquiror (and
after the Closing Date, the Company), on the one hand, and Seller, on the other
hand, and (ii) is independent from the provision set forth in Section 2.4.
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5.9. Repayment or Release of Indebtedness or Obligations. On or before
the Closing Date, Seller shall cause all (i) outstanding indebtedness of the
Company (on a consolidated basis), owed to Seller or any of Seller's Affiliates
and (ii) obligations of the Company (on a consolidated basis) for borrowed money
(and all obligations, contingent or otherwise, of the Company or any of its
Subsidiaries guaranteeing or having the economic effect of guaranteeing any
obligation for borrowed money of any other Person) to any other Person, in each
case to be repaid or released such that the Company (on a consolidated basis)
will have no such outstanding indebtedness and obligations, as the case may be,
as of the Closing Date.
5.10. Resignations. Prior to the Closing, Seller shall cause to be
delivered to Acquiror the written resignations of the directors and officers of
the Company and its Subsidiaries (such resignations being resignations of their
positions as such) specified in writing by Acquiror at least 5 days prior to the
Closing; provided, however, that if any such resignation triggers the payment of
any amount by the Company to any such Person under a contract or under any
Employee Plan disclosed on Schedule 3.11 or 3.9, as the case may be, Acquiror
shall bear the cost of such payment.
5.11. Title Commitments. Seller shall, promptly (and in no event more
than five (5) days) after the date hereof, order from a title company reasonably
acceptable to Acquiror (the "TITLE COMPANY") a title insurance commitment or
commitments with respect to (i) all Real Property that is used or intended to be
used for the purpose of mining and (ii) the "Bender" site in Humble, Texas.
Seller shall use its reasonable efforts to cause the Title Company to issue such
title commitments as promptly as feasible and, immediately upon receipt thereof,
shall deliver the same to Acquiror and, at Acquiror's request, to the surveyor
or engineer that has been engaged by Acquiror to prepare surveys of the Real
Property. To the extent Acquiror reasonably objects to
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any matter(s) reflected therein or requests additional information with respect
thereto, Seller shall use its reasonable efforts to cause the Title Company to
modify and/or supplement the commitments accordingly.
5.12. Obligations and Liabilities. The parties hereby agree that on and
after the Closing Date, the Company will continue to discharge its obligations
and liabilities in the ordinary course of business, and Seller shall not be
derivatively liable for such obligations and liabilities except to the extent
expressly provided in this Agreement.
5.13. Undertaking to Deliver Real Property Descriptions. Within 21 days
of the date hereof, Seller shall deliver to Acquiror (i) a boundary description
which accurately describes the collective perimeter boundary(ies) of the
parcel(s) which comprise the Beckmann Tract, the Partnership Tract and the 95+/-
acrE "TRIANGLE TRACt" and (ii) a map which accurately depicts the property
boundary(ies) described in clause (i), identifies all of the courses and
distances for such boundary(ies) and each strip, gap or gore within the Real
Property outlined in black on the map included in Schedule 1.1A. The items
delivered to Acquiror by Seller pursuant to this Section 5.13 shall be
substituted for the corresponding items attached to this Agreement concurrently
with the execution hereof as Schedules 1.1A, 1.1B and 1.1C.
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ARTICLE VI.
EMPLOYEE BENEFITS
6.1. Maintenance of Benefits.
(a) For a period of 12 months following the Closing Date, Acquiror
shall cause the Company to provide Employees with the same base pay levels and
comparable long-term and short-term incentive compensation bonus opportunities
as were in place immediately prior to the Closing Date; provided, however, that
the Company shall not be required to maintain base pay levels or long-term and
short-term incentive compensation bonus opportunities at levels greater than
those provided for similarly situated employees of Acquiror and its
subsidiaries. Except as provided in the preceding sentence, Acquiror shall for a
period of 12 months following the Closing Date, cause the Company to provide
Employees with compensation and benefits comparable to the Company's Benefits.
Notwithstanding any other provision of this Agreement (i) nothing in this
Agreement will confer third-party beneficiary rights on any individual Employee
or group of Employees, and (ii) nothing in this Agreement will prohibit Acquiror
from permitting the Company during the 12-month period following the Closing
Date to substitute any compensation or benefit plan, program, arrangement or
structure for Employees so long as such Employees are treated on substantially
the same basis as similarly situated employees of Acquiror and its Affiliates.
Nothing in this Section 6.1(a) will limit Acquiror's right to permit the Company
to terminate the employment of any Employee as of or following the Closing Date.
(b) From and after the Closing Date, Acquiror will cause the Company to
perform when due all obligations (i) under the Redland Aggregates North America
Long-Term Incentive Program to Employees and (ii) under each severance or
employment agreement to
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which the Company is a party in accordance with the terms and conditions of such
Program and each such agreement as in effect on the Closing Date; provided, that
nothing in this sentence shall be construed as prohibiting the Acquiror or the
Company from amending or terminating such Program or any such agreement to the
extent permitted by the terms of such Program or any such agreement. From and
after the Closing Date, Acquiror will cause the Company to give Employees
preacquisition service credit for purposes of eligibility, vesting and benefit
accrual under Employee Plans or Benefit Arrangements adopted by the Company or
otherwise made available by Acquiror to Employees at or after the Closing Date.
"Preacquisition service credit" means service with the Company (or a predecessor
or Affiliate of the Company) prior to the Closing Date to the extent such
service was recognized for such purposes by the Company under similar plans and
arrangements prior to the Closing Date, provided that the preacquisition service
credit for benefit accrual purposes under a defined benefit pension plan shall
be granted only if the benefit liability under an Employee Benefit Plan that is
related to such service is transferred to such defined benefit pension plan, and
provided further that preacquisition service credit shall not be granted for the
purpose of retiree medical coverage. From and after the Closing Date, Employee
Plans and Benefit Arrangements relating to Employees adopted by the Company or
otherwise made available by Acquiror to Employees at or after the Closing Date
shall (A) waive all pre-existing condition exclusions for each Employee to the
extent that the Employee Plan or Benefit Arrangement replaces a similar Employee
Plan or Benefit Arrangement maintained by the Company prior to the Closing Date
and such condition was not excluded at the time of such replacement with respect
to such Employee by such similar Employee Plan or Benefit Arrangement of the
Company, and (B) credit each such Employee for purposes of deductible
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limits and copayment requirements during the remainder of the calendar year in
which an Employee Plan or Benefit Arrangement replaces a similar Employee Plan
or Benefit Arrangement of the Company with amounts so credited under such
similar Employee Plan or Benefit Arrangement of the Company for such calendar
year.
(c) As soon as reasonably practicable after the Closing Date, Seller
will cause the plan sponsor ("PLAN SPONSOR") of the Redland North America
Retirement Plan or its successor (the "REDLAND PENSION PLAN") to transfer the
vested and nonvested accrued benefits of participants in the Redland Pension
Plan employed by the Company as of December 31, 1998 or the Closing Date, if
earlier ("REDLAND PENSION PARTICIPANTS") and assets (cash or cash equivalents)
equal to the present value of such benefits or, if less, such amount as may be
permitted pursuant to Section 414(l) of the Code, to be transferred in a manner
that satisfies Section 414(l) of the Code to a defined benefit pension plan or
plans maintained or established by Acquiror which is qualified within the
meaning of Section 401(a) of the Code ("ACQUIROR'S PLAN"). No transfer will
occur until the Plan Sponsor and Seller agree as to the amounts to be
transferred and have received such assurances as may be reasonable that the
applicable provisions of the Code have been satisfied; provided, however, that
Seller will not agree to any such amounts or assurances without the prior
consent of Acquiror. The present value of vested and nonvested accrued benefits
of Redland Pension Participants under the Redland Pension Plan will be
determined by the Plan Sponsor's actuary as of December 31, 1998 (the "VALUATION
DATE") on the basis of the mortality table prescribed by and an interest rate or
rates permitted by Part 4044 of the Pension Benefit Guaranty Corporation
regulations effective as of the Valuation Date, and such other actuarial
assumptions and methods agreed to by both the Plan Sponsor's actuary and an
actuary designated by Acquiror. On the date of the actual transfer from the
Redland Pension
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Plan to Acquiror's Plan, the amount so determined will be increased at the
initial interest rate effective as of the Valuation Date as set forth for
Annuity Valuations in Table I of Appendix B to Part 4044 of the Pension Benefit
Guaranty Corporation regulations, unless the actual transfer occurs more than
180 days after the Valuation Date, in which case the initial interest rate shall
be adjusted for each month following the Valuation Date to reflect the rate in
effect for that month under Table I of Appendix B, and reduced by the amount of
any benefit payments made to Redland Pension Participants for the period between
the Valuation Date and the date of transfer. Acquiror will take such action as
may be necessary to cause Acquiror's Plan to provide each Redland Pension
Participant participating in Acquiror's Plan after the transfer with an accrued
benefit that is not less than the accrued benefit transferred from the Redland
Pension Plan and to provide all benefits protected by law, including optional
forms of benefit. Acquiror's Plan will provide for benefit accrual for Redland
Pension Participants effective as of the earlier of January 1, 1999 and the date
that Redland Pension Participants cease benefit accruals under the Redland
Pension Plan. Seller shall take such action as may be necessary to cause the
Company to withdraw as a participating employer from the Redland Pension Plan
effective as of the Closing Date. Seller agrees to cooperate with Acquiror and
the Company after the Closing Date and to provide any information which Seller
has or can reasonably obtain and any other assistance to the extent reasonably
necessary in order for Acquiror and the Company to fulfill their reporting and
disclosure obligations, to file determination letter applications or other
applications for recognition of tax exemption, and to fulfill their obligations
to protect accrued benefits with respect to Acquiror's Plan and the Company's
Benefits.
6.2. Vacation and Sick Leave. For a period of 12 months following the
Closing Date, Acquiror will cause the Company to maintain vacation and sick
leave policies for
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Employees no less favorable than those maintained by the Company immediately
prior to the Closing Date, and to credit all service earned by Employees prior
to the Closing Date and to accept all vacation and sick leave days accrued by
Employees as of the Closing Date.
6.3. WARN. Acquiror shall not, at any time prior to 180 days after the
Closing Date, effectuate a "plant closing" or "mass layoff" as those terms are
defined in the Worker Adjustment and Retraining Notification Act of 1988, as
amended ("WARN") affecting in whole or in part any facility, site of employment,
operating unit or employee of the Company without complying fully with the
requirements of WARN.
ARTICLE VII.
CONDITIONS TO THE TRANSFER
7.1. Conditions to the Obligations of Each Party. The obligations of
each of Seller and Acquiror to consummate the Transfer of the Stock are subject
to the satisfaction of the following conditions:
(a) the waiting period, if any, under the HSR Act relating to the
transactions contemplated under this Agreement shall have expired or been
terminated; and
(b) no provision of any applicable Law and no judgment, injunction,
order or decree shall prohibit the consummation of the Transfer of the Stock or
the transactions contemplated under this Agreement.
7.2. Conditions to the Obligations of Seller. The obligation of Seller
to consummate the Transfer of the Stock is subject to the satisfaction (or
written waiver by Seller) of each of the following further conditions:
(a) Acquiror shall have performed and complied with in all material
respects all obligations and covenants required to be performed or complied with
by it under this
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Agreement at or prior to the Closing Date and Seller shall have received a
certificate signed by an executive officer of Acquiror on behalf of Acquiror to
the foregoing effect;
(b) the representations and warranties of Acquiror contained in this
Agreement and in any certificate or other writing delivered by Acquiror pursuant
to this Agreement shall be true in all material respects at and as of the
Closing Date as if made at and as of such time and Seller shall have received a
certificate signed by an executive officer of Acquiror to the foregoing effect;
and
(c) the Purchase Price shall have been paid by Acquiror via wire
transfer of immediately available funds to an account designated by Seller.
7.3. Conditions to the Obligations of Acquiror. The obligation of
Acquiror to consummate the Transfer of the Stock is subject to the satisfaction
(or written waiver by Acquiror) of each of the following further conditions:
(a) Seller shall have performed and complied with in all material
respects all obligations and covenants, required to be performed or complied
with by it under this Agreement at or prior to the Closing Date and Acquiror
shall have received a certificate signed by an executive officer of Seller to
the foregoing effect;
(b) the representations and warranties of Seller contained in this
Agreement and in any certificate or other writing delivered by Seller, the
Company or any of its Subsidiaries, pursuant to this Agreement shall be true at
and as of the Closing Date as if made at and as of such time (other than
inaccuracies that in the aggregate do not constitute a Material Adverse Effect)
and Acquiror shall have received a certificate signed by an executive officer of
Seller to the foregoing effect; provided, however, that for the avoidance of
doubt the parties expressly agree that the filing of any civil, criminal or
administrative claim, action, proceeding or
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suit against Acquiror, Seller, the Company or any of their respective
Subsidiaries after the date hereof could give rise to the non-satisfaction of
this condition if, in the aggregate, such claims, actions, proceedings or suits
constitute a Material Adverse Effect;
(c) Seller shall have delivered to Acquiror at Closing the Stock free
and clear of all Liens and encumbrances with the certificate or certificates
evidencing the Stock duly endorsed;
(d) (i) Seller shall have delivered to Acquiror title insurance
commitments in accordance with the provisions of Section 5.11 hereof; and (ii)
Acquiror shall have received current surveys of the Beckmann Tract, the Rogers
Tract, the Partnership Tract, the "Hunter Tract" in New Braunfels, Texas, and
the "Bender Tract" in Humble, Texas prepared by a surveyor or engineer licensed
in the State of Texas (each such survey shall be prepared in accordance with the
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys adopted by
the American Land Title Association and the American Congress on Surveying &
Mapping in 1997, certified to Acquiror's title insurance company (if any),
Acquiror, any mortgagee of Acquiror and such other parties as Acquiror may
designate), which surveys do not disclose any matters relating to the Company's
(or the applicable Subsidiary's) title to the subject real property which make
any of the representations or warranties contained herein inaccurate in a manner
that constitutes a Material Adverse Effect; provided, however, that the
conditions set forth in this Section 7.3(d) shall be of no further force or
effect if, on or before November 30, 1998, (y) Acquiror fails to obtain a survey
of the Beckmann Tract, the Rogers Tract, the Partnership Tract, the Hunter Tract
or the Bender Tract or (z) Acquiror fails to notify Seller of any such
inaccuracy;
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(e) Seller shall have delivered to Acquiror all consents,
authorizations, orders and approvals set forth on Schedule 3.5;
(f) Seller shall have delivered to Acquiror an opinion of counsel to
Seller covering the matters set forth in Exhibit B hereto;.
(g) Lafarge S.A. shall have duly executed and delivered to Seller a
guaranty in the form attached to this Agreement as Exhibit C;
(h) the Company shall have the ability in a commercially reasonable
manner and in a manner consistent with its present plan to access, process,
exploit or otherwise utilize the reserves as reported on the Reports (after
giving effect to ordinary course mining since the date of the relevant Report)
with respect to the Beckmann Tract and the Rogers Tract and no fact, event or
circumstance shall exist with respect to the Beckmann Tract or the Rogers Tract
that would affect the Company's ability to access, process, exploit or otherwise
utilize the reserves located at each such tract (other than inabilities or
facts, events or circumstances that in the aggregate do not constitute a
Material Adverse Effect).
ARTICLE VIII.
TERMINATION
8.1. Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(i) by mutual written consent of Seller and Acquiror;
(ii) by Seller, so long as Seller is not then in material
breach of this Agreement, (A) after February 28, 1999 if the Closing
shall not have occurred on or before such date or (B) at any time in
the event Acquiror is in material breach of any of its
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obligations under this Agreement and such breach has continued uncured
for a period of more than 10 days after receipt of a written notice
from Seller;
(iii) by Acquiror, so long as Acquiror is not then in material
breach of this Agreement, (A) after February 28, 1999 if the Closing
shall not have occurred on or before such date or (B) at any time in
the event Seller is in material breach of any of its obligations under
this Agreement and such breach has continued uncured for a period of
more than 10 days after receipt of a written notice from Acquiror; and
(iv) by Acquiror, provided it is not in breach of any of its
obligations under this Agreement, if any disclosure provided by Seller
pursuant to Section 5.2 would result in a Material Adverse Effect and
Acquiror exercises this right within ten days of its receipt of the
relevant disclosure or of the Supplemental Disclosures.
8.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1 hereof, this Agreement, except for the
provisions of Sections 5.4, 5.6(b), 5.7, 11.4, 11.10 and 11.11, shall forthwith
become null and void and have no effect, without any liability on the part of
either party or their respective directors, officers or stockholders. Nothing in
this Article VIII shall, however, relieve either party to this Agreement of
liability for breach of this Agreement occurring prior to such termination, or
for breach of any provision of this Agreement which specifically survives
termination hereunder.
ARTICLE IX.
TAX MATTERS
9.1. Preparation of Tax Returns; Responsibility for Taxes.
(a) Seller shall prepare and timely file (or cause to be prepared and
timely filed) a consolidated United States federal income Tax Return for the
Company and its
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affiliated Subsidiaries, and all other separate, consolidated, combined or
unitary income Tax Returns in which the Company or any of its Subsidiaries is
required to be included, for each taxable year or period of the Company and any
such Subsidiary which ends on or before the Closing Date; provided, however,
that Seller shall allow Acquiror to review and reasonably approve without undue
delay any such Tax Return with respect to any taxable period which ends on or
before the Closing Date at any time during the forty-five (45) day period
immediately preceding the filing of such Tax Return; and provided, further, that
Acquiror shall have no right to object to any tax elections reflected on such
Tax Returns to the extent such elections are otherwise permitted under the terms
of this Agreement, unless Acquiror agrees to bear any increase in Taxes
attributable to the failure to make such elections. Seller shall be responsible
for the timely payment (and entitled to any refund) of all Taxes due with
respect to the taxable years or periods covered by such Tax Returns. Seller and
Acquiror agree that, to the extent that the relevant Tax Authority permits, but
does not require, the Company or any of its Subsidiaries to file a Tax Return
for the taxable period that includes the Closing Date as ending on the Closing
Date, Seller shall file (or cause to be filed) such Tax Return as if the taxable
period ended as of the close of business on the Closing Date. Any Tax Return
described in the preceding sentence shall not constitute a Straddle Tax Return.
(b) Except as provided in Section 9.1(a), Acquiror shall prepare and
timely file (or cause to be prepared and timely filed) all Tax Returns relating
to the Company and its Subsidiaries and their respective operations or assets
that are required to be filed (taking into account applicable extensions) after
the Closing Date.
(c) The Company shall pay (or cause to be paid) the Taxes shown to be
due on all Straddle Tax Returns, provided that Seller shall promptly reimburse
the Company for
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the portion of such Tax that relates to a Pre-Closing Tax Period, except to the
extent accrued on the Working Capital Statement. Seller will furnish to Acquiror
all information and records in the possession of Seller reasonably requested by
Acquiror for use in preparation of any Straddle Tax Returns. Acquiror shall
allow Seller to review, comment upon and reasonably approve without undue delay
any Straddle Tax Return at any time during the forty-five (45) day period
immediately preceding the filing of such Tax Return. Acquiror and Seller agree
that Acquiror will cause the Company to file all Tax Returns for any Straddle
Period on the basis that the relevant taxable period ended as of the close of
business on the Closing Date, unless the relevant Tax authority will not accept
a Tax Return filed on that basis. In the case of any Straddle Period, (i) real,
personal and intangible property Taxes ("PROPERTY TAXES") of the Company and its
Subsidiaries for the Pre-Closing Tax Period shall be equal to the amount of such
property Taxes for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that are in
the Pre-Closing Tax Period and the denominator of which is the number of days in
the Straddle Period; and (ii) the Taxes of the Company and its Subsidiaries
(other than property Taxes) for the portion of the Straddle Period that
constitutes a Pre-Closing Tax Period shall be computed as if such taxable period
ended as of the close of business on the Closing Date.
(d) Any Tax Returns to be prepared pursuant to the provisions of
Section 9.1(a) and any Straddle Tax Return shall be prepared in a manner
consistent with practices followed in prior years with respect to similar Tax
Returns, except for changes required by changes in Law or fact.
(e) Seller shall indemnify Acquiror, the Company, its Affiliates and
each of their respective officers, directors and employees and hold them
harmless from all Losses
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attributable to Pre-Closing Taxes. For purposes of this Agreement, "PRE-CLOSING
TAXES" shall mean, except to the extent accrued on the Working Capital
Statement: (a) all liability for Taxes of the Company and its Subsidiaries for
Pre-Closing Tax Periods; (b) all liability resulting by reason of the several
liability of the Company or any of its Subsidiaries pursuant to Treasury
Regulations ss. 1.1502-6 or any analogous state, local or foreign law or
regulation or by reason of having been a member of any consolidated, combined or
unitary group on or prior to the Closing Date; (c) all liability for Taxes
resulting by reason of events or transactions (other than any intercompany
transaction under Treasury Regulations ss. 1.1502-13) occurring or performed in
a Pre-Closing Tax Period; (d) any liability for Taxes attributable to the
failure of Acquiror to withhold any portion of the Purchase Price under Section
9.4 of this Agreement; and (e) all liability for Taxes of any other Person
pursuant to any contractual agreement entered into by the Seller, the Company or
any of its Subsidiaries on or before the Closing Date.
(f) Seller and Acquiror will, and Acquiror will cause the Company and
its Subsidiaries to, in all reasonable respects cooperate with each other in the
conduct of any Tax audit or similar proceedings involving or otherwise relating
to the Company or any of its Subsidiaries (or the income therefrom or assets
thereof) with respect to any Tax and each will execute and deliver such powers
of attorney and other documents as are necessary to carry out the intent of this
Section 9.1(f). In the event of any Tax audit or similar proceedings involving
(in whole or in part) Taxes subject to Section 9.1(c), if Seller and its
Affiliates are not the primary parties to such proceedings, (i) Acquiror will,
and will cause the Company to, promptly notify Seller of the pendency of such
audit or proceeding; (ii) if Seller so elects, Seller or its designated
accountants or counsel will be permitted at its own cost and expense to
participate in such audit or proceedings and all appeals therefrom; (iii)
Acquiror and its Affiliates will direct and control
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such audit or proceedings except for audits and proceedings where the majority
of the potential liability relating to such Tax Returns is the responsibility of
Seller, which audits and proceedings Seller shall have the right to direct and
control, subject in each case to the right of the non-controlling party to
approve any settlements or decisions to appeal, which approval shall not be
unreasonably withheld. In any event, the party conducting or directing such
audit or other proceedings (the "DIRECTING PARTY") will consult in good faith
with the other party on all decisions relating to such audit and proceedings,
and will provide such party with copies of all documents received or submitted
during such audit and proceedings (redacted as appropriate to preserve the
confidentiality of the Affiliates of the Directing Party).
(g) Seller will cause any Tax sharing agreement or similar arrangement
between the Company and Seller or its Affiliates to be terminated, effective as
of the Closing, to the extent that any such agreement relates to the Company or
any of its Subsidiaries, and after the Closing neither the Company nor any of
its Subsidiaries shall have any obligation under any such agreement or
arrangement for any past, present or future period.
9.2. Access to Information.
(a) From and after the Closing, Seller shall grant to Acquiror (or its
designee) access at all reasonable times after reasonable advance notice to all
of the information, books and records, relating to the Company or any of its
Subsidiaries within the possession of Seller (including work papers and
correspondence with Tax authorities) and shall afford Acquiror (or its designee)
the right (at Acquiror's expense) to take extracts therefrom and make copies
thereof, to the extent reasonably necessary to permit Acquiror (or its designee)
to prepare Tax Returns and to respond to any audit, inquiry, proceeding or other
action with respect to such Tax Returns.
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(b) From and after the Closing, Acquiror shall grant to Seller (or its
designee) access at all reasonable times after reasonable advance notice to all
of the information, books and records, relating to the Company or any of its
Subsidiaries within the possession of Acquiror, the Company or any such
Subsidiary (including work papers and correspondence with Tax authorities) and
shall afford Seller (or its designee) the right (at Seller's expense) to take
extracts therefrom and make copies thereof, to the extent reasonably necessary
to permit Seller (or its designee) to prepare Tax Returns and to respond to any
audit, inquiry, proceeding or other action with respect to such Tax Returns. In
addition, and without limiting the generality of the foregoing, to permit Seller
to comply with its obligations under Section 9.1(a), Acquiror will prepare (or
cause the Company to prepare in accordance with prior practices) and deliver to
Seller, as soon as reasonably practical after receipt of a request therefor from
Seller, the standard income tax data reporting package and audit working paper
files traditionally provided by the Company and any of its Subsidiaries to
Seller and all other data regarding the Company reasonably requested by Seller
for the preparation of any Tax Return under Section 9.1(a).
9.3. Transfer Taxes. Acquiror shall be responsible for the payment of
all foreign, state, local, provincial and municipal transfer, sales, use or
other similar Taxes (and all recording or filing fees) resulting from the
transactions contemplated by this Agreement, excluding any U.S. or foreign
income, franchise or similar Taxes.
9.4. FIRPTA Matters. Seller shall, on the Closing Date, cause the
Company to (i) deliver to Acquiror a written statement which, in form and
substance, satisfies the requirements of section 1.897-2(h)(1) of the Income Tax
Regulations certifying that, as of the Closing Date, the Company has determined
that it is not and, at all times during the five year period preceding the date
of such written statement, has not been a United States real property
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holding corporation within the meaning of Section 897(c)(2) of the Code, and
that the stock does not constitute a United States real property interest within
the meaning of Section 897(c)(1)(A) of the Code (the "FIRPTA STATEMENT"), and
(ii) deliver to the Internal Revenue Service a written notification which, in
form and substance, satisfies the requirements of section 1.897-2(h)(2) of the
Income Tax Regulations with respect to the determinations referred to in clause
(i) above, together with any of the supplemental statements specified in section
1.897-2(h)(5) of the Income Tax Regulations which the Company is required to
submit to the Internal Revenue Service in connection therewith. Acquiror shall
rely on the FIRPTA Statement for purposes of availing itself of the exception to
withholding set forth in Section 1445(b)(3) of the Code, and the Purchase Price
shall be paid by the Acquiror to Seller without any reduction therefrom for the
withholding tax imposed by Section 1445(a) of the Code.
ARTICLE X.
SURVIVAL; INDEMNIFICATION
10.1. Limitation of Representations and Warranties. EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, (A) THERE ARE NO REPRESENTATIONS OR WARRANTIES OF
ANY KIND, EXPRESSED OR IMPLIED, WITH RESPECT TO SELLER OR THE COMPANY OR ITS
BUSINESSES, ASSETS, RESULTS OF OPERATIONS, OR FINANCIAL CONDITION AND (B) SELLER
AND THE COMPANY MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO (i) ANY
PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE AVAILABLE TO ACQUIROR OF
FUTURE REVENUES, FUTURE RESULTS OF OPERATIONS (OR ANY COMPONENT THEREOF), FUTURE
CASH FLOWS OR FUTURE FINANCIAL CONDITION (OR ANY COMPONENT THEREOF) OF THE
COMPANY, OR
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(ii) ANY OTHER INFORMATION OR DOCUMENTS MADE AVAILABLE TO ACQUIROR OR ITS
COUNSEL, ACCOUNTANTS OR ADVISORS WITH RESPECT TO THE COMPANY, OR (iii) THE
CONDITION OF ANY ASSETS OWNED, USED OR HELD FOR USE BY THE COMPANY OR ANY
SUBSIDIARY OF THE COMPANY.
10.2. Survival of Representations and Warranties. The representations
and warranties of Acquiror and Seller contained in this Agreement shall survive
the Closing; provided, however, that (a) no claim, lawsuit, or other proceeding
based upon the breach of any representation or warranty contained in this
Agreement (other than Sections 3.4, 3.8 and 3.12) may be made by any Indemnitee
unless notice of such claim, lawsuit or other proceeding, is given to the
Indemnitor in accordance with Section 10.5 prior to the second anniversary of
the Closing Date, (b) no claim, lawsuit, or other proceeding based upon the
breach of the representations and warranties contained in Section 3.8 may be
made by any Acquiror Indemnitee unless notice of such claim, lawsuit or other
proceeding, is given to the Indemnitor in accordance with Section 10.5 prior to
180 days after the later of the expiration of (i) the statute of limitations for
the applicable Tax and (ii) any extension of the statute of limitations for the
applicable Tax, (c) no claim, lawsuit, or other proceeding based upon the breach
of the representations and warranties contained in Section 3.12 may be made by
any Acquiror Indemnitee unless notice of such claim, lawsuit or other
proceeding, is given to the Indemnitor in accordance with Section 10.5 prior to
the tenth anniversary of the Closing Date and (d) claims, lawsuits, or other
proceedings based upon the representations and warranties contained in Section
3.4 with respect to the capital stock of the Company may be made at any time
upon notice of such claim, lawsuit or other proceeding, being given to the
Indemnitor in accordance with Section 10.5.
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10.3. Indemnification by Seller. Notwithstanding the Closing and
regardless of any investigation at any time made by or on behalf of Acquiror or
of any knowledge or information that Acquiror may have, from and after the
Closing and in addition to the indemnification obligation of Seller set forth in
Section 9.1(e) Seller shall indemnify and fully defend, save and hold Acquiror,
any Affiliate of Acquiror, and their respective stockholders, directors,
officers, agents, employees and representatives, including after Closing the
Company and its Subsidiaries (the "ACQUIROR INDEMNITEES"), harmless if any
Acquiror Indemnitee shall at any time or from time to time suffer any damage,
liability, loss, cost, expense (including all reasonable attorneys' fees and
expenses), deficiency, interest, penalty, impositions, assessments or fines but
less any insurance proceeds (collectively, "LOSSES") to the extent not included
in the Final Working Capital arising out of or resulting from, or shall pay or
become obligated to pay any sum on account of, one or more of the following:
(a) any untruth or inaccuracy in any representation or certification of
Seller, the Company or any of its Subsidiaries or the breach of any warranty of
Seller contained in this Agreement or in any certificate delivered by Seller,
the Company or any of its Subsidiaries to the Acquiror in connection with the
Closing to the extent the amount of the Losses resulting from such untruth,
inaccuracy or breach have not been specifically set forth on Schedule 10.3 (the
"NON-CURRENT LIABILITIES SCHEDULE") as a liability included in the June 30, 1998
Balance Sheet, without regard to (i) any limitation or qualification as to
materiality, Material Adverse Effect or material adverse change or (ii) the
information set forth in Schedules 3.3, 3.6, 3.7, 3.8, 3.9 (except with respect
to clause (h) of the related representation), 3.10 (with respect to clause (b)
of the related representation), 3.10 (with respect to clause (c) of the related
representation), 3.12 (with respect to clause (c) of the related
representation), 3.12 (with respect to clause (d) of the
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related representation), 3.14, 3.15 (with respect to the second sentence of
clause (b) of the related representation) , 3.16(b) (with respect to the last
sentence of clause (b) of the related representation), 3.21 (with respect to the
fourth sentence of the related representation); 3.24 (with respect to the fourth
sentence of the related representation) and 3.27, except to the extent marked on
any of such Schedules with an asterisk (the "LIABILITY SCHEDULES") (it being the
intent of the parties that for purposes of this Section 10.3(a) such Liability
Schedules shall be deemed to be blank); or
(b) any liability (including, without limitation, the portion of the
Loss set forth in clause (h) below not paid by Seller), penalty, assessment or
fine ("LIABILITY") and any Loss (but only if such Loss arises out of or relates
to a Liability) to the extent arising out of or relating to facts,
circumstances, events or occurrence existing at or prior to the Closing
(collectively, "PRE-CLOSING MATTERS") if, had all of the facts relating to such
Pre-Closing Matters been known and the amount of such Liability or Loss been
established as of the Closing (provided that the amount of such Liability or
Loss which would have been established as of the Closing Date shall not be
determinative of the amount of such Liability or Loss), an accrual or reserve
for such Pre-Closing Matters would have been included in a consolidated balance
sheet for the Company prepared as of the Closing in accordance with GAAP
(ignoring for these purposes, principles of probability, materiality and ability
to quantify); provided, however, that the foregoing shall apply only so long as
notice of such fact, circumstance, event or occurrence is given to the
Indemnitor in accordance with Section 10.5 prior to the tenth anniversary of the
Closing Date; and, provided, further, that the foregoing shall not apply to the
extent of the amount of such Liability or Loss included in the Non-current
Liabilities Schedule; or
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(c) any failure of the Seller duly to perform or observe any term,
provision, covenant, agreement or condition contained in this Agreement on the
part of Seller to be performed or observed (except each of the covenant set
forth in Section 5.1(xii) and Section 5.2(c) which for purposes of this Article
X shall be deemed covered by Sections 10.3(a) and/or 10.3(b)); or
(d) any Loss arising out of or relating to (i) the business of
processing stone to produce lime and lime products (including, without
limitation, the disposition or operation of such business on or prior to the
Closing Date) conducted by the Company or any of its Subsidiaries before May 28,
1998 or such former business as conducted by any other Person after May 28,
1998; or
(e) any Loss on account of any act or failure to act on the part of any
member of the Company's affiliated group (excepting the Company or any
Subsidiary of the Company) or of any other person (excepting the Company or any
Subsidiary of the Company) arising out of or relating to: (i) a violation of
ERISA or any other law or regulation relating to an employee benefit plan as
defined in Section 3(3) of ERISA or any other employee benefit or compensation
arrangement sponsored, maintained, participated in or contributed to by a member
of the Company's affiliated group (all referred to hereinafter as "plan"), or
(ii) a failure to comply with the terms of a plan or to make a required
contribution to a plan; provided, however, that the purpose of this Section
10.3(e), the "Company's affiliated group" means (A) the Company and any trade or
business (whether or not incorporated) which is or has ever been under common
control with or treated as a single employer with the Company under Section
414(b), (c), (m) or (o) of the Code, (B) any trade or business (whether or not
incorporated) which has maintained, sponsored, participated in, contributed to
or been required to contribute to any plan which the
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Company or any of its Subsidiaries has maintained, sponsored, participated in,
contributed to or been required to contribute to, and (C) any trade or business
(whether or not incorporated) which is or has ever been under common control
with or treated as a single employer with any trade or business described in
clause (B) (immediately preceding) under Section 414(b), (c), (m) or (o) of the
Code; or
(f) any Loss relating to the assets transferred from the Redland
Pension Plan to the Acquiror's Plan under Section 6.1(c) being less than the
guaranteed transfer amount (provided that the amount of such Loss shall be
determined as follows. If the amount of assets transferred is less than the
present value of the Redland Pension Participants' vested and nonvested benefits
as determined under Section 6.1(c), the Loss is the guaranteed transfer amount
minus the amount of such transferred assets. The guaranteed transfer amount is
the same percentage of the total assets of the Redland Pension Plan at the
transfer date as the present value of the Redland Pension Participants' vested
and nonvested benefits as determined under Section 6.1(c) is as a percentage of
the present value of all participants' vested and nonvested benefits determined
under Section 6.1(c) at the date of the transfer. For example, if the total
value of the Redland Pension Plan assets at the transfer date is $75,000,000,
the present value of the Redland Pension Participants' vested and nonvested
benefits as determined under Section 6.1(c) is $6,000,000 and the present value
of all other vested and nonvested benefits of the Redland Pension Plan is
$71,000,000, then the guaranteed transfer amount would be $5,844,150. If the
amount of assets transferred is $5,700,000, the Loss would be $144,150); or
(g) any Loss with respect to contributions required to be made to the
Redland Pension Plan with respect to benefit liabilities of the Redland Pension
Plan other than benefit liabilities transferred to Acquiror's Plan under Section
6.1(c); or
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(h) any Loss set forth on Schedule 10.3(h);
provided, however, that Seller shall have no obligation to make any payment
under Section 10.3(a) or 10.3(b) unless the aggregate amount to which all
Acquiror Indemnitees are entitled by reason of all such claims under Sections
10.3(a) and 10.3(b) exceeds $25 million, and then only for the amount by which
such total claims for Losses exceed such amount but such amount to be paid by
Seller shall not, in any event, exceed $200 million, it being understood that
such amount shall be payable by Seller upon a valid indemnity claim made by
Acquiror.
10.4. Indemnification by Acquiror. Notwithstanding the Closing and
regardless of any investigation at any time made by or on behalf of Seller or of
any knowledge or information that Seller may have, from and after the Closing
Acquiror shall indemnify and agree to fully defend, save and hold Seller, any
Affiliate of Seller, and their respective stockholders, directors, officers,
agents, employees and representatives (the "SELLER INDEMNITEES") harmless if
Seller shall at any time or from time to time suffer any Losses arising out of
or resulting from, or shall pay or become obligated to pay any sum on account of
any one or more of the following:
(a) any untruth or inaccuracy in any representation or certification of
the Acquiror or the breach of any warranty of Acquiror contained in this
Agreement or in any certificate delivered to Seller in connection with the
Closing; or
(b) any failure of Acquiror duly to perform or observe any term,
provision, covenant, agreement or condition contained in this Agreement on the
part of Acquiror to be performed or observed;
provided, however, that Acquiror shall have no obligation to make any payment
under Section 10.4(a) with respect to any representation or warranty unless the
aggregate amount to which
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Seller is entitled by reason of all such claims exceeds $25 million, and then
only for the amount by which such total claims for Losses exceed such amount but
such amount to be paid by Acquiror shall not, in any event, exceed $200 million,
it being understood that such amount shall be payable by Acquiror upon a valid
indemnity claim made by Seller.
10.5. Procedures for Indemnification.
(a)(i) If any Acquiror Indemnitee or Seller Indemnitee (an "INDEMNIFIED
PARTY") receives notice of the assertion of any claim, the commencement of any
suit, action or proceeding, or the imposition of any penalty or assessment by a
third party in respect of which indemnity may be sought hereunder (a "THIRD
PARTY CLAIM"), and the indemnified party intends to seek indemnity hereunder,
the indemnified party will promptly provide the other party (an "INDEMNIFYING
PARTY") with written notice of the Third Party Claim, but in any event such
notice shall be provided not later than 30 calendar days after receipt of such
notice of Third Party Claim. The failure by an indemnified party to so notify an
indemnifying party of a Third Party Claim will not relieve the indemnifying
party of any indemnification responsibility under this Article X, except to the
extent, if any, that such failure materially prejudices the ability of the
indemnifying party to defend such Third Party Claim. For clarification, it is
agreed that Seller will not be an indemnifying party for claims pursuant to
Section 10.3(a) or 10.3(b) for amounts below the $25 million amount referred to
in the last proviso of Section 10.3.
(ii) The indemnifying party will have the right to control the defense,
compromise or settlement of the Third Party Claim with its own counsel
(reasonably satisfactory to the indemnified party); provided, however, that the
indemnifying party shall not settle any such Third Party Claim without the
consent of the indemnified party (which
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consent shall not be unreasonably withheld); and provided, further, that if the
indemnifying party presents to the indemnified party a bona fide settlement
proposal that the indemnifying party desires to accept that is not patently
unreasonable on its face (the "SETTLEMENT PROPOSAL") and such Settlement
Proposal is not consented to by the indemnified party, the indemnifying party's
responsibility under this Agreement shall not extend beyond the amount set forth
in the Settlement Proposal. The indemnified party will cooperate in the defense
of any Third Party Claim. The indemnified party will be entitled (at the
indemnified party's expense) to participate in the defense by the indemnifying
party of any Third Party Claim with its own counsel. In the event that a
Settlement Proposal is not consented to by the indemnified party, the
indemnified party may, at its option, assume the defense of such Third Party
Claim and the indemnifying party shall cooperate with the defense of such claim.
(iii) In the event that the indemnifying party does not undertake the
defense, compromise or settlement of a Third Party Claim in accordance with
subsection (ii) of this Section 10.5, the indemnified party will have the right
to control the defense, compromise or settlement of such Third Party Claim with
counsel of its choosing; provided, however, that the indemnified party will not
settle or compromise any Third Party Claim without the indemnifying party's
prior written consent, (A) the indemnifying party has failed to acknowledge its
obligation to indemnify the indemnified party with respect to said Third Party
Claim in accordance with this Article X, in which case the indemnified party may
settle or compromise without such consent or (B) the indemnifying party has
acknowledged its obligation but refuses to consent to said settlement or
compromise, in which case the indemnified party may settle or compromise without
such
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consent, so long as said settlement or compromise is at a cost which is
reasonable. The indemnifying party will be entitled (at the indemnifying party's
expense) to participate in the defense of any Third Party Claim with its own
counsel.
(iv) Any indemnifiable claim hereunder that is not a Third Party Claim
will be asserted by the indemnified party by promptly delivering notice thereof
to the indemnifying party. Such notice must set forth with specificity the facts
and circumstances on which the claim for indemnity is based, identify the
specific provision or provisions of this Agreement upon which the claim is
based, set forth the amount of the claim or a reasonable estimate thereof if the
amount is not liquidated and, in the case of a claim by an Acquiror Indemnitee
pursuant to Section 10.3(b), such notice shall state the basis for the
claimant's conclusion that the matter giving rise to the claim would have been
required to have been included in the consolidated closing balance sheet as
contemplated in Section 10.3(b). In the case of an Acquiror Indemnitee claim
pursuant to Section 10.3(a) or Section 10.3(b), such notice must also include
substantiation that the amount of all prior claims to which Acquiror Indemnitees
would have been entitled to indemnification (but for time limits and amounts
considerations) has exceeded $25 million.
(b) Notwithstanding anything contained in this Agreement to the
contrary, in the event that a claim or demand for indemnification by Acquiror or
Seller may be made under more than one provision of this Agreement, Acquiror or
Seller, as applicable, shall have the right to recover Losses under any
provision of this Agreement and may make such claim or demand without regard to
whether such claim or demand would be precluded by any other provision of this
Agreement; provided, however, that neither Acquiror nor Seller shall be entitled
to recover more than once for the same Loss.
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10.6. Exclusive Remedy. Except as otherwise provided under Sections
5.6(b) and 9.1(e), the parties hereto hereby acknowledge and agree that the
indemnification rights under this Article X constitute the exclusive remedy
after the Closing for any party for any claim of a breach of or inaccuracy in
any representation or warranty herein and any breach or non-fulfillment of any
covenant or agreement herein, except for equitable relief; provided, that
nothing contained herein shall limit the right of any party to exercise or
enforce (i) any right of contribution available under any law, rule or
regulation from any other party or (ii) any rights under the Lafarge Guaranty or
any other agreement entered into on or prior to the Closing Date.
ARTICLE XI.
MISCELLANEOUS
11.1. Entire Agreement. This Agreement, including the Schedules to this
Agreement and the Confidentiality Agreement constitute the entire agreement of
the parties to this Agreement with respect to the subject matter hereof and
thereof and supersede all prior agreements and undertakings, both written and
oral, with respect to the subject matter hereof and thereof.
11.2. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile) and shall be given
if to Seller, to:
Redland International Limited
c/o Lafarge S.A.
61, rue des Belles Feuilles
B.P.40
75782 Paris, cedex 16
France
Attention: Directeur des Affaires Juridiques
Telecopy: (33-1) 44-34-11-48
with a copy to:
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Jones Day Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Facsimile: (404) 581-8330
Attention: William S. Paddock
if to Acquiror to:
Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Facsimile: (919) 783-4695
Attention: Chairman
with a copy to:
Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Facsimile: (919) 783-4535
Attention: Vice President and General Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
Facsimile: (212) 728-8111
Attention: John S. D'Alimonte
or such other address or facsimile number as such party may hereafter specify
for such purpose by notice to the other party to this Agreement. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when such facsimile is transmitted to the facsimile
number specified in this Section 11.2 and the appropriate confirmation is
received, or (ii) if given by any other means, when delivered at the address
specified in this Section 11.2.
11.3. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to
the Closing Date if, and only if, such amendment or waiver is in writing and
signed, in the case
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of an amendment, by Seller and Acquiror or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
11.4. Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
11.5. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns, provided that, no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party to this Agreement and provided further
that Acquiror may assign its rights, but not its obligations, under this
Agreement to any of its Subsidiaries. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties to this Agreement or
their respective successors and permitted assigns, any rights, remedies
obligations or liabilities under or by reason of this Agreement.
11.6. Certain Interpretive Matters.
(a) Unless the context otherwise requires, (i) all references in this
Agreement to Sections, Articles or Schedules are to Sections, Articles or
Schedules of or to this Agreement, (ii) each term defined in this Agreement has
the meaning ascribed to it, (iii) each accounting term not otherwise defined in
this Agreement has the meaning assigned to it in
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accordance with GAAP and (iv) words in the singular include the plural and vice
versa. All references to "$" or dollar amounts will be to lawful currency of the
United States of America.
(b) Titles and headings to Sections in this Agreement are inserted for
convenience of reference only, and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. No provision of this Agreement
will be interpreted in favor of, or against, any of the parties to this
Agreement by reason of the extent to which any such party or its counsel
participated in the drafting thereof or by reason of the extent to which any
such provision is inconsistent with any prior draft hereof or thereof.
(c) Unless otherwise indicated in a particular schedule, disclosure of
any matter, fact or circumstance in a Schedule to this Agreement shall not be
deemed to be disclosure thereof for purposes of any other Schedule hereto.
11.7. Governing Law. This Agreement shall be construed in accordance
with and governed by the internal substantive law of the State of Texas
regardless of the laws that might otherwise govern under principles of conflict
of laws applicable thereto.
11.8. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and to this Agreement were upon the same
instrument. This Agreement shall become effective when each party to this
Agreement shall have received counterparts hereof signed by the other party to
this Agreement.
11.9. Knowledge. For purposes of this Agreement, "to the knowledge of
Seller" shall mean actual knowledge, based on reasonable inquiry, of the persons
identified on Schedule 11.9.
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11.10. Consent to Jurisdiction. Any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in the State or Federal Courts in the State of New York. The parties to
this Agreement consent to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waive, to the fullest extent permitted by Law, any objection
which they may now or hereafter have to the laying of the venue of any such
suit, action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, the parties to this Agreement
agree that service of process on such party may be made upon the designated
person at the address provided in Section 11.2 hereof and shall be deemed to be
effective service of process on such party.
11.11. Confidentiality. Each of Seller and Acquiror agrees to maintain
in strict confidence any and all information each party learns or discovers
about the other or its respective Affiliates during the course of the
negotiation, execution and delivery of this Agreement and agrees to abide by the
terms and conditions set forth in the Confidentiality Agreement. This Section
11.11 shall not apply to any information that is, or could reasonably be,
learned or discovered through any independent source that is not obligated to
maintain such information as confidential.
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11.12. Severability. If any term, provision, covenant or restriction of
this Agreement is determined by a Governmental Entity to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed by their respective authorized officers a
day and year first above written.
REDLAND INTERNATIONAL LIMITED
By: /s/ D.G. Hooreman
---------------------------------
Name: D.G. Hooreman
Title: Director
MARTIN MARIETTA MATERIALS, INC.
By: /s/ Janice K. Henry
---------------------------------
Name: Janice K. Henry
Title: Vice President,
Chief Financial Officer and
Treasurer
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EXHIBIT 99.1
[MARTIN MARIETTA MATERIALS letterhead]
NEWS RELEASE
P.O. Box 30013
Raleigh, North Carolina 27622
Telephone: (919) 781-4550
FOR IMMEDIATE RELEASE Contact: Janice K. Henry
Vice President, Chief Financial
Officer and Treasurer
(919) 783-4658
MARTIN MARIETTA MATERIALS, INC.
AGREES TO ACQUIRE REDLAND STONE PRODUCTS COMPANY
FOR $272 MILLION
RALEIGH, North Carolina (October 5, 1998) - Martin Marietta Materials, Inc.,
(NYSE: MLM) today announced that it has signed a contract with an affiliate of
Lafarge SA to acquire the common stock of Redland Stone Products Company for
$272 million. The purchase price is subject to certain post-closing adjustments
related to working capital. Redland Stone is the leading producer of aggregates
and asphaltic concrete in the state of Texas, and has mineral reserves which
exceed 1 billion tons. The company serves the San Antonio, Houston and South
Texas areas. Aggregates production in 1998 is expected to be about 14 million
tons, asphaltic concrete production is expected to be about 3 million tons, and
revenue is expected to be approximately $140 million. Redland Stone will be
operated as a new division of Martin Marietta Materials, with its headquarters
in San Antonio. The transaction is scheduled for closing prior to year end,
subject to satisfaction of conditions typical for such a transaction.
Commenting on the transaction, Stephen P. Zelnak, Jr., Chairman
and CEO of Martin Marietta Materials, stated, "The acquisition of Redland Stone
is a major step in positioning our Company for further expansion in the western
United States. We believe this transaction will be neutral to earnings in 1999
and offers an excellent opportunity to grow the sales and earnings of our
Company in 2000 and beyond.
"Redland Stone is the leading supplier of aggregates and
asphaltic concrete in both Houston and San Antonio. The company is
well-positioned for growth in both Texas and surrounding areas. Texas is
scheduled to receive a 61 percent increase in transportation funding from the
new Transportation Equity Act of the 21st Century (TEA-21). This should
generate strong demand for materials used in highway and bridge construction for
the foreseeable future. When coupled with the above-average population growth
expected for Texas, the market for aggregates and asphalt should experience
solid growth."
Martin Marietta Materials is the nation's second largest producer
of construction aggregates and a leading producer of magnesia-based chemical and
refractory products used in a wide variety of industries.
- --------------------------------------------------------------------------------
Investors are cautioned that statements in this press release which relate to
the future are, by their nature, uncertain and dependent upon numerous
contingencies - including political, economic, regulatory, climatic,
competitive, and technological - any of which could cause actual results and
events to differ materially from those indicated in such forward-looking
statements. Additional information regarding these and other risk factors and
uncertainties may be found in the Corporation's filings with the Securities and
Exchange Commission.
- --------------------------------------------------------------------------------
- END -
<PAGE> 1
EXHIBIT 99.2
[MARTIN MARIETTA MATERIALS letterhead]
NEWS RELEASE
P.O. Box 30013
Raleigh, North Carolina 27622
Telephone: (919) 781-4550
FOR IMMEDIATE RELEASE Contact: Janice K. Henry
Senior Vice President, Chief
Financial Officer and Treasurer
(919) 783-4658
http:\\www.martinmarietta.com
MARTIN MARIETTA MATERIALS, INC. COMPLETES ACQUISITION OF
REDLAND STONE PRODUCTS COMPANY
RALEIGH, North Carolina (December 7, 1998) - Martin Marietta Materials, Inc.
(NYSE:MLM) today announced that it has completed the purchase of all the common
stock of Redland Stone Products Company from an affiliate of Lafarge SA for $272
million in cash. The purchase price is subject to certain post-closing
adjustments related to working capital plus approximately $8 million in certain
other assumed liabilities and transaction costs. The Corporation did not assume
any longterm debt in the transaction.
Redland Stone is the leading producer of aggregates and asphaltic
concrete in the state of Texas, with mineral reserves that exceed 1 billion
tons. Redland Stone serves the San Antonio, Houston and South Texas areas. The
company will be operated as the Southwest Division of Martin Marietta Materials,
with its headquarters remaining in San Antonio. Redland Stone is expected to
produce approximately 14 million tons of aggregates and 3 million tons of
asphaltic concrete during 1998, which is expected to generate $140 million in
revenue.
Commenting on the transaction, Stephen P. Zelnak, Jr., Chairman
and Chief Executive Officer of Martin Marietta Materials, stated, "The purchase
of Redland Stone is a major component of our expansion into the western United
States. This acquisition provides a strong platform for continued growth in
Texas and the surrounding region. When coupled with our recent investment in
Meridian Aggregates, which provides the opportunity to purchase the remaining
interest in that
-MORE-
<PAGE> 2
MLM Completes Acquisition of Redland
Page 2
December 7, 1998
- --------------------------------------------------------------------------------
company within five years, Martin Marietta Materials has become a leading
aggregates producer in both the southwest and western half of the United States.
"Texas is scheduled to receive a 61 percent increase in
transportation funding from the new Transportation Equity Act of the 21st
Century (TEA-21). This should generate strong demand for materials used in
highway and bridge construction for the foreseeable future. When coupled with
the above-average population growth expected for Texas, we believe the market
for aggregates and asphaltic concrete should experience strong growth.
"Redland Stone's position as the leading producer of aggregates
and asphaltic concrete in both Houston and San Antonio, along with Meridian's
growing presence in Dallas and Northeast Texas, enables Materials to take
advantage of the growth expected in the state."
Martin Marietta Materials, Inc., is in the process of completing
the private placement of $200,000,000 in 5-7/8% Notes due December 2008. The
proceeds of this offering will be applied to repay a portion of the commercial
paper that was used to finance the acquisition. The Notes are being issued in an
exempt transaction under the Securities Act of 1933 and may not be offered or
resold in the United States absent registration or applicable exemption.
Martin Marietta Materials is the nation's second largest producer
of construction aggregates and a leading producer of magnesia-based chemical and
refractory products used in a wide variety of industries.
- --------------------------------------------------------------------------------
Investors are cautioned that statements in this press release which relate to
the future are, by their nature, uncertain and dependent upon numerous
contingencies - including political, economic, regulatory, climatic,
competitive, and technological - any of which could cause actual results and
events to differ materially from those indicated in such forward-looking
statements. Additional information regarding these and other risk factors and
uncertainties may be found in the Corporation's filings with the Securities and
Exchange Commission.
- --------------------------------------------------------------------------------
- END -
<PAGE> 1
EXHIBIT 99.3
[EXECUTION COPY]
$300,000,000
REVOLVING CREDIT AGREEMENT
dated as of
December 3, 1998
among
MARTIN MARIETTA MATERIALS, INC.,
The BANKS Listed Herein,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent,
--------------------
J.P. MORGAN SECURITIES, INC
Lead Arranger
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
Co-Agent,
WACHOVIA BANK OF NORTH CAROLINA, N.A.,
Co-Agent
NATIONSBANK, N.A.
Managing Agent
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1
DEFINITIONS
<S> <C>
SECTION 1.01. Definitions.......................................................................1
SECTION 1.02. Accounting Terms and Determinations..............................................13
SECTION 1.03. Types of Borrowings..............................................................13
ARTICLE 2
THE LOANS
SECTION 2.01. Commitments to Lend..............................................................14
SECTION 2.02. Notice of Committed Borrowing....................................................14
SECTION 2.03. Money Market Borrowings..........................................................14
SECTION 2.04. Notice to Banks; Funding of Loans................................................18
SECTION 2.05. Loan Accounts and Notes..........................................................19
SECTION 2.06. Maturity of Loans................................................................20
SECTION 2.07. Interest Rates...................................................................20
SECTION 2.08. Mandatory Termination of Commitments.............................................22
SECTION 2.09. Optional Prepayments.............................................................22
SECTION 2.10. General Provisions as to Payments................................................22
SECTION 2.11. Fees.............................................................................23
SECTION 2.12. Reduction or Termination of Commitments..........................................23
SECTION 2.13. Method of Electing Interest Rates................................................24
SECTION 2.14. Funding Losses...................................................................25
SECTION 2.15. Computation of Interest and Fees.................................................25
SECTION 2.16. Increased Commitments; Additional Banks..........................................26
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing..........................................................................26
SECTION 3.02. Borrowings.......................................................................27
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power....................................................28
SECTION 4.02. Corporate Authorization; No Contravention........................................28
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 4.03. Binding Effect...................................................................29
SECTION 4.04. Financial Information............................................................29
SECTION 4.05. Litigation.......................................................................29
SECTION 4.06. Taxes............................................................................29
SECTION 4.07. Margin Regulations...............................................................30
SECTION 4.08. Compliance with Laws.............................................................30
SECTION 4.09. Governmental Approvals...........................................................30
SECTION 4.10. Pari Passu Obligations...........................................................30
SECTION 4.11. No Defaults......................................................................30
SECTION 4.12. Full Disclosure..................................................................30
SECTION 4.13. ERISA............................................................................31
SECTION 4.14. Environmental Matters............................................................31
SECTION 4.15. Regulatory Restrictions on Borrowing.............................................31
ARTICLE 5
COVENANTS
SECTION 5.01. Information......................................................................32
SECTION 5.02. Payment of Obligations...........................................................33
SECTION 5.03. Insurance........................................................................34
SECTION 5.04. Maintenance of Existence.........................................................34
SECTION 5.05. Maintenance of Properties........................................................34
SECTION 5.06. Compliance with Laws.............................................................34
SECTION 5.07. Mergers, Consolidations and Sales of Assets......................................35
SECTION 5.08. Negative Pledge..................................................................36
SECTION 5.09. Leverage Ratio...................................................................37
SECTION 5.10. Use of Loans.....................................................................37
SECTION 5.11. Investments......................................................................37
SECTION 5.12. Transactions with Affiliates.....................................................38
ARTICLE 6
DEFAULTS
SECTION 6.01. Event of Default.................................................................39
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization....................................................41
SECTION 7.02. Agent and Affiliates.............................................................42
SECTION 7.03. Action by Agent..................................................................42
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 7.04. Consultation with Experts........................................................42
SECTION 7.05. Liability of Agent...............................................................42
SECTION 7.06. Indemnification..................................................................42
SECTION 7.07. Credit Decision..................................................................43
SECTION 7.08. Successor Agents.................................................................43
SECTION 7.09. Agent's Fees.....................................................................43
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Increased Cost and Reduced Return; Capital Adequacy..............................43
SECTION 8.02. Substitute Rate..................................................................45
SECTION 8.03. Illegality.......................................................................45
SECTION 8.04. Taxes on Payments................................................................46
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Termination of Commitment of a Bank; New Banks...................................48
SECTION 9.02. Notices..........................................................................49
SECTION 9.03. No Waivers.......................................................................49
SECTION 9.04. Expenses; Indemnification........................................................49
SECTION 9.05. Pro Rata Treatment...............................................................50
SECTION 9.06. Sharing of Set-Offs..............................................................50
SECTION 9.07. Amendments and Waivers...........................................................50
SECTION 9.08. Successors and Assigns; Participations; Novation.................................51
SECTION 9.09. Visitation.......................................................................54
SECTION 9.10. Collateral.......................................................................54
SECTION 9.11. Reference Banks..................................................................54
SECTION 9.12. Governing Law; Submission to Jurisdiction........................................54
SECTION 9.13. Effectiveness; Counterparts; Integration.........................................54
SECTION 9.14. WAIVER OF JURY TRIAL.............................................................55
SECTION 9.15. Confidentiality..................................................................55
</TABLE>
iii
<PAGE> 5
COMMITMENT SCHEDULE
SCHEDULE I - Pricing
EXHIBIT A-1 - Committed Note
EXHIBIT A-2 - Money Market Note
EXHIBIT B - Money Market Quote Request
EXHIBIT C - Invitation for Money Market Quotes
EXHIBIT D - Money Market Quote
EXHIBIT E-1 - Opinion of Counsel for the Borrower
EXHIBIT E-2 - Opinion of North Carolina Counsel for the Borrower
EXHIBIT F - Opinion of Special Counsel for the Agent
EXHIBIT G - Assignment and Assumption Agreement
EXHIBIT H - Compliance Certificate
<PAGE> 6
REVOLVING CREDIT AGREEMENT
AGREEMENT dated as of December 3, 1998 among MARTIN MARIETTA MATERIALS,
INC., the BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent.
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein and in
any Exhibit or Schedule hereto, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Additional Bank" has the meaning set forth in Section 2.16(b).
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent with a copy to the Borrower duly completed by such Bank.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled by
or is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to vote 10% or
more of any class of voting securities of a Person or to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as administrative agent for the Banks hereunder, and its successor or successors
in such capacity.
"Agreement" means this Revolving Credit Agreement as it may be amended
from time to time.
<PAGE> 7
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office, (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of
its Money Market Loans, its Money Market Lending Office.
"Assignee" has the meaning set forth in Section 9.08(c).
"Assignment and Assumption Agreement" means an agreement, substantially
in the form of Exhibit G hereto, under which an interest of a Bank hereunder is
transferred to an Assignee pursuant to Section 9.08(c) hereof.
"Bank" means (i) each bank listed on the signature pages hereof, (ii)
each Additional Bank or Assignee that becomes a Bank pursuant to either Section
2.16 or Section 9.08(c), and (iii) their respective successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day or (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day, each change in the Base Rate to become effective on the
day on which such change occurs.
"Base Rate Loan" means a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Article 8.
"Borrower" means Martin Marietta Materials, Inc., a North Carolina
corporation.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly report on
Form 10-Q for the quarter ended September 30, 1998, as filed with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934.
"Change in Law" means, for purposes of Section 8.01 and Section 8.03,
the adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency.
"Closing Date" means the date on or after the Effective Date on which
the Agent shall have received the documents specified in or pursuant to Section
3.01.
2
<PAGE> 8
"Commitment" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite the name of such Bank on the
Commitment Schedule and (ii) with respect to each Additional Bank or Assignee
which becomes a Bank pursuant to Section 2.16 or 9.08(c), the amount of the
Commitment thereby assumed by it, in each case as such amount may be changed
from time to time pursuant to Section 2.09, 2.16 or 9.08(c).
"Committed Loan" means a loan made by a Bank pursuant to Section 2.01;
provided that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term Committed
Loan shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"Committed Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A-1 hereto, evidencing the obligation of the Borrower to
repay the Committed Loans, and "Committed Note" means any one of such promissory
notes issued hereunder.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Net Worth" means at any date the consolidated
shareholders' equity of the Borrower and its Consolidated Subsidiaries which
would be reported on the consolidated balance sheet of the Borrower as total
shareholders' equity, determined as of such date.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with the Borrower in its
consolidated financial statements if such statements were prepared as of such
date.
"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,
except trade accounts payable arising in the ordinary course of business, (iv)
all obligations of such Person as lessee which are capitalized in accordance
with generally accepted accounting principles, (v) all non-contingent
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit, banker's acceptance, bank guarantee or
similar instrument which remain unpaid for two Business Days, (vi) all Debt
secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person provided that the amount of such Debt
which is not otherwise an
3
<PAGE> 9
obligation of such Person shall be deemed to be the fair market value of such
asset and (vii) all Debt of others guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Dollars" or "$" means lawful currency of the United States.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 9.13.
"Eligible Institution" means any commercial bank having total assets in
excess of $3,000,000,000 (or the equivalent amount in the local currency of such
bank) as determined by the Agent based on the most recent publicly available
financial statements of such bank.
"Environmental Laws" means any and all applicable federal, state and
local statutes, regulations, ordinances, rules, administrative orders, consent
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, hazardous substances, or
hazardous wastes into the environment including, without limitation, ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing,
4
<PAGE> 10
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, hazardous substances, or hazardous wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control that, together with the Borrower, are treated as a single
employer under Section 4001(a)(14) of ERISA.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Loan" means any Committed Loan in respect of which
interest is to be computed on the basis of a Euro-Dollar Rate.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Margin" means the percentage determined in accordance with
the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.07(b) on the basis of an London Interbank Offered Rate.
"Event of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Credit Facility" means the Revolving Credit Agreement dated
as of May 27, 1997, and amended and restated as of May 26, 1998, among the
Borrower, the banks party thereto and Morgan Guaranty Trust Company of New York,
as agent for such banks.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by
5
<PAGE> 11
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to the Agent on such day on such transactions
as determined by the Agent.
"Fixed Rate Loans" means Euro-Dollar Loans or Money Market Loans
(excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant
to Section 8.03) or both.
"Group of Loans" means at any time a group of Loans consisting of (i)
all Committed Loans which are Base Rate Loans at such time or (ii) all
Euro-Dollar Loans having the same Interest Period at such time, provided that,
if a Committed Loan of any particular Bank is converted to or made as a Base
Rate Loan pursuant to Article 8, such Loan shall be included in the same Group
or Groups of Loans from time to time as it would have been in if it had not been
so converted or made.
"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 other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Interest Period" means:
(1) with respect to each Euro-Dollar Loan, the period
commencing on the date of borrowing specified in the applicable Notice
of Borrowing or on the date specified in the applicable Notice of
Interest Rate Election and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable notice;
provided that:
(a) any Interest Period which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
6
<PAGE> 12
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to clause (c) below, end on the last Euro-Dollar
Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination Date.
(2) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice
of Borrowing and ending such whole number of months thereafter as the
Borrower may elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to clause (c) below, end on the last Euro-Dollar
Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination Date.
(3) with respect to each Money Market Absolute Rate Loan, the
period commencing on the date of borrowing specified in the applicable
Notice of Borrowing and ending such number of days thereafter (but not
less than seven days) as the Borrower may elect in accordance with
Section 2.03; provided that:
(a) any Interest Period which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day; and
7
<PAGE> 13
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, guarantee, time deposit or otherwise
(but not including any demand deposit).
"Invitation for Money Market Quotes" means the notice substantially in
the form of Exhibit C hereto to the Banks in connection with the solicitation by
the Borrower of Money Market Quotes.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth the Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which 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" and "Loans" mean and include each and every loan made by a Bank
under this Agreement.
"London Interbank Offered Rate" has the meaning set forth in Section
2.07(b).
"Material Adverse Effect" means a material adverse effect on (a) the
ability of the Borrower to perform its obligations under this Agreement or any
of the Notes, (b) the validity or enforceability of this Agreement or any of the
Notes, (c) the rights and remedies of any Bank or the Agent under this Agreement
or any of the Notes, or (d) the timely payment of the principal of or interest
on the Loans or other amounts payable in connection therewith.
"Material Debt" means Debt (other than the Notes) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal or face amount exceeding
$35,000,000.
8
<PAGE> 14
"Material Financial Obligations" means a principal or face amount of
Debt and/or payment or collateralization obligations in respect of Derivatives
Obligations of the Borrower and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, exceeding in the aggregate
$35,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $35,000,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Borrower
and the Agent; provided that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.03).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.03(d)(ii)(C).
"Money Market Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A-2 hereto, evidencing the obligation of
the Borrower to repay the Money Market Loans, and "Money Market Note" means any
one of such promissory notes issued hereunder.
"Money Market Quote" means an offer by a Bank, in substantially the
form of Exhibit D hereto, to make a Money Market Loan in accordance with Section
2.03.
9
<PAGE> 15
"Money Market Quote Request" means the notice, in substantially the
form of Exhibit B hereto, to be delivered by the Borrower in accordance with
Section 2.03 in requesting Money Market Quotes.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibits A-1 or A-2 hereto, evidencing the obligation of the Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.13.
"Officer's Certificate" means a certificate signed by an officer of the
Borrower.
"Other Taxes" has the meaning set forth in Section 8.04.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means any individual, firm, company, corporation, joint
venture, joint-stock company, limited liability company or partnership, trust,
unincorporated organization, government or state entity, or any association or
partnership (whether or not having separate legal personality) of two or more of
the foregoing.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group.
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"Pricing Schedule" means the Schedule attached hereto identified as
such.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Principal Property" means, at any time, any manufacturing facility
that is located in the United States, is owned by the Borrower or any of its
Subsidiaries, and has a book value, net of any depreciation or amortization,
pursuant to the then most recently delivered financial statements, in excess of
2.5% of the consolidated total assets of the Borrower and its Consolidated
Subsidiaries, taken as a whole.
"Quarterly Date" means the last day of March, June, September and
December in each year, commencing December 31, 1998.
"Reference Banks" means the principal London offices of First Union
National Bank, Wachovia Bank, N.A. and Morgan Guaranty Trust Company of New
York. "Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time and for any specific purpose the
Bank or Banks having, in the aggregate, more than 50% of the Total Commitments,
or, if the Commitments have terminated, more than 50% of the Loans.
"Restricted Subsidiary" means (x) any Significant Subsidiary, (y) any
Subsidiary that has substantially all of its property located in the United
States and that owns a Principal Property and (z) other Subsidiaries from time
to time designated, by the Borrower by notice to the Agent, as Restricted
Subsidiaries as necessary such that at all times, based on the most recent
financial statements delivered pursuant hereto, at the end of any fiscal quarter
the book value of the aggregate total assets, net of depreciation and
amortization and after intercompany eliminations, of the Borrower and all of its
Restricted Subsidiaries is not less than 85% of the consolidated total assets,
net of depreciation and amortization and after intercompany eliminations, of the
Borrower and its Consolidated Subsidiaries, taken as a whole.
"Revolving Credit Period" means the period from and including the
Effective Date to but not including the Termination Date.
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"Retiring Bank" has the meaning set forth in Section 9.01(a).
"Significant Subsidiary" means a Subsidiary with a book value of total
assets, net of depreciation and amortization and after intercompany
eliminations, equal to or greater than 5% of the consolidated total assets of
the Borrower and its Consolidated Subsidiaries, taken as a whole.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.
"Taxes" has the meaning set forth in Section 8.04.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Rating Group and P-1 by Moody's
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any state
thereof and has capital, surplus and undivided profits aggregating at least
$1,000,000,000 or (iv) repurchase agreements with respect to securities
described in clause (i) above entered into with an office of a bank or trust
company meeting the criteria specified in clause (iii) above, provided in each
case that such Investment matures within one year from the date of acquisition
thereof by the Borrower or a Subsidiary.
"Termination Date" means December 2, 1999, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Total Capital" means, at any date, the sum of (x) Consolidated Debt
plus (y) Consolidated Net Worth.
"Total Commitments" means, at the time for any determination thereof,
the aggregate of the Commitments of the Banks.
"Transferee" has the meaning set forth in Section 9.08(e).
"United States" means the United States of America, including the
States and the District of Columbia, but excluding the Commonwealths,
territories and possessions of the United States.
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"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or an appointed trustee under Title IV of ERISA.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks; provided that, if the Borrower notifies the Agent that the
Borrower wishes to amend any covenant contained in Article 5 to eliminate the
effect of any change after the date hereof in generally accepted accounting
principles (which, for purposes of this proviso shall include the generally
accepted application or interpretation thereof) on the operation of such
covenant (or if the Agent notifies the Borrower that the Required Banks wish to
amend any such covenant for such purpose), then the Borrower's compliance with
such covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles is adopted by the Borrower, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the
Borrower and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on the same date, all of which Loans are of the same type (subject to
Article 8) and, except in the case of Base Rate Loans, have the same initial
Interest Period. Borrowings are classified for purposes of this Agreement either
by reference to the pricing of Loans comprising such Borrowing (e.g., a "Fixed
Rate Borrowing" is a Euro-Dollar Borrowing or a Money Market Borrowing
(excluding any such Borrowing consisting of Money Market LIBOR Loans bearing
interest at the Base Rate pursuant to Section 8.03), and a "Euro-Dollar
Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the
provisions of Article 2 under which participation therein is determined (i.e., a
"Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks
participate in proportion to their Commitments, while a "Money Market Borrowing"
is a Borrowing under Section 2.03 in which the Bank participants are determined
on the basis of their bids in accordance therewith).
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ARTICLE 2
THE LOANS
SECTION 2.01. Commitments to Lend. During the Revolving Credit Period,
each Bank severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Borrower pursuant to this Section from time to
time in amounts such that the aggregate principal amount of Committed Loans by
such Bank at any one time outstanding shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an aggregate principal
amount of $5,000,000 or any larger multiple of $1,000,000 (except that any such
Borrowing may be in the aggregate amount available in accordance with Section
3.02) and shall be made from the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits, the Borrower may borrow
under this Section, prepay Loans to the extent permitted by Section 2.09 and
reborrow at any time during the Revolving Credit Period under this Section.
SECTION 2.02. Notice of Committed Borrowing. The Borrower shall give
the Agent notice (a "Notice of Committed Borrowing") not later than 12:00 Noon
(New York City time) on (x) the date of each Base Rate Borrowing and (y) the
third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate or a Euro-Dollar Rate; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
SECTION 2.03. Money Market Borrowings. (a) The Money Market Option. In
addition to Committed Borrowings pursuant to Section 2.01, the Borrower may, as
set forth in this Section, request the Banks during the Revolving Credit Period
to make offers to make Money Market Loans to the Borrower. The Banks may, but
shall have no obligation to, make such offers and the Borrower may, but shall
have no obligation to, accept any such offers in the manner set forth in this
Section.
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(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received not later
than 12:00 Noon (New York City time) on (x) the fifth Euro-Dollar Business Day
prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction
or (y) the Domestic Business Day next preceding the date of Borrowing proposed
therein, in the case of an Absolute Rate Auction (or, in either case, such other
time or date as the Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the Money Market Quote
Request for the first LIBOR Auction or Absolute Rate Auction for which such
change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more
than one Interest Period in a single Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market Quotes. Each Money Market
Quote must comply with the requirements of this Section 2.03(d) and must be
submitted to the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 9.02 not later than (x) 2:00 P.M. (New
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York City time) on the fourth Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York
City time) on the proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the Borrower and the
Agent shall have mutually agreed and shall have notified to the Banks not later
than the date of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective); provided that
Money Market Quotes submitted by the Agent (or any affiliate of the Agent) in
the capacity of a Bank may be submitted, and may only be submitted, if the Agent
or such affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline for the
other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except
with the written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the
form of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested and (z) may be
subject to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above
or below the applicable London Interbank Offered Rate (the
"Money Market Margin") offered for each such Money Market
Loan, expressed as a percentage (specified to the nearest
1/10,000th of 1%) to be added to or subtracted from such base
rate,
(D) in the case of an Absolute Rate Auction, the rate
of interest per annum (specified to the nearest 1/10,000th of
1%) (the "Money Market Absolute Rate") offered for each such
Money Market Loan, and
(E) the identity of the quoting Bank.
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A Money Market Quote may set forth up to five separate offers
by the quoting Bank with respect to each Interest Period
specified in the related Invitation for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection (d)(ii) above;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market
Quotes; or
(D) arrives after the time set forth in subsection
(d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the Borrower
of the terms (x) of any Money Market Quote submitted by a Bank that is in
accordance with subsection (d) and (y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection
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(e). In the case of acceptance, such notice (a "Notice of Money Market
Borrowing") shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may accept any Money Market
Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;
(ii) the principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000;
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be; and
(iv) the Borrower may not accept any offer that is described
in subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Agent shall give each Bank prompt notice of the
contents thereof and of such Bank's share (if any) of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by Borrower.
(b) Not later than 2:00 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing in Federal or other funds immediately available in New York City,
to the Agent at its address referred to in Section 9.02. Unless the Agent
determines that any applicable condition specified in Article 3 has not been
satisfied, the Agent will make the funds so received from the Banks available to
the Borrower at the Agent's aforesaid address.
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(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at the Federal
Funds Rate. If such Bank shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
(d) The failure of any Bank to make a Loan required to be made by it
as part of any Borrowing hereunder shall not relieve any other Bank of its
obligation, if any, hereunder to make its Loan on the date of such Borrowing,
but no Bank shall be responsible for the failure of any other Bank to make the
Loan to be made by such other Bank on the date of the Borrowing.
SECTION 2.05. Loan Accounts and Notes. (a) Except as provided in
subsection (b) below, the Committed Loans and Money Market Loans of each Bank
shall be evidenced by a loan account in the Borrower's name maintained by such
Bank and the Agent in the ordinary course of business. Such loan account
maintained by the Agent shall be prima facie evidence absent manifest error of
the amount of the Loan made by such Bank to the Borrower, the interest accrued
and payable thereon and all interest and principal payments made thereon. Any
failure so to record or any error in doing so shall in no way limit or otherwise
affect the obligation of the Borrower hereunder to pay any amount owing with
respect to the Loans.
(b) Upon written request made to the Agent by a Bank, the Borrower
shall deliver to the Agent for such Bank a single Committed Note and a single
Money Market Note, if applicable, evidencing the Committed Loans and the Money
Market Loans, respectively, of such requesting Bank, payable to the order of
each such Bank for the account of its Applicable Lending Office. Each such Note
shall be in substantially the form of Exhibit A-1 or A-2 hereto, as appropriate.
Each reference in this Agreement to the "Note" or "Notes" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
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(c) Upon receipt from the Borrower of the requesting Bank's Note, the
Agent shall forward such Note to such Bank. Such Bank shall record the date and
amount of each Loan made by it and the date and amount of each payment of
principal made by the Borrower with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement of its Note, endorse on
the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding; provided
that the failure of any Bank that has requested a Note to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Note. Each Bank that receives a Note from the Borrower is
hereby irrevocably authorized by the Borrower to so endorse its Note and to
attach to and make a part of its Note a continuation of any such schedule as and
when required.
SECTION 2.06. Maturity of Loans. (a) Each Committed Loan shall mature,
and the principal amount thereof shall be due and payable, on the Termination
Date.
(b) Each Money Market Loan included in any Money Market Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest, including with respect to the principal amount
of any Base Rate Loan converted to a Euro-Dollar Loan, shall be payable at
maturity, quarterly in arrears on each Quarterly Date prior to maturity. Any
overdue principal of or interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the rate otherwise applicable to Base Rate Loans for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such
day plus the London Interbank Offered Rate applicable to such Interest Period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/100 of 1%)
of the respective rates per annum at which deposits in dollars are offered by
each of the Reference Banks in the London interbank market at approximately
11:00
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A.M. (London time) two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such
day plus the average (rounded upward, if necessary, to the next higher 1/100 of
1%) of the respective rates per annum at which one day (or, if such amount due
remains unpaid more than three Euro-Dollar Business Days, then for such other
period of time not longer than three months as the Agent may select) deposits in
dollars in an amount approximately equal to such overdue payment due to each of
the Reference Banks are offered by such Reference Bank in the London interbank
market for the applicable period determined as provided above and (ii) the sum
of 2% plus the Euro-Dollar Margin for such day plus the London Interbank Offered
Rate applicable to such Loan at the date such payment was due.
(d) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.07(b) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(e) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(f) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest
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rate on the basis of the quotation or quotations furnished by the remaining
Reference Bank or Banks or, if none of such quotations is available on a timely
basis, the provisions of Section 8.01 shall apply.
SECTION 2.08. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on such date.
SECTION 2.09. Optional Prepayments. (a) Subject in the case of any
Euro-Dollar Borrowing to Section 2.14, the Borrower may, upon notice to the
Agent not later than 11:30 A.M. (New York City time) on the date of such
prepayment, prepay any Group of Base Rate Loans (or any Money Market Borrowing
bearing interest at the Base Rate pursuant to Section 8.01) or upon at least
three Euro-Dollar Business Days' notice to the Agent, prepay any Group of
Euro-Dollar Loans, in each case in whole at any time, or from time to time in
part in amounts aggregating $5,000,000 or any larger multiple of $1,000,000 by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such Group (or
Borrowing).
(b) Except as provided in subsection (a) above the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.10. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 2:00 P.M. (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.02. If a Fed-Wire reference or tracer
number has been received, from the Borrower or otherwise, by the Agent by that
time the Borrower will not be penalized for a payment received after 2:00 P.M.
(New York City time). The Agent will promptly distribute to each Bank its
ratable share of each such payment received by the Agent for the account of the
Banks. Whenever any payment of principal of, or interest on, the Base Rate Loans
or of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any
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payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day.
Whenever any payment of principal of, or interest on, the Money Market Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day. If the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Bank on
such due date an amount equal to the amount then due such Bank. If and to the
extent that the Borrower shall not have so made such payment, each Bank shall
repay to the Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.11. Fees. (a) Facility Fees. The Borrower shall pay to the
Agent for the account of the Banks ratably a facility fee at the Facility Fee
Rate (determined daily in accordance with the Pricing Schedule). Such facility
fee shall accrue (i) from and including the Effective Date to but excluding the
date of termination of the Commitments in their entirety, on the daily aggregate
amount of the Commitments (whether used or unused) and (ii) from and including
such date of termination to but excluding the date the Loans shall be repaid in
their entirety, on the daily aggregate outstanding principal amount of the
Loans. Accrued facility fees shall be payable quarterly in arrears on each
Quarterly Date and on the date of termination of the Commitments in their
entirety (and, if later, the date the Loans shall be repaid in their entirety).
(b) Participation Fees. On the Closing Date, the Borrower shall pay to
the Agent for the account of each Bank a participation fee in the amount
heretofore mutually agreed.
SECTION 2.12. Reduction or Termination of Commitments. During the
Revolving Credit Period, the Borrower may, upon at least three Domestic Business
Days' notice to the Agent, (i) terminate the Commitments at any time, if no
Loans are outstanding at such time or (ii) ratably reduce from time to time by
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an aggregate amount of $5,000,000 or a larger multiple of $1,000,000, the
aggregate amount of the Commitments in excess of the aggregate outstanding
principal amount of the Loans.
SECTION 2.13. Method of Electing Interest Rates. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject in each case to the
provisions of Article 8 and the last sentence of this subsection(a)), as
follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar
Business Day and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or elect to continue
such Loans as Euro-Dollar Loans for an additional Interest Period,
subject to Section 2.14 in the case of any such conversion or
continuation effective on any day other than the last day of the then
current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of
Interest Rate Election") to the Agent not later than 12:00 noon. (New York City
time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such portion
is allocated ratably among the Loans comprising such Group and (ii) the portion
to which such Notice applies, and the remaining portion to which it does not
apply, are each $5,000,000 or any larger multiple of $1,000,000. If no such
notice is timely received prior to the end of an Interest Period, the Borrower
shall be deemed to have elected that all Loans having such Interest Period be
converted to Base Rate Loans at the end of such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the
applicable clause of subsection (a) above;
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(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans being converted are to be
Euro-Dollar Loans, the duration of the next succeeding Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans
for an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Agent shall promptly notify each
Bank of the contents thereof and such notice shall not thereafter be revocable
by the Borrower.
(d) An election by the Borrower to change or continue the rate of
interest applicable to any Group of Loans pursuant to this Section shall not
constitute a "Borrowing" subject to the provisions of Section 3.02.
SECTION 2.14. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the
last day of an Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to Section 2.07(c), or if the Borrower fails to
borrow, prepay, convert or continue any Fixed Rate Loans after notice has been
given to any Bank in accordance with Section 2.04(a), 2.09 or 2.13 the Borrower
shall reimburse each Bank within 30 days after demand for any resulting loss or
expense incurred by it, including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow, prepay, convert or continue, provided that such Bank shall have
delivered to the Borrower a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error.
SECTION 2.15. Computation of Interest and Fees. The facility fee paid
pursuant to Section 2.11 and interest based on the Prime Rate hereunder shall be
computed on the basis of a year of 365 days (or 366 days in a leap year) and
paid for the actual number of days elapsed (including the first day but
excluding the last day). All other interest and fees shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
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SECTION 2.16. Increased Commitments; Additional Banks. (a) Subsequent
to the Effective Date, the Borrower may, upon at least 30 days' notice to the
Agent (which shall promptly provide a copy of such notice to the Banks), propose
to increase the aggregate amount of the Commitments by an amount not to exceed
$75,000,000 (the amount of any such increase, the "Increased Commitments"). Each
Bank party to this Agreement at such time shall have the right (but no
obligation), for a period of 15 days following receipt of such notice, to elect
by notice to the Borrower and the Agent to increase its Commitment by a
principal amount which bears the same ratio to the Increased Commitments as its
then Commitment bears to the aggregate Commitments then existing.
(b) If any Bank party to this Agreement shall not elect to increase
its Commitment pursuant to subsection (a) of this Section, the Borrower may
designate another bank or other banks (which may be, but need not be, one or
more of the existing Banks) which at the time agree to (i) in the case of any
such bank that is an existing Bank, increase its Commitment and (ii) in the case
of any other such bank (an "Additional Bank"), become a party to this Agreement.
The sum of the increases in the Commitments of the existing Banks pursuant to
this subsection (b) plus the Commitments of the Additional Banks shall not in
the aggregate exceed the unsubscribed amount of the Increased Commitments.
(c) An increase in the aggregate amount of the Commitments pursuant to
this Section 2.16 shall become effective upon the receipt by the Agent of an
agreement in form and substance satisfactory to the Agent signed by the
Borrower, by each Additional Bank and by each other Bank whose Commitment is to
be increased, setting forth the new Commitments of such Banks and setting forth
the agreement of each Additional Bank to become a party to this Agreement and to
be bound by all the terms and provisions hereof, together with such evidence of
appropriate corporate authorization on the part of the Borrower with respect to
the Increased Commitments and such opinions of counsel for the Borrower with
respect to the Increased Commitments as the Agent may reasonably request.
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall occur upon receipt
by the Agent of the following documents, each dated the Closing Date unless
otherwise indicated:
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(a) an opinion of Willkie Farr & Gallagher, counsel for the
Borrower, substantially in the form of Exhibit E-1 hereto and an
opinion of Robinson Bradshaw & Hinson, North Carolina counsel for the
Borrower, substantially in the form of Exhibit E-2 hereto; the Borrower
hereby expressly instructs each such counsel to prepare such opinion
for the benefit of the Agent and the Banks;
(b) an opinion of Davis Polk & Wardwell, special counsel for
the Agent, substantially in the form of Exhibit F hereto;
(c) all documents the Agent may reasonably request relating to
the existence of the Borrower, the corporate authority for and the
validity of this Agreement and the Notes, and any other matters
relevant hereto, all in form and substance reasonably satisfactory to
the Agent; and
(d) evidence satisfactory to the Agent that all principal of
and interest on any loans outstanding under, and all accrued fees
under, the Existing Credit Facility shall have been paid in full.
The Agent shall promptly notify the Borrower and the Banks of the
Closing Date, and such notice shall be conclusive and binding on all parties
hereto. The Banks which are parties to the Existing Credit Facility,
constituting the "Required Banks" under the Existing Credit Facility, and the
Borrower agree that the Commitments under the Existing Credit Agreement shall
terminate automatically on the Closing Date without need for further action by
any party to the Existing Credit Agreement.
SECTION 3.02. Borrowings. The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) the fact that the Closing Date shall have occurred on or
prior to December 22, 1998;
(b) receipt by the Agent of a Notice of Borrowing as required
by Section 2.02 or Section 2.03, as the case may be;
(c) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitments;
(d) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing; and
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(e) the fact that, except as otherwise described by the
Borrower in a writing to the Agent and waived by the Required Banks,
the representations and warranties of the Borrower contained in this
Agreement (except, in the case of any Borrowing subsequent to the
Closing Date, the representations and warranties set forth in Section
4.04(c), 4.05, 4.06, 4.08, 4.13 and 4.14) shall be true on and as of
the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (c), (d) and (e) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. Each of the Borrower and
its Restricted Subsidiaries is a corporation duly organized and validly existing
under the laws of the state of its incorporation without limitation on the
duration of its existence, is in good standing therein, and is duly qualified to
transact business in all jurisdictions where such qualification is necessary,
except for such jurisdictions where the failure to be so qualified or licensed
will not be reasonably likely to have a Material Adverse Effect; the Borrower
has corporate power to enter into and perform this Agreement; and the Borrower
has the corporate power to borrow and issue Notes as contemplated by this
Agreement.
SECTION 4.02. Corporate Authorization; No Contravention. The execution,
delivery and performance by the Borrower of this Agreement and the Notes are
within the corporate powers of the Borrower, have been duly authorized by all
necessary corporate action and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or any
of its Subsidiaries or result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries which would be reasonably
likely to have a Material Adverse Effect.
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SECTION 4.03. Binding Effect. This Agreement and any Notes constitute
valid and binding agreements of the Borrower enforceable against the Borrower in
accordance with their respective terms, except to the extent limited by
bankruptcy, reorganization, insolvency, moratorium and other similar laws of
general application relating to or affecting the enforcement of creditors'
rights or by general equitable principles.
SECTION 4.04. Financial Information. (a) The consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as of December 31, 1997 and
the related consolidated statements of earnings and cash flows for the fiscal
year then ended, reported on by Ernst & Young LLP and set forth in the
Borrower's 1997 Form 10-K, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of September 30, 1998 and the related unaudited
consolidated statements of income and cash flows for the nine months then ended,
set forth in the Borrower's Latest Form 10-Q, a copy of which has been delivered
to each of the Banks, fairly present, in conformity with generally accepted
accounting principles ("GAAP"), the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date and its consolidated
results of operations and cash flows for such nine month period (subject to
year-end audit adjustments).
(c) Since September 30, 1998, there has been no change in the
consolidated financial condition of the Borrower and its Consolidated
Subsidiaries which would be reasonably likely to have a Material Adverse Effect.
SECTION 4.05. Litigation. There are no suits, actions or proceedings
pending, or to the knowledge of any member of the Borrower's legal department
threatened or against the Borrower or any Subsidiary, the adverse determination
of which is reasonably likely to occur, and if so adversely determined would be
reasonably likely to have a Material Adverse Effect.
SECTION 4.06. Taxes. The Borrower and each Subsidiary have filed all
material tax returns which to the knowledge of any member of the Borrower's tax
department were required to be filed and have paid or have adequately provided
for all taxes shown thereon to be due, including interest and penalties, except
for (i) those not yet delinquent, (ii) those the nonpayment of which would not
be
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reasonably likely to have a Material Adverse Effect and (iii) those being
contested in good faith.
SECTION 4.07. Margin Regulations. No part of the proceeds of any Loan
will be used in a manner which would violate, or result in a violation of,
Regulation U.
SECTION 4.08. Compliance with Laws. The Borrower and its Restricted
Subsidiaries are in compliance in all material respects with all applicable
laws, rules and regulations, other than such laws, rules and regulations (i) the
validity or applicability or which the Borrower or such Subsidiary is contesting
in good faith or (ii) failure to comply with which would not be reasonably
likely to have a Material Adverse Effect.
SECTION 4.09. Governmental Approvals. No consent, approval,
authorization, permit or license from, or registration or filing with, any
Governmental Authority is required in connection with the making of this
Agreement, with the exception of routine periodic filings made under the
Exchange Act.
SECTION 4.10. Pari Passu Obligations. Under applicable United States
laws (including state and local laws) in force at the date hereof, the claims
and rights of the Banks and the Agent against the Borrower under this Agreement
and the Notes will not be subordinate to, and will rank at least pari passu
with, the claims and rights of any other unsecured creditors of the Borrower
(except to the extent provided by bankruptcy, reorganization, insolvency,
moratorium or other similar laws of general application relating to or affecting
the enforcement of creditors' rights and by general principles of equity).
SECTION 4.11. No Defaults. The payment obligations of the Borrower and
its Subsidiaries in respect of any Material Debt are not overdue.
SECTION 4.12. Full Disclosure. All information furnished to the Banks
in writing prior to the date hereof in connection with the transactions
contemplated hereby (including, without limitation, the Information Memorandum,
but subject to the qualifications and limitations set forth in the Information
Memorandum (including, without limitation, in the pro forma and forecasted
financial information)) does not, collectively, contain any misstatement of a
material fact or omit to state a fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading in any material respect on and as of the date hereof.
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SECTION 4.13. ERISA. Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in substantial compliance in all
material respects with the presently applicable material provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member of the ERISA
Group has (i) sought a waiver of the minimum funding standard under Section 412
of the Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or made any amendment
to any Plan which, in either case has resulted or could result in the imposition
of a material Lien or the posting of a material bond or other material security
under ERISA or the Internal Revenue Code or (iii) incurred any material
liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.14. Environmental Matters. The Financial Statements described
in Section 4.04 provide certain information regarding environmental matters
related to properties currently owned by the Borrower or its Restricted
Subsidiaries, previously owned properties, and other properties. Since December
31, 1997, environmental matters have not caused any material adverse change in
the consolidated financial condition of the Borrower and the Consolidated
Subsidiaries from that shown by such Financial Statement.
In the ordinary course of business, the ongoing operations of the
Borrower and its Restricted Subsidiaries are reviewed from time to time to
determine compliance with applicable Environmental Laws. Based on these reviews,
to the knowledge of the Borrower, ongoing operations at the Principal Properties
are currently being conducted in substantial compliance with applicable
Environmental Laws except to the extent that noncompliance would not be
reasonably likely to have a Material Adverse Effect.
SECTION 4.15. Regulatory Restrictions on Borrowing. The Borrower is not
an "investment company" within the meaning of the Investment Company Act of
1940, as amended, a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended, or otherwise subject to any regulatory
scheme which restricts its ability to incur debt.
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ARTICLE 5
COVENANTS
From the Closing Date and so long as any Commitments of the Banks shall
be outstanding and until the payment in full of all Loans outstanding under this
Agreement and the performance of all other obligations of the Borrower under
this Agreement, the Borrower agrees that, unless the Required Banks shall
otherwise consent in writing:
SECTION 5.01. Information. The Borrower will deliver to the Agent which
will deliver to each of the Banks:
(a) as soon as available and in any event within 60 days after
the end of each of its first three quarterly accounting periods in each
fiscal year, consolidated statements of earnings and cash flows of the
Borrower and the Consolidated Subsidiaries for the period from the
beginning of such fiscal year to the end of such fiscal period and the
related consolidated balance sheet of the Borrower and the Consolidated
Subsidiaries as at the end of such fiscal period, all in reasonable
detail (it being understood that delivery of such statements as filed
with the Securities and Exchange Commission shall be deemed to satisfy
the requirements of this subsection) and accompanied by a certificate
in the form attached hereto as Exhibit H signed by a financial officer
of the Borrower stating that such consolidated financial statements
fairly present the consolidated financial condition and results of
operations of the Borrower and the Consolidated Subsidiaries as of the
end of such period and for the period involved, subject, however, to
year-end audit adjustments, and that such officer has no knowledge,
except as specifically stated, of any Default;
(b) as soon as available and in any event within 120 days
after the end of each fiscal year, consolidated statements of earnings
and cash flows of the Borrower and the Consolidated Subsidiaries for
such year and the related consolidated balance sheets of the Borrower
and the Consolidated Subsidiaries as at the end of such year, all in
reasonable detail and accompanied by (i) an opinion of independent
public accountants of recognized standing selected by the Borrower as
to such consolidated financial statements (it being understood that
delivery of such statements as filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this
subsection), and (ii) a certificate in the form attached hereto as
Exhibit H signed by a financial officer of the Borrower stating that
such consolidated financial statements fairly present
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the consolidated financial condition and results of operations of the
Borrower and the Consolidated Subsidiaries as of the end of such year
and for the year involved and that such officer has no knowledge,
except as specifically stated, of any Default;
(c) promptly after their becoming available:
(i) copies of all financial statements, stockholder
reports and proxy statements that the Borrower shall have sent
to its stockholders generally; and
(ii) copies of all registration statements filed by
the Borrower under the Securities Act of 1933, as amended
(other than registration statements on Form S-8 or any
registration statement filed in connection with a dividend
reinvestment plan), and regular and periodic reports, if any,
which the Borrower shall have filed with the Securities and
Exchange Commission (or any governmental agency or agencies
substituted therefor) under Section 13 or Section 15(d) of the
Exchange Act, or with any national or international securities
exchange (other than those on Form 11-K or any successor
form);
(d) from time to time, with reasonable promptness, such
further information regarding the business and financial condition of
the Borrower and its Subsidiaries as any Bank may reasonably request
through the Agent;
(e) prompt notice of the occurrence of any Default; and
(f) prompt notice of all litigation and of all proceedings
before any governmental or regulatory agency pending (or, to the
knowledge of the General Counsel of the Borrower, threatened) and
affecting the Borrower or any Restricted Subsidiary, except litigation
or proceedings which, if adversely determined, would not be reasonably
likely to have a Material Adverse Effect.
Each set of financial statements delivered pursuant to Section 5.01(a)
or 5.01(b) shall be accompanied by or include the computations showing, in the
form attached hereto as Exhibit H, whether the Borrower was, at the end of the
relevant fiscal period, in compliance with the provisions of Section 5.09.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Restricted Subsidiary to pay and discharge, all
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material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits, or upon any property belonging to it, prior to
the date on which penalties attach thereto, and all lawful material claims
which, if unpaid, might become a Lien upon the property of the Borrower or such
Restricted Subsidiary; provided that neither the Borrower nor any such
Restricted Subsidiary shall be required to pay any such tax, assessment, charge,
levy or claim (i) the payment of which is being contested in good faith and by
proper proceedings, (ii) not yet delinquent or (iii) the non-payment of which,
if taken in the aggregate, would not be reasonably likely to have a Material
Adverse Effect.
SECTION 5.03. Insurance. The Borrower will maintain, and will cause
each Restricted Subsidiary to maintain, insurance from responsible companies in
such amounts and against such risks as is reasonable, taking into consideration
the practices of businesses in the same line of business or of similar size as
the Borrower or such Restricted Subsidiary, or, to a reasonable extent,
self-insurance.
SECTION 5.04. Maintenance of Existence. The Borrower will preserve and
maintain, and will cause each Restricted Subsidiary to preserve and maintain,
its corporate existence and all of its rights, privileges and franchises
necessary or desirable in the normal conduct of its business, and conduct its
business in an orderly, efficient and regular manner. Nothing herein contained
shall prevent the termination of the business or corporate existence of any
Restricted Subsidiary which in the judgment of the Borrower is no longer
necessary or desirable, a merger or consolidation of a Restricted Subsidiary
into or with the Borrower (if the Borrower is the surviving corporation) or
another Subsidiary or any merger, consolidation or transfer of assets permitted
by Section 5.07, as long as immediately after giving effect to any such
transaction, no Default shall have occurred and be continuing.
SECTION 5.05. Maintenance of Properties. The Borrower will keep, and
will cause each Restricted Subsidiary to keep, all of its properties necessary,
in the judgment of the Borrower, in its business in good working order and
condition, ordinary wear and tear excepted. Nothing in this Section 5.05 shall
prevent the Borrower or any Restricted Subsidiary from discontinuing the
operation or maintenance, or both the operation and maintenance, of any
properties of the Borrower or any such Restricted Subsidiary if such
discontinuance is, in the judgment of the Borrower (or such Restricted
Subsidiary), desirable in the conduct of its business.
SECTION 5.06. Compliance with Laws. The Borrower will comply, and will
cause each Restricted Subsidiary to comply, with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority
(including Environmental Laws and ERISA), a breach of which would be
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reasonably likely to have a Material Adverse Effect, except where contested in
good faith and by proper proceedings.
SECTION 5.07. Mergers, Consolidations and Sales of Assets. (a) The
Borrower will not consolidate with or merge into any other Person or convey or
transfer its properties and assets substantially as an entirety to any Person,
unless:
(i) the Borrower or a Consolidated Subsidiary that is
incorporated under the laws of the United States, any state thereof or
the District of Columbia is the surviving corporation of any such
consolidation or merger or is the Person that acquires by conveyance or
transfer the properties and assets of the Borrower substantially as an
entirety;
(ii) if a Consolidated Subsidiary is the surviving corporation
or is the Person that acquires the property and assets of the Borrower
substantially as an entirety, it shall expressly assume the performance
of every covenant of this Agreement and of the Notes on the part of the
Borrower to be performed or observed;
(iii) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing; and
(iv) if the Borrower is not the surviving corporation, the
Borrower has delivered to the Agent an Officer's Certificate and a
legal opinion of its General Counsel, Associate General Counsel or
Assistant General Counsel, upon the express instruction of the Borrower
for the benefit of the Agent and the Banks, each stating that such
transaction complies with this Section and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
(b) Upon any consolidation by the Borrower with, or merger by the
Borrower into, a Consolidated Subsidiary or any conveyance or transfer of the
properties and assets of the Borrower substantially as an entirety to a
Consolidated Subsidiary, the Consolidated Subsidiary into which the Borrower is
merged or consolidated or to which such conveyance or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Borrower, as the case may be, under this Agreement with the same effect as
if such Consolidated Subsidiary had been named as the Borrower, as the case may
be, herein, and thereafter, in the case of a transfer or conveyance permitted by
Section 5.07(a), the Borrower shall be relieved of all obligations and covenants
under this Agreement and the Notes.
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SECTION 5.08. Negative Pledge. Neither the Borrower nor any Restricted
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement;
(b) Liens securing Debt of a Restricted Subsidiary owing to
the Borrower or to another Restricted Subsidiary;
(c) any Lien existing on any asset of any person at the time
such person becomes a Subsidiary and not created in contemplation of
such event;
(d) 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 (and/or, in the case of the acquisition of a business, any
Lien on the equity and/or assets of the acquired entity), provided that
such Lien attaches to such asset concurrently with or within 180 days
after the acquisition thereof;
(e) any Lien on any asset of any person existing at the time
such person is merged or consolidated with or into the Borrower or a
Restricted Subsidiary and not created in contemplation of such event;
(f) 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;
(g) 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, provided that such Debt is
not increased and is not secured by any additional assets;
(h) Liens in favor of any customer (including any Governmental
Authority) to secure partial, progress, advance or other payments or
performance pursuant to any contract or statute or to secure any
related indebtedness or to secure Debt guaranteed by a Governmental
Authority;
(i) materialmen's, suppliers', tax or other similar Liens
arising in the ordinary course of business securing obligations which
are not overdue or are being contested in good faith by appropriate
proceedings; Liens arising by operation of law in favor of any lender
to the Borrower or any Restricted Subsidiary in the ordinary course of
business constituting a
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banker's lien or right of offset in moneys of the Borrower or a
Restricted Subsidiary deposited with such lender in the ordinary course
of business; and appeal bonds in respect of appeals being prosecuted in
good faith;
(j) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $50,000,000;
(k) Liens securing Debt equally and ratably securing the Loans
and such Debt; provided that the Required Banks may, in their sole
discretion, refuse to take any Lien on any asset (which refusal will
not limit the Borrower's or any Restricted Subsidiary's ability to
incur a Lien otherwise permitted by this Section 5.08(k)); such Lien
may equally and ratably secure the Loans and any other obligation of
the Borrower or any of its Subsidiaries, other than an obligation that
is subordinated to the Loans;
(l) Liens securing contingent obligations in an aggregate
principal amount not to exceed $15,000,000; and
(m) Liens not otherwise permitted by the foregoing clauses of
this Section securing obligations in an aggregate principal or face
amount at any date not to exceed at the time of incurrence the greater
of 12.5% of Consolidated Net Worth or $75,000,000.
For the avoidance of doubt, the creation of a security interest arising
solely as a result of, or the filing of UCC financing statements in connection
with, any sale by the Borrower or any of its Subsidiaries of accounts receivable
not prohibited by Section 5.07 shall not constitute a Lien prohibited by this
covenant.
SECTION 5.09. Leverage Ratio. The ratio of Consolidated Debt to Total
Capital shall not exceed (i) 55% at any time prior to June 30, 1999 or (ii) 50%
at any time at or after June 30, 1999.
SECTION 5.10. Use of Loans. The Borrower will use the proceeds of the
Loans for any lawful corporate purposes.
SECTION 5.11. Investments. Neither the Borrower nor any Subsidiary will
hold, make or acquire any Investment in any Person other than:
(a) Investments in Temporary Cash Investments and other Investments in
cash or cash equivalents from time to time approved by the Board of Directors of
the Borrower;
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(b) Investments comprised of debt consideration received in connection
with the sale of assets (including any extensions, renewals and modifications
thereof);
(c) Investments existing on the date of this Agreement or which the
Borrower or any Restricted Subsidiary has, as of the date of this Agreement,
committed to make and which are set forth on Schedule 5.11(c) (including any
extensions, renewals and modifications thereof);
(d) Investments in any Subsidiary or guaranties of obligations of any
Subsidiary whose principal business on the date of the making of such Investment
or after giving effect to such Investment is either (i) the same line or lines
of business as the Borrower or (ii) in the judgment of the Borrower related to
such line or lines of business (it being understood that Schedule 5.11(d)
contains a nonexhaustive list of certain related businesses);
(e) Investments by any Subsidiary in the Borrower; and
(f) Additional Investments not otherwise included in the foregoing
clauses of this Section 5.11 if, after giving effect to such Investment, the
outstanding amount (computed by taking the difference of (x) the original cash
purchase price of all such Investments less (y) the sum of (i) all payments
(including interest and dividends) and repayments of principal or capital plus
(ii) all proceeds from the sale of such Investment) of all Investments permitted
by this clause (f) does not exceed $150,000,000.
SECTION 5.12. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect, any transaction with,
any Affiliate except (i) transactions on an arms-length basis on terms at least
as favorable to the Borrower or such Subsidiary Affiliate than could have been
obtained from a third party who was not an Affiliate, and (ii) transactions
described in this Section 5.12 that would not be reasonably likely to have a
Material Adverse Effect.
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ARTICLE 6
DEFAULTS
SECTION 6.01. Event of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay the principal of any Loan
when due;
(b) the Borrower shall fail to pay within 5 days of the due
date thereof (i) any facility fee or (ii) interest on any Loan;
(c) the Borrower shall fail to pay within 30 days after a
request for payment by any Bank acting through the Agent any other
amount payable under this Agreement;
(d) the Borrower shall fail to observe or perform any
agreement contained in Sections 5.07 through 5.11 (and, with respect to
Sections 5.10 and 5.11, such failure shall have continued for 10 days
after notice thereof has been given to the Borrower by the Agent at the
request of the Required Banks);
(e) the Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
clauses (a) through (d) above) for 30 days after notice thereof has
been given to the Borrower by the Agent at the request of the Required
Banks;
(f) any representation, warranty or certification made by the
Borrower in this Agreement or in any certificate, or writing delivered
pursuant to this Agreement shall prove to have been incorrect in any
material respect when made and such deficiency shall remain unremedied
for five days after notice thereof shall have been given to the
Borrower by the Agent at the request of the Required Banks;
(g) any Material Financial Obligations shall become due before
stated maturity by the acceleration of the maturity thereof by reason
of default, or any Material Financial Obligations shall become due by
its terms and shall not be paid and, in any case aforesaid in this
clause (g), corrective action satisfactory to the Required Banks shall
not have been taken within 5 days after written notice of the situation
shall have been given to the Borrower by the Agent at the request of
the Required Banks;
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(h) the Borrower or any Restricted Subsidiary 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 shall 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;
(i) an involuntary case or other proceeding shall be commenced
against the Borrower or any Restricted Subsidiary 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 90 days; or an order
for relief shall be entered against the Borrower or any Restricted
Subsidiary under the federal bankruptcy laws as now or hereafter in
effect;
(j) a final judgment for the payment of money in excess of
$35,000,000 shall have been entered against the Borrower or any
Restricted Subsidiary, and the Borrower or such Subsidiary shall not
have satisfied the same within 60 days, or caused execution thereon to
be stayed within 60 days, and such failure to satisfy or stay such
judgment shall remain unremedied for 5 days after notice thereof shall
have been given to the Borrower by the Agent at the request of the
Required Banks;
(k) a final judgment either (1) requiring termination or
imposing liability (other than for premiums under Section 4007 of
ERISA) under Title IV of ERISA in respect of, or requiring a trustee to
be appointed under Title IV of ERISA to administer, any Plan or Plans
having aggregate Unfunded Liabilities in excess of $35,000,000 or (2)
in an action relating to a Multiemployer Plan involving a current
payment obligation in excess of $35,000,000, which judgment, in either
case, has not been satisfied or stayed within 60 days and such failure
to satisfy or stay is unremedied for 5 days after notice thereof shall
have been given to the Company by the Documentation Agent at the
request of the Required Banks; or
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(l) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of 35% or more of the outstanding shares of common stock of the
Borrower; or during any two-year period, individuals who at the
beginning of such period constituted the Borrower's Board of Directors
(together with any new director whose election by the Board of
Directors or whose nomination for election by the shareholders of the
Borrower was approved by a vote of at least two-thirds of the directors
then in office who either were directors as the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
directors then in office;
then, and in every such event, the Agent shall, if requested by the Required
Banks, (i) by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, and (ii) by notice to the Borrower declare the Loans,
interest accrued thereon and all other amounts payable hereunder to be, and the
same shall thereupon become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; provided that in the event of (A) the filing by the Borrower of a
petition, or (B) an actual or deemed entry of an order for relief with respect
to the Borrower, under the federal bankruptcy laws as now or hereafter in
effect, without any notice to the Borrower or any other act by the Agent or the
Banks, the Commitments shall thereupon terminate and the Loans, interest accrued
thereon and all other amounts payable hereunder shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the Notes as are delegated
to such Agent by the terms hereof or thereof, together with all such powers as
are reasonably incidental thereto; provided, however, that the Agent shall not
commence any legal action or proceeding before a court of law on behalf of any
Bank without such Bank's prior written consent.
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SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of
New York shall have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or affiliate of the Borrower as if
it were not the Agent. The term "Bank" or "Banks" shall, unless expressly
indicated, include Morgan Guaranty Trust Company of New York (and any successor
acting as Agent) in its capacity as a Bank.
SECTION 7.03. Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article 6.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable to any Bank
for any action taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower; (iii) the satisfaction of
any condition specified in Article 3, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex, facsimile transmission or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including reasonable counsel fees and
disbursements),
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claim, demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with this Agreement or any action taken or omitted
by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agents. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such resignation,
the Borrower shall, with the consent of the Required Banks, have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed,
and shall have accepted such appointment, within 60 days after the retiring
Agent gives notice of resignation, the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of its appointment as an Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder as Agent. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
SECTION 7.09. Agent's Fees. The Borrower shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Borrower and the Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Increased Cost and Reduced Return; Capital Adequacy . (a)
If after the date hereof, in the case of any Committed Loan, or the date of the
related Money Market Quote, in the case of any Money Market Loan, a Change in
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Law shall impose, modify or deem applicable any reserve, special deposit,
assessment or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System
pursuant to Regulation D or otherwise, as herein provided) against assets of,
deposits with or for the account of, or credit extended by, any Bank or shall
impose on any Bank or the London interbank market any other condition affecting
such Bank's Fixed Rate Loans, or its Notes; and the result of any of the
foregoing is to increase the cost to such Bank of making or maintaining any such
Fixed Rate Loans, or to reduce the amount of any sum received or receivable by
such Bank under this Agreement or under its Note, by an amount deemed by such
Bank to be material, then, within 15 days after written demand therefor made
through the Agent, in the form of the certificate referred to in Section
8.01(c), the Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such increased cost or reduction; provided that
the Borrower shall not be required to pay any such compensation with respect to
any period prior to the 30th day before the date of any such demand.
(b) Without limiting the effect of Section 8.01(a) (but without
duplication), if any Bank determines at any time after the date on which this
Agreement becomes effective that a Change in Law will have the effect of
increasing the amount of capital required to be maintained by such Bank (or its
Parent) based on the existence of such Bank's Loans, Commitment and/or other
obligations hereunder, then the Borrower shall pay to such Bank, within 15 days
after its written demand therefor made through the Agent in the form of the
certificate referred to in Section 8.01(c), such additional amounts as shall be
required to compensate such Bank for any reduction in the rate of return on
capital of such Bank (or its Parent) as a result of such increased capital
requirement; provided that the Borrower shall not be required to pay any such
compensation with respect to any period prior to the 30th day before the date of
any such demand; provided further, however, that to the extent (i) a Bank shall
increase its level of capital above the level maintained by such Bank on the
date of this Agreement and there has not been a Change in Law or (ii) there has
been a Change in Law and a Bank shall increase its level of capital by an amount
greater than the increase attributable (taking into consideration the same
variables taken into consideration in determining the level of capital
maintained by such Bank on the date of this Agreement) to such Change in Law,
the Borrower shall not be required to pay any amount or amounts under this
Agreement with respect to any such increase in capital. Thus, for example, a
Bank which is "adequately capitalized" (as such term or any similar term is used
by any applicable bank regulatory agency having authority with respect to such
Bank) may not require the Borrower to make payments in respect of increases in
such Bank's level of capital made under the circumstances described in clause
(i) or (ii) above which improve its capital position from "adequately
capitalized" to "well capitalized" (as such
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term or any similar term is used by any applicable bank regulatory agency having
authority with respect to such Bank).
(c) Each Bank will promptly notify the Borrower, through the Agent, of
any event of which it has knowledge, occurring after the date on which this
Agreement becomes effective, which will entitle such Bank to compensation
pursuant to this Section 8.01 and will designate a different Applicable Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section 8.01 and setting forth the additional amount or amounts to be
paid to it hereunder and setting forth the basis for the determination thereof
shall be conclusive in the absence of manifest error. In determining such
amount, such Bank shall act reasonably and in good faith, and may use any
reasonable averaging and attribution methods.
SECTION 8.02. Substitute Rate. Anything herein to the contrary
notwithstanding, if within two Euro-Dollar Business Days, in the case of
Euro-Dollar Loans or Money Market LIBOR Loans, prior to the first day of an
Interest Period none of the Reference Banks is, for any reason whatsoever, being
offered Dollars for deposit in the relevant market for a period and amount
relevant to the computation of the rate of interest on a Fixed Rate Loan for
such Interest Period, the Agent shall give the Borrower and each Bank prompt
notice thereof and on what would otherwise be the first day of such Interest
Period such Loans shall be made as Base Rate Loans.
SECTION 8.03. Illegality. (a) Notwithstanding any other provision
herein, if, after the date on which this Agreement becomes effective, a Change
in Law shall make it unlawful or impossible for any Bank to (i) honor any
Commitment it may have hereunder to make any Euro-Dollar Loan, then such
Commitment shall be suspended, or (ii) maintain any Euro-Dollar Loan or any
Money Market LIBOR Loan, then all Euro-Dollar Loans and Money Market LIBOR loans
of such Bank then outstanding shall be converted into Base Rate Loans as
provided in Section 8.03(b), and any remaining Commitment of such Bank hereunder
to make Euro-Dollar Loans (but not other Loans) shall be immediately suspended,
in either case until such Bank may again make and/or maintain Euro-Dollar Loans
(as the case may be), and borrowings from such Bank, at a time when borrowings
from the other Banks are to be of Euro-Dollar Loans, shall be made,
simultaneously with such borrowings from the other Banks, by way of Base Rate
Loans. Upon the occurrence of any such change, such Bank shall promptly notify
the Borrower thereof (with a copy to the Agent), and shall furnish to the
Borrower in writing evidence thereof certified by such Bank. Before giving any
notice pursuant to this Section 8.03, such Bank shall designate a different
Applicable
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Lending Office if such designation will avoid the need for giving such notice
and will not, in the sole reasonable judgment of such Bank, be otherwise
disadvantageous to such Bank.
(b) Any conversion of any outstanding Euro-Dollar Loan or an
outstanding Money Market Loan which is required under this Section 8.03 shall be
effected immediately (or, if permitted by applicable law, on the last day of the
Interest Period therefor).
SECTION 8.04. Taxes on Payments. (a) All payments in respect of the
Loans shall be made free and clear of and without any deduction or withholding
for or on account of any present and future taxes, assessments or governmental
charges imposed by the United States, or any political subdivision or taxing
authority thereof or therein, excluding taxes imposed on its net income, branch
profit taxes and franchise taxes (all such non-excluded taxes being hereinafter
called "Taxes"), except as expressly provided in this Section 8.04. If any Taxes
are imposed and required by law to be deducted or withheld from any amount
payable to any Bank, then the Borrower shall (i) increase the amount of such
payment so that such Bank will receive a net amount (after deduction of all
Taxes) equal to the amount due hereunder, (ii) pay such Taxes to the appropriate
taxing authority for the account of such Bank, and (iii) as promptly as possible
thereafter, send such Bank evidence of original or certified receipt showing
payment thereof, together with such additional documentary evidence as such Bank
may from time to time require. If the Borrower fails to perform its obligations
under (ii) or (iii) above, the Borrower shall indemnify such Bank for any
incremental taxes, interest or penalties that may become payable as a result of
any such failure; provided, however, that the Borrower will not be required to
make any payment to any Bank under this Section 8.04 if withholding is required
in respect of such Bank by reason of such Bank's inability or failure to furnish
under subsection (c) an extension or renewal of a Form 1001 or Form 4224 (or
successor form), as applicable, unless such inability results from an amendment
to or a change in any applicable law or regulation or in the interpretation
thereof by any regulatory authority (including without limitation any change in
an applicable tax treaty), which amendment or change becomes effective after the
date hereof.
(b) The Borrower shall indemnify the Agent and each Bank against any
present or future transfer taxes, stamp or documentary taxes, excise or property
taxes, assessments or charges made by any Governmental Authority by reason of
the execution, delivery, registration or enforcement of this Agreement or any
Notes (hereinafter referred to as "Other Taxes").
(c) Subject to subsection (d) below, each Bank that is a foreign
person (i.e. a person who is not a United States person for United States
federal income
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tax purposes) agrees that it shall deliver to the Borrower (with a copy to the
Agent) (i) within twenty Domestic Business Days after the date on which this
Agreement becomes effective, two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, as appropriate, indicating that such Bank is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, or is entitled to a
reduced rate of United States withholding taxes under an applicable income tax
treaty, (ii) from time to time, such extensions or renewals of such forms (or
successor forms) as may reasonably be requested by the Borrower but only to the
extent such Bank determines that it may properly effect such extensions or
renewals under applicable tax treaties, laws, regulations and directives and
(iii) in the event of a transfer of any Loan to a subsidiary or affiliate of
such Bank, a new Internal Revenue Service Form 1001 or 4224 (or any successor
form), as the case may be, for such subsidiary or affiliate indicating that such
subsidiary or affiliate is, on the date of delivery thereof, entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes or is entitled to a reduced rate of United States
withholding tax under an applicable income tax treaty. The Borrower and the
Agent shall each be entitled to rely on such forms in its possession until
receipt of any revised or successor form pursuant to the preceding sentence.
(d) If a Bank at the time it first becomes a party to this Agreement
(or because of a change in an Applicable Lending Office) is subject to a United
States interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from Taxes. For any period with respect to
which a Bank has failed to provide the Borrower with the appropriate form
pursuant to Section 8.04(c) (unless such failure is due to a change in treaty,
law or regulation, or in the interpretation thereof by any regulatory authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Bank shall not be entitled to additional payments under Section
8.04(a) with respect to Taxes imposed by the United States; provided, however,
that should a Bank, which is otherwise exempt from or subject to a reduced rate
of withholding tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(e) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.04, then such Bank will
change the jurisdiction of one or more Applicable Lending Offices so as to
eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.
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(f) If any Bank is able to apply for any credit, deduction or other
reduction in Taxes or Other Taxes in an amount which is reasonably determined by
such Bank to be material, which arises by reason of any payment made by the
Borrower pursuant to this Section 8.04, such Bank will use reasonable efforts,
excluding the institution of any judicial proceeding, to obtain such credit,
deduction or other reduction and, upon receipt thereof, will pay to the Borrower
an amount, not exceeding the amount of such payment by the Borrower, equal to
the net after-tax value to such Bank, in its good faith determination, of such
part of such credit, deduction or other reduction as it determines to be
allocable to such payment by the Borrower, having regard to all of its dealings
giving rise to similar credits, deductions or other reductions during the same
tax period and to the cost of obtaining the same; provided, however, that (i)
such Bank shall not be obligated to disclose to the Borrower any information
regarding its tax affairs or computations and (ii) nothing contained in this
Section 8.04(f) shall be construed so as to interfere with the right of such
Bank to arrange its tax affairs as it deems appropriate.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Termination of Commitment of a Bank; New Banks. (a) (1)
Upon receipt of notice from any Bank for compensation or indemnification
pursuant to Section 8.01(c) or Section 8.04 or (2) upon receipt of notice that
the Commitment of a Bank to make Euro-Dollar Loans has been suspended, the
Borrower shall have the right to terminate the Commitment in full of the Bank
providing such notice (a "Retiring Bank"). The termination of the Commitment of
a Retiring Bank pursuant to this Section 9.01(a) shall be effective on the tenth
Domestic Business Day following the date of a notice of such termination to the
Retiring Bank through the Agent, subject to the satisfaction of the following
conditions:
(i) in the event that on such effective date there shall be
any Loans outstanding hereunder, the Borrower shall have prepaid on
such date the aggregate principal amount of such Loans held by the
Retiring Bank only; and
(ii) in addition to the payment of the principal of the Loans
held by the Retiring Bank pursuant to clause (i) above, the Borrower
shall have paid such Retiring Bank all accrued interest thereon, and
facility fee and any other amounts then payable to it hereunder,
including, without
48
<PAGE> 54
limitation, all amounts payable by the Borrower to such Bank under
Section 2.14 by reason of the prepayment of Loans pursuant to clause
(i) with respect to the period ending on such effective date; provided
that the provisions of Section 8.01, Section 8.04 and Section 9.04
shall survive for the benefit of any Retiring Bank.
Upon satisfaction of the conditions set forth in clauses (i) and (ii)
above, such Bank shall cease to be a Bank hereunder.
(b) In lieu of the termination of a Bank's Commitment pursuant to
Section 9.01(a), the Borrower may notify the Agent that the Borrower desires to
replace such Retiring Bank with a new bank or banks (which may be one or more of
the Banks), which will purchase the Loans and assume the Commitment of the
Retiring Bank. Upon the Borrower's selection of a bank to replace a Retiring
Bank, such bank's agreement thereto and the fulfillment of the conditions to
assignment and assumption set forth in Section 9.08(c)(iii) such bank shall
become a Bank hereunder for all purposes in accordance with Section
9.08(c)(iii).
SECTION 9.02. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party: (a)
in the case of the Borrower or the Agent, at its address, facsimile number or
telex number set forth on the signature pages hereof, (b) in the case of any
Bank, at its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (c) in the case of any party, such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received or (iii) if given by any other means, when
delivered at the address specified in this Section.
SECTION 9.03. No Waivers. No failure or delay by either Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.04. Expenses; Indemnification. (a) The Borrower shall pay (i)
reasonable out-of-pocket expenses, including the reasonable fees and expenses of
special counsel for the Agent in connection with the preparation of this
49
<PAGE> 55
Agreement and (ii) if an Event of Default occurs, all reasonable out-of-pocket
expenses incurred by the Agent and the Banks, including reasonable fees and
expenses of counsel, in connection with such Event of Default and collection and
other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
reasonable expenses of any kind, including, without limitation, the reasonable
fees and disbursements of counsel, incurred by such Indemnitee in response to or
in defense of any investigative, administrative or judicial proceeding brought
or threatened against the Agent or any Bank relating to or arising out of this
Agreement or any actual or proposed use of proceeds of Loans; provided that no
Indemnitee shall have the right to be indemnified hereunder (i) to the extent
such indemnification relates to relationships between or among each of, or any
of, the Agent, the Banks or any Assignee or Participant or (ii) for such
Indemnitee's own gross negligence or willful misconduct.
SECTION 9.05. Pro Rata Treatment. Except as expressly provided in this
Agreement with respect to Money Market Loans or otherwise, (a) each borrowing
from, and change in the Commitments of, the Banks shall be made pro rata
according to their respective Commitments, and (b) each payment and prepayment
on the Loans shall be made to all the Banks, pro rata in accordance with the
unpaid principal amount of the Loans held by each of them.
SECTION 9.06. Sharing of Set-Offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest then due with
respect to the Loans held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of principal and interest then
due with respect to the Loans held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Loans
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Loans held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower, other than its
indebtedness hereunder.
SECTION 9.07. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such
50
<PAGE> 56
amendment or waiver is in writing and is signed by the Borrower and the Required
Banks (and, if the rights or duties of the Agent are affected thereby, by the
Agent so affected); provided that no such amendment or waiver shall, unless
signed by all the Banks, (i) subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any fees hereunder,
(iii) postpone the date fixed for any payment of principal of or interest on any
Loan or for termination of any Commitment, (iv) change Section 4.10 or 9.05 or
(v) change the percentage of Loans or Total Commitments that shall be required
for the Banks or any of them to take any action under this Section 9.07 or any
other provision of this Agreement.
SECTION 9.08. Successors and Assigns; Participations; Novation. (a)
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that, except in
accordance with Sections 5.04 and 5.07, the Borrower may not assign or transfer
any of its rights or obligations under this Agreement without the consent of all
Banks.
(b) Any Bank may, without the consent of the Borrower, but upon prior
written notification to the Borrower, at any time sell to one or more banks or
other financial institutions (each a "Participant") participating interests in
any Loan owing to such Bank, any Note held by such Bank, the Commitment of such
Bank hereunder, and any other interest of such Bank hereunder; provided that no
prior notification to the Borrower is required in connection with the sale of a
participating interest in a Money Market Loan. In the event of any such sale by
a Bank of a participating interest to a Participant, such Bank's obligations
under this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
its Note or Notes, if any, for all purposes under this Agreement and the
Borrower and the Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which a Bank may grant such a participating interest shall
provide that such Bank shall retain the sole right and responsibility to enforce
the obligations of the Borrower hereunder including, without limitation, the
right to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that such Bank
will not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii) or (iii) of Section 9.07 affecting such
Participant without the consent of the Participant; provided further that such
Participant shall be bound by any waiver, amendment or other decision that all
Banks shall be required to abide by pursuant to a vote by Required Banks.
Subject to the provisions of Section 9.08(d), the Borrower agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article 8 with respect to its participating
interest. An assignment or other transfer which is not permitted by
51
<PAGE> 57
subsection (c) or (g) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection (b).
(c) (i) Any Bank may at any time sell to one or more Eligible
Institutions (each an "Assignee") all or a portion of its rights and obligations
under this Agreement and the Notes. Each Assignee shall assume all such rights
and obligations pursuant to an Assignment and Assumption Agreement executed by
such Assignee, such transferor Bank and the Borrower. In no event shall (A) any
Commitment of a transferor Bank (together with the Commitment of any affiliate
of such Bank), after giving effect to any sale pursuant to this subsection (c),
be less than $5,000,000, (B) any Commitment of an Assignee (together with the
Commitment of any affiliate of such Assignee), after giving effect to any sale
pursuant to this subsection (c), be less than $5,000,000, except in each case as
may result upon the transfer by a Bank of its Commitment in its entirety or (C)
any sale pursuant to this subsection (c) result in the transferee Bank (together
with its affiliates) holding more than 35% of the aggregate Commitments, except
to the extent that the Borrower and the Required Banks consent to such sale.
(ii) No interest may be sold by a Bank pursuant to this
subsection (c), except to an affiliate of such Bank, provided that such
affiliate is an Eligible Institution, without the prior written consent
of the Borrower and the Agent, which consent shall not be unreasonably
withheld. The withholding of consent by the Borrower shall not be
deemed unreasonable if based solely upon the Borrower's desire to (A)
balance relative loan exposures to such Eligible Institution among all
credit facilities of the Borrower or (B) avoid payment of any
additional amounts payable to such Eligible Institution under Article 8
which would arise from such assignment.
(iii) Upon (A) execution of an Assignment and Assumption
Agreement, (B) delivery by the transferor Bank of an executed copy
thereof, together with notice that the payment referred to in clause
(C) below shall have been made, to the Borrower and the Agent, (C)
payment by such Assignee to such transferor Bank of an amount equal to
the purchase price agreed between such transferor Bank and such
Assignee and (D) if the Assignee is organized under the laws of any
jurisdiction other than the United States or any state thereof,
evidence satisfactory to the Agent and the Borrower of compliance with
the provisions of Section 9.08(f), such Assignee shall for all purposes
be a Bank party to this Agreement and shall have all the rights and
obligations of a Bank under this Agreement to the same extent as if it
were an original party hereto with a Commitment as set forth in such
Assignment and
52
<PAGE> 58
Assumption Agreement, and the transferor Bank shall be released
from its obligations hereunder to a correspondent extent, and no
further consent or action by the Borrower, the Banks or the Agents
shall be required to effectuate such transfer. Each Assignee shall be
bound by any waiver, amendment or other decision that all Banks shall
be required to abide by pursuant to a vote by Required Banks.
(iv) Upon the consummation of any transfer to an Assignee
pursuant to this subsection (c), the transferor Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if requested by
the transferor Bank or the Assignee, a new Note or Notes shall be
delivered from the Borrower to the transferor Bank and/or such
Assignee. In connection with any such assignment, the Assignee or the
transferor Bank shall pay to the Agent an administrative fee for
processing such assignment in the amount of $3,000.
(d) No Assignee, Participant or other transferee (including any
successor Applicable Lending Office) of any Bank's rights shall be entitled to
receive any greater payment under Section 8.01 than such Bank would have been
entitled to receive with respect to the rights transferred, unless such transfer
is made with the Borrower's prior written consent or by reason of the provisions
of Section 8.01 or Section 8.03 requiring such Bank to designate a different
Applicable Lending Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
(e) Each Bank may, upon the written consent of the Borrower, which
consent shall not be unreasonably withheld, disclose to any Participant or
Assignee (each a "Transferee") and any prospective Transferee any and all
financial information in such Bank's possession concerning the Borrower that has
been delivered to such Bank by the Borrower pursuant to this Agreement or that
has been delivered to such Bank by the Borrower in connection with such Bank's
credit evaluation prior to entering into this Agreement, subject in all cases to
agreement by such Transferee or prospective Transferee to comply with the
provisions of Section 9.15.
(f) If pursuant to subsection (c) of this Section 9.08, any interest
in this Agreement or any Note is transferred to any Assignee that is organized
under the laws of any jurisdiction other than the United States or any state
thereof, the transferor Bank shall cause such Assignee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Agents and the Borrower) that under
applicable law and treaties no taxes or only a reduced rate of withholding taxes
(excluded from the definition of Taxes under Section 8.04(d)) will be required
to be withheld by the
53
<PAGE> 59
Agent, the Borrower or the transferor Bank with respect to any payments to be
made to such Assignee in respect of the Loans and (ii) to furnish to each of the
transferor Bank, the Agent and the Borrower two duly completed copies of the
forms required by Section 8.04(c)(i).
(g) Notwithstanding any provision of this Section 9.08 to the
contrary, any Bank may assign or pledge any of its rights and interests in the
Loans to a Federal Reserve Bank without the consent of the Borrower.
SECTION 9.09. Visitation. Subject to restrictions imposed by applicable
security clearance regulations, the Borrower will upon reasonable notice permit
representatives of any Bank at such Bank's expense to visit any of its major
properties.
SECTION 9.10. Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.11. Reference Banks. If any Reference Bank assigns its rights
and obligations hereunder to an unaffiliated institution, the Borrower shall, in
consultation with the Agent, appoint another Bank to act as a Reference Bank
hereunder. If the Commitment of any Bank which is also a Reference Bank is
terminated pursuant to the terms of this Agreement, the Borrower may, in
consultation with the Agent, appoint a replacement Reference Bank.
SECTION 9.12. Governing Law; Submission to Jurisdiction. This Agreement
and each Note shall be governed by and construed in accordance with the internal
laws of the State of New York. Each of the Borrower, the Agent and the Banks
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York State Court
sitting in New York for purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. Each of the
Borrower, the Agent and the Banks irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
SECTION 9.13. Effectiveness; Counterparts; Integration. This Agreement
shall become effective upon receipt by the Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the Agent in form
54
<PAGE> 60
satisfactory to it of telegraphic, telex, facsimile or other written
confirmation from such party of execution of a counterpart hereof by such
party). This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.15. Confidentiality. Each Bank agrees, with respect to any
information delivered or made available by the Borrower to it that is clearly
indicated to be confidential information or private data, to use all reasonable
efforts to protect such confidential information from unauthorized use or
disclosure and to restrict disclosure to only those Persons employed or retained
by such Bank who are or are expected to become engaged in evaluating, approving,
structuring or administering this Agreement and the transactions contemplated
hereby. Nothing herein shall prevent any Bank from disclosing such information
(i) to any other Bank, (ii) to its affiliates, officers, directors, employees,
agents, attorneys and accountants who have a need to know such information in
accordance with customary banking practices and who receive such information
having been made aware of and having agreed to the restrictions set forth in
this Section, (iii) upon the order of any court or administrative agency, (iv)
upon the request or demand of any regulatory agency or authority having
jurisdiction over such Bank, (v) which has been publicly disclosed, (vi) to the
extent reasonably required in connection with any litigation to which either
Agent, any Bank, the Borrower or their respective affiliates may be a party,
(vii) to the extent reasonably required in connection with the exercise of any
remedy hereunder and (viii) with the prior written consent of the Borrower;
provided however, that before any disclosure is permitted under (iii) or (vi) of
this Section 9.15, each Bank shall, if not legally prohibited, notify and
consult with the Borrower, promptly and in a timely manner, concerning the
information it proposes to disclose, to enable the Borrower to take such action
as may be appropriate under the circumstances to protect the confidentiality of
the information in question, and provided further that any disclosure under the
foregoing proviso be limited to only that information discussed with the
Borrower. The use of the term "confidential" in this Section 9.15 is not
intended to refer to data classified by the government of the United States
under laws and regulations relating to the
55
<PAGE> 61
handling of data, but is intended to refer to information and other data
regarded by the Borrower as private.
56
<PAGE> 62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
MARTIN MARIETTA MATERIALS, INC.
By:________________________________________
Name:
Title:
Address: 2710 Wycliff Road
Raleigh, NC 27607
Facsimile: 919-510-4700
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:________________________________________
Name:
Title:
Address:
Facsimile:
FIRST UNION NATIONAL BANK
By:________________________________________
Name:
Title:
<PAGE> 63
WACHOVIA BANK, N.A.
By:________________________________________
Name:
Title:
NATIONSBANK, N.A.
By:________________________________________
Name:
Title:
BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By:________________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY
By:________________________________________
Name:
Title:
<PAGE> 64
CENTURA BANK
By:________________________________________
Name:
Title:
BANK OF MONTREAL
By:________________________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By:________________________________________
Name:
Title:
<PAGE> 65
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By:________________________________________
Name:
Title:
Address: 60 Wall Street
New York, NY 10260
Facsimile:
<PAGE> 66
COMMITMENT SCHEDULE
Bank Commitment
- ---- ----------
Morgan Guaranty Trust Company of New York $53,750,000.00
First Union National Bank $53,750,000.00
Wachovia Bank, N.A. $53,750,000.00
NationsBank, N.A. $53,750,000.00
Banque Nationale De Paris, Houston Agency $35,000,000.00
State Street Bank and Trust $25,000,000.00
Centura Bank $25,000,000.00
Bank of Montreal $ 0.00
The Sumitomo Bank, Limited, New York Branch $ 0.00
<PAGE> 67
PRICING SCHEDULE
Each of "Facility Fee Rate" and "Euro-Dollar Margin" means, for any
day, the rate set forth below (in basis points per annum) in the row opposite
such term and in the column corresponding to the Pricing Level that apply for
such day:
- --------------------------------------------------------------------------------
Pricing Level Level I Level II Level III
- --------------------------------------------------------------------------------
Facility Fee Rate 7.0 8.0 11.0
- --------------------------------------------------------------------------------
Euro-Dollar Margin
if Utilization < 25% 18.0 24.5 34.0
if Utilization => 25% 38.0 42.0 64.0
- --------------------------------------------------------------------------------
For purposes of this Schedule, the following terms have the following meanings,
subject to the further provisions of this Schedule:
"Level I Pricing" applies at any date if, at such date, the Borrower's
long-term debt is rated A or higher by S&P and no lower than A3 by Moody's or A2
or higher by Moody's and no lower than A- by S&P.
"Level II Pricing" applies at any date if, at such date, (i) the
Borrower's long-term debt is rated A- or higher by S&P and no lower than Baa1 by
Moody's or A3 or higher by Moody's and no lower than BBB+ by S&P and (ii) Level
I Pricing does not apply.
"Level III Pricing" applies at any date if, at such date, neither Level
I Pricing nor Level II Pricing applies.
"Moody's" means Moody's Investors Service, Inc.
"Pricing Level" refers to the determination of which of Level I, Level
II or Level III applies at any date.
"S&P" means Standard & Poor's Ratings Group.
"Utilization" means, at any date, the percentage equivalent of a
fraction the numerator of which is the aggregate outstanding principal amount of
the Loans at such date and the denominator of which is the aggregate amount of
the Commitments at such date. If for any reason any Loans remain outstanding
PS-1
<PAGE> 68
following termination of the Commitments, Utilization shall be deemed to be in
excess of 25%.
The credit ratings to be utilized for purposes of this Schedule are
those assigned to the senior unsecured long-term debt securities of the Borrower
without third-party credit enhancement, and any rating assigned to any other
debt security of the Borrower shall be disregarded. The ratings in effect for
any day are those in effect at the close of business on such day. The ratings in
effect for any day are those in effect at the close of business on such day, and
the Euro-Dollar Margin and Facility Fee Rate may change from time to time during
any Interest Period as a result of changes in the Pricing Level during such
Interest Period.
PS-2
<PAGE> 1
EXHIBIT 99.4
[EXECUTION COPY]
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of October 16, 1998 to the Revolving Credit
Agreement dated as of January 29, 1997 (the "Credit Agreement") among MARTIN
MARIETTA MATERIALS, INC. (the "Borrower"), the BANKS party thereto (the "Banks")
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
WITNESSETH:
WHEREAS, the parties hereto desire to amend the Credit Agreement
as set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Credit Agreement has the meaning assigned to such term in the Credit Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other similar
reference contained in the Credit Agreement shall, after this Amendment becomes
effective, refer to the Credit Agreement as amended hereby.
SECTION 2. Amendment. Section 5.09 is amended to read in its
entirety as follows:
SECTION 5.09. Leverage Ratio. The ratio of
Consolidated Debt to Total Capital shall not exceed (i) 55% at
any time prior to June 30, 1999 or (ii) 50% at any time at or
after June 30, 1999.
SECTION 3. Representations of Borrower. The Borrower represents
and warrants that (i) the representations and warranties of the Borrower set
forth in Article 4 of the Credit Agreement will be true on and as of the
Amendment Effective Date and (ii) no Default will have occurred and be
continuing on such date.
SECTION 4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
<PAGE> 2
SECTION 5. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
SECTION 6. Effectiveness. This Amendment shall become effective
as of the date hereof on the date (the "AMENDMENT EFFECTIVE DATE") when the
Agent shall have received from each of the Borrower and the Required Banks a
counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to the Agent) that such party has signed a
counterpart hereof.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first above written.
MARTIN MARIETTA MATERIALS, INC.
By: /s/ Janice K. Henry
-----------------------------
Title: CFO & Treasurer
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:
-----------------------------
Title:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:
-----------------------------
Title:
3
<PAGE> 4
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By:
-----------------------------
Title:
BANK OF MONTREAL
By:
-----------------------------
Title:
NATIONSBANK, N.A.
By:
-----------------------------
Title:
THE SUMITOMO BANK, LIMITED
By:
-----------------------------
Title:
4
<PAGE> 1
EXHIBIT 99.5
EXECUTION COPY
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT dated as of December 3, 1998 to the Revolving Credit
Agreement dated as of January 29, 1997 (as amended as of October 16, 1998, the
"CREDIT AGREEMENT") among MARTIN MARIETTA MATERIALS, INC. (the "BORROWER"), the
BANKS party thereto (the "BANKS") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent (the "AGENT").
WITNESSETH:
WHEREAS, the parties hereto desire to amend the Credit Agreement
as set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.
SECTION 2. Amendment. The figure of "$100,000,000" in Section
5.11(f)(ii) is changed to "$150,000,000".
SECTION 3. Representations of Borrower. The Borrower hereby
represents and warrants that (i) the representations and warranties of the
Borrower set forth in Article 4 of the Credit Agreement will be true on and as
of the Amendment Effective Date and (ii) no Default will have occurred and be
continuing on such date.
SECTION 4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
<PAGE> 2
SECTION, 6. Effectiveness. This Amendment shall become effective
as of the date hereof on the date (the "AMENDMENT EFFECTIVE DATE") when the
Agent shall have received from each of the Borrower and the Required Banks a
counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to the Agent) that such party has signed a
counterpart hereof.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first above written.
MARTIN MARIETTA MATERIALS, INC.
By:
-----------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:
-----------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By:
-----------------------------
Name:
Title:
WACHOVIA BANK, N.A.
By:
-----------------------------
Name:
Title:
<PAGE> 4
BANK OF MONTREAL
By:
-----------------------------
Name:
Title:
NATIONSBANK, N.A.
By:
-----------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH
By:
-----------------------------
Name:
Title:
