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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
|X|ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: (1-13888)
UCAR INTERNATIONAL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 06-1385548
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
Suite 1100, 3102 West End Avenue 37203
Nashville, Tennessee (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (615) 760-8227
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED:
Common stock, par value $.01 per share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant'S knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
As of March 1, 1999, 45,312,334 shares of common stock were outstanding. The
aggregate market value of the outstanding common stock as of March 1, 1999
(based upon the closing sale price of the common stock on the New York Stock
Exchange on such date) held by non-affiliates of the registrant was $496
million.
DOCUMENTS INCORPORATED BY REFERENCE
The information required under Part III is incorporated by reference from
the UCAR International Inc. Proxy Statement for the Annual Meeting of
Stockholders to be held on May 11, 1999, which will be filed on or about March
26, 1999.
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TABLE OF CONTENTS
PAGE
PRELIMINARY NOTES............................................................1
Important Terms...........................................................1
Presentation of Financial, Market and Legal Data..........................1
PART I.......................................................................3
Item 1. Business..........................................................3
Introduction..............................................................3
Risk Factors..............................................................6
Corporate History........................................................11
Markets and Industry Overview............................................14
Manufacturing Processes..................................................18
Products.................................................................21
Raw Materials and Suppliers..............................................22
Sales and Customer Service; Research and Development.....................22
Distribution.............................................................23
Patents and Trademarks...................................................24
Competition..............................................................24
Environmental Matters....................................................26
Insurance................................................................27
Employees................................................................28
Item 2. Properties.......................................................28
Item 3. Legal Proceedings................................................29
Item 4. Submission of Matters to a Vote of Security Holders..............35
PART II.....................................................................36
Item 5. Market for Registrant's Common Stock and Related Stockholder
Matters..................................................................36
Market Information.......................................................36
Dividend and Stock Repurchase Policies and Restrictions..................37
Recent Sales of Unregistered Securities..................................38
Item 6. Selected Financial Data..........................................38
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................41
General..................................................................41
Results of Operations....................................................45
Effects of Inflation....................................................51
Effects of Changes in Currency Exchange Rates............................52
Liquidity and Capital Resources..........................................53
Restrictions on Dividends and Stock Repurchases..........................61
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PAGE
Accounting Changes.......................................................62
Year 2000 Issue..........................................................63
Assessment of the Euro...................................................64
Costs Relating to Protection of the Environment..........................64
Item 7A. Quantitative and Qualitative Disclosures About Market Risks....65
Item 8. Financial Statements and Supplementary Data.....................66
Item 9.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure....................................................114
PART III...................................................................114
Items 10 to 13 (inclusive)..............................................114
Executive Officers and Directors........................................114
PART IV....................................................................118
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K................................................................118
SIGNATURE..................................................................125
EXHIBIT INDEX..............................................................127
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PRELIMINARY NOTES
IMPORTANT TERMS
We use the following terms to identify various companies or groups of
companies, markets or other matters. These terms help to simplify the
presentation of information in this Report.
UCAR refers to UCAR International Inc. only. UCAR is the issuer of the
publicly traded common stock covered by this Report.
UCAR GLOBAL refers to UCAR Global Enterprises Inc. only. UCAR Global is a
holding company and a direct wholly owned subsidiary of UCAR. UCAR Global is the
only subsidiary directly owned by UCAR. UCAR Global is the issuer of our
outstanding 12% senior subordinated notes due 2005 (the "SUBORDINATED NOTES")
and is the primary borrower under our senior secured bank credit facilities (the
"SENIOR BANK FACILITIES").
UCAR GROUP, WE, US or OUR refers collectively to UCAR, its subsidiaries and
its and their predecessors to the extent that those predecessor's activities
related to the carbon and graphite business.
SUBSIDIARIES refers to those companies which, at the relevant time, were
majority-owned or wholly owned directly or indirectly by UCAR or its
predecessors described above. All of UCAR's subsidiaries have been wholly owned
(with de minimis exceptions in the case of certain foreign subsidiaries) since
January 1, 1996, except for our German subsidiary and Carbone Savoie S.A.S.
("CARBONE SAVOIE"), both of which have been 70%-owned since we acquired them in
early 1997, and except for our South African subsidiary, which was 50% owned
until April 1997.
HOME MARKETS refer to North America, Western Europe, Brazil and South
Africa. We have major manufacturing facilities located in each of these markets,
and these are our largest markets.
FREE TRADING MARKETS refer to the entire world, excluding China, the former
Soviet Union, India and Eastern Europe. We sometimes use this term when
describing markets for various products because information about excluded
markets is believed to be unreliable or not readily available.
PRESENTATION OF FINANCIAL, MARKET AND LEGAL DATA
Separate consolidated financial statements of UCAR Global are not presented
in this Report because they would be substantially the same as those of UCAR.
We present financial information for the UCAR Group on a consolidated basis.
We use the equity method to account for 50% or less-owned interests and we do
not restate financial information for periods prior to the acquisition of
subsidiaries. This means that, prior to April 1997, financial information of our
South African subsidiary is only reflected on the single line in the
consolidated financial statements entitled "UCAR share of net income from
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company carried at equity." For the same reason, financial information for our
German subsidiary and Carbone Savoie is consolidated on each line of the
Consolidated Financial Statements and the equity of the other 30% owners in
those subsidiaries is reflected on the single line entitled "minority
stockholders' share of income."
References to cost in the context of our low-cost producer strategy do not
include the unusual or non-recurring charges identified in the Consolidated
Financial Statements on the lines entitled "antitrust investigations and related
lawsuits and claims," "restructuring charge" or "impairment loss on Russian
assets" or the impact of accounting changes.
Unless otherwise noted, all cost savings and reductions described in this
Report are estimates based on a comparison to costs in 1998 and on the
assumption that net sales and other operating conditions are the same in 1999 as
they were in 1998.
Neither any statements in this Report nor any charge taken by the UCAR Group
relating to any legal proceedings constitute an admission as to any wrongdoing
or liability.
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PART I
ITEM 1. BUSINESS
INTRODUCTION
We are the largest manufacturer of graphite and carbon electrodes and
cathodes in the world, with sales in over 80 countries and manufacturing
facilities on four continents.
Graphite electrodes, our principal product, are used primarily in the
production of steel in an electric arc furnace, the steelmaking technology used
by virtually all "mini-mills," as well as for refining steel in ladle furnaces
and in other refining processes. Graphite electrodes accounted for about 73% of
our net sales in 1996, 72% of our net sales in 1997 and 69% of our net sales in
1998.
Carbon electrodes are used primarily in the production of silicon metal,
which is used in the manufacture of aluminum. Carbon electrodes accounted for
about 6% of our net sales in 1996, 5% of our net sales in 1997 and 5% of our net
sales in 1998.
Graphite and carbon cathodes are both used as lining for furnaces that smelt
aluminum. Cathodes accounted for about 2% of our net sales in 1996, 8% of our
net sales in 1997 and 10% of our net sales in 1998.
We also manufacture other graphite and carbon products as well as flexible
graphite and cooling systems and components for steelmaking furnaces and other
high temperature applications. These products accounted for about 19% of our net
sales in 1996, 16% of our net sales in 1997 and 16% of our net sales in 1998.
BACKGROUND. Electrodes act as conductors of electricity in a furnace,
generating sufficient heat to melt scrap metal or other raw materials used to
produce steel, silicon metal or other materials. The electrodes are gradually
consumed in the course of that production.
Graphite electrodes are used primarily in the production of steel in an
electric arc furnace. On average, one electrode must be replaced in an electric
arc furnace every eight to ten operating hours. Graphite electrodes are
currently the only products available that have the high levels of electrical
conductivity and the capability of sustaining the high levels of heat required
in an electric arc furnace. Demand for graphite electrodes is directly related
to the amount of electric arc furnace steel produced.
Electric arc furnace steel production has, for many years, been the growth
sector of the steel industry. In 1998, it accounted for about 34% of total steel
production, according to Company and industry estimates.
Over the past two decades, electric arc furnace steelmaking has become more
efficient. This improved efficiency has resulted in a decrease in the quantity
of graphite electrodes consumed per metric ton of steel produced (known as
"SPECIFIC CONSUMPTION"). During the period from the early 1990's through late
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1997, increased levels of electric arc furnace steel production more than offset
the decrease in specific consumption. This resulted in increased demand for
graphite electrodes.
Throughout 1998 and continuing into 1999, global economic conditions have
adversely impacted steel production, including steel produced in electric arc
furnaces. As a result, demand for graphite electrodes has declined. We cannot
predict either the timing or extent of changes in global economic conditions.
If, however, global economic conditions over the long term are similar to those
of the past two decades, we believe that worldwide production of steel in
electric arc furnaces will continue to grow over the long term at its historical
annual trendline growth rate of 4% and that, as a result, worldwide demand for
graphite electrodes will grow over the long term at an average annual rate of 1%
to 2%.
Presently, in the free trading markets, there is one other global
manufacturer of electrodes and there are, in total, eight other manufacturers of
graphite electrodes.
OVERVIEW OF RECENT DEVELOPMENTS. As a result of the adoption of a global
restructuring and rationalization plan and the completion of a major debt
refinancing as well as other developments described in this Report, we believe
that, under current conditions, we will be able to fully implement our
strategies and meet our debt service, trade and other obligations, including
currently known obligations for liabilities and expenses in connection with
antitrust investigations and related lawsuits and claims, when due.
GLOBAL RESTRUCTURING AND RATIONALIZATION PLAN. In September 1998, UCAR's
Board of Directors adopted a global restructuring and rationalization plan. The
plan is intended to enhance stockholder value by focusing on optimizing margins,
maximizing cash flow, generating growth in earnings and strengthening
competitiveness through operating and overhead cost reduction and plant
rationalization. The plan is also intended, over the long term, to strengthen
our position as a low cost producer supplying the steel and metals industries
and, over the near term, to respond to global economic conditions that are
adversely impacting our customers. We believe that, under current conditions,
the plan will have a positive impact on earnings in the second half of 1999.
The key elements of the plan consist of:
o Rationalization of manufacturing operations, including closure of higher
cost operations in Germany and Canada and downsizing of operations in
Russia.
o Centralization and consolidation of administrative functions, including
relocation of our corporate headquarters to Nashville, Tennessee and
centralization of our European administrative activities in Lausanne,
Switzerland.
o Implementation of more than 150 identified cost reduction projects.
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We estimate that the plan will generate permanent annual cost savings at a
rate of about $80 million by the end of 1999, $111 million by the end of 2000
and $135 million by the end of 2001, reduce working capital needs and improve
efficiencies. We anticipate achieving about $64 million of annual savings in
1999.
The plan resulted in a 1998 third quarter restructuring charge of $86
million ($77 million after income tax). The plan also included the
rationalization and downsizing of our Russian operations. We recorded an
impairment loss on long-lived Russian assets of $60 million.
As part of the plan, we are seeking to divest or joint venture part or all
of our graphite and carbon specialties business (which is part of our graphite
and carbon product business segment) on acceptable terms. No assurance can be
given that any divestiture or joint venture will be completed or as to timing or
terms of any such transaction.
REFINANCING. In November 1998, the Senior Bank Facilities were refinanced
and the indenture governing the Subordinated Notes (the "SUBORDINATED NOTE
INDENTURE") was amended. In connection with the refinancing, we obtained
additional term debt of $210 million.
Following the refinancing, the covenants under the Senior Bank Facilities
are more restrictive than they had been prior to the time when we recorded the
$340 million charge described below. The covenants do, however, allow us to
implement our global restructuring and rationalization plan. Further, the
covenants do not restrict our ability to draw on our revolving credit facility
unless payments and reserves with respect to the litigation matters described
below exceed $400 million (adjusted for certain imputed interest expense).
LITIGATION MATTERS. Since 1997, we have been served with subpoenas, search
warrants and information requests by antitrust authorities in the United States
and elsewhere in connection with investigations as to whether there has been any
violation of antitrust laws by producers of graphite electrodes. In addition,
antitrust class action and other civil lawsuits have been commenced against us
and other producers of graphite electrodes in the United States and Canada. We
recorded a charge against results of operations for 1997 in the amount of $340
million as a reserve for estimated potential liabilities and expenses in
connection with antitrust investigations and related lawsuits and claims. UCAR
has also been named as a nominal defendant in a shareholder derivative lawsuit
and is a defendant in a securities class action lawsuit, each of which is based,
in part, on the subject matter of the antitrust investigations, lawsuits and
claims. It is possible that antitrust investigations in other jurisdictions and
additional civil lawsuits could be commenced.
In April 1998, pursuant to a plea agreement with the Antitrust Division of
the United States Department of Justice (the "DOJ"), UCAR pled guilty to a
one-count charge of violating U.S. federal antitrust laws in connection with the
sale of graphite electrodes and was sentenced to pay a non-interest-bearing fine
in the aggregate amount of $110 million, payable in six annual installments. In
March 1999, pursuant to a plea agreement with the Canadian Competition Bureau,
our Canadian subsidiary pled guilty to a one-count charge of violating Canadian
antitrust laws in connection with the sale of graphite electrodes and was
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sentenced to pay a fine of Cdn.$11 million. The guilty pleas have made it more
difficult to defend against other investigations, lawsuits and claims. Through
March 25, 1999, we have settled virtually all of the actual and potential
graphite electrode antitrust claims by steelmakers in the United States and
Canada as well as antitrust claims by certain other steelmakers. In the
aggregate, the above mentioned fines and settlements are within the amounts we
used for purposes of evaluating the $340 million charge. Actual liabilities and
expenses could be materially higher than such charge. We do not believe that the
outcome of the shareholder derivative lawsuit will have a material adverse
effect on us. The securities class action is still in its early stages and no
evaluation of potential liability can yet be made.
RISK FACTORS
Investors in the common stock should consider carefully the following
factors in addition to other information included in this Report.
WE ARE DEPENDENT ON GLOBAL STEEL AND OTHER METALS INDUSTRIES AND ARE
DIRECTLY AFFECTED BY CHANGES IN GLOBAL AND REGIONAL ECONOMIC CONDITIONS. Our
principal products, graphite electrodes, are sold primarily to the electric arc
furnace steel production industry. Many of our other products are sold primarily
to other metals industries. All of these are global basic industries, and
customers in these industries are located in virtually every industrialized
country in the world. As a result, our customers are impacted by changes in
global and regional economic conditions. This, in turn, impacts demand for and,
to a lesser extent, prices of our products. Accordingly, we are directly
affected by changes in global and regional economic conditions.
The electric arc furnace steel industry has been for many years the growth
sector of the steel industry. Although the steel industry as a whole is
generally cyclical, the electric arc furnace steel sector has been less so.
While we believe that the electric arc furnace steel industry will continue to
be the growth sector of the steel industry, no assurance can be given that this
will be the case. In addition, even if there is growth in the electric arc
furnace steel industry, no assurance can be given that there will be growth in
demand for graphite electrodes.
As a result of global economic conditions, demand for graphite electrodes
and some of our other products declined in 1998. No assurance can be given as to
the timing or extent of any change in those conditions which could affect demand
for our products in the future.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH INVESTIGATIONS, LAWSUITS AND CLAIMS
WHICH MAY ADVERSELY IMPACT US. Since 1997, we have been subject to antitrust
investigations, lawsuits and claims, a shareholder derivative lawsuit and
securities class action lawsuits. We recorded a charge of $340 million against
results of operations for 1997 as a reserve for estimated potential liabilities
and expenses in connection with antitrust investigations and related lawsuits
and claims. No reserves have been established for the shareholder derivative or
securities class action lawsuits.
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We have resolved the antitrust investigations in the United States and
Canada and settled virtually all of the antitrust claims by steelmakers in the
United States and Canada in connection with the sale of graphite electrodes.
These have been within the amounts used by us to evaluate the $340 million
charge. No assurance can be given, however, that remaining liabilities and
expenses in connection with antitrust investigations and related lawsuits and
claims will not exceed the remaining balance of such reserve. In addition, while
we do not believe that the shareholder derivative lawsuit will have a material
adverse effect on us, no assurances can be given that the securities class
action lawsuit will not have a material adverse effect on us.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR SUBSTANTIAL LEVERAGE AND OTHER
OBLIGATIONS. We are highly leveraged and we have substantial obligations in
connection with antitrust, shareholder derivative and securities investigations,
lawsuits and claims. We had an aggregate of $804 million of outstanding
indebtedness, a majority of which had variable interest rates, and a
stockholders' deficit of $287 million at December 31, 1998.
Our indebtedness and these obligations could have important consequences,
including the following:
o our ability to restructure our existing debt or obtain additional debt
financing for working capital, capital expenditures, payment of these
obligations or general corporate or other purposes may be impaired in the
future;
o a substantial portion of our cash flow from operations must be dedicated to
debt service and payment of these obligations, thereby reducing the funds
available to us for other purposes;
o we may have substantially more leverage and obligations in connection with
these investigations, lawsuits and claims than certain of our competitors,
which may place us at a competitive disadvantage;
o our leverage and these obligations may hinder our ability to adjust rapidly
to changing market conditions or other events; and
o our substantial leverage and these obligations makes us more vulnerable in
the event of a downturn in general economic conditions or our business or in
the event that these obligations are greater than expected.
Our ability to service our debt and meet these and other obligations as they
come due will depend on our future financial and operating performance. This in
turn, is subject to, among other things, changes in the graphite and carbon
products industry, prevailing economic conditions and certain financial,
business and other factors beyond our control, including interest rates. These
obligations have in the past and may have in the future a material adverse
impact on our working capital, cash flow and liquidity. In this regard, the plea
agreement with the DOJ will assist us in our efforts to meet our obligations as
they become due since the plea agreement permits us to pay the balance of $110
million non-interest-bearing fine in five annual installments. If our cash flow
and capital resources are insufficient to enable us to meet our debt service,
trade credit and other obligations as they become due, the failure to meet such
obligations could have a material adverse effect on us.
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WE HAVE RESTRICTIVE DEBT COVENANTS WHICH COULD SIGNIFICANTLY AFFECT THE WAY
IN WHICH WE CONDUCT OUR BUSINESS. The Senior Bank Facilities contain a number of
covenants that, among other things, significantly restrict our ability to
dispose of assets, incur additional indebtedness, repay or refinance other
indebtedness or amend other debt instruments, create liens on assets, enter into
leases, make investments or acquisitions, engage in mergers or consolidations,
make capital expenditures or engage in certain transactions with subsidiaries
and affiliates and that otherwise restrict corporate activities. In addition,
under the Senior Bank Facilities, we are required to comply with specified
financial ratios and tests, including minimum interest coverage and maximum
leverage ratios. The Subordinated Note Indenture also contains restrictive
covenants regarding similar matters.
We are currently in compliance with the covenants contained in the Senior
Bank Facilities and the Subordinated Note Indenture. However, our ability to
continue to comply may be affected by events beyond our control. These include
prevailing economic, financial and industry conditions and establishment of
reserves or payment of liabilities and expenses in connection with antitrust,
shareholder derivative and securities investigations, lawsuits and claims which
result in total reserves and payments exceeding $400 million. The breach of any
of these covenants could result in a default under the Senior Bank Facilities or
the Subordinated Note Indenture, which would permit the senior lenders or the
holders of the Subordinated Notes to declare all amounts thereunder immediately
due and would permit the senior lenders to terminate their commitments to extend
credit under our revolving credit facility. If we were unable to repay our
indebtedness to the senior lenders, the senior lenders could proceed against the
collateral securing the Senior Bank Facilities.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH OPERATIONS IN MULTIPLE COUNTRIES
WHICH COULD ADVERSELY AFFECT US. As a result of our international operations, we
are subject to risks associated with operating in multiple countries, including:
o devaluations and fluctuations in currency exchange rates;
o imposition of limitations on conversion of non-U.S. currencies into U.S.
dollars or remittance of dividends and other payments by subsidiaries;
o imposition or increase of withholding and other taxes on remittances and
other payments by subsidiaries, hyperinflation in certain countries and
imposition or increase of investment and other restrictions or
requirements by non-U.S. governments; and
o in the case of operations in Russia, nationalization and other risks which
could result from a change in government.
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Although such risks have not had a material adverse effect on us within the
past decade, no assurance can be given that such risks will not have a material
adverse effect on us in the future.
DUE TO THE SEASONALITY AND OTHER FLUCTUATIONS IN OUR QUARTERLY RESULTS OF
OPERATIONS, OUR RESULTS OF OPERATIONS FOR ANY QUARTER ARE NOT NECESSARILY
INDICATIVE OF OUR RESULTS OF OPERATIONS FOR A FULL YEAR OR OTHERWISE. Our sales
of graphite electrodes and other products fluctuate from quarter to quarter due
to such factors as scheduled plant shutdowns by customers, national vacation
practices, changes in customer production schedules in response to seasonal
changes in energy costs, weather conditions, strikes and work stoppages at
customer plants and changes in customer order patterns in response to the
announcement of price increases. We have experienced, and expect to continue to
experience, volatility with respect to demand for graphite electrodes in various
geographic areas as regional economic conditions fluctuate. These factors tend
to affect our quarterly as well as annual results of operations. In addition,
during the period prior to the effective date of a price increase, customers
tend to buy additional quantities of graphite electrodes at the then lower
pricing (known as "CUSTOMER BUY-INS"), which add to our net sales during that
period. During the period following the effective date of a price increase,
customers tend to use those additional quantities before placing further orders,
which reduces our net sales during that period. Accordingly, results of
operations for any quarter are not necessarily indicative of the results of
operations for a full year or otherwise.
WE COULD BE ADVERSELY AFFECTED BY VIGOROUS PRICE AND OTHER TYPES OF
COMPETITION. Competition in the graphite and carbon products industry is based
primarily on price, product quality and customer service. Graphite electrodes,
in particular, are subject to rigorous price competition. Price increases by us
or price reductions by our competitors, decisions by us with respect to
maintaining profit margins rather than market share, or other competitive or
market factors or strategies could adversely affect our market share or results
of operations. Competition could prevent implementation of price increases or
could require price reductions or increased spending on research and
development, marketing and sales which could adversely affect our results of
operations.
THERE ARE PROVISIONS IN SOME OF OUR IMPORTANT DOCUMENTS WHICH COULD HAVE
THE EFFECT OF PREVENTING A CHANGE IN CONTROL OF UCAR. UCAR's Certificate of
Incorporation and By-Laws contain provisions concerning voting, issuance of
preferred stock, removal of officers and directors and other matters which may
have the effect of discouraging, delaying or preventing a change in control of
UCAR. In addition, UCAR's Board of Directors has adopted a stockholder rights
plan which may have the same effect. Further, UCAR Global is required, in the
event of a change in control where it has not elected to redeem the Subordinated
Notes, to repurchase any Subordinated Notes that holders desire to have
repurchased at 101% of the principal amount repurchased, plus accrued interest.
The Senior Bank Facilities restrict certain events which would constitute a
change in control and provide that certain events which would constitute a
change in control would constitute an event of default. The exercise by holders
of the Subordinated Notes of their right to require UCAR Global to purchase the
Subordinated Notes may cause a default under the Senior Bank Facilities or other
indebtedness, even if the change in control does not. Finally, there can be no
assurance that UCAR Global will have the financial resources necessary to
repurchase the Subordinated Notes upon a change of control or repay amounts due
under the Senior Bank Facilities upon such an event of default.
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THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WHICH COULD VARY
SIGNIFICANTLY FROM ACTUAL EVENTS OR CIRCUMSTANCES DUE TO VARIOUS FACTORS. This
Report contains forward-looking statements. These include statements about
future production of steel in electric arc furnaces, future prices and sales of
and demand for graphite electrodes and other products, future operational and
financial performance of various businesses, plans and programs relating to
strategies and divestiture, joint venture, operating global integration and
capital projects, legal matters and related fees and costs, consulting fees and
related projects, and future costs, cost savings and reductions, margins and
earnings. Except as otherwise required to be disclosed in periodic reports
required to be filed by public companies with the SEC pursuant to the SEC's
rules, we have no duty to update these statements.
Actual future events and circumstances (including future performance,
results and trends) could differ materially from those set forth in these
statements due to various factors. These factors include:
o the possibility that announced additions to capacity for producing steel
in electric arc furnaces or announced reductions in graphite electrode
manufacturing capacity may not occur;
o the possibility that increased production of steel in electric arc
furnaces may not result in increased demand for or prices or sales of
graphite electrodes;
o the occurrence of unanticipated events or circumstances relating to
pending antitrust investigations or pending antitrust, shareholder
derivative or securities lawsuits;
o the commencement of investigations or lawsuits relating to the same
subject matter of these pending investigations or lawsuits;
o the occurrence of unanticipated events or circumstances relating to
businesses acquired within the past three years;
o the occurrence of unanticipated events or circumstances relating to
strategic plans or divestiture, joint venture, operating, capital, global
integration or other projects;
o changes in currency exchange rates, changes in economic or competitive
conditions, technological developments, and other risks and
uncertainties, including those described in this Report.
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CORPORATE HISTORY
GENERAL. Our business was founded in 1886 by National Carbon Company. In
1917, National Carbon Company, along with Union Carbide Company and three other
companies, combined to form a new corporation named Union Carbide and Carbon
Company, now known as Union Carbide Corporation ("UNION CARBIDE"). National
Carbon Company became the Carbon Products Division of Union Carbide. In 1989,
Union Carbide realigned each of its worldwide businesses into separate
subsidiaries. As part of the realignment, the business of the Carbon Products
Division was separated from Union Carbide's other businesses and became owned by
the UCAR Group, which was then wholly owned by Union Carbide. In 1991, Union
Carbide sold to Mitsubishi Corporation ("Mitsubishi") 50% of the common equity
of the UCAR Group.
In January 1995, we consummated a leveraged recapitalization (the
"RECAPITALIZATION") pursuant to an agreement among Union Carbide, Mitsubishi,
UCAR and a corporation affiliated with Blackstone Capital Partners II Merchant
Banking Fund L.P. and its affiliates (collectively, "BLACKSTONE"). Under the
Recapitalization:
o UCAR issued common stock representing about 75% of the then outstanding
common stock to Blackstone, an affiliate of Chase Manhattan Bank and
certain members of management for $203 million.
o UCAR Global and certain of its foreign subsidiaries borrowed $585 million
under senior secured bank credit facilities arranged through Chase
Manhattan Bank.
o UCAR Global issued $375 million of Subordinated Notes.
o We repaid about $250 million of then existing indebtedness.
o UCAR repurchased and cancelled all of the common equity then held by
Mitsubishi for $406 million.
o UCAR paid to Union Carbide a cash dividend of $347 million on the common
equity then held by Union Carbide, which common equity represented about
25% of the then outstanding common stock.
o Certain members of management received restricted stock matching a
portion of the common stock purchased by them and options to purchase up
to an aggregate of 12% of the then outstanding common stock on a fully
diluted basis, subject to certain vesting requirements.
In connection with the Recapitalization, we transferred all of our
operating subsidiaries to UCAR Global or subsidiaries of UCAR Global. UCAR
currently holds no material assets other than common stock of UCAR Global and
intercompany debt owed to it.
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In August 1995, UCAR completed an initial public offering of common stock.
In connection with the offering, UCAR sold common stock representing 22% of the
common stock outstanding immediately after the offering for net proceeds of $227
million and Union Carbide sold all of the common stock then owned by it. UCAR
used net proceeds from the offering to contribute to UCAR Global an amount
sufficient to redeem $175 million aggregate principal amount of Subordinated
Notes at a redemption price equal to 110% of the aggregate principal amount
redeemed, plus accrued interest of $4 million. We used the balance of the net
proceeds for general corporate purposes and to reduce other outstanding
indebtedness.
In October 1995, we refinanced the bank credit facilities obtained in
connection with the Recapitalization with the Senior Bank Facilities at more
favorable interest rates and with more favorable covenants.
In March 1996, Blackstone, an affiliate of Chase Manhattan Bank and certain
members of management sold shares of common stock in a secondary public
offering. After the offering, Blackstone owned about 20% of the then outstanding
shares of common stock.
In March 1997, the Senior Bank Facilities were amended to reduce interest
rates, increase the amount available under our revolving credit facility to $250
million from $100 million and change covenants to allow more flexibility in uses
of free cash flow for acquisitions, capital expenditures and restricted
payments.
In 1997, Blackstone sold about 14% of the then outstanding common stock in
a secondary public offering. Concurrently with the offering, we repurchased
1,300,000 shares of common stock from Blackstone for $48 million. This
repurchase constituted part of a previously announced stock repurchase program.
After the offering and the repurchase, Blackstone ceased to be a principal
stockholder of UCAR.
In 1997, UCAR's Board of Directors authorized a program to repurchase up to
$200 million of common stock at prevailing prices from time to time in the open
market or otherwise depending on market conditions and other factors, without
any established minimum or maximum time period or number of shares. UCAR
purchased an aggregate of $92 million of common stock (including common stock
repurchased from Blackstone) under this program. The last repurchase was made in
1997. We do not expect to repurchase additional common stock under this program
in the near term.
ACQUISITION OF MINORITY INTERESTS AND INTEREST IN JOINT VENTURE Affiliate.
In 1995 and 1996, we acquired substantially all of the shares of our then
54%-owned Brazilian subsidiary that were owned by public shareholders in Brazil
for an aggregate purchase price of $55 million, plus expenses.
In April 1997, we acquired the outstanding shares of our then 50%-owned
South African affiliate from Samancor Limited, our then joint venture partner in
South Africa. The purchase price was $75 million, plus expenses.
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We believe that these acquisitions have enabled us to better integrate
worldwide operations, to recognize production efficiencies at various
manufacturing facilities, to lower average companywide cost of sales and to
better capture and manage cash flow from operations of these subsidiaries.
ACQUISITIONS IN RUSSIA AND GERMANY. In late 1996, 1997 and early 1998, we
acquired 99% of the equity of our Russian subsidiary. The aggregate investment
was $57 million, plus expenses. In February 1997, through a newly formed
70%-owned German subsidiary, we acquired the graphite electrode business of
Elektrokohle Lichtenberg AG. The 30% minority interest in our German subsidiary
was held by a private company based in Germany not engaged in the graphite
electrode business. The aggregate purchase price paid by our German subsidiary
for the acquired assets was $15 million, consisting of $3 million for equipment
and $12 million for working capital, plus expenses.
We acquired our Russian and German subsidiaries to expand geographically.
While we have been a supplier to Eastern Europe for over 25 years, we believed
that these acquisitions would increase our market penetration in Eastern Europe,
Russia and the other countries of the former Soviet Union, and the Middle East.
In addition, many of the electric arc furnace steel producers in these markets
consume lower quality graphite electrodes. Accordingly, sales by these two
subsidiaries of their lower quality electrodes would generally be additive to
sales made by our other subsidiaries, which continued to export ultra-high-power
graphite electrodes to their existing customer base in these regions.
The market for graphite electrodes in these regions has not grown as
rapidly as we expected at the time of these acquisitions due primarily to global
and regional economic conditions. In addition, Russia has been experiencing a
continued economic crisis since at least August 1998, including the devaluation
of its currency. In response, as part of our global restructuring and
rationalization plan, we are closing the manufacturing operations of our German
subsidiary and downsizing the manufacturing operations of our Russian
subsidiary. After full implementation of the plan, our Russian subsidiary will
have capacity to finish the manufacturing of about 10,000 metric tons of
electrodes annually. It will be supplied with partially manufactured electrodes
primarily by our Spanish subsidiary.
ACQUISITION OF ADDITIONAL CATHODE PRODUCT MANUFACTURING OPERATIONS. In
January 1997, we acquired 70% of the outstanding shares of Carbone Savoie,
previously a wholly owned subsidiary of Pechiney S.A. The purchase price was $33
million, plus expenses. Carbone Savoie has facilities in Notre Dame and
Venissieux, France.
As a result of the acquisition, we are the largest manufacturer of cathodes
in the free trading markets and we are allied with Aluminium Pechiney S.A.
Aluminium Pechiney S.A. is one of the world's leading producers of aluminum and
the leading supplier of smelting technology to the aluminum industry. Aluminium
Pechiney S.A. is developing the use of graphite cathodes (instead of carbon
cathodes) in its aluminum smelting technology. We believe that this development
allows for substantial improvement in process efficiency. The graphite cathodes
will be used by Aluminium Pechiney S.A. in its own plants and will be marketed
to its licensees as well as to third parties. We believe that joint development
efforts combining Aluminium Pechiney S.A.'s smelting technology and our graphite
technology and expertise in high temperature industrial applications should
result in process improvements in aluminum smelting.
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RESTRUCTURING, RE-ENGINEERING AND OTHER PROJECTS. We have implemented
several successful restructuring and re-engineering projects since the
mid-1980s. These projects have eliminated work, improved operating efficiency
and reduced costs.
Since 1997, we have undertaken, with the assistance of consultants, various
projects to further integrate global operations. We estimate that costs
associated with these projects will aggregate $18 million over a two-year period
ending mid-1999. We also estimate that, under current conditions, these projects
will have a pay-back period of two years ending in 2000.
As part of our global restructuring and rationalization plan, we intend to
implement more than 150 identified projects to improve plant operating
efficiency. We believe that these projects will yield annual cost savings of
about $37 million in 1999, $46 million in 2000 and $47 million in 2001 and
thereafter. These projects will require capital expenditures of about $24
million. These projects relate to such areas as energy conservation, raw
material substitution, yield improvement, reduction in labor by automation,
maintenance savings and reduction in plant administration.
PROPOSED DIVESTITURE. We are seeking to divest or joint venture part or all
of our graphite and carbon specialties business (which is part of our graphite
and carbon product business segment). In 1998, our graphite and carbon
specialties business had net sales of about $120 million. It includes our carbon
refractories and composite tooling businesses. Any or all three of these
businesses could be divested or joint ventured, individually or in some
combination. We will divest or joint venture these businesses only if we can do
so on acceptable terms. If these businesses are fully divested, net cash
proceeds are expected to far exceed the cash costs included in the 1998 third
quarter write-off and the capital expenditures required to achieve the cost
savings expected under our global restructuring and rationalization plan. Any
joint venture would reduce or eliminate any immediate net cash proceeds. No
assurance can be given that any joint venture or divestiture will be completed
or as to the net proceeds from any joint venture or divestiture or the timing of
completion. We have no commitments with respect to any joint venture or
divestiture.
CLOSURE OF CANADIAN MANUFACTURING OPERATIONS. As part of our new global
restructuring and rationalization plan, we are permanently closing our
manufacturing operations in Welland, Canada. These operations had capacity to
manufacture about 23,000 metric tons of graphite electrodes annually as well as
carbon and graphite cathodes. Cathodes will continue to be manufactured in North
America at our facility in Columbia, Tennessee. We expect to complete the
closure in the second quarter of 1999.
MARKETS AND INDUSTRY OVERVIEW
We estimate that, in 1998, the worldwide market for graphite and carbon
products was about $3 billion. These products are sold primarily to customers in
the steel, silicon metal, ferronickel, thermal phosphorous and aluminum
industries. Customers in these industries are located in virtually every
industrialized country in the world.
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USE OF GRAPHITE ELECTRODES IN ELECTRIC ARC FURNACES. There are two primary
technologies for steelmaking: basic oxygen furnace steel production; and
electric arc furnace steel production. Electric arc furnace steelmakers are
called "market mills" or "mini-mills" because of their smaller capacity as
compared to basic oxygen furnace steelmakers. Graphite electrodes are used
primarily in electric arc furnace steel production. They are also used to refine
steel in ladle furnaces and in other refining processes such as production of
titanium dioxide.
Electric arc furnaces typically range in size from those which produce
about 25 metric tons of steel per production cycle to those which produce about
150 metric tons per production cycle. Graphite electrodes act as conductors of
electricity into the furnace, generating sufficient heat to melt scrap metal or
other material used to produce steel. The graphite electrodes are gradually
consumed in the course of the steel production. Electric arc furnaces operate
using either alternating or direct electric current. The vast majority of
electric arc furnaces use alternating current. Each of these furnaces typically
uses nine electrodes (in three columns of three electrodes each) at one time.
The other electric arc furnaces, which use direct current, typically use one
column of three electrodes. The size of the electrodes varies depending on the
size of the furnace, the size of the furnace's electric transformer and the
planned productivity of the furnace. In a typical furnace using alternating
current and operating at a typical number of production cycles per day, one of
the nine electrodes is fully consumed (requiring the addition of a new
electrode), on average, every eight to ten operating hours. The actual rate of
consumption and addition of electrodes for a particular furnace depend primarily
on the efficiency and productivity of the furnace. Therefore, demand for
graphite electrodes is directly related to the amount and efficiency of electric
arc furnace steel produced.
Graphite electrodes are currently the only products available that have the
high levels of electrical conductivity and the capability of sustaining the high
levels of heat required in an electric arc furnace. Therefore, graphite
electrodes are essential for electric arc furnace steel production.
HISTORICAL GROWTH OF ELECTRIC ARC FURNACE STEEL PRODUCTION AND RECENT
DEVELOPMENTS. Electric arc furnace steel production has, for many years, been
the growth sector of the steel industry. There are currently in excess of 2,000
electric arc furnaces operating worldwide. Worldwide electric arc furnace steel
production grew from 113 million metric tons (about 18% of total steel
production) in 1975 to 271 million metric tons (about 34% of total steel
production) in 1997, according to Company and industry estimates. We estimate
that steelmakers worldwide added net new electric arc furnace steel production
capacity of about 18 million metric tons in 1996, about 16 million metric tons
in 1997 and about 19 million metric tons in 1998.
For the two decades ended 1997, worldwide electric arc furnace steel
production had experienced only two relatively minor downturns. Each of these
downturns lasted for about one year. As a result of the global economic
conditions which began in late 1997 and continue to date, there was a decline in
electric arc furnace steel production to about 260 million metric tons (about
34% of total steel production) in 1998, according to Company and industry
estimates. We believe that some previously announced additions to electric arc
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furnace steel production capacity which had been scheduled for start-up in 1998
have been delayed or cancelled and we estimate that net new capacity added in
1998 was only 19 million metric tons. Further, we believe that a portion of the
net new capacity added in the last three years has not yet become fully
operational.
RELATIONSHIP BETWEEN GRAPHITE ELECTRODE DEMAND AND ELECTRIC ARC FURNACE
STEEL PRODUCTION. We believe that the worldwide growth in electric arc furnace
steel production has been due primarily to improvements in the cost
effectiveness and operating efficiency of electric arc furnace steelmaking. We
believe that growth has also been due to the fact that, as a result of recent
technical advances, electric arc furnace steelmakers are capable of producing
nearly all of the product lines available from basic oxygen furnace steelmakers.
Developments in electric arc furnace steelmaking that we believe improved
average cost effectiveness and operating efficiency include:
o Changes in equipment design and production processes stemming from the
now largely completed conversion of furnaces from a refractory lined
system to a water cooled system, which sharply reduced specific
consumption.
o Use of higher quality scrap metals and other raw materials.
o Improvements in the size, strength and quality of graphite electrodes
(including those developed by us).
This improved efficiency resulted in a decrease in specific consumption. We
estimate that specific consumption in the free trading markets declined from
about 6.4 kilograms of graphite electrodes per metric ton of steel produced in
1974 to about 2.5 kilograms per metric ton in 1997. We believe that, on average,
as the costs (relative to the benefits) increase for electric arc furnace
steelmakers to achieve significant further efficiencies in electric arc furnace
graphite electrode consumption, the decline in specific consumption will
continue at a more gradual pace. We further believe that the rate of decline in
the future will be impacted by the addition of new electric arc furnace
steelmaking capacity. To the extent that this new capacity replaces old
capacity, it has the effect of reducing industrywide specific consumption due to
the efficiency of new electric arc furnaces. To the extent this new capacity
increases industrywide electric arc furnace steel production capacity, it
creates additional demand for graphite electrodes.
During the period from the early 1990s through late 1997, increased levels
of electric arc furnace steel production more than offset the decrease in
specific consumption. This resulted in increased demand for graphite electrodes.
In addition, since the mid-1980s, there has been a consolidation in the number
of graphite electrode producers and a reduction in graphite electrode
manufacturing capacity in the free trading markets. We believe that, during the
mid-1990s, capacity and demand were in relative balance in the free trading
markets.
Throughout 1998 and continuing into 1999, global economic conditions have
adversely impacted steel production, including steel produced in electric arc
furnaces. As a result, demand for graphite electrodes declined through 1998. In
response, as part of our global restructuring and rationalization plan, we are
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reducing our annual graphite electrode manufacturing capacity by about 30,000
metric tons. We believe that this reduction represents about 4% of estimated
graphite electrode manufacturing capacity in the free trading markets. We are
not aware of any construction of new graphite electrode manufacturing facilities
anywhere in the free trading markets. Two of our competitors have announced
their intention to reduce their annual graphite electrode manufacturing
capacity. Their announced reductions total more than 28,000 metric tons.
During the period from the early 1990s through late 1997, there was a
significant improvement in pricing of graphite electrodes in the free trading
markets. Since mid-1998, there has been downward pressure on graphite electrode
pricing.
We estimate that the average cost of graphite electrodes represents about
3% of the cost of producing steel in an electric arc furnace.
We estimate that, in 1998, the worldwide market for graphite electrodes was
about $2.7 billion.
OUR GRAPHITE ELECTRODE MARKET SHARE. We estimate that about two-thirds of
electric arc furnace steelmakers in the free trading markets and about 85% of
electric arc furnace steelmakers in the home markets purchased graphite
electrodes from us in 1998. We further estimate that, in 1998, we supplied about
38% of all graphite electrodes purchased in the home markets and about 29% of
those purchased in the free trading markets.
Sales of graphite electrodes in the home markets accounted for about 50% of
our net sales in 1998. We estimate that, in 1998, (i) sales in the United States
accounted for about 23% of our total net sales of graphite electrodes and (ii)
we sold graphite electrodes in over 80 countries, with no other country
accounting for more than 10% of our total net sales of graphite electrodes. We
estimate that we supplied all or a portion of the graphite electrodes consumed
by about 50% of the new electric arc furnaces which commenced operation during
the past three years.
OUTLOOK FOR GRAPHITE ELECTRODES. During the past three years, we estimate
that an aggregate of about 52 million metric tons of net new electric arc
furnace steelmaking capacity was added. We are aware of about 44 million metric
tons of announced net new electric arc furnace production capacity that is
scheduled to start-up through the year 2001. This includes those announced
additions to capacity which had been scheduled to start up in 1998 or earlier,
but have been delayed. It excludes those which have been cancelled.
Notwithstanding the growth in capacity, as a result of global economic
conditions, steel production, including steel produced in electric arc furnaces,
has declined since mid 1997. As a result, demand for and prices of graphite
electrodes have declined.
While we have seen some signs of a possible improvement, that improvement
has not yet materialized in increased orders for graphite electrodes. We cannot
predict either the timing or extent of changes in global economic conditions.
If, however, global economic conditions in the future over the long term are
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similar to those of the past two decades, we believe that worldwide production
of steel in electric arc furnaces will continue to grow over the long term at
its historical trendline annual growth rate of 4% and that, as a result,
worldwide demand for graphite electrodes will grow over the long-term at an
average annual rate of 1% to 2%.
CARBON ELECTRODES. Carbon electrodes are used primarily to produce silicon
metal, which is used in the manufacture of aluminum. Carbon electrodes are used
and consumed in a manner similar to that of graphite electrodes, although at
lower temperatures and with different consumption rates. We estimate that demand
for carbon electrodes in the free trading markets declined by about 10% to about
63,000 metric tons in 1998. We believe that the decline was due primarily to the
impact of global economic conditions on the production of silicon metal.
We estimate that, in 1998, we sold about 39% of the carbon electrodes
purchased in the free trading markets. We estimate that, in 1998, the worldwide
market for carbon electrodes was about $130 million. We are the only major
manufacturer of carbon electrodes in North and South America.
CATHODES. Cathodes consist primarily of blocks used as lining for furnaces
used to smelt aluminum. In a typical smelting furnace operating at a typical
rate and efficiency of production, the cathodes must be replaced every 5 to 6
years. We believe that demand for cathodes in the free trading markets will grow
over the long term at an average annual growth rate of about 3%, similar to the
aluminum industry growth rate. We also believe that the demand for graphite
cathodes will exceed that of carbon cathodes as new smelting furnaces are built
and existing smelting furnaces are converted from carbon to graphite cathodes.
We estimate that, in 1998, we sold about 31% of the carbon and graphite
cathodes sold in the free trading markets. We estimate that, in 1998, the
worldwide market for graphite and carbon cathodes was about $220 million.
OTHER PRODUCTS. Our other products include flexible graphite (which is
marketed under the trademark GRAFOIL(R)), graphite and carbon specialties (which
include refractories and composite tooling), and systems and components for
steelmaking furnaces. Flexible graphite is used in the manufacture of internal
combustion engines for the automotive and other industries and in the chemical
and petrochemical industries. The volume of flexible graphite sold has grown at
an average annual rate in excess of 10% over the past 10 years, due primarily to
demand for a high quality sealing material to replace asbestos and to a decline
in prices resulting from reduced manufacturing costs as a result of improvements
in manufacturing processes. Our graphite and carbon specialties are used in the
metals, chemicals, transportation, energy, semiconductor and aerospace
industries.
MANUFACTURING PROCESSES
The manufacture of a graphite electrode takes, on average, about two
months. Graphite electrodes range in size from three inches to 30 inches in
diameter and two feet to nine feet in length and weigh between 20 pounds and
4,800 pounds (2.2 metric tons).
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The manufacture of graphite electrodes involves the six main processes
described below.
FORMING. Calcined petroleum coke is crushed, screened, sized and blended in
a heated vessel with coal tar pitch. The resulting plastic mass is extruded
through a forming press and cut into cylindrical lengths (called "green"
electrodes) before cooling in a water bath.
BAKING. The "green" electrodes are baked at about 1,700 degrees Fahrenheit
in specially designed furnaces to carbonize the pitch. After cooling, the
electrodes are cleaned, inspected and sample-tested.
IMPREGNATION. Baked electrodes are impregnated with a special pitch when
higher density, mechanical strength and capability to withstand higher
electric currents are required.
REBAKING. The impregnated electrodes are rebaked to carbonize the pitch,
thereby adding strength to the electrodes.
GRAPHITIZING. Using a process which we developed, the rebaked electrodes are
heated in longitudinal electric resistance furnaces at about 5,000 degrees
Fahrenheit to restructure the carbon to its characteristically crystalline
form, graphite. After this process, the electrodes are gradually cooled,
cleaned, inspected and sample-tested.
MACHINING. After graphitizing, the electrodes are machined to comply with
international specifications governing outside diameters, overall lengths
and joint details. Tapered sockets are machine-threaded at each end of the
electrode to permit the joining of electrodes in columns by means of
correspondingly double-tapered machine-threaded graphite nipples.
Carbon electrodes and graphite and carbon cathodes are manufactured by a
comparable process (excluding, in the case of carbon electrodes and cathodes,
impregnation and graphitization). Graphite and carbon specialties are made by a
process similar to the process for manufacturing electrodes but using different
mixtures of raw materials and different processing time periods. Flexible
graphite is made from mined natural graphite flake that is acid treated, heat
treated and rolled into sheets of desired thickness and width.
We use robotics and statistical process controls in manufacturing processes
and have a total quality control program which involves significant in-house
training. We generally warrant to our customers that our electrodes and cathodes
will meet our specifications. Electrode and cathode returns and replacements
have aggregated less than 1% of net sales in each of the last three years. We
utilize "pipeline" or "just-in-time" manufacturing systems at most of our
electrode and cathode manufacturing facilities. These controls, programs and
systems have improved product quality, reduced waste in the manufacturing
process, resulted in more efficient utilization of manufacturing personnel and
equipment, improved efficiency in customer order processing and reduced
inventory requirements.
Major maintenance at our facilities is conducted on an ongoing basis.
Manufacturing operations at any facility may be subject to curtailment due to
new laws or regulations, changes in interpretations of existing laws or
regulations or changes in governmental enforcement policies.
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The closure of our manufacturing operations in Canada and Germany and the
downsizing of our manufacturing operations in Russia will reduce our graphite
electrode manufacturing capacity by about 11%. After the closures, we will have
capacity to manufacture about 245,000 metric tons of graphite electrodes
annually. We have the capacity to manufacture about 30,000 metric tons of carbon
electrodes annually and about 40,000 metric tons of cathodes annually. The
following table sets forth certain information regarding our sales volumes:
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
---- ---- ----
(In metric tons)
Volume of graphite electrodes sold(a).........231,000 250,000 211,000
Volume of carbon electrodes sold.............. 30,000 28,000 25,000
- ---------------
(a) Includes volume of graphite electrodes sold by our South African
subsidiary both before and after its acquisition in April 1997. The
results of such subsidiary are not consolidated in the Consolidated
Financial Statements before that date.
START
After the closures and downsizing described above, we will operate 15
manufacturing facilities and three machine shops located in Brazil, England,
France, Italy, Mexico, Russia, South Africa, Spain and the United States.
Graphite electrodes are manufactured in each country (other than England)
in which we have a manufacturing facility. Through restructuring and
re-engineering projects, we have sought to modularize our graphite electrode
manufacturing capacity. This enables us to seek to incrementally adjust capacity
in use, as well as related costs, to accommodate anticipated normalized changes
in sales volume. We believe that our modular facilities together with the
diverse worldwide locations of our manufacturing operations position us to
minimize impacts from various negative trends, and to benefit from various
positive trends, in the graphite electrode industry. We also believe that we
have adequate existing permanent capacity to meet any increased demand over the
near term. Further, under current conditions, we are able to incrementally add
new permanent capacity at our existing manufacturing facilities, when and as
required, at an initial investment of less than $1,000 per annual metric ton.
Carbon electrodes are manufactured in the United States. After the closures
described above, graphite and carbon cathodes will be manufactured in Brazil,
France and the United States. Graphite and carbon specialties are manufactured
in France and the United States. Flexible graphite is manufactured in the United
States.
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PRODUCTS
GRAPHITE ELECTRODES. Our principal products are graphite electrodes.
Graphite electrodes are consumed primarily in the production of steel in
electric arc furnaces. They are also used to refine steel in ladle furnaces and
in other refining processes.
Electric arc furnace steel production requires significant heat (as high as
5,000 degrees Fahrenheit, which we believe is the hottest operating temperature
in any industrial or commercial manufacturing process worldwide) to melt scrap
metal, iron ore or other raw materials for processing into ingots or
semi-finished continuously cast shapes. That heat is generated by graphite
electrodes as electricity (as much as 150,000 amps) passes through them and
creates an electric arc between the graphite electrodes and the raw materials.
The graphite electrodes are gradually consumed in the production process.
We believe that we provide the broadest range of sizes in graphite
electrodes and that the quality of our graphite electrodes is equal to or better
than that of comparable products of any other manufacturer. We also believe that
there are presently no commercially viable substitutes for graphite electrodes
in electric arc furnace steelmaking.
OTHER PRODUCTS. We manufacture carbon electrodes. Carbon electrodes are
consumed primarily in the production of silicon metal and also in the production
of ferronickel and thermal phosphorous. The production of these materials
involves processes similar to the production of steel in electric arc furnaces,
but at lower temperatures.
We manufacture carbon and graphite cathodes. Cathodes consist primarily of
blocks used as liners for, and acting as conductors of electricity in, aluminum
smelting furnaces. In addition, we manufacture flexible graphite which is used
primarily to make gaskets for internal combustion engines, pipe flanges and
other industrial applications.
We manufacture graphite and carbon specialties for use in the metals,
chemicals, transportation, energy, semiconductor and aerospace industries. Our
graphite specialties consist primarily of molded and extruded graphite shapes
sold to specialty machine shops and end users for machining and, to a lesser
extent, molds, insulation substrates and other machined products. Most of these
machined products are manufactured for specific applications or to meet customer
specifications. Our carbon specialties consist primarily of carbon refractories
which are used as lining for blast furnaces. In addition, we manufacture tooling
made from graphite blocks.
We sell proprietary water spray cooling systems and components for
steelmaking furnaces, exhaust systems and other high temperature applications.
These systems and components, designed by us, were first sold in 1986 and are
fabricated by third party contractors in the United States and various other
countries. We believe that our systems represent a significant improvement over
prior technologies. The improvement results from both the increased life of
furnace components resulting from the improved cooling processes and the
reduction in maintenance down time resulting from various design improvements.
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RAW MATERIALS AND SUPPLIERS
The primary raw materials for graphite electrodes, graphite cathodes and
graphite specialty products are petroleum cokes (needle coke for electrodes and
regular grades for cathodes and specialty products), coal tar pitch and
petroleum pitch. The primary raw materials for carbon electrodes, carbon
cathodes and carbon specialty products are anthracite coal and coal tar pitch
and, in some instances, a petroleum coke-based material. The primary raw
material for flexible graphite is natural graphite flake. We purchase our raw
materials from a variety of sources and have no material long-term purchase
contracts with respect to any raw materials. Over the past several decades, we
have purchased a majority of our petroleum coke from multiple plants of a single
major petroleum company and, since 1988, have done so pursuant to annual
purchase arrangements. We believe that the quality of our raw materials is the
highest available and that, under current conditions, our raw materials are
available in adequate quantities at market prices. Electric power or natural gas
used in manufacturing processes is purchased from local suppliers under
short-term contracts or in the spot market.
The availability and price of raw materials and energy may be subject to
curtailment or change due to limitations which may be imposed under new
legislation or governmental regulations, suppliers' allocations to meet the
demands of other purchasers during periods of shortage (or, in the case of
energy suppliers, extended cold weather), interruptions in production by
suppliers, and market and other events and conditions.
Over the past several years, we have mitigated the effect of raw material
and energy price increases on our results of operations through a combination of
improved operating efficiency, permanent on-going cost savings and, prior to
1998, passing such price increases on to customers. However, there can be no
assurance that such measures will successfully mitigate future increases in the
price of petroleum coke or other raw materials or energy. A substantial increase
in raw material or energy prices which cannot be mitigated or passed on to
customers or a continued interruption in supply, particularly in the supply of
petroleum coke, would have a material adverse effect on us.
SALES AND CUSTOMER SERVICE; RESEARCH AND DEVELOPMENT
Our products are sold primarily by our direct sales force, which operates
from more than 20 sales offices. Our direct sales force is supported by our
customer technical service personnel, and, to a lesser extent, by independent
sales agents, most of whom have worked with us for many years, in various
countries outside the home markets.
We have a global business with a diversified customer base. Sales of our
products to customers outside the United States accounted for about 70% of our
net sales in 1998. No single customer or group of affiliated customers accounted
for more than 3% of our net sales in 1998.
We have had, for many years, a strong commitment to provide a high level of
technical service to customers, which supports our sales activities. We employ
about 60 engineers to provide technical assistance to customers in, among other
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things, all areas of electric arc furnace design and operation, electrode
specification and use and related matters to maximize customer production and
minimize customer costs. This technical assistance includes periodically
monitoring certain customers' electric arc furnace efficiency levels via
computer modem.
Carbone Savoie has its own dedicated sales and customer service groups that
work closely with Aluminium Pechiney S.A.'s sales and customer service groups to
maximize use of their respective products and technologies.
We conduct, at our dedicated technology centers and manufacturing
facilities throughout the world, a focused technology program to improve product
quality and manufacturing processes. This program, which is conducted both
independently and in conjunction with suppliers, customers and others, was
initiated in 1984. About 80 technical professionals are directly involved in
this program. Their activities are integrated with the efforts of over 100
engineers at our manufacturing facilities who are focused on improving
manufacturing processes. In addition, Carbone Savoie operates its own dedicated
cathode technology center employing about 20 professionals.
Developments by us include larger and stronger electrodes (increasing our
ability to supply various "supersized" electrodes), new chemical additives to
enhance raw materials used in graphite electrodes and new applications for water
spray cooling technology, resulting in the development of safer, more
cost-effective and more efficient electric arc furnace steel and graphite
electrode production. We have received recognition for the high quality of our
products under several programs around the world and have been awarded preferred
or certified supplier status by many major steel and other manufacturing
companies. Our research and development expenses (other than certain expenses at
our manufacturing facilities, which are included in cost of sales) were $8
million in 1996, $9 million in 1997 and $9 million in 1998.
DISTRIBUTION
Our customers generally seek to negotiate electrode prices and anticipated
volumes on an annual basis. Our customers then generally place orders for
electrodes three to six months prior to the specified delivery date. Such orders
are cancelable by the customer. Therefore, we manufacture electrodes and seek to
manage electrode inventory levels to meet rolling sales forecasts. We generally
seek to maintain an appropriately low level of finished electrode inventories,
taking into account these factors and the length of electrode manufacturing
cycles. Other products are generally manufactured or fabricated to meet customer
orders. Accordingly, inventory levels will vary with demand for these finished
products.
Finished products are generally stored at our manufacturing facilities. We
ship our finished products to customers primarily by truck and ship, using
"just-in-time" techniques where practicable.
Proximity of manufacturing facilities to customers can provide a
competitive advantage in terms of cost of delivery of electrodes to customers.
The significance of these costs is affected by fluctuations in exchange rates,
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methods of shipment, import duties and whether the manufacturing facilities are
located in the same economic trading region as the customer. We believe that we
are generally better positioned in terms of such proximity than our major
competitors to supply graphite electrodes to the free trading markets.
PATENTS AND TRADEMARKS
We own or have obtained licenses to various domestic and foreign patents,
patent applications and trademarks related to our products, processes and
business.
These patents expire at various times over the next 20 years. While these
patents and patent applications in the aggregate are important to our
competitive position, no single patent or patent application is material to us.
The tradename and trademark UCAR are owned by Union Carbide and licensed to
us on a royalty-free basis under a license expiring in 2015, which license
automatically renews for successive ten-year periods and permits non-renewal by
Union Carbide commencing after the first ten-year renewal period upon five
years' notice of non-renewal. The tradename and trademark CARBONE SAVOIE is
owned by Carbone Savoie and used in connection with cathodes manufactured by it.
It is a registered trademark in Europe. The trademark GRAFOIL(R) is owned by us
and used in connection with flexible graphite manufactured by us. It is
registered in the United States and elsewhere. These tradenames and trademarks
are the only ones which are material to us.
COMPETITION
GRAPHITE ELECTRODES. There are 10 manufacturers of graphite electrodes in
the free trading markets. We believe that we are the largest and SGL Carbon AG
is the second largest. We estimate that we supplied about 38% of the graphite
electrodes purchased in the home markets in 1998 and that we supplied about 29%
of those purchased in the free trading markets in 1998. Other manufacturers of
graphite electrodes include: SGL Carbon AG (whose plants are located in North
America and Europe); The Carbide/Graphite Group, Inc. (whose plants are located
in the United States); and four manufacturers in Japan (one of whom, Showa Denko
Carbon, Inc., has a plant located in the United States). There are also
government-controlled and independent graphite electrode manufacturers in the
non-free trading markets. They generally provide less reliable delivery and
produce lower quality products (with higher rates of breakage and specific
consumption) for use in their respective countries and in countries which are
their traditional trading partners. Most of these countries and partners are
generally net importers of graphite electrodes.
The pending antitrust investigations, lawsuits and claims are likely to
have a material impact on the graphite electrode industry. We believe that, at a
minimum, these impacts will include increased debt or cost burdens, or both, for
the manufacturers named above. In December 1998, the U.S. subsidiary of SGL
Carbon AG commenced a proceeding for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. In its petition commencing the proceeding, the subsidiary
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alleges that antitrust claims by steelmakers are unreasonable and, if allowed to
proceed without reduction or delay, would render it unable to meet its
obligations. It is possible that other competitors could commence similar
proceedings. It is also possible that, as a result of these proceedings or the
increased debt or costs mentioned above, one or more of our competitors could
divest graphite electrode manufacturing facilities. This could increase the
number or change the capabilities of our competitors. It is not uncommon for
companies subject to such proceedings to enjoy, at least temporarily, a cost
advantage as compared to their competitors. This advantage may enable them to
compete more aggressively on price. While we cannot predict all of the possible
impacts from these external circumstances, we believe that there will be
increasing competition, particularly price competition, in the graphite
electrode industry.
In addition to the external circumstances described above, our competitive
position in the industry could be impacted by internal circumstances. These
include decisions by us with respect to maintaining profit margins rather than
market share or other competitive or market strategies.
All of the circumstances described above could adversely affect our market
share or results of operations. They could also affect our ability to institute
price increases or compel us to reduce prices or increase spending on research
and development or marketing and sales, all of which could adversely affect us.
OTHER PRODUCTS. There are two significant manufacturers of carbon
electrodes in the world (excluding the government-controlled and independent
manufacturers in the non-free trading markets). We believe that we are the
largest and SGL Carbon AG is the second largest. We estimate that we supplied
about 39% of the carbon electrodes purchased in the free trading markets in
1998.
There are eight manufacturers of cathodes in the world (excluding the
government- controlled and independent manufacturers in the non-free trading
markets). We believe that we are the largest and SGL Carbon AG is the second
largest. We estimate that we supplied about 31% of the cathodes purchased in the
free trading markets in 1998.
With respect to our other products, we compete with other graphite and
carbon product manufacturers as well as manufacturers of non-graphite or carbon
products used for similar purposes.
OTHER COMPETITIVE FACTORS. The manufacture of high quality graphite and
carbon products is a mature, capital intensive business which requires extensive
process know-how developed over years of experience working with the various raw
materials and their suppliers, furnace manufacturers and steel or aluminum
producers or other end users (including working on the specific applications for
finished electrodes and cathodes). It also requires high quality raw material
sources and a developed energy supply infrastructure. There have been no
significant new entrants in the manufacture of these products since 1950.
Accordingly, while no assurance can be given that such will be the case, we
believe that it is unlikely that there will be significant new entrants in the
manufacture of these products in the next several years.
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ENVIRONMENTAL MATTERS
Since the 1970s, a wide variety of federal, state, local and foreign laws
and regulations relating to the storage, handling, generation, treatment,
emission, release, discharge and disposal of certain substances and wastes have
been adopted. These laws and regulations (and the enforcement thereof) are
periodically changed. We are subject to many of these laws and regulations.
Certain of our facilities have experienced some level of regulatory scrutiny,
have been required to take remedial action and have incurred related costs in
the past and may experience further regulatory scrutiny, be required to take
further remedial action and incur additional costs in the future. Although this
has not been the case in the past, these costs could have a material adverse
effect on us in the future.
The principal United States laws and regulations to which we are subject
are described below. The Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, the Safe Drinking Water Act and similar state or
local laws regulate air emissions, water discharges and hazardous waste
generation, treatment, storage, handling, transportation and disposal. The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986
("SUPERFUND"), and similar state laws provide for responses to and liability for
releases of hazardous substances into the environment. The Toxic Substances
Control Act and related laws are designed to assess the risk of new products to
health and to the environment at early developmental stages. In addition, laws
adopted or proposed in various states impose or may impose, as the case may be,
reporting or remediation requirements if operations cease or property is
transferred or sold.
Our manufacturing operations outside the United States are subject to the
laws and regulations of the countries in which those operations are conducted.
These laws and regulations primarily relate to pollution prevention and the
control of risks arising from industrial activities having high potential impact
on the environmental quality of the air, water and soil. Regulated activities
include, among other things: use of hazardous substances; packaging, labeling
and transportation of products; management and disposal of toxic wastes;
discharge of industrial and sanitary wastewater; and emissions to the air.
We believe that we are currently in material compliance with the federal,
state, local and foreign environmental laws and regulations to which we are
subject. As a result of amendments to the Clean Air Act, enacted in 1990,
certain of our facilities will be required to comply with new standards for air
emissions to be adopted by the United States Environmental Protection Agency
(the "USEPA") and state environmental protection agencies over the next several
years pursuant to regulations that are currently being drafted or that have been
promulgated. The regulations which have been promulgated will necessitate the
installation of additional controls and/or changes in certain manufacturing
processes in order for us to achieve compliance with these regulations. Based on
information currently available to us, we believe that compliance with these
regulations will not have a material adverse effect on us.
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We have received and continue periodically to receive notices from the
USEPA or state environmental protection agencies, as well as claims from others,
alleging that we are a potentially responsible party (a "PRP") under Superfund
and similar state laws for past and future remediation costs at hazardous
substance disposal sites. Although Superfund liability is joint and several, in
general, final allocation of responsibility at sites where there are multiple
PRPs is made based on each PRPs relative contribution of hazardous substances to
the site. Based on information currently available to us, we believe that any
potential liability associated with being named a PRP will not have a material
adverse effect on us.
We sold a plant in Niagara Falls, New York in 1986. Adjacent to the plant
is a solid waste landfill. Ownership of the landfill was retained by us, and the
landfill was closed by us in 1987 in accordance with a closure plan approved by
the New York State Department of Environmental Conservation. In early 1991, the
Department notified us that it was investigating the landfill as a former
inactive hazardous waste site. In September 1997, the site was reclassified from
a class 2a site (a site for which the Department has insufficient information to
determine whether hazardous wastes or substances are present) to a class 4 site
(a site properly closed and requiring continued management). To date, the costs
associated with this site have not been, and we do not anticipate that future
costs will be, material to us.
We establish accruals for environmental liabilities where it is probable
that a liability has been incurred and the amount of the liability can be
reasonably estimated. We adjust accruals as new remediation and other
commitments are made and as information becomes available which changes
estimates previously made.
Estimates of future costs of environmental protection are necessarily
imprecise due to numerous uncertainties, including the impact of new laws and
regulations, the availability and application of new and diverse technologies,
the extent of insurance coverage, the identification of new hazardous substance
disposal sites at which we may be a PRP and, in the case of sites subject to
Superfund and similar state laws, the ultimate allocation of costs among PRPs
and the final determination of remedial requirements. Subject to the inherent
imprecision in estimating such future costs, but taking into consideration our
experience to date regarding environmental matters of a similar nature and facts
currently known, we believe that costs and capital expenditures (in each case,
before adjustment for inflation) for environmental protection will not increase
materially over the next several years.
INSURANCE
We obtain insurance against civil liabilities relating to personal injuries
to third parties, for loss of or damage to property and for environmental
matters to the extent that it is currently available and provides coverage that
we believe is appropriate upon terms and conditions and for premiums that we
consider fair and reasonable. We believe that we have insurance providing
coverage for claims and in amounts which we believe appropriate as described
above. There can be no assurance, however, that we will not incur losses beyond
the limits of, or outside the coverage of, our insurance. We currently believe
that recovery under our insurance, if any, will not materially offset
liabilities which have or may become due in connection with antitrust
investigations or related lawsuits or claims.
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EMPLOYEES
At December 31, 1998, we had 4,952 employees, of which 1,291 were in the
United States, 2,082 were in Europe (including Russia), 882 were in Mexico and
Brazil, 415 were in South Africa, 276 were in Canada and 6 were in the Asia
Pacific region. At December 31, 1998, we had 3,463 hourly employees.
About 64% of our employees are covered by collective bargaining or similar
agreements which expire at various times in each of the next several years. At
December 31, 1998, about 1,924, or 39%, of our employees were covered by
agreements which expire, or are subject to renegotiation, at various times
during the remainder of 1999 or the first quarter of the year 2000. We believe
that our relationships with our unions are satisfactory and that we will be able
to renew or extend our collective bargaining or similar agreements on reasonable
terms as they expire. There can be no assurance, however, that renewed or
extended agreements will be reached without a work stoppage or strike or will be
reached on terms satisfactory to us. A prolonged work stoppage at any one of our
manufacturing facilities could have a material adverse effect on us. Excluding
our subsidiaries prior to the time when we acquired them, we have not had any
material work stoppages or strikes during the past decade.
ITEM 2. PROPERTIES
We operate the following facilities, which are owned or leased as
indicated.
<TABLE>
<CAPTION>
OWNED OR
LOCATION OF FACILITY PRIMARY USE LEASED
-------------------- ----------- ------
UNITED STATES
<S> <C> <C>
Irvine, California................... Machine Shop and Sales Office Leased
Danbury, Connecticut................. Administrative Office Leased
Niagara Falls, New York.............. Coal Calcining Facility Owned
Cleveland, Ohio...................... Flexible Graphite Manufacturing Facility Owned
and Sales Office
Parma, Ohio.......................... Technology Center Owned
Clarksville, Tennessee............... Electrode Manufacturing Facility and Owned
Sales Office
Columbia, Tennessee.................. Electrode and Cathode Manufacturing Owned
Facility and Sales Office
Nashville, Tennessee................. Corporate Headquarters and Sales Office Leased
Lawrenceburg, Tennessee.............. Carbon Specialties Manufacturing Facility Owned
Clarksburg, West Virginia............ Graphite Specialties Manufacturing Owned
Facility and Sales Office
INTERNATIONAL
Salvador Bahia, Brazil............... Electrode and Cathode Manufacturing Owned
Facility
Sao Paulo, Brazil.................... Sales Office Leased
Welland, Canada(a)................... Electrode and Cathode Manufacturing Owned
Facility and Sales Office
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
OWNED OR
LOCATION OF FACILITY PRIMARY USE LEASED
-------------------- ----------- --------
<S> <C> <C>
Hong Kong, China..................... Sales Office Leased
Notre Dame, France................... Electrode and Graphite Specialties Owned
Manufacturing Facility and Sales Office
Notre Dame, France................... Cathode Manufacturing Facility and Sales Leased
Office
Rungis, France....................... Sales Office Leased
Venissieux, France................... Cathode Manufacturing Facility and Owned
Technology Center
Caserta, Italy....................... Electrode Manufacturing Facility Owned
Malonno, Italy....................... Machine Shop Owned
Milan, Italy......................... Administration and Sales Office Leased
Monterrey, Mexico.................... Electrode Manufacturing Facility and Owned
Sales Office
Moscow, Russia....................... Sales Office Leased
Vyazma, Russia....................... Electrode Manufacturing Facility Owned
Singapore............................ Sales Office Leased
Meyerton, South Africa............... Electrode Manufacturing Facility and Owned
Sales Office
Pamplona, Spain...................... Electrode Manufacturing Facility and Owned
Sales Office
Lausanne, Switzerland(b)............. Sales Office and European Headquarters Owned
Sheffield, United Kingdom............ Machine Shop and Sales Office Owned
</TABLE>
------------
(a) Until closure which is scheduled for the second quarter of
1999.
(b) Sales office and European Headquarters are located in a leased
facility in Gland, Switzerland and will be moved to Lausanne,
Switzerland in 1999.
We believe that our facilities, which are of varying ages and types of
construction, are in good condition, are suitable for our operations and
generally provide sufficient capacity to meet our requirements for the
foreseeable future. We do not own any other properties which are material to our
financial condition.
ITEM 3. LEGAL PROCEEDINGS
PUERTO RICAN FACILITY LITIGATION. In 1978, a lawsuit entitled ORTIZ ET AL.
V. UNION CARBIDE GRAFITO, INC. was commenced in the Superior Court of Puerto
Rico (the "SUPERIOR COURT") by persons residing near our former facility in
Yabucoa, Puerto Rico alleging property damage and personal injury due to air
emissions and noise from the facility and seeking damages. The defendant in the
lawsuit is one of our wholly owned subsidiaries which owned the facility. The
facility ceased operations in 1989 and was demolished in 1994. Our subsidiary
had no other operations.
In 1986, the complaint was dismissed as to about two-thirds of the 759
plaintiffs for failure to provide discovery. In 1987, the complaint was
dismissed as to the remaining plaintiffs for failure to prosecute the lawsuit.
Certain of the plaintiffs thereafter retained new counsel and filed a motion to
set aside the 1986 and 1987 dismissals. That motion was denied by the trial
court and an appeal was taken to the Supreme Court of Puerto Rico (the "SUPREME
COURT"). In 1992, the Supreme Court remanded the case to the Superior Court for
a hearing on whether the dismissals should be vacated on the ground that
plaintiffs' former counsel had allowed the dismissals to occur due to fraud. The
hearing was held in March and June 1995, and a decision was rendered in favor of
our subsidiary. In March 1996, the plaintiffs filed a writ of appeal with the
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Circuit Court of Appeals. The writ of appeal was dismissed on procedural
grounds. In June 1996, the plaintiffs filed a petition for certiorari to the
Supreme Court seeking review of the dismissal of such writ of appeal. The
Supreme Court issued a writ of certiorari to review the dismissal. The writ of
certiorari is still pending before the Supreme Court. We believe that the
ultimate disposition of this lawsuit will not have a material adverse effect on
us. Union Carbide and Mitsubishi have agreed to indemnify UCAR and Blackstone
for any liabilities in excess of $20 million arising out of this lawsuit.
ANTITRUST INVESTIGATIONS. On June 5, 1997, we were served with subpoenas
issued by the United States District Court for the Eastern District of
Pennsylvania (the "DISTRICT COURT") to produce documents to a grand jury
convened by attorneys for the Antitrust Division of the DOJ and a related search
warrant in connection with a criminal investigation as to whether there has been
any violation of U.S. federal antitrust laws by producers of graphite
electrodes. Concurrently, representatives of Directorate General IV of the
European Union, the antitrust enforcement authorities of the European Union (the
"EU AUTHORITIES"), visited offices of our French subsidiary for purposes of
gathering information in connection with an investigation as to whether there
has been any violation of Article 85-1 of the Treaty of Rome, the antitrust law
of the European Union, by those producers. In October 1997, we were served with
subpoenas by the DOJ to produce documents relating to, among other things, our
carbon electrode and bulk graphite businesses.
In December 1997, UCAR's Board of Directors appointed a special committee
of outside directors, consisting of John R. Hall and R. Eugene Cartledge, to
exercise the power and authority of UCAR's Board of Directors in connection with
antitrust investigations and related lawsuits and claims. On March 13, 1998,
effective immediately, Robert P. Krass, then Chairman of the Board, President
and Chief Executive Officer, and Robert J. Hart, then Senior Vice President and
Chief Operating Officer, retired and Mr. Krass resigned as a director.
On April 7, 1998, pursuant to a plea agreement between the DOJ and UCAR,
the DOJ charged UCAR and unnamed co-conspirators with participating from at
least July 1992 until at least June 1997 in an international conspiracy
involving meetings and conversations in the Far East, Europe and the United
States resulting in agreements to fix prices and allocate market shares in the
United States and elsewhere, to restrict co-conspirators' capacity and to
restrict non-conspiring producers' access to manufacturing technology for
graphite electrodes. In addition, on April 24, 1998, pursuant to the plea
agreement, UCAR pled guilty to a one-count charge of violating U.S. federal
antitrust laws in connection with the sale of graphite electrodes and was
sentenced to pay a non-interest-bearing fine in the aggregate amount of $110
million. The fine is payable in six annual installments of $20 million, $15
million, $15 million, $18 million, $21 million and $21 million, commencing July
23, 1998. The agreement was approved by the District Court and, as a result,
under the plea agreement, we will not be subject to prosecution by the DOJ with
respect to any other violations of the U.S. federal antitrust laws occurring
prior to April 24, 1998. The payment due July 23, 1998 was timely made.
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In April 1998, we became aware that the Canadian Competition Bureau (the
"COMPETITION BUREAU") had commenced a criminal investigation as to whether there
has been any violation of Canadian antitrust laws by producers of graphite
electrodes. In March 1999, pursuant to a plea agreement between the Company's
Canadian subsidiary and the Competition Bureau, our Canadian subsidiary pled
guilty to a one count charge of violating Canadian antitrust laws in connection
with the sale of graphite electrodes and was sentenced to pay a fine of Cdn.$11
million. The plea agreement was approved by the court and, as a result, we will
not be subject to prosecution by the Competition Bureau with respect to any
antitrust violations occurring prior to the date of the plea agreement. The fine
was timely paid.
The guilty pleas make it more difficult for us to defend against other
investigations as well as civil lawsuits and claims.
In June 1998, we became aware that the Japanese Fair Trade Commission, the
Japanese antitrust enforcement authority (the "JFTC"), had commenced an
investigation as to whether there has been any violation of the Act Concerning
the Prohibition of Private Monopolization and Maintenance of Fair Trade by
producers and distributors of graphite electrodes. On January 14, 1999, we
received a request from the JFTC to explain, in writing, the purpose of various
alleged meetings which took place between us and other producers of graphite
electrodes during the period from 1992 to the present. The Company believes
that, among other things, it has good defenses to any claim that it is subject
to the jurisdiction of these authorities and does not intend to comply with this
request. The independent distributor of the Company's products in Japan has been
required to produce documents and witnesses to the JFTC. In March 1998, the JFTC
issued a "warning" letter against the four Japanese graphite electrode
producers. While the JFTC did not issue a similar warning against the Company,
the warning issued against the Japanese producers did reference UCAR as a member
of an alleged cartel.
We have been vigorously protecting, and intend to continue to vigorously
protect, our interests in connection with the investigations described above. We
may, however, at any time settle any possible unresolved charges. We are
cooperating with the EU authorities in its investigation and with the DOJ and
the Competition Bureau in their continuing investigations of other producers of
graphite electrodes. In connection with these investigations, we have produced
and are producing documents and witnesses. It is possible that antitrust
investigations seeking, among other things, to impose fines and penalties
against us could be initiated by authorities in other jurisdictions.
ANTITRUST LAWSUITS. In 1997, UCAR and other producers of graphite
electrodes were served with complaints commencing various antitrust class action
lawsuits. Subsequently, the complaints were either withdrawn without prejudice
to refile or consolidated into a single complaint in the District Court
(sometimes called the "ANTITRUST CLASS ACTION LAWSUIT"). In the consolidated
complaint to the antitrust class action lawsuit, the plaintiffs allege that the
defendants violated U.S. federal antitrust laws in connection with the sale of
graphite electrodes and seek, among other things, an award of treble damages
resulting from such alleged violations. In August 1998, the District Court
certified a class of plaintiffs consisting of all persons who purchased graphite
electrodes in the United States (sometimes called the "CLASS") directly from the
defendants during the period from July 1, 1992 through June 30, 1997 (sometimes
called the "CLASS PERIOD").
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<PAGE>
In 1998, UCAR and other producers of graphite electrodes were served with a
complaint by 27 steelmakers in the United States commencing a separate civil
antitrust lawsuit in the District Court (sometimes called the "OPT-OUT
LAWSUIT"). In the complaint to the opt-out lawsuit, the plaintiffs allege that
the defendants violated U.S. federal antitrust laws in connection with the sale
of graphite electrodes and seek, among other things, an award of treble damages
resulting from such alleged antitrust violations.
In 1998, the UCAR Group, other producers of graphite electrodes, Union
Carbide and Mitsubishi were served with a complaint by Nucor Corporation and an
affiliate commencing a civil antitrust and fraudulent transfer lawsuit in the
District Court (sometimes called the "NUCOR LAWSUIT"). In the complaint to the
Nucor lawsuit, the plaintiffs allege that the defendants violated U.S. federal
antitrust laws in connection with the sale of graphite electrodes and that Union
Carbide and Mitsubishi violated applicable state fraudulent transfer laws. The
complaint seeks, among other things, an award of treble damages resulting from
such alleged antitrust violations and an order to have payments made by UCAR to
Union Carbide and Mitsubishi in connection with the Recapitalization declared to
be fraudulent conveyances and returned to UCAR for purposes of enabling UCAR to
satisfy any judgments resulting from such alleged antitrust violations.
In 1998, the UCAR Group and other producers of graphite electrodes were
served with a petition by Chaparral Steel Company commencing a separate civil
antitrust lawsuit entitled CHAPARRAL STEEL COMPANY, ET AL. V. SHOWA DENKO
CARBON, INC., ET. AL. in the District Court of Ellis County, Texas (the "TEXAS
lawsuit"). In the petition to the Texas lawsuit, the plaintiff alleges that the
defendants violated Texas antitrust laws in connection with the sale of graphite
electrodes and seeks, among other things, an award of treble damages resulting
from such alleged violations.
Certain other steelmakers in the United States and Canada have also served
the UCAR Group with complaints commencing five separate civil antitrust lawsuits
(four in the United States and one in Canada) in various courts (sometimes
called the "OTHER LAWSUITS"). The UCAR Group and other producers of graphite
electrodes have been named as defendants in some or all of the complaints. In
the complaints to the other lawsuits, the plaintiffs allege that the defendants
violated applicable antitrust laws (and applicable conspiracy laws, in the case
of the lawsuit in Canada) in connection with the sale of graphite electrodes and
seek, among other things, an award of treble damages (in the case of lawsuits in
the United States) or actual and punitive damages (in the case of the lawsuit in
Canada) resulting from such alleged violations. Each of the other lawsuits in
the United States has been transferred to the District Court and consolidated
with the antitrust class action lawsuit, the opt-out lawsuit and the Nucor
lawsuit for purposes of discovery.
We are aware of other antitrust lawsuits in the United States in which
other producers of graphite electrodes (but not us) are defendants and that some
of those lawsuits have been settled. In addition, all antitrust lawsuits against
SGL Carbon Corporation, the U.S. subsidiary of SGL Carbon AG, have been stayed
as a result of the filing on December 17, 1998 of a petition by SGL Carbon
Corporation in the United States District Court for the District of Delaware for
reorganization under Chapter 11 of the U.S. Bankruptcy Code.
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<PAGE>
In February 1999, the UCAR Group and other producers of graphite electrodes
were served with a complaint by 23 steelmakers and related parties outside the
United States commencing a separate civil antitrust lawsuit entitled FERROMIN
INTERNATIONAL TRADE CORPORATION, ET. AL. VS. UCAR, ET. AL. in the United States
District Court for the Eastern District of Pennsylvania (the "FOREIGN CUSTOMER
LAWSUIT"). The plaintiffs allege that the defendants violated U.S. federal
antitrust laws in connection with the sale of graphite electrodes sold or
sourced from the United States and those sold and sourced outside the United
States. The plaintiffs seek, among other things, an award of treble damages
resulting from such alleged antitrust violations. We believe that, among other
things, we have strong defenses against claims alleging that purchases of
graphite electrodes outside the United States are actionable under U.S. federal
antitrust laws.
Certain steelmakers in other countries who purchased graphite electrodes
from us, and certain customers who purchased other products from us, have
threatened to commence antitrust lawsuits against us in the United States and in
other jurisdictions.
Through March 25, 1999, we have settled the antitrust class action lawsuit,
the opt-out lawsuit, the Nucor lawsuit and, except as stated below, all of the
other lawsuits (in Canada as well as in the United States), certain of the
threatened lawsuits and certain antitrust claims by certain other steelmakers
who negotiated directly with us. The settlements cover virtually all of the
actual and potential claims against us (but not other defendants) by steelmakers
in the United States and Canada arising out of alleged antitrust violations
occurring prior to the date of the respective settlements in connection with the
sale of graphite electrodes. The only material exceptions are the Texas lawsuit,
the foreign customer lawsuit and possible claims by customers in the United
States and Canada whose aggregate purchases do not constitute a material portion
of our sales in those countries. Although each settlement is unique, in the
aggregate they consist primarily of current and deferred cash payments with some
product credits and, in a few instances, discounts. Through March 25, 1999, all
payments due have been timely made. Through December 31, 1998, an aggregate of
$145 million (including the DOJ payment) was paid. As of December 31, 1998 and
based on information known to us at March 25, 1999, the aggregate amount
remaining due under these settlements was about $29 million, most of which is
payable in 1999. Amounts due under the settlement of the antitrust class action
may be increased if additional claims are filed by members of the class or if it
is determined that steelmakers outside the United States who purchased graphite
electrodes sourced within the United States are members of the class and such
steelmakers file claims thereunder.
The Texas lawsuit and the foreign customer lawsuit have not been settled
and are still in their early stages. We have been vigorously defending, and
intend to continue to vigorously defend, against the Texas lawsuit and the
foreign customer lawsuit as well as all threatened lawsuits and possible claims,
including those mentioned above. We may at any time, however, settle the Texas
lawsuit and the foreign customer lawsuit as well as any threatened lawsuits and
possible claims and we are actively negotiating settlements which we consider
fair and reasonable with customers who are not parties to any lawsuit to settle
certain of these claims.
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It is possible that additional civil antitrust lawsuits seeking, among
other things, to recover damages could be commenced against us in the United
States and other jurisdictions.
We recorded a charge of $340 million against results of operations for 1997
as a reserve for potential liabilities and expenses in connection with antitrust
investigations and related lawsuits and claims. Actual liabilities and expenses
could be materially higher than $340 million. To the extent that these
liabilities and expenses are reasonably estimable, at March 25, 1999, we believe
that $340 million continues to represent the best estimate of these liabilities
and expenses. The fines and settlements described above are within the amounts
we used to evaluate the $340 million charge.
SHAREHOLDER DERIVATIVE LAWSUIT. On March 4, 1998, UCAR was served with a
complaint commencing a shareholder derivative lawsuit entitled JAROSLAWICZ V.
KRASS, ET AL. in the Connecticut Superior Court (Judicial District of Danbury).
Messrs. Krass and Hart, William P. Wiemels, then Vice President and Chief
Financial Officer, Peter B. Mancino, General Counsel, Vice President and
Secretary, and Fred C. Wolf, then Vice President, Administration and Strategic
Projects, together with Messrs. Cartledge and Hall, Robert D. Kennedy, current
Chairman of the Board, and Glenn H. Hutchins, Howard A. Lipson, Peter G.
Peterson and Stephen A. Schwarzman, former directors, are named as defendants.
UCAR is named as a nominal defendant. On March 13, 1998, effective immediately,
Messrs. Krass and Hart retired and Mr. Krass resigned as a director. On March
18, 1998, Mr. Kennedy was elected Chairman of the Board and Chief Executive
Officer, Mr. Wiemels became Vice President and Chief Operating Officer and Mr.
Wolf became Vice President and Chief Financial Officer. On October 1, 1998,
Messrs. Wiemels and Wolf retired. The plaintiff named in the complaint is David
Jaroslawicz.
In the complaint, the plaintiff alleges that the defendants breached their
fiduciary duties in connection with alleged non-compliance by the UCAR Group and
its employees with antitrust laws. The plaintiff also alleges that certain of
the defendants sold common stock while in possession of materially adverse
non-public information relating to such non-compliance with antitrust laws. The
complaint seeks recovery for UCAR of damages to the UCAR Group resulting from
these alleged breaches and sales. In May 1998, UCAR and the individual
defendants filed a motion to dismiss the complaint on the grounds that plaintiff
failed to make a demand upon UCAR's Board of Directors prior to commencing the
lawsuit and to sufficiently allege that such a demand would have been futile. In
response to the motion, plaintiff requested and obtained court permission to
file an amended complaint. The amended complaint was served in July 1998. In
August 1998, UCAR and the individual defendants moved to dismiss the complaint
on the same grounds. The motion has been fully briefed.
This lawsuit is still in its early stages. This lawsuit is being pursued
for recovery from the individual defendants on behalf of (and payable to) UCAR
and any indemnification obligations which UCAR may have to the individual
defendants would result from judgments or settlements in favor of UCAR. As a
result, we believe that UCAR's ultimate exposure in this lawsuit is limited to
expenses, including defense costs, and possibly reimbursement of certain
plaintiff's attorneys' fees and expenses.
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SECURITIES CLASS ACTION LAWSUIT. In April and May 1998, UCAR was served
with complaints commencing securities class actions in the United States
District Court for the District of Connecticut. The complaints have been
consolidated into a single lawsuit entitled IN RE: UCAR INTERNATIONAL INC.
SECURITIES LITIGATION and the Florida State Board of Administration has been
designated as lead plaintiff (without prejudice to defendants' right to contest
such designation on the basis that such plaintiff would not be an adequate class
representative). A consolidated amended complaint was served in September 1998.
The defendants named in the consolidated amended complaint are UCAR and each of
Messrs. Krass, Hart, Mancino, Wiemels, Wolf, Hutchins, Lipson, Peterson and
Schwarzman. The proposed class consists of all persons (other than the
defendants) who purchased common stock during the period from August 1995
through March 1998.
In the consolidated amended complaint, the plaintiffs allege that, during
such period, the defendants violated U.S. federal securities laws in connection
with purchases and sales of common stock by making material misrepresentations
and omissions regarding alleged violations of antitrust laws. The plaintiffs
seek, among other things, to recover damages resulting from such alleged
violations. UCAR and each of the individual defendants has filed a motion to
dismiss the consolidated amended complaint.
This lawsuit is still in its early stages and no evaluation of liability or
exposure related to this lawsuit can yet be made. As mentioned above, the guilty
pleas make it more difficult for UCAR to defend against claims asserted against
it.
OTHER PROCEEDINGS. We are involved in various other legal proceedings
incidental to the conduct of our business. While it is not possible to determine
the ultimate disposition of each of these other proceedings, we believe that the
ultimate disposition of these other proceedings will not have a material adverse
effect on us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The common stock is listed on the NYSE under the trading symbol "UCR." The
closing sale price of the common stock was $17 13/16 on December 31, 1998, the
last trading day of our last fiscal year. The following table sets forth, for
the periods indicated, the high and low closing sales prices for the common
stock as reported by the NYSE:
HIGH LOW
1997: ---- ---
First Quarter......................... $45 $36 7/8
Second Quarter........................ $49 1/8 $38
Third Quarter......................... $48 11/16 $42 1/2
Fourth Quarter........................ $50 1/4 $36 13/16
1998:
First Quarter......................... $41 1/4 $27 1/2
Second Quarter........................ $35 1/8 $29
Third Quarter......................... $30 5/8 $12 1/4
Fourth Quarter........................ $20 7/16 $14 5/8
As of March 1, 1999, there were 72 record holders of common stock. We
estimate that about 4,000 stockholders are represented by nominees.
The common stock is included in Standard & Poor's 400 Mid-Cap Index.
Effective August 7, 1998, UCAR adopted a Stockholder Rights Plan (the
"RIGHTS PLAN"). Under the Rights Plan, one preferred stock purchase right (a
"RIGHT") was distributed on September 21, 1998 to stockholders of record on
August 20, 1998 as a dividend on each share of common stock outstanding on the
record date. Each share of common stock issued after the record date is
accompanied by a Right.
When a Right becomes exercisable, it entitles the holder to buy one
one-thousandth of a share of a new series of preferred stock for $110. The
Rights are subject to adjustment upon the occurrence of certain dilutive events.
The Rights will become exercisable only when a person or group becomes the
beneficial owner of 15% or more of the outstanding shares of common stock or 10
days after a person or group announces a tender offer to acquire beneficial
ownership of 15% or more of the outstanding shares of common stock. No
certificates representing the Rights will be issued, and the Rights are not
transferable separately from the common stock, unless the Rights become
exercisable.
Under certain circumstances, holders of Rights, except a person or group
described above and certain related parties, will be entitled to purchase shares
36
<PAGE>
of common stock (or, in certain circumstances, other securities or assets) at
50% of the price at which the common stock traded prior to the acquisition or
announcement (or 50% of the value of such other securities or assets). In
addition, if UCAR is acquired after the Rights become exercisable, the Rights
will entitle those holders to buy the acquiring company's common shares at a
similar discount.
UCAR is entitled to redeem the Rights for one cent per Right prior to the
time when the Rights become exercisable. If not redeemed, the Rights will expire
on August 7, 2008. For stockholders who owned more than 15% of the outstanding
shares of common stock on August 7, 1998, the thresholds described above are
22.5% (and not 15%) of the outstanding shares of common stock.
The preferred stock issuable upon exercise of Rights consists of Series A
Junior Participating Preferred Stock, par value $.01 per share, of UCAR. In
general, each share of that preferred stock will be entitled to a minimum
preferential quarterly dividend payment equal to the greater of $10 per share or
1,000 times the quarterly dividend declared on the common stock, will be
entitled to a liquidation preference of $110,000 and will have 1,000 votes,
voting together with the common stock.
DIVIDEND AND STOCK REPURCHASE POLICIES AND RESTRICTIONS
It is the current policy of UCAR's Board of Directors to retain earnings to
finance plans and operations, fund acquisitions, meet obligations and repay
debt. Any declaration and payment of cash dividends or repurchases of common
stock will be subject to the discretion of UCAR's Board of Directors and will be
dependent upon our financial condition, results of operations, cash requirements
and future prospects, the limitations contained in the Senior Bank Facilities
and the Subordinated Note Indenture and other factors deemed relevant by UCAR's
Board of Directors. We do not anticipate paying any cash dividends (or
repurchasing any material amount of common stock) in the near term.
UCAR is a holding company that derives substantially all of its cash flow
from UCAR Global. Consequently, UCAR's ability to pay dividends or repurchase
common stock is dependent upon the earnings of UCAR Global and its subsidiaries
and the distribution of those earnings by UCAR Global to UCAR.
Under the Senior Bank Facilities, UCAR is permitted to pay dividends on and
repurchase common stock, and UCAR Global is permitted to pay dividends to UCAR
for those purposes, only in an aggregate amount of up to $15 million in 1999 and
$20 million in 2000 and thereafter. We are also permitted to repurchase common
stock from present or former directors, officers or employees in an aggregate
amount of up to the lesser of $5 million per year (with unused amounts permitted
to be carried forward) or $25 million on a cumulative basis since October 19,
1995. In addition, UCAR Global is permitted to pay dividends to UCAR (i) in
respect of UCAR's administrative fees and expenses and (ii) to fund payments in
connection with antitrust investigations, lawsuits and claims and securities and
shareholder derivative lawsuits and claims. The total amount of dividends to
fund those payments, plus the total amount paid on intercompany debt owed to
UCAR for the same purpose, may not exceed $400 million (adjusted for certain
imputed interest expense).
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<PAGE>
The Subordinated Note Indenture restricts the payment of dividends by UCAR
Global to UCAR if (i) at the time of the proposed dividend, Global is unable to
meet certain indebtedness incurrence and income tests or (ii) the total amount
of the dividends paid exceeds specified aggregate limits based on consolidated
net income, net proceeds from asset and stock sales and certain other
transactions. These restrictions are not applicable to dividends paid to UCAR
(i) in respect of UCAR's administrative fees and expenses and (ii) to purchase
common stock held by present or former officers or employees subject to limits
similar to those under the Senior Bank Facilities.
RECENT SALES OF UNREGISTERED SECURITIES
In December 1998 and the first quarter of 1999, UCAR sold an aggregate of
222,909 shares of common stock to certain members of senior management under
executive employee stock purchase programs adopted by UCAR's Board of Directors
in September 1998. The shares were sold for an aggregate of $3,496,260. These
sales were exempt from registration under Section 4(2) of the Securities Act of
1933 because the shares were sold in transactions not involving any public
offering.
ITEM 6. SELECTED FINANCIAL DATA
The following selected annual consolidated financial data (excluding the
"quantity of graphite electrodes sold") have been derived from the Consolidated
Financial Statements at the dates and for the periods indicated, which have been
audited by KPMG LLP as indicated in their reports thereon. The selected
consolidated financial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements at December 31, 1997 and
1998 and for each of the years in the three-year period ended December 31, 1998
and the related notes thereto included elsewhere in this Report.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
(Dollars in millions, except per share data)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Net sales.................................................. $ 758 $ 901 $ 948 $ 1,097 $ 947
Gross profit............................................... 243 345 365 411 343
Selling, administrative and other expenses............... 79 115 90 115 103
Restructuring charges(a)................................... - 30 - - 86
Impairment loss on Russian assets.......................... - - - - 60
Antitrust investigations
and related lawsuits and claims(b).................. - - - 340 -
Operating profit (loss).................................... 162 189 268 (58) 77
Interest expense........................................... 19 93 61 64 73
Income (loss) before extraordinary item.................... 100 25 145 (160) (30)
Extraordinary item, net of tax(c).......................... - 37 - - 7
Net income (loss).......................................... 100 (12) 145 (160) (37)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
(Dollars in millions, except per share data)
Earnings (loss) per common share:
<S> <C> <C> <C> <C> <C>
Basic: Income (loss) before
extraordinary item............................... $2.77 $0.55 $3.15 $(3.49) $(0.66)
Net income (loss).................................. $2.77 $(0.26) $3.15 $(3.49) $(0.83)
===== ====== ===== ====== ======
Weighted average common shares
outstanding (in thousands)(d).................... 35,840 45,960 46,274 45,963 44,972
Diluted: Income (loss) before extraordinary
item......................................... $2.77 $0.52 $3.00 $(3.49) $(0.66)
Net income (loss).................................. $2.77 $(0.24) $3.00 $(3.49) $(0.83)
===== ====== ===== ====== ======
Weighted average common shares
outstanding (in thousands)(d).................... 35,840 48,763 48,469 45,963 44,972
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
(Dollars in millions, except per share data)
BALANCE SHEET DATA (AT PERIOD END):
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents................................. $ 60 $ 53 $ 95 $ 58 $ 58
Total assets.............................................. 818 904 1,017 1,262 1,137
Total debt................................................ 247 668 635 732 804
Stockholders' equity (deficit)............................ 218 (141) 17 (227) (287)
Working capital........................................... 235 215 263 94 203
OTHER DATA:
Gross profit margin...................................... 32.1% 38.3% 38.5% 37.5% 36.2%
Operating profit (loss) margin........................... 21.4 21.0 28.3 (5.3) 8.1
Depreciation and amortization............................ $ 39 $ 38 $ 36 $ 49 $ 51
Capital expenditures..................................... 34 65 62 79 52
EBITDA (adjusted for non-cash
restructuring charges and
impairment loss) (e)................................... 201 249 304 (9) 217
Cash flow provided by (used in) operations............ 174 130 172 172 (29)
Cash flow used in investing.............................. (56) (116) (104) (221) (31)
Quantity of graphite electrodes sold
(thousands of metric tons) (f)(g).................. 196 217 205 242 211
</TABLE>
- --------------------------
(a) For 1995, represents costs recorded in connection with closing of graphite
electrode operations at Columbia, Tennessee. These costs consisted primarily
of write-offs of fixed assets and other shut down costs. For 1998,
represents costs recorded in connection with closing graphite electrode
operations in Welland, Canada and Berlin, Germany and the consolidation of
certain corporate administrative offices. These costs consisted primarily of
severance, write-offs of fixed assets, environmental and other shut down
costs.
(b) Represents estimated potential liabilities and expenses in connection with
antitrust investigations and related lawsuits and claims.
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<PAGE>
(c) The 1995 extraordinary item resulted from early extinguishment of debt in
connection with a redemption of Subordinated Notes and a refinancing of bank
credit facilities. The 1998 extraordinary item resulted from early
extinguishment of debt in connection with the refinancing of the Senior Bank
Facilities.
(d) In 1994, reflects common shares outstanding prior to our initial public
offering, adjusted for the effects of the January 26, 1995 and August 3,
1995 stock splits. In 1995 and all other years thereafter, reflects common
shares and potential common shares outstanding after our initial public
offering, including potential common shares calculated in accordance with
the "treasury stock method," wherein the net proceeds from the exercise of
potential common shares are assumed to be used to repurchase common shares
at the average closing price for such year.
(e) EBITDA, for this purpose, means operating profit (loss), plus depreciation,
amortization, impairment loss and the portion of restructuring charges
applicable to non-cash asset write-offs. The amount of restructuring charges
applicable to non-cash asset write-offs was $22 million for 1995 and $29
million for 1998. We believe that EBITDA is generally accepted as providing
useful information regarding a company's ability to service and incur debt.
EBITDA should not be considered in isolation or as a substitute for net
income, cash flows from continuing operations or other consolidated income
or cash flow data prepared in accordance with generally accepted accounting
principles or as a measure of a company's profitability or liquidity. This
method for calculating EBITDA may not be comparable to other companies.
(f) Excludes graphite electrodes sold by our South African subsidiary, before it
became wholly owned on April 21, 1997, of 24,000 metric tons in 1994, 27,000
metric tons in 1995, 26,000 metric tons in 1996 and 8,000 metric tons in
1997.
(g) The quantity of graphite electrodes sold in the first quarter of 1994 was
impacted by customer buy-ins during the fourth quarter of 1993 in advance of
price increases effective in January 1994 and the quantity of graphite
electrodes sold in the fourth quarter of 1997 was impacted by customer
buy-ins in advance of price increases effective in January 1998.
The following quarterly selected consolidated financial data have been
derived from the Consolidated Financial Statements for the periods indicated,
which have not been audited. The selected quarterly consolidated financial data
set forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements at December 31, 1997 and 1998 and for each of the years in
the three-year period ended December 31, 1998 and the related notes thereto
included elsewhere in this Report.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(Dollars in millions, except per share data)
1997:
<S> <C> <C> <C> <C>
Net sales...................................... $ 238 $ 290 $ 278 $ 291
Gross profit................................... 88 110 104 109
Net income (loss)(a)........................... 37 42 37 (276)
Basic net income (loss) per share.............. $0.79 $0.93 $0.80 $(6.07)
Diluted net income (loss) per share............ $0.76 $0.89 $0.77 $(6.07)
1998:
Net sales...................................... $ 244 $ 248 $ 233 $ 222
Gross profit................................... 93 96 82 72
Net income (loss)(b)(c)........................ 35 31 (113) 10
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Basic income (loss) per share before
extraordinary item............................ $0.77 $0.70 $(2.51) $0.39
Basic net income (loss) per share.............. $0.77 $0.70 $(2.51) $0.22
===== ===== ====== =====
Diluted income (loss) per share before
extraordinary item............................ $0.74 $0.67 $(2.51) $0.38
Diluted net income (loss) per share........... $0.74 $0.67 $(2.51) $0.22
===== ===== ====== =====
</TABLE>
- ----------------
(a) Includes a charge of $2 million ($1 million after tax) in the third quarter
of 1997 and $338 million ($309 million after tax) in the fourth quarter of
1997 associated with estimated potential liabilities and expenses in
connection with antitrust investigations and related lawsuits and claims.
(b) The third quarter of 1998 includes a restructuring charge of $86 million
($77 million after tax) recorded in connection with closing graphite
electrode operations in Welland, Canada and Berlin, Germany and the
consolidation of certain administrative offices and an impairment loss of
$60 million ($58 million after tax) associated with our Russian operations.
(c) The 1998 fourth quarter includes an extraordinary charge of $11 million ($7
million after tax) associated with early extinguishment of debt.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
COMPANY BACKGROUND. In 1995, UCAR International Inc. ("UCAR" and, together
with its subsidiaries, the "UCAR GROUP," "WE" or "US") consummated a leveraged
recapitalization (the "RECAPITALIZATION"), an initial public offering of common
stock, a redemption of a portion of the subordinated notes (the "SUBORDINATED
NOTES") issued in connection with the Recapitalization and a refinancing of the
bank credit facilities established in connection with the Recapitalization with
new senior secured bank credit facilities (the "SENIOR BANK FACILITIES").
In 1995 and 1996, we acquired substantially all of the shares of our
Brazilian subsidiary owned by public shareholders in Brazil. In late 1996, 1997
and early 1998, we acquired substantially all of the equity of our Russian
subsidiary. In 1997, we acquired 70% of the equity of Carbone Savoie S.A.S.
("CARBONE SAVOIE"). We also acquired, through a newly formed 70%-owned German
subsidiary, the graphite electrode business of Elektrokohle Lichtenberg AG in
Germany. In addition, we acquired the outstanding shares of our South African
subsidiary held by our former 50%-joint venture partner in South Africa. These
acquisitions were accounted for as purchases.
In 1997, we refinanced the Senior Bank Facilities and repurchased $92
million of common stock. We also undertook, with the assistance of consultants,
various projects to integrate global operations. We estimate that costs
associated with these projects will aggregate $18 million over a two-year period
ending mid-1999. We also estimate that, under current conditions, these projects
will have a pay-back period of two years ending in 2000. Additionally, in 1997,
UCAR's Board of Directors accelerated the vesting of outstanding performance
stock options associated with 1998 performance targets which resulted in a
non-cash charge of $12 million.
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<PAGE>
GLOBAL RESTRUCTURING AND RATIONALIZATION PLAN. In September 1998, UCAR's
Board of Directors adopted a global restructuring and rationalization plan. The
plan is intended to enhance stockholder value by focusing on optimizing margins,
maximizing cash flow, generating growth in earnings and strengthening
competitiveness through operating and overhead cost reduction and plant
rationalization. The plan is also intended, over the long term, to strengthen
our position as a low cost producer supplying the steel and metals industries
and, over the near term, to respond to global economic conditions that are
adversely impacting our customers.
We believe that, under current conditions, the plan will have a positive
impact on earnings in the second half of 1999. We estimate that the plan will
generate permanent annual cost savings at a rate of about $80 million by the end
of 1999, $111 million by the end of 2000 and $135 million by the end of 2001 and
thereafter, reduce working capital needs and improve efficiencies. We anticipate
achieving about $64 million of savings in 1999.
The plan resulted in a 1998 third quarter restructuring charge of $86
million ($77 million after income tax). The restructuring charge includes $47
million for asset write-offs and related shut down costs, $30 million for
employee severance and related benefit costs, and $9 million for postmonitoring
and environmental clean-up costs. The plan also included the rationalization and
downsizing of our Russian operations and we recorded an impairment loss on
long-lived Russian assets of $60 million.
The key elements of the plan consist of:
o Rationalization of manufacturing operations, including closure of higher
cost operations in Germany and Canada and downsizing of operations in
Russia. We are reducing our annual graphite electrode manufacturing capacity
by about 11%, or 30,000 metric tons. Our German operation manufactured
"green" electrodes and had about 70 employees. Our Canadian operation
manufactures graphite electrodes (with annual capacity of 23,000 metric
tons) and carbon and graphite cathodes. It has about 280 employees. Cathodes
will continue to be manufactured in North America at our manufacturing
facility in Columbia, Tennessee. Our Russian operation will have its annual
graphite electrode manufacturing capacity reduced to 10,000 metric tons from
17,000 metric tons. The closures and downsizing are expected to generate
annual cost savings of about $24 million in 1999, $33 million in 2000 and
$35 million in 2001 and thereafter.
o Centralization and consolidation of administrative functions, including
relocation of our corporate headquarters to Nashville, Tennessee and
centralization of our European administrative activities in Lausanne,
Switzerland, on a cost center basis. This includes the consolidation of
finance and administrative functions, including accounting, treasury,
information systems, accounts receivable/payable, purchasing and human
resources, along with targeted outsourcing, to gain efficiencies. Our new
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<PAGE>
corporate headquarters in Nashville will be centrally located near our
facilities in Clarksville, Columbia and Lawrenceburg, Tennessee. We believe
that this centralization and consolidation will generate annual savings in
total overhead (selling, administrative and other expense, research and
development, and other expense (net)) of about $16 million in 1999, $26
million in 2000 and $30 million in 2001 and thereafter. We also believe that
this centralization and consolidation will contribute to permanently
reducing our effective annual income tax rate, which we believe will
generate tax savings of about $3 million in 1999, $5 million in 2000 and $6
million in 2001.
o Implementation of more than 150 identified projects to reduce cost and
improve operating efficiencies. We believe that these projects will yield
annual savings of about $37 million in 1999, $46 million in 2000 and $47
million in 2001 and thereafter, after initial capital expenditures of about
$24 million. These projects relate to such areas as energy conservation, raw
material substitution, yield improvement, reduction in labor by automation,
maintenance savings and reduction in plant administration.
This plan is expected to result in improved cash flow from operations. If
this cash flow is used to reduce debt, it would result in interest savings of
about $1 million by year 2000 and $17 million by year 2001.
As part of the plan, we are seeking to divest or joint venture all or part
of our graphite and carbon specialties business (which is part of our graphite
and carbon products segment) on acceptable terms. No assurance can be given that
any divestiture or joint venture will be completed or as to timing or terms of
any such transaction.
REFINANCING. In November 1998, the Senior Bank Facilities were refinanced
and the indenture governing the Subordinated Notes (the "SUBORDINATED NOTE
INDENTURE") was amended. In connection with the refinancing, we obtained
additional term debt of $210 million.
Following the refinancing, the covenants under the Senior Bank Facilities
are more restrictive than they had been prior to the time when we recorded the
$340 million charge described below. The covenants do, however, allow us to
implement our global restructuring and rationalization plan. Further, the
covenants do not restrict our ability to draw on our revolving credit facility
unless payments and reserves with respect to the litigation matters described
below exceed $400 million (adjusted for certain imputed interest expense).
LITIGATION MATTERS. Since 1997, we have been served with subpoenas, search
warrants and information requests by antitrust authorities in the United States
and elsewhere in connection with investigations as to whether there has been any
violation of antitrust laws by producers of graphite electrodes. In addition,
antitrust class action and other civil lawsuits have been commenced and
threatened against us and other producers of graphite electrodes in the United
States and elsewhere. We recorded a charge against results of operations for
1997 in the amount of $340 million as a reserve for estimated potential
liabilities and expenses in connection with antitrust investigations and related
lawsuits and claims. UCAR has also been named as a nominal defendant in a
shareholder derivative lawsuit and is a defendant in a securities class action
lawsuit, each of which is based, in part, on the subject matter of the antitrust
investigations, lawsuits and claims. It is possible that antitrust
investigations in other jurisdictions and additional civil lawsuits could be
commenced.
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<PAGE>
In April 1998, pursuant to a plea agreement with the Antitrust Division of
the United States Department of Justice (the "DOJ"), UCAR pled guilty to a
one-count charge of violating U.S. federal antitrust laws in connection with the
sale of graphite electrodes and was sentenced to pay a non-interest-bearing fine
in the aggregate amount of $110 million, payable in six annual installments. In
March 1999, pursuant to a plea agreement with the Canadian Competition Bureau,
our Canadian subsidiary pled guilty to a one-count charge of violating Canadian
antitrust laws in connection with the sale of graphite electrodes and was
sentenced to pay a fine of Cdn.$11 million. The guilty pleas have made it more
difficult to defend against other investigations, lawsuits and claims. Through
March 25, 1999, we have settled virtually all of the actual and potential
graphite electrode antitrust claims by steelmakers in the United States and
Canada as well as antitrust claims by certain other steelmakers. In the
aggregate, the fines and settlements are within the amounts we used for purposes
of evaluating the $340 million charge. Actual liabilities and expenses could be
materially higher than such charge. We do not believe that the outcome of the
shareholder derivative lawsuit will have a material adverse effect on us. The
securities class action is still in its early stages and no evaluation of
potential liability can yet be made.
GLOBAL ECONOMIC CONDITIONS. We are a global company and serve every
geographic market worldwide. Accordingly, we are always impacted in varying
degrees, both positively and negatively, as country or regional conditions
affecting the markets for our products fluctuate.
In 1996, most of the markets for our products were experiencing strong
demand. The markets for graphite electrodes and certain of our other products in
Western Europe were, however, experiencing weaker demand due to a regional
economic downturn. In the aggregate, these circumstances positively impacted our
results of operations for 1996.
In 1997, the markets for our products in Western Europe began to experience
stronger demand as that region began to recover from its economic downturn.
Conversely, an economic downturn began in the Asia Pacific region. This downturn
did not, however, materially affect the markets for our products until 1998.
In 1998, the economic downturn in the Asia Pacific region directly or
indirectly affected most of the worldwide markets for our products. This
downturn has directly affected demand for steel and other metals in the Asia
Pacific region. To the extent that certain regions (such as Eastern Europe,
Africa, South America and the Middle East) were major exporters of steel and
other metals to the Asia Pacific region, this downturn has also affected demand
for their products. In some instances, those exporters have sought to sell their
products in other regions (such as North America and Western Europe), thereby
adversely affecting demand for steel and other metals produced in those other
regions. All of these factors have resulted in a reduction in global demand for
and production of steel and other metals. As a result, our customers have sought
to reduce their inventories of supplies (such as inventories of electrodes) as
well as reduce their production rates. All of these circumstances have adversely
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affected demand for graphite electrodes and some of our other products. We also
experienced downward pressure in certain markets on pricing of graphite
electrodes and some of our other products beginning in early 1998. These
circumstances negatively impacted our results of operations in 1998.
While we have seen some signs of a possible improvement, that improvement
has not yet materialized. In addition, in light of typical order patterns for
graphite electrodes, we do not expect an improvement until the second half of
1999.
We cannot predict the timing or extent of changes in future global economic
conditions. If, however, global economic conditions in the future over the long
term are similar to those of the past two decades, we believe that worldwide
production of steel in electric arc furnaces will continue to grow over the long
term at its historical compound average annual growth rate of 4% and that, as a
result, worldwide demand for graphite electrodes will grow over the long term at
an average rate of 1% to 2%.
CURRENCY MATTERS. We sell our products in more than 80 countries in
multiple currencies. The prices for our products in each currency are based on
evaluations of the relevant exchange rates, the relationship among all of our
prices in the various relevant currencies, and competitive and other factors.
Price increases or discounts are instituted when, as and if local conditions
permit or require. The impact on net sales of any price increase or discount in
foreign currencies can be mitigated or exaggerated by changes in currency
exchange rates. We enter into hedging transactions to reduce our exposure to
changes in currency exchange rates.
While most of our sales are made to customers in markets where local
currencies are readily convertible into U.S. dollars, we make sales to customers
in other markets, particularly countries in Eastern Europe, the Middle East and
the Asia Pacific region. When we deem it appropriate, the terms of sale to
customers in these markets require payment in U.S. dollars, deutsche marks or
yen and may additionally require prepayment or delivery of a bank letter of
credit or equivalent security for payment.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items in
the Consolidated Statements of Operations and the increase or decrease
(expressed as a percentage of such item in the comparable prior period) of such
items:
45
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<TABLE>
<CAPTION>
PERCENTAGE
FOR THE YEAR ENDED INCREASE
DECEMBER 31, (DECREASE)
------------ ----------
1996 TO 1997 TO
1996 1997 1998 1997 1998
---- ---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Net sales....................................... $948 $1,097 $947 16% (14)%
Cost of sales................................... 583 686 604 18 (12)
---- ------- ----- -- ----
Gross profit.................................... 365 411 343 13 (17)
Selling, administrative and other expenses...... 90 115 103 28 (10)
Restructuring charges........................... -- -- 86 N/M N/M
Impairment loss on Russian assets............... -- -- 60 N/M N/M
Antitrust investigations
and related lawsuits and claims............ -- 340 -- N/M N/M
Operating profit (loss)......................... 268 (58) 77 N/M N/M
</TABLE>
- ----------------------
N/M: Not Meaningful
The following table sets forth, for the periods indicated, the percentage
of net sales represented by certain items in the Consolidated Statements of
Operations:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Net sales.................................................. 100.0% 100.0% 100.0%
Cost of sales.............................................. 61.5 62.5 63.8
----- ----- -----
Gross profit............................................... 38.5 37.5 36.2
Selling, administrative and other expenses................. 9.5 10.5 10.9
Restructuring charges...................................... -- -- 9.1
Impairment loss on Russian assets.......................... -- -- 6.3
Antitrust investigations
and related lawsuits and claims....................... -- 31.0 --
Operating profit (loss).................................... 28.3 (5.3) 8.1
</TABLE>
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The following table sets forth, for the periods indicated, certain items in
the Consolidated Statements of Operations and certain information as to gross
profit margins related to our business segments:
<TABLE>
<CAPTION>
GRAPHITE AND CARBON
GRAPHITE ELECTRODE PRODUCTS BUSINESS
SEGMENT SEGMENT
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------ ------------
(Dollars in millions) (Dollars in millions)
1996 1997 1998 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales..................................... $696 $788 $652 $252 $309 $295
Cost of sales................................. 412 479 405 171 207 199
------ ------ ---- ----- ----- -----
Gross profit.................................. 284 309 247 81 102 96
Gross profit margin........................... 40.8% 39.2% 37.9% 32.1% 33.0% 32.5%
</TABLE>
1998 COMPARED TO 1997. Net sales in 1998 were $947 million, a decrease of
$150 million, or 14%, from net sales in 1997 of $1,097 million. Gross profit in
1998 was $343 million, a decrease of $68 million, or 17%, from gross profit in
1997 of $411 million. Gross profit margin in 1998 was 36.2% of net sales as
compared to gross profit margin in 1997 of 37.5% of net sales. These changes
were due primarily to changes in global economic conditions which reduced demand
for steel and other metals. This, in turn, reduced demand for most of our
products, particularly graphite electrodes.
GRAPHITE ELECTRODE BUSINESS SEGMENT. Net sales in 1998 were $652 million, a
decline of $136 million, or 17%, from net sales in 1997 of $788 million. The
majority of this decline, about $98 million, was due to lower volume of graphite
electrodes sold. Our volume of graphite electrodes sold declined 31,000 metric
tons to 211,000 metric tons in 1998 from 242,000 metric tons in 1997. The
average selling price (in U.S. dollars and net of changes in currency exchange
rates) declined $110 per metric ton to $3,013 per metric ton in 1998 from $3,123
per metric ton in 1997. The reduction in selling price was primarily due to the
stronger dollar in relation to the other currencies in which we sell graphite
electrodes. The adverse impact of the currency translation was about $34 million
in 1998.
Cost of sales declined $74 million, or 15%, to $405 million in 1998 from
$479 million in 1997. The reduction was due primarily to lower volume of
graphite electrodes sold. This decline in volume adversely affected our capacity
utilization rate, which typically has the effect of increasing cost of sales per
metric ton sold since the same fixed costs must be absorbed by a smaller
quantity of products.
As a result of the changes described above, gross profit declined $62
million, or 20%, to $247 million in 1998 from $309 million in 1997 and gross
profit margin decreased to 37.9% of net sales in 1998 from 39.2% of net sales in
1997.
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GRAPHITE AND CARBON PRODUCTS BUSINESS SEGMENT. Net sales in 1998 were $295
million, a decline of $14 million, or 5%, from net sales in 1997 of $309
million. The majority of this decline, about $13 million, was due to lower
volume of carbon refractories sold. Carbon refractories are used primarily as
lining for blast furnaces. Blast furnace linings last for several years and
demand for refractories fluctuates based on the cycle for lining replacements.
In addition, net sales of graphite specialties declined $7 million due to lower
demand from the semi-conductor, aerospace and aircraft industries. Net sales of
carbon electrodes declined $5 million due to lower volume of carbon electrodes
sold as a result of lower demand for silicon metals. These decreases were
partially offset by a $9 million increase in net sales of cathodes. This
increase was due to increased volume and prices of cathodes sold as a result of
increases in aluminum production and increases in demand for graphite cathodes
in lieu of carbon cathodes in certain smelting furnace relinings.
Cost of sales declined $8 million, or 4%, to $199 million in 1998 from $207
million in 1997. The decline was due primarily to lower overall volume of
products sold and, to a lesser extent, changes in product mix.
As a result of the changes described above, gross profit declined $6
million, or 6%, to $96 million in 1998 from $102 million in 1997 and gross
profit margin declined to 32.5% of net sales in 1998 from 33.0% of net sales in
1997.
OPERATING PROFIT FOR THE UCAR GROUP. Operating profit in 1998 was $77
million as compared to an operating loss in 1997 of $58 million.
Operating profit in 1998 was impacted primarily by restructuring charges of
$86 million and impairment loss on Russian assets of $60 million.
Operating profit in 1997 was impacted primarily by a charge of $340 million
for estimated potential liabilities and expenses in connection with antitrust
investigations and related lawsuits and claims.
Excluding those charges and impairment loss, operating profit would have
been $223 million in 1998 as compared to $282 million in 1997, a decrease of $59
million. In addition, operating profit as a percentage of net sales would have
been 24% in 1998 as compared to 26% in 1997. Excluding those charges and
impairment loss, the change in operating profit was primarily due to decreases
in gross profit.
Selling, administrative and other expenses decreased $12 million, or 10%,
to $103 million in 1998 from $115 million in 1997. The decrease was due to the
non-cash charge for accelerated vesting of outstanding performance stock options
of $12 million in 1997 which did not recur in 1998.
Other expense (net) was $8 million in 1998 as compared to $5 million in
1997. The increase was primarily due to consulting fees associated with projects
that we undertook to improve operating efficiency, integrate worldwide
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operations and generate earnings growth. These fees totaled $9 million in 1998
as compared to $4 million in 1997. Interest income increased to $14 million in
1998 from $9 million in 1997, primarily because of higher average investment
levels in Brazil.
OTHER ITEMS AFFECTING THE UCAR GROUP. Interest expense increased to $73
million in 1998 from $64 million in 1997. In 1998, the average outstanding total
debt balance was $783 million and the average annual interest rate was 8.8%
inclusive of imputed interest of $5 million on the non-interest-bearing $110
million antitrust fine payable to the DOJ in six annual installments. In 1997,
the average outstanding total debt balance was $726 million and the average
annual interest rate was 8.9%. We incurred additional debt to finance a portion
of the fines and settlements paid in connection with the antitrust
investigations and related lawsuits and claims.
Provision for income taxes was $32 million in 1998 as compared to $39
million in 1997. In 1998, the provision for income taxes was significantly
higher than the amount computed by applying the United States federal income tax
rate primarily due to the non-deductibility of the impairment loss, imputed
interest expense associated with the antitrust fine, limited deductibility of
certain antitrust settlements, foreign losses resulting from the restructuring
charge which provided no tax benefit, other taxes related to the restructuring
charge, and the generation of excess foreign tax credits where we consider
utilization unlikely. This was partially offset by foreign earnings taxed at
lower rates.
1997 COMPARED TO 1996. Net sales in 1997 were $1,097 million, an increase
of $149 million, or 16%, from net sales in 1996 of $948 million. Gross profit in
1997 was $411 million, an increase of $46 million, or 13%, from gross profit in
1996 of $365 million. Gross profit margin in 1997 was 37.5% of net sales as
compared to gross profit margin in 1996 of 38.5% of net sales.
The increase in net sales and gross margin was primarily attributable to
the acquisitions of Carbone Savoie and our Russian, German and South African
subsidiaries (sometimes called the "ACQUIRED COMPANIES") in late 1996 and early
1997. The acquired companies added $140 million of the $149 million increase in
net sales, after taking into account inter-company sales to them which would
have been classified as third party sales prior to their respective
acquisitions. These inter-company sales include sales of raw material, which
were reduced by $13 million in 1997. The decrease in gross profit margin in 1997
as compared to 1996 was primarily due to our acquisitions of Carbone Savoie and
our Russian and German subsidiaries, which have lower gross profit margins than
our other subsidiaries.
GRAPHITE ELECTRODE BUSINESS SEGMENT. Net sales in 1997 were $788 million,
an increase of $92 million, or 13%, from net sales in 1996 of $696 million. The
increase was primarily attributable to the acquired companies. Our volume of
graphite electrodes sold in 1997 was 242,000 metric tons. Excluding the acquired
companies, the volume of graphite electrodes sold increased 10,000 metric tons,
or 5%, to 215,000 metric tons in 1997 from 205,000 metric tons in 1996, which
added $31 million of net sales in 1997. This increase of 10,000 metric tons in
the volume of graphite electrodes sold was primarily due to the economic
recovery in Western Europe, purchases by certain customers in advance of
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<PAGE>
announced price increases effective January 1, 1998, or "customer buy-ins," and
increased export shipments to the Asia Pacific and Middle East regions.
Excluding the acquired companies, increases in the average selling price (in
U.S. dollars and net of changes in currency exchange rates) added about $38
million to net sales in 1997. The Western European currencies weakened
considerably in 1997 against the U.S. dollar. Accordingly, these price increases
were more than offset by the negative impact of currency translation on net
sales of graphite electrodes, which amounted to about $43 million.
Costs of sales increased $67 million, or 16%, to $479 million in 1997 from
$412 million in 1996. This increase was primarily due to the increase in volume
of graphite electrodes sold. In addition, higher raw material costs and normal
inflation in other costs were offset by cost reduction projects. Further, higher
than anticipated costs related to our Russian subsidiary increased overall costs
of sales.
As a result of the changes described above, gross profit was $309 million,
or 39.2% of net sales, in 1997 as compared to $284 million, or 40.8% of net
sales, in 1996.
GRAPHITE AND CARBON PRODUCTS BUSINESS SEGMENT. Net sales in 1997 were $309
million, an increase of $57 million, or 23%, from net sales of $252 million in
1996. The increase in net sales was primarily attributable to the acquired
companies, which added net sales of $71 million after taking into account
inter-company sales to the acquired companies which would have been classified
as third party sales prior to their respective acquisitions. Excluding the
acquired companies, our non-graphite electrode businesses remained relatively
stable on a combined basis in 1997 as compared to 1996. A decline in volume of
carbon electrodes and graphite specialties sold was offset by an increase in
volume and prices of carbon refractories sold and a slight increase in net sales
of flexible graphite.
Cost of sales increased $36 million, or 21%, to $207 million in 1997 from
$171 million in 1996. This increase was primarily due to the increase in volume
of products sold. Higher unit cost of sales of the acquired companies and higher
raw material costs were more than offset by cost improvement projects and
changes in product mix.
Gross profit was $102 million, or 33.0% of net sales, in 1997, up from $81
million, or 32.1% of net sales, in 1996.
OPERATING LOSS FOR THE UCAR GROUP. Operating loss in 1997 was $58 million,
a decrease of $326 million from operating profit of $268 million (28.3% of net
sales) in 1996. Operating profit in 1997 was primarily impacted by a $340
million charge for estimated potential liabilities and expenses in connection
with antitrust investigations and related lawsuits and claims, a $12 million
non-cash charge for the accelerated vesting of outstanding performance stock
options and $4 million of consulting fees associated with projects that we
undertook to improve operating efficiency, integrate worldwide operations and
generate earnings growth. Excluding the $340 million charge, operating profit
would have been $282 million (25.7% of net sales) in 1997.
Selling, administrative and other expenses were $115 million in 1997, an
increase of $25 million, or 27.8%, from $90 million in 1996. Selling,
administrative and other expenses in 1997 included the $12 million non-cash
50
<PAGE>
charge for the accelerated vesting of outstanding performance stock options.
Additionally, the acquired companies had selling, administrative and other
expenses amounting to $16 million in 1997.
Other income or expense (net) was expense of $5 million in 1997 as compared
to income of $1 million in 1996. The change resulted primarily from $4 million
of consulting fees associated with projects that we undertook to improve
operating efficiency, integrate worldwide operations and generate earnings
growth.
OTHER ITEMS AFFECTING THE UCAR GROUP. Interest expense increased to $64
million in 1997 from $61 million in 1996. In 1997, the average outstanding total
debt balance was $726 million and the average annual interest rate was 8.9% as
compared to an average outstanding total debt balance of $643 million and an
average annual interest rate of 9.4% in 1996. The decline in the average annual
interest rate was primarily attributable to decreases in interest rates
resulting from the amendment of the Senior Bank Facilities in March 1997. The
increase in outstanding debt resulted primarily from $124 million of investments
in acquisitions, $92 million for repurchase of common stock and $79 million for
capital expenditures, offset by net cash flow from operations of $172 million.
Provision for income taxes was $39 million in 1997 as compared to $68
million in 1996. In 1997, the provision for income taxes was significantly
higher than the amount computed by applying the United States federal income tax
rate primarily due to the fact that a majority of the charge in connection with
antitrust investigations and related lawsuits and claims will not be deductible.
These increases were offset to a much lesser extent by our tax exemption in
Brazil, tax credits in the United States associated with research and
development expenses and tax benefits recognized in Italy and Spain associated
with capital expenditures and fixed asset revaluations, respectively.
UCAR's share of net income from its company carried at equity was $2
million during the period from January 1, 1997 to April 21, 1997 as compared to
$7 million for all of 1996. In April 1997, we acquired the outstanding shares of
our South African subsidiary held by our former 50%-joint venture partner.
Following the acquisition, our South African subsidiary's results of operations
were consolidated with our results of operations.
EFFECTS OF INFLATION
In general, our cost of sales is affected by the inflation in each country
in which we have a manufacturing facility. During the past three years, the
effects of inflation in the United States and foreign countries (except for
highly inflationary countries) have been offset by a combination of improved
operating efficiency, permanent cost savings and, prior to 1998, increased
prices for graphite electrodes and certain of our other products. Accordingly,
during the past three years, these effects have not been material to us. The
cost of petroleum coke, a principal raw material used by us, and natural gas,
which is used by us in our electrode, cathode and graphite specialties baking
operations, may fluctuate widely for various reasons, including fuel shortages
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and cold weather. Changes in such costs were not material to us during the past
three years. No assurance can be given that future increases in our cost of
sales or other expenses will not exceed the rate of inflation or the amounts, if
any, by which we may be able to increase prices for our products.
We maintain operations in Brazil, Russia and Mexico, countries which have
had in the past, and may have now or in the future, highly inflationary
economies. Accordingly, the financial statements of these foreign operations
have been remeasured as described below as if the functional currencies of their
economic environments were the U.S. dollar.
Prior to January 1, 1998, Brazil was considered to have a highly
inflationary economy. Accordingly, translation gains and losses for our
Brazilian operations were included in the Consolidated Statements of Operations
for 1996 and 1997. Effective January 1, 1998, Brazil was no longer considered to
have a highly inflationary economy. For 1998, unrealized gains and losses
resulting from translating assets and liabilities of our Brazilian operations
into U.S. dollars were accumulated in an equity account in the Consolidated
Balance Sheet. As a result of the devaluation of the Brazilian currency in
January 1999 and changes in the Brazilian inflation rate, it is possible that
Brazil could be considered to have a highly inflationary economy in 1999. This
would result in accounting for translation gains and losses in the same manner
for which they were accounted for in 1996 and 1997.
In light of significant increases in inflation in Mexico, effective since
January 1, 1997, Mexico has been considered to have a highly inflationary
economy. Accordingly, translation gains and losses for our Mexican operations
were included in the Consolidated Statements of Operations for 1997 and 1998.
We have always considered Russia to have a highly inflationary economy.
Accordingly, translation gains and losses for our Russian subsidiary are
included in the Consolidated Statements of Operations for both 1997 and 1998.
EFFECTS OF CHANGES IN CURRENCY EXCHANGE RATES
We produce and sell our products in multiple currencies. As a result, in
general, our results of operations are affected by changes in currency exchange
rates. When the local currencies of foreign countries in which we have a
manufacturing facility decline (or increase) in value relative to the U.S.
dollar, this has the effect of reducing (or increasing) the U.S. dollar
equivalent cost of sales and other expenses with respect to those facilities.
This effect is, however, partially offset by the cost of petroleum coke, a
principal raw material used by us, which is priced in U.S. dollars. We price
products manufactured at our facilities for sale in local and certain export
markets in local currencies. Accordingly, when the local currencies increase (or
decline) in value relative to the U.S. dollar, this has the effect of increasing
(or reducing) net sales. The result of these effects is to increase (or
decrease) operating profit and net income.
During the past three years, many of the currencies in which we manufacture
and sell our products weakened against the U.S. dollar. This adversely affected
our net sales and, to a lesser extent, benefited our cost of sales as reported
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in U.S. dollars. In the case of net sales of graphite electrodes, the adverse
impact was not material in 1996, $43 million in 1997 and $34 million in 1998.
Through early 1998, we sought to mitigate these adverse impacts on net sales by
increasing local currency prices for some of our products in various regions as
circumstances permitted. We have not been able to do so since then. We cannot
predict changes in currency exchange rates in the future or whether those
changes will have positive or negative impacts on our net sales or cost of
sales. No assurance can be given that we would be able to mitigate any adverse
effects of such changes.
To manage certain exposures to general economic and specific financial
market risks caused by changes in currency exchange rates, we engage in hedging
activities and use various off-balance sheet financial instruments. The amount
of currency exchange contracts used by us to minimize these risks was $350
million at December 31, 1996, $353 million at December 31, 1997 and $484 million
at December 31, 1998.
At December 31, 1998, total outstanding U.S. dollar-denominated debt of our
foreign subsidiaries (excluding our Russian and Swiss subsidiaries which used
the U.S. dollar as their functional currency) was $209 million. Changes in the
currency exchange rates between the U.S. dollar and the currencies in the
countries in which these subsidiaries are located result in foreign currency
gains and losses that are reported in other (income) expense (net) in the
Consolidated Statements of Operations. While changes in currency exchange rates
did not materially affect us in the past three years, there can be no assurance
that such changes will not have a material adverse effect on us in the future.
Our foreign subsidiaries with U.S. dollar-denominated debt have entered
into foreign currency contracts to protect against changes in currency exchange
rates. The amount of such contracts was $169 million at December 31, 1996, $214
million at December 31, 1997 and $209 million at December 31, 1998. We believe
that such contracts reduce our exposure to changes in currency exchange rates
related to such borrowings.
Since late 1998, the Brazilian economy has been subject to various economic
pressures. Inflation substantially increased and economic activity began to
decline. In January 1999, the Brazilian currency devalued. These circumstances
may affect other countries in South America. We have manufacturing operations in
Brazil, and these circumstances can be expected to impact us. They may reduce
demand for our products in Brazil or elsewhere in South America. They may also
reduce our costs in Brazil, which are paid in local currency. In addition, they
would increase our gross profit margin, since a significant portion of the sales
of our Brazilian subsidiary are denominated in U.S. dollars. If the devaluation
had occurred on January 1, 1998, we believe that, on a pro forma basis, we would
have had an increase in net income of our Brazilian subsidiary. No assurance can
be given, however, that these circumstances will not adversely affect us.
LIQUIDITY AND CAPITAL RESOURCES
Our sources of funds have consisted principally of: invested capital; cash
flow from operations; and debt financing. Our uses of those funds (other than
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for operations) have consisted principally of: debt reduction; capital
expenditures; in 1997, repurchases of common stock; in 1996 and 1997,
acquisition of controlling interests in new companies or businesses; and, in
1998, payment of fines, liabilities and expenses in connection with antitrust
investigations and related lawsuits and claims.
We are highly leveraged and we have substantial obligations in connection
with antitrust and securities investigations, lawsuits and claims. We had
aggregate outstanding indebtedness of $804 million, aggregate cash, cash
equivalents and short-term investments of $69 million and a stockholders'
deficit of $287 million at December 31, 1998.
OVERVIEW OF DEBT FINANCING. In connection with the Recapitalization, we
obtained senior secured bank credit facilities which provided for borrowings of
up to $685 million, of which $585 million was used at that time. We also issued
$375 million of Subordinated Notes, $175 million of which were redeemed in 1995.
In October 1995, we replaced those bank credit facilities with the Senior
Bank Facilities, which had more favorable interest rates and favorable covenants
and required less collateral. The Senior Bank Facilities initially provided for
borrowings of up to $620 million, of which $520 million was used at that time.
In March 1997, the Senior Bank Facilities were amended to reduce interest
rates, increase our revolving credit facility to $250 million from $100 million
and change certain covenants to allow greater flexibility in uses of free cash
flow for acquisitions, capital expenditures and stock repurchases and other
restricted payments.
In April 1998, we obtained a limited waiver of a breach, if any, of certain
covenants in the Senior Bank Facilities relating to our compliance with laws
prior to March 13, 1998 and our obligation to deliver certain financial
information within 90 days of the end of the prior year. In connection with the
waiver, we agreed to grant to our senior lenders a security interest in
substantially all of our assets. We also agreed to amend certain provisions of
the Senior Bank Facilities. These amendments had the effect of increasing
interest rates paid by us. In addition, in reliance on the waiver, we were able
to borrow an additional $35 million under our revolving credit facility. The
waiver was not, however, effective for any additional borrowings and provided
that it would terminate no later than July 1999.
Under the Subordinated Note Indenture, subject to certain exceptions, we
may not incur additional indebtedness if our adjusted coverage ratio is less
than certain specified ratios. In April 1998, as a result of the $340 million
charge, our adjusted coverage ratio was less than those specified ratios. As a
result, under the Subordinated Note Indenture, we could not, with limited
exceptions, incur additional indebtedness (even under the Senior Bank
Facilities).
In November 1998, we refinanced the Senior Bank Facilities and amended the
Subordinated Note Indenture. The refinancing consisted of the addition of a new
$210 million senior secured term debt facility to the Senior Bank Facilities and
the amendment of the Senior Bank Facilities. The amendments included, among
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other things, modification of covenants and representations relating to
compliance with laws, absence of material legal proceedings and absence of
material adverse changes in our business, financial condition or results of
operations insofar as they relate to certain antitrust, shareholder derivative
and securities investigations, lawsuits and claims.
The amendments to the Subordinated Note Indenture, among other things,
eliminated the $340 million charge from the calculation of our adjusted coverage
ratio. This amendment enabled us to incur additional debt in the refinancing.
As a result of the refinancing and the amendment of the Subordinated Note
Indenture, we have the ability (subject to compliance with applicable covenants,
conditions and other terms in the future under both the Senior Bank Facilities
and the Subordinated Note Indenture) to borrow under our revolving credit
facility. At December 31, 1998, $200 million was available for borrowing under
our revolving credit facility.
CASH FLOW AND PLANS TO MANAGE LIQUIDITY. For at least the past five years,
we have had positive annual cash flow from operations (excluding, in 1998,
payments in connection with antitrust investigations, lawsuits and claims).
Typically, the first quarter of each year results in neutral or negative cash
flow from operations (after deducting cash used for capital expenditures and
excluding those payments) due to various factors. These factors include interest
payments on the Subordinated Notes and the payment during the first quarter of
each year of variable compensation with respect to the immediately preceding
year. Typically, the other three quarters result in significant positive cash
flow from operations (after deducting cash used for capital expenditures and
excluding those payments). The third quarter tends to produce relatively less
positive cash flow primarily as a result of interest payments on the
Subordinated Notes due in that quarter and scheduled plant shutdowns by our
customers for vacations. We believe that 1999 will follow the historical
pattern.
To minimize interest expense, except for our Brazilian subsidiary, we
typically operate on a "zero-cash" basis. This means that we use, and are
dependent on, funds available under our revolving credit facility and monthly or
quarterly cash flow from operations as our primary sources of liquidity. We
believe that our global restructuring and rationalization plan will, over the
next one to two years, improve our cash flow from operations for a given level
of net sales. In addition to projects described above, as part of the plan, we
are also seeking to improve cash flow from operations in 1999 through
improvements in production scheduling and inventory management. In 1999, the
improvements in cash flow from operations resulting from the plan will be
partially offset by cash costs associated with the plan.
Our indebtedness and obligations in connection with antitrust and
securities investigations, lawsuits and claims could have important consequences
for our liquidity. A substantial portion of our cash flow from operations must
be dedicated to debt service and payment of these obligations, thereby reducing
funds available to us for other purposes. Our leverage and these obligations may
hinder our ability to adjust rapidly to changing market conditions or other
events. In this regard, the plea agreement with the DOJ will assist us in our
efforts to meet our obligations as they become due since the plea agreement
permits us to pay the balance of $110 million non-interest-bearing fine in five
annual installments. Our leverage and these obligations make us more vulnerable
to economic downturns or in the event that these obligations are greater than
expected.
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Our ability to service our debt and meet these and other obligations as
they come due will depend on our future financial and operating performance,
which, in turn, is subject to, among other things, changes in the graphite and
carbon products industry, global and regional economic conditions and certain
financial, business and other factors beyond our control, including interest
rates.
No assurance can be given that our cash flow from operations and capital
resources will be sufficient to enable us to meet our debt service and other
obligations when due. If we are unable to do so, we could be required to limit
or discontinue, temporarily or permanently, certain of our business plans,
activities or operations, reduce or delay capital expenditures, sell certain of
our assets or businesses, restructure or refinance some or all of our debt or
incur additional debt, or sell additional common stock or other securities. No
assurance can be given that we would be able to take any of such actions on
favorable terms or at all.
Our current plan is to continue our long-term strategy of being a low-cost
supplier of high quality products and provider of superior services to
customers. Consistent with this strategy and in order to maximize funds
available to meet our obligations, we are focusing significant efforts on
reducing operating expenses, capital expenditures beyond those contemplated by
our global restructuring and rationalization plan and other cash requirements
and commitments, while maintaining necessary and appropriate business
operations. We believe that the long-term fundamentals of our business continue
to be sound. Accordingly, although no assurance can be given that such will be
the case, we believe, based on our expected cash flow from operations and
existing capital resources and taking into account our efforts to maximize funds
available to meet our obligations, we will be able to manage our working capital
and cash flow to permit us to service our debt and meet our obligations as they
become due.
DESCRIPTION OF SENIOR BANK FACILITIES. The Senior Bank Facilities consist
of:
o A Tranche A Facility in the initial amount of $270 million consisting of:
(i) a Tranche A Letter of Credit Facility providing for the initial issuance
of up to $225 million (including reserves for interest rate and, if
applicable, currency exchange rate fluctuations) of U.S. dollar-denominated
letters of credit for the purpose of supporting U.S. dollar-denominated or
foreign currency-denominated loans to certain of our foreign subsidiaries
under facilities arranged with local lending institutions; (ii) a Tranche A
Term Loan Facility providing for initial term loans of $45 million to UCAR
Global Enterprises Inc. ("UCAR GLOBAL"); and (iii) a Tranche A Reimbursement
Loan Facility to reimburse drawings under those letters of credit or
refinance those local facilities. The Tranche A Facility amortizes in
quarterly installments over four years, commencing March 31, 1998, with
installments ranging from $50 million in 1998 to $85 million in 2001, with
the final installment payable on December 31, 2001.
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o A Tranche B Facility providing for initial term loans of $120 million to
UCAR Global. The Tranche B Facility amortizes over five years, commencing
March 31, 1998, with nominal quarterly installments during the first four
years, and quarterly installments aggregating $116 million in 2002, with the
final installment payable on December 31, 2002.
o A Revolving Credit Facility providing for revolving and swingline loans to,
and the issuance of U.S. dollar-denominated letters of credit for the
account of, UCAR Global and certain of our other U.S. subsidiaries in an
aggregate principal and stated amount at any time not to exceed $250
million. The Revolving Credit Facility terminates on December 31, 2001. As a
condition to each borrowing under the Revolving Credit Facility, we are
required to represent, among other things, that the sum of payments and
reserves relating to specified litigation liabilities has not and is not
reasonably expected to exceed $400 million. If we were unable to make that
representation (or the other required representations), we would not be able
to borrow.
o A Tranche C Facility providing for initial term loans of $210 million to
Global and our Swiss subsidiary. The Tranche C Facility was added in
connection with the refinancing. The Tranche C Facility amortizes over five
years, commencing March 31, 1999, with nominal quarterly installments during
the first four years, and quarterly installments aggregating $206 million in
2003, with the final installment payable on December 31, 2003.
Our aggregate required installment payments for the Tranche A, Tranche B
and Tranche C Facilities during 1999 are $62 million. We paid in advance $60
million in 1995 and $25 million in 1996 of installments due on the Tranche A
Facility and $25 million in 1995 and $30 million in 1996 of installments due on
the Tranche B Facility. We have not made any advance payments since 1996.
We are required to make mandatory prepayments under the Senior Bank
Facilities in the amount of:
o Either 75% or 50% (depending on the ratio of (i) our adjusted total debt
plus adjusted reserves relating to specified litigation liabilities to (ii)
our adjusted total EBITDA) of our adjusted excess cash flow. Our adjusted
excess cash flow is determined after taking into account, among other
things, debt service on the Senior Bank Facilities and the Subordinated
Notes. Our obligation to make these prepayments, if any, arises after the
end of each year with respect to our adjusted excess cash flow during the
prior year. Any mandatory prepayments would be reduced by voluntary
prepayments made during the prior year. The refinancing increased the
percentage of our excess cash flow required to be applied to these
prepayments.
o 100% of the net proceeds of certain asset sales or incurrence of certain
indebtedness.
o 50% of the net proceeds of the issuance of any equity securities by UCAR.
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Mandatory prepayments require either prepayment of loans, reduction of
letters of credit or both. No mandatory prepayments were required in 1996, 1997
or 1998. We may make voluntary prepayments under the Senior Bank Facilities up
to four times each year. There is no penalty or premium due in connection with
prepayments (whether voluntary or mandatory), except that, as a result of the
refinancing, a premium equal to 1.0% of the principal amount prepaid is due on
prepayments under the Tranche B or Tranche C Facilities prior to December 31,
1999.
UCAR unconditionally and irrevocably guaranteed the obligations of UCAR
Global and the other borrowers under the Senior Bank Facilities. This guarantee
is secured, with certain exceptions, by first priority security interests in all
of the outstanding capital stock of UCAR Global and all of the intercompany debt
owed to UCAR.
Each of UCAR Global's subsidiaries has guaranteed, with certain exceptions,
the obligations of UCAR Global and its other subsidiaries under the Senior Bank
Facilities, except that our U.S. subsidiaries have not guaranteed obligations of
our foreign subsidiaries. The obligations of UCAR Global and the other borrowers
under the Senior Bank Facilities as well as these guarantees are secured, with
certain exceptions, by first priority security interests in substantially all of
our assets, except that no more than 65% of the capital stock or other equity
interests in our foreign subsidiaries held directly by our U.S. subsidiaries and
no other foreign assets secure obligations or guarantees of our U.S.
subsidiaries (including UCAR Global). We have not guaranteed or secured
obligations to the extent that guarantees or security interests are limited or
prohibited by applicable contracts or laws or to the extent that the cost or tax
consequences of guarantees or security interests were not justified.
After the refinancing, the interest rates applicable to the Tranche A and
Revolving Credit Facilities are, at our option, either adjusted LIBOR plus a
margin ranging from 2.25% to 2.75% (depending on the same ratio) or the
alternate base rate plus a margin ranging from 1.25% to 1.75% (depending on the
same ratio). The interest rate applicable to the Tranche B and Tranche C
Facilities is either adjusted LIBOR plus 3.25% or the alternate base rate plus
2.25%. The alternate base rate is the higher of Chase Manhattan Bank's prime
rate or the federal funds effective rate plus 0.50%. At the option of foreign
borrowers under local facilities, the interest rate under the local facilities
is either adjusted LIBOR plus 0.25%, an alternate base rate (which varies from
facility to facility) or, in the case of local currency-denominated loans, the
local interbank offered rate plus 0.25%. After the refinancing, UCAR Global pays
a per annum fee ranging from 2.25% to 2.75% (depending on the same ratio) of the
aggregate face amount of outstanding letters of credit under the Tranche A and
Revolving Credit Facilities and a per annum fee of 0.50% on the undrawn portion
of the commitments under the Revolving Credit Facility. The effect of the
refinancing has been to increase interest rates by about 2.00% per annum and
commitment fees by about 0.25% per annum from those which would otherwise have
been payable in the absence of both the waiver and the refinancing.
The Senior Bank Facilities contain a number of significant covenants that,
among other things, restrict our ability to sell assets, incur additional
indebtedness, repay or refinance other debt or amend other debt instruments,
create liens on assets, enter into leases, investments or acquisitions, engage
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in mergers or consolidations, make capital expenditures, engage in transactions
with affiliates, or pay dividends or make other restricted payments that
otherwise restrict corporate activities. In addition, we are required to comply
with specified minimum interest coverage and maximum leverage ratios. The
refinancing effected changes to these covenants to make them generally more
restrictive, but with exceptions intended to permit implementation of our global
restructuring and rationalization plan. Among the changes is a change to the
calculation of our leverage ratio so as to include reserves relating to
specified litigation liabilities as debt.
We enter into agreements with financial institutions which are intended to
limit, or cap, our exposure to incurrence of additional interest expense due to
increases in variable interest rates. During 1995, we purchased interest rate
caps on up to $375 million of debt, limiting the floating interest rate factor
on this debt to a weighted-average rate of 8.5% through 1997. During 1997, we
purchased interest rate caps on up to $250 million of debt, limiting the
floating interest rate factor on this debt to a weighted-average rate of 8.2%
for the period commencing February 1998 and continuing through various dates
ending February 2001. In February 1999, we purchased interest rate caps on $300
million of debt, limiting the floating interest rate factor on this debt to 5.0%
through 1999. Fees related to these agreements are charged to interest expense
over the term of the agreements. Use of these agreements satisfy requirements
under the Senior Bank Facilities.
The Senior Bank Facilities prohibit modification of the Subordinated Note
Indenture in any manner adverse to the lenders under the Senior Bank Facilities
and limit our ability to refinance the Subordinated Notes without the consent of
those lenders.
In addition to the failure to pay principal, interest and fees when due,
events of default under the Senior Bank Facilities include: failure to comply
with applicable covenants; failure to pay when due, or other defaults permitting
acceleration of, other indebtedness exceeding $7.5 million; judgment defaults in
excess of $7.5 million to the extent not covered by insurance; certain events of
bankruptcy; and certain changes in control. For this purpose, a change in
control occurs on the date on which: UCAR ceases to own 100% of the outstanding
capital stock of UCAR Global; any person (other than management) beneficially
owns more than 25% of the total voting power of UCAR at a time when management
beneficially owns less than a majority of that voting power; a majority of the
directors of UCAR then serving are individuals who were neither nominated by
management or by a majority of the directors of UCAR (or by directors so
nominated) then serving; or a change in control of UCAR or UCAR Global occurs
under the indenture or agreement governing any other indebtedness exceeding $7.5
million. There can be no assurance that we will have the financial resources
necessary to repay amounts due under the Senior Bank Facilities upon an event of
default.
DESCRIPTION OF SUBORDINATED NOTES. UCAR Global has $200 million aggregate
principal amount of Subordinated Notes outstanding. Interest on the Subordinated
Notes is payable semi-annually on January 15 and July 15 of each year at the
rate of 12% per annum. The Subordinated Notes mature on January 15, 2005.
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Except as described below, UCAR Global may not redeem the Subordinated
Notes prior to January 15, 2000. On or after that date, UCAR Global may redeem
the Subordinated Notes, in whole or in part, at specified redemption prices
beginning at 104.5% of the principal amount redeemed for the year commencing
January 15, 2000 and reducing to 100% of the principal amount redeemable for the
years commencing January 15, 2003 and thereafter, in each case together with
accrued and unpaid interest.
Upon the occurrence of a change of control, (i) UCAR Global will have the
option to redeem the Subordinated Notes in whole but not in part at a redemption
price equal to 100% of the principal amount redeemed, plus a specified premium,
plus accrued and unpaid interest and (ii) if UCAR Global does not so redeem the
Subordinated Notes, UCAR Global will be required to make an offer to repurchase
the Subordinated Notes at a price equal to 101% of the principal amount
redeemed, together with accrued and unpaid interest. For this purpose, a change
in control occurs on (i) the date on which any person (other than a former
principal stockholder and management) beneficially owns more than 35% of the
total voting power of UCAR and such stockholder and management beneficially own
a lesser percentage of that voting power and do not have the right or ability to
elect or designate for election a majority of UCAR's Board of Directors or (ii)
the date, at the end of any two-year period, on which individuals, who at the
beginning of such period were directors of UCAR (or individuals nominated or
elected by a vote of 66 2/3% of such directors or directors previously so
elected or nominated), cease to constitute a majority of UCAR's Board of
Directors.
The Subordinated Notes are unsecured and subordinated to all existing and
future senior indebtedness of UCAR Global. The Subordinated Notes will rank pari
passu with any future senior subordinated indebtedness of UCAR Global and senior
to all other subordinated indebtedness of UCAR Global. UCAR has unconditionally
guaranteed the Subordinated Notes on a senior subordinated basis.
The Subordinated Note Indenture contains a number of covenants that, among
other things, restrict our ability to incur additional indebtedness, pay
dividends, make investments, create or permit to exist restrictions on
distributions from subsidiaries, or sell assets, repurchase Subordinated Notes,
engage in certain transactions with affiliates or enter into certain mergers and
consolidations. The Subordinated Note Indenture also prohibits UCAR from
engaging in any business activities other than holding the stock of UCAR Global
and certain permitted investments.
In addition to the failure to pay principal and interest on, or repurchase
when required, the Subordinated Notes, events of default under the Subordinated
Note Indenture include failure to comply with certain covenants in the
Subordinated Note Indenture, failure to pay at maturity or acceleration of other
indebtedness exceeding $25 million, judgment defaults in excess of $25 million
to the extent not covered by insurance and certain events of bankruptcy. The
Subordinated Note Indenture contains provisions as to legal defeasance and
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covenant defeasance. There can be no assurance that we will have the financial
resources necessary to repurchase the Subordinated Notes upon a change in
control, pay amounts due in connection with any legal or covenant defeasance or
pay amounts due under the Subordinated Note Indenture upon an event of default.
CASH FLOW PROVIDED BY (USED IN) OPERATIONS. In 1998, $29 million of cash
flow was used in operations. In 1997, $172 million of cash flow was provided by
operations. This change was primarily due to fines, liabilities and expenses in
connection with antitrust investigations and related lawsuits and claims of $142
million in 1998 as compared to $3 million in 1997. The balance of the change was
primarily attributable to lower gross profit. Decreases in notes and accounts
receivable and in accounts payable and accruals, and increases in inventory,
resulting primarily from the decline in net sales and reduction in production
due to global economic conditions largely offset each other.
CASH FLOW USED IN INVESTING ACTIVITIES. We used $31 million in investing
activities in 1998 as compared to $221 million in 1997. Most of the change is
due to the fact that we used $124 million in 1997 in connection with the
acquisition of Carbone Savoie and our German and South African subsidiaries. The
balance of the change is due to a decrease of $27 million in capital
expenditures to $52 million in 1998 from $79 million in 1997. A portion of the
capital expenditures in 1998 was used to complete cost reduction and operating
efficiency projects begun in prior years. In addition, we had net proceeds from
short-term investments held by our Brazilian subsidiary of $9 million in 1998 as
compared to net purchases of short-term investments by our Brazilian subsidiary
of $20 million in 1997.
CASH FLOW PROVIDED BY FINANCING ACTIVITIES. Cash flow provided by financing
activities was $62 million in 1998 as compared to $13 million in 1997. In 1998,
we had net long-term borrowings of $128 million, primarily under the Senior Bank
Facilities in April and November 1998. These net long-term borrowings include
the repayment of a short-term loan of $40 million to our Russian subsidiary that
was refinanced on a long-term basis under the Senior Bank Facilities. The net
long-term borrowings were also used to finance the increase in working capital,
including fines, liabilities and expenses in connection with antitrust
investigations and related lawsuits and claims. Also, in 1998, we paid $12
million in financing costs associated with refinancing the Senior Bank
Facilities and amending the Subordinated Note Indenture in November 1998. In
1997, net long-term borrowings were $74 million, primarily under the Senior Bank
Facilities. These net total borrowings were used to finance a portion of the
acquisitions described above and to repurchase a portion of the $92 million of
common stock.
RESTRICTIONS ON DIVIDENDS AND STOCK REPURCHASES
Under the Senior Bank Facilities, we are permitted to pay dividends on
common stock and repurchase common stock only in an aggregate amount of up to
$15 million in 1999 and $20 million in 2000 and thereafter. Under the
Subordinated Note Indenture, there are restrictions on the payment of dividends
by UCAR Global to UCAR. We do not anticipate paying any dividends or
repurchasing any material amounts of common stock in the near term.
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ACCOUNTING CHANGES
Effective January 1, 1998, we adopted Statement of Financial Accounting
Standards ("SFAS") 130, "Reporting Comprehensive Income." SFAS 130 establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. Earlier periods have been
restated to conform with SFAS 130. Our comprehensive income (loss) consists of
net income (loss) and foreign currency translation adjustments. Comprehensive
income was $145 million for 1996. Comprehensive losses were $174 million for
1997 and $64 million for 1998. We do not provide for U.S. income taxes on
foreign currency translation since the existing tax and reporting basis
differences in foreign investments are considered essentially permanent in
duration.
Effective January 1, 1998, we adopted SFAS 131, "Disclosures About Segments
of an Enterprise and Related Information," and SFAS 132, "Employers' Disclosures
about Pension and Other Postretirement Benefits." These statements address
presentation and disclosure matters and have no impact on our financial
position, results of operations or cash flows. The presentations for 1996 and
1997 have been restated to conform with the presentation for 1998.
In 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 is effective for
fiscal years beginning after December 15, 1998. We adopted SOP 98-1 in 1998. The
implementation of SOP 98-1 did not have a material impact on our financial
position, results of operations or cash flows.
In 1998, we changed our method of accounting for the cost of certain U.S.
inventories from the last-in first-out method (LIFO) to the first-in first-out
(FIFO) method. We believe the new method to be preferable because it provides
improved consistency in accounting for worldwide inventories and avoids
potential distortion of future profits from anticipated decrements. The
Consolidated Financial Statements for all periods have been restated to reflect
this change in accordance with the requirements of Accounting Principles Board
Opinion 20, "Accounting Changes." The restatement did not have a material impact
on consolidated net income (loss) or related per share amounts in 1996
(adjusted, as discussed below), 1997 or 1998. The restatement has no cash flow
impact.
The analyses performed by us in considering our change to the FIFO method
in 1998 revealed that the LIFO method adopted in 1996 produced unrepresentative
results for certain new items. We had previously changed our method of
application of LIFO to provide specific parameters for defining new items within
the LIFO calculation and had recognized a $7 million increase (net of taxes of
$4 million) in net income as the cumulative effect of a change in accounting in
1996. As a result of these analyses, we revised our previous LIFO calculations
and reduced 1996 net income by the cumulative effect of the change in accounting
of $7 million ($0.15 per share). This revision eliminated the impact of the
unrepresentative results for certain new items.
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In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
We are currently evaluating the impact of SFAS 133 on our financial position,
results of operations and cash flows.
YEAR 2000 ISSUE
The Year 2000 issue results from the fact that many computer programs were
written using two rather than four digits to define the applicable year. Any
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in processing
errors, miscalculations or failures causing disruptions of operations,
including, among other things, temporary inability to process transactions or
otherwise engage in similar normal business activities.
In 1996, we decided to upgrade and integrate substantially all of our
systems, both domestic and foreign. As part of this process, for the past three
years, we have been remediating our existing systems so that they are Year 2000
compliant. Remediation consists of identifying, analyzing, replacing or
modifying, and testing our existing systems so that they are Year 2000
compliant. Testing includes documentation review. In addition, since 1996, when
we have installed or plan to install new systems, whether installed as part of
this upgrade and integration, as part of process improvement or cost reduction
projects or otherwise, we believe that they have been, or will be at the time of
installation, Year 2000 compliant.
We identified the following systems that required analysis for Year 2000
compliance: finance and control systems; local and wide area networks;
production process systems and instrumentation; stand-alone and networked
personal computers; and other business equipment and site systems.
Substantially all of our personal computers have been analyzed, modified or
replaced, and tested. Substantially all of our finance and control systems have
been analyzed and modified or replaced and are currently being tested. We expect
to complete testing in the second quarter of 1999. Our production process
systems and instrumentation and local and wide area networks are being
remediated on a plant-by-plant basis. Likewise, our other business equipment and
site systems are being remediated on a site-by-site basis. We expect to be
substantially complete with this remediation by the end of the second quarter of
1999.
We have conducted surveys of customers, suppliers and service providers to
determine whether they have any Year 2000 issues which, if unaddressed, could
have a material impact on us. Based on responses which we have received from
these surveys, we believe that customers and critical suppliers and service
providers representing about 85% of our business activities involving third
parties will be Year 2000 compliant on a timely basis. The critical suppliers
and service providers who responded negatively to our surveys do not represent
sole suppliers or service providers where an interruption in supply or service
would materially impair continued normal business activities. No utility
provider responded negatively to our survey.
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We are developing contingency plans that respond to risks of either one or
more of our systems not becoming Year 2000 compliant or our customers or
critical suppliers or service providers not becoming Year 2000 compliant on a
timely basis. We expect to have these plans in place by the end of the third
quarter of 1999, with particular emphasis on the completion of remediation by
our manufacturing operations and the ability of certain electric utility
providers that supply electric power to our manufacturing operations to become
Year 2000 compliant on a timely basis. Contingency plans will include
consideration of alternative sources of supply or service, customer
communication plans and plant and business response plans.
The failure to sufficiently remediate Year 2000 issues in a timely fashion
could pose substantial risks for us. These risks include possible manufacturing
system malfunctions, including shut downs. The extent of these risks to us is
uncertain at this time.
Since 1996, we estimate that we have incurred and will incur an aggregate
incremental cost of about $3 million for internal and external services in
connection with Year 2000 issues. Internal costs consist principally of payroll
costs for our information systems group.
ASSESSMENT OF THE EURO
On January 1, 1999, eleven of the member countries of the European Union
established fixed conversion rates between their existing currencies (called
"LEGACY CURRENCIES") and one common currency called the euro. The euro trades on
currency exchanges and may be used in business transactions. Beginning in
January 2002, new euro-denominated currency will be issued and legacy currencies
will be withdrawn from circulation. Our subsidiaries affected by the euro
conversion are establishing plans to address issues raised by the euro currency
conversion. These issues include, among others, the need to adapt computer and
financial systems to accommodate euro-denominated transactions and the impact of
a common currency on pricing. We believe that, under current conditions, the
conversion of legacy currencies into the euro will not have a material adverse
affect on us.
COSTS RELATING TO PROTECTION OF THE ENVIRONMENT
We have been and are subject to increasingly stringent environmental
protection laws and regulations. In addition, we have an on-going commitment to
rigorous internal environmental protection standards. The following table sets
forth certain information regarding environmental expenses and capital
expenditures.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1996 1997 1998
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Expenses relating to environmental protection................... $15 $14 $12
Capital expenditures related to environmental protection........ 14 15 8
</TABLE>
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We are exposed to market risks primarily from changes in interest rates and
currency exchange rates. To manage our exposure to these changes, we routinely
enter into various hedging transactions that have been authorized according to
documented policies and procedures. We do not use derivatives for trading
purposes or to generate income or engage in speculative activity, and we never
use leveraged derivatives.
Our exposure to changes in interest rates results primarily from floating
rate long-term debt tied to LIBOR. We use interest rate caps to manage the risk
associated with these changes.
Our exposure to changes in currency exchange rates results primarily from:
o Investments in our foreign subsidiaries and in our share of the earnings of
those subsidiaries, which are denominated in local currencies.
o Raw material purchases made by our foreign subsidiaries in a currency other
than the local currency.
o Export sales made by our subsidiaries in a currency other than the local
currency.
When we deem it appropriate, we may attempt to limit our risks associated
with changes in currency exchange rates through both operational and financial
market activities. Financial instruments are used to hedge existing exposures,
firm commitments and, potentially, anticipated transactions. We use forward,
option and swap contracts to reduce risk by essentially creating offsetting
currency exposures. At December 31, 1998, we held contracts for the purpose of
hedging these risks with an aggregate notional amount of about $484 million. All
of our contracts mature within one year. All of our contracts are accounted for
as hedges and, accordingly, gains and losses are reflected in the cost basis of
the underlying transaction. At December 31, 1998, unrealized gains and losses on
outstanding foreign currency contracts were not material.
We used a sensitivity analysis to assess the potential effect of changes in
currency exchange rates and interest rates on reported earnings at December 31,
1998. Based on this analysis, a hypothetical 10% weakening or strengthening in
the U.S. dollar would not have resulted in a material effect on our reported
earnings. A hypothetical increase in interest rates of 100 basis points across
all maturities would have had an insignificant effect on our reported earnings,
due to the use of interest rate caps and the fact that the interest rate on the
Senior Notes is fixed.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Independent Auditors' Report......................................... 67
Consolidated Balance Sheets.......................................... 68
Consolidated Statements of Operations................................ 69
Consolidated Statements of Cash Flows................................ 70
Consolidated Statements of Stockholders' Equity (Deficit)............ 71
Notes to Consolidated Financial Statements........................... 72
All schedules are omitted because they are not required or are not
applicable or because the information is included in the Consolidated Financial
Statements or the notes thereto.
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors
UCAR International Inc.:
We have audited the accompanying Consolidated Balance Sheets of UCAR
International Inc. and Subsidiaries as of December 31, 1997 and 1998, and the
related Consolidated Statements of Operations, Cash Flows and Stockholders'
Equity (Deficit) for each of the years in the three-year period ended December
31, 1998. These Consolidated Financial Statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
Consolidated Financial Statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the Consolidated Financial Statements referred to above present
fairly, in all material respects, the financial position of UCAR International
Inc. and Subsidiaries at December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
In 1998, the Company changed its method of accounting for the cost of certain
U.S. inventories from the last-in first-out method to the first-in first-out
method. Previously issued financial statements have been restated as discussed
in Note 2.
/s/ KPMG LLP
Stamford, Connecticut
February 26, 1999
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UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share data)
AT DECEMBER 31,
----------------
1997 1998
---- ----
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 58 $ 58
Short-term investments................................. 20 11
Notes and accounts receivable.......................... 242 198
Inventories:
Raw materials and supplies............................ 53 58
Work in process....................................... 148 150
Finished goods........................................ 34 56
---- ----
235 264
Prepaid expenses....................................... 40 47
---- ----
Total current assets.................................. 595 578
---- ----
Property, plant and equipment............................ 1,289 1,220
Less: accumulated depreciation.......................... 724 752
---- ----
Net fixed assets...................................... 565 468
---- ----
Other assets............................................. 102 91
---- ----
Total assets.......................................... $ 1,262 $ 1,137
===== =====
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable....................................... $ 76 $ 67
Short-term debt........................................ 76 19
Payments due within one year on long-term debt......... 52 63
Accrued income and other taxes......................... 35 28
Other accrued liabilities.............................. 262 198
---- ----
Total current liabilities............................. 501 375
---- ----
Long-term debt........................................... 604 722
Other long-term obligations.............................. 313 266
Deferred income taxes.................................... 58 48
Minority stockholders' equity in consolidated entities... 13 13
Stockholders' equity (deficit):
Preferred stock, par value $.01, 10,000,000 shares
authorized, none issued.................................. -- --
Common stock, par value $.01, 100,000,000 shares
authorized,
47,330,570 shares issued at December 31, 1997;
47,411,296 shares issued at December 31, 1998......... -- --
Additional paid-in capital............................. 520 521
Accumulated other comprehensive (loss)................. (130) (157)
Retained earnings (deficit)............................ (525) (566)
Less: cost of common stock held in treasury, 2,402,427
shares at December 31, 1997, 2,226,498 shares at
December 31, 1998..................................... (92) (85)
---- ----
Total stockholders' equity (deficit).................. (227) (287)
---- ----
Total liabilities and stockholders' equity (deficit).. $ 1,262 $ 1,137
===== =====
See accompanying Notes to Consolidated Financial Statements.
68
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share data)
FOR THE YEAR ENDED DECEMBER 31,
1996 1997 1998
---- ---- ----
Net sales........................................ $ 948 $ 1,097 $ 947
Cost of sales.................................... 583 686 604
---- ---- ----
Gross profit................................... 365 411 343
Research and development......................... 8 9 9
Selling, administrative and other expenses....... 90 115 103
Restructuring charge............................. -- -- 86
Impairment loss on Russian assets................ -- -- 60
Antitrust investigations and related lawsuits
and claims..................................... -- 340 --
Other (income) expense (net)..................... (1) 5 8
---- ------ ----
Operating profit (loss)........................ 268 (58) 77
Interest expense................................. 61 64 73
---- ---- ----
Income (loss) before provision for income taxes 207 (122) 4
Provision for income taxes....................... 68 39 32
---- ---- ----
Income (loss) of consolidated entities......... 139 (161) (28)
Less: minority stockholders' share of income.... 1 1 2
Plus: UCAR share of net income from company
carried at equity .............................. 7 2 --
---- ---- ----
Income (loss) before extraordinary item........ 145 (160) (30)
Extraordinary item, net of tax................... -- -- 7
---- ---- ----
Net income (loss)............................. $ 145 $ (160) $ (37)
==== ==== ====
Earnings (loss) per common share:
BASIC:
-----
Income (loss) before extraordinary item....... $ 3.15 $ (3.49) $(0.66)
Extraordinary item, net of tax................ -- -- (0.17)
---- ---- -----
Net income (loss) per share................... $ 3.15 $ (3.49) $(0.83)
==== ===== =====
DILUTED:
-------
Income (loss) before extraordinary item....... $ 3.00 $ (3.49) $(0.66)
Extraordinary item, net of tax................ -- -- (0.17)
---- ---- -----
Net income (loss) per share................... $ 3.00 $ (3.49) $(0.83)
==== ===== =====
See accompanying Notes to Consolidated Financial Statements.
69
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions, except per share data)
FOR THE YEAR ENDED
DECEMBER 31,
1996 1997 1998
---- ---- ----
Cash flow from operating activities:
Net income (loss)............................. $ 145 $ (160) $ (37)
Extraordinary item, net of tax................ -- -- 7
Non-cash (credits) charges to net income
(loss):
Depreciation and amortization................ 36 49 51
Deferred income taxes........................ 19 (38) (24)
Restructuring charge......................... -- -- 86
Impairment loss on Russian assets............ -- -- 60
Accelerated vesting of performance stock
options.................................... -- 12 --
Other non-cash (credits) charges............. 10 7 (3)
Antitrust investigations and related
lawsuits and claims........................ -- 340 --
Working capital*.............................. (45) (43) (159)
Long-term assets and liabilities.............. 7 5 (10)
--- --- ----
Net cash provided by (used in) operating
activities................................ 172 172 (29)
--- --- ---
Cash flow from investing activities:
Capital expenditures.......................... (62) (79) (52)
Capital incentive grant....................... -- -- 3
Purchase of subsidiaries...................... (45) (124) --
Purchases of short-term investments........... -- (59) (28)
Maturities of short-term investments.......... -- 39 37
Redemption/sale of assets..................... 3 2 9
--- --- ---
Net cash used in investing activities........ (104) (221) (31)
---- ---- ---
Cash flow from financing activities:
Short-term debt borrowings (reductions)....... 22 23 (58)
Long-term debt borrowings..................... 2 178 420
Long-term debt reductions..................... (58) (104) (292)
Financing costs............................... -- (2) (12)
Purchase of treasury stock.................... -- (92) --
Sale of common stock.......................... 4 5 4
Tax benefit arising from exercise of employee
stock options................................ 4 5 --
--- --- ---
Net cash provided by (used in) financing
activities.................................. (26) 13 62
--- --- ---
Net increase (decrease) in cash and cash
equivalents................................... 42 (36) 2
Effect of exchange rate changes on cash and cash
equivalents..................................... -- (1) (2)
Cash and cash equivalents at beginning of
period....................................... 53 95 58
--- --- ---
Cash and cash equivalents at end of period...... $ 95 $ 58 $ 58
=== === ===
Supplemental disclosures of cash flow
information:
Net cash paid during the year for:
Interest expense............................. $ 54 $ 62 $ 70
Income taxes................................. 45 72 61
* Net change in working capital due to the
following components:
(Increase) decrease in current assets:
Notes and accounts receivable................ $ (6) $ (30) $ 49
Inventories.................................. (29) 5 (27)
Prepaid expenses............................. 6 (1) (1)
Payments for antitrust investigations and
related lawsuits and claims................. -- (3) (142)
Increase (decrease) in payables and accruals.. (16) (14) (38)
--- --- ---
Working capital......................... $ (45) $ (43) $ (159)
=== === ====
See accompanying Notes to Consolidated Financial Statements.
70
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(Dollars in millions)
<TABLE>
<CAPTION>
ACCUMULATED TOTAL
ADDITIONAL OTHER RETAINED STOCKHOLDERS'
COMMON PAID-IN COMPREHENSIVE EARNINGS TREASURY EQUITY
STOCK CAPITAL (LOSS) (DEFICIT) STOCK (DEFICIT)
----- ------- ------ --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995, as
previously reported........... $ -- $ 485 $ (116) $ (536) $ -- $ (167)
Effect of restatement (Note 2) -- -- -- 26 -- 26
---- ----- ----- ------ ---- ------
Balance at December 31, 1995, as
restated........................ -- 485 (116) (510) -- (141)
Comprehensive income (loss):
Net income, as adjusted
(Note 2) -- -- -- 145 -- 145
Foreign currency translation
adjustments................ -- -- -- -- -- --
---- ----- ----- ------ ---- ------
Total comprehensive income
(loss)..................... -- -- -- 145 -- 145
Exercise of employee stock
options..................... -- 5 -- -- -- 5
Tax benefit arising from
exercise of employee stock
options...................... -- 4 -- -- -- 4
Reclassification of:
Common stock subject to "puts" -- 8 -- -- -- 8
Related loans to management.. -- (3) -- -- -- (3)
Cost of secondary offering.... -- (1) -- -- -- (1)
---- ----- ----- ------ ---- ------
Balance at December 31, 1996.... -- 498 (116) (365) -- 17
Comprehensive income (loss):
Net loss..................... -- -- -- (160) -- (160)
Foreign currency translation
adjustments................ -- -- (14) -- -- (14)
---- ----- ----- ------ ---- ------
Total comprehensive income
(loss)...................... -- -- (14) (160) -- (174)
Exercise of employee stock
options..................... -- 6 -- -- -- 6
Tax benefit arising from
exercise of employee stock
options..................... -- 5 -- -- -- 5
Repurchase of common stock.... -- -- -- -- (92) (92)
Vesting of performance stock
options..................... -- 12 -- -- -- 12
Cost of secondary offering.... -- (1) -- -- -- (1)
---- ----- ----- ------ ---- ------
Balance at December 31, 1997.... -- 520 (130) (525) (92) (227)
Comprehensive income (loss):
Net loss..................... -- -- -- (37) -- (37)
Foreign currency translation
adjustments................. -- -- (27) -- -- (27)
---- ----- ----- ------ ---- ------
Total comprehensive income
(loss)...................... -- -- (27) (37) -- (64)
Sale of common stock - stock
options..................... -- 1 -- -- -- 1
Sale of common stock -
treasury stock.............. -- -- -- (4) 7 3
---- ----- ----- ------ ---- ------
Balance at December 31, 1998.... $ -- $ 521 $ (157) $ (566) $ (85) $ (287)
==== ===== ===== ====== ==== =====
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
71
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) DISCUSSION OF BUSINESS AND STRUCTURE
IMPORTANT TERMS
The following terms are used to identify various companies or groups of
companies, markets or other matters in the Consolidated Financial Statements.
"UCAR" refers to UCAR International Inc. only. UCAR is the issuer of the
publicly traded common stock covered by the Consolidated Financial Statements.
"Global" refers to UCAR Global Enterprises Inc. only. Global is a holding
company and a direct wholly owned subsidiary of UCAR. Global is the only
subsidiary directly owned by UCAR. Global is the issuer of the outstanding 12%
senior subordinated notes due 2005 (the "Subordinated Notes") and is the primary
borrower under the senior secured bank credit facilities (the "Senior Bank
Facilities").
"Company" refers collectively to UCAR, its subsidiaries and its and their
predecessors to the extent those predecessor's activities related to the
graphite and carbon business.
"Subsidiaries" refers to those companies which, at the relevant time, were
majority-owned or wholly-owned directly or indirectly by UCAR or its
predecessors. All of UCAR's subsidiaries have been wholly-owned (with de minimis
exceptions in the case of certain foreign subsidiaries) since January 1, 1996,
except for its German subsidiary, UCAR Elektroden GmbH ("UCAR Elektroden"), and
Carbone Savoie S.A.S. ("Carbone Savoie"), both of which have been 70%-owned
since the Company acquired them in early 1997, and except for its South African
subsidiary, EMSA (Pty) Ltd. ("EMSA"), which was 50% owned until April 1997, when
it became 100% owned.
The Company operates in two business segments: graphite electrodes; and
graphite and carbon products. The Company develops, manufactures and markets
graphite and carbon products, including electrodes, for the steel, ferroalloy,
aluminum, chemical, aerospace and transportation industries. Its principal
products are graphite electrodes, carbon electrodes, graphite and carbon
cathodes, graphite and carbon specialties and flexible graphite.
SECONDARY OFFERINGS AND STOCK REPURCHASE PROGRAM
On March 6, 1996, certain stockholders (including the principal
stockholder) and members of management sold an aggregate of 16,675,000 shares in
a secondary public offering. After the offering, the principal stockholder owned
approximately 20% of the then outstanding common stock. UCAR did not sell any
shares in or receive any proceeds from the offering. Approximately 193,000 of
the shares sold by management consisted of shares issued upon the exercise of
vested stock options concurrent with the offering and UCAR received proceeds of
approximately $1.5 million from the exercise of such options.
72
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(1) DISCUSSION OF BUSINESS AND STRUCTURE -- (CONTINUED)
On February 10, 1997, UCAR's Board of Directors authorized a program to
repurchase up to $100 million of common stock at prevailing prices from time to
time in the open market or otherwise depending on market conditions and other
factors, without any established minimum or maximum time period or number of
shares.
On April 3, 1997, the principal stockholder sold 6,411,227 shares in a
secondary public offering. UCAR did not sell any shares in or receive any
proceeds from the offering. Concurrently with the offering, as part of the
program mentioned above, UCAR repurchased 1,300,000 shares from the principal
stockholder for $48 million. After the offering and the repurchase of shares,
the principal stockholder ceased to be a principal stockholder of UCAR.
On December 8, 1997, UCAR's Board of Directors increased the maximum amount
of common stock which may be purchased under the program mentioned above from
$100 million to $200 million. Through December 31, 1997, UCAR purchased an
aggregate of $92 million of common stock (including the shares repurchased from
the principal stockholder) under the program. No common stock was purchased
under the program in 1998.
ACQUISITION OF SUBSIDIARIES
On November 10, 1996, the Company purchased the controlling equity interest
in Graphite PLC, which operates a graphite electrode business in Vyazma, Russia.
The Company acquired 90% of the equity of Graphite PLC through a tender offer to
its major shareholders, which included members of the board of directors and
employees of Graphite PLC. The aggregate investment was $50 million. Thereafter,
in 1997 and early 1998, the Company increased its ownership to 99% (at December
31, 1998) of such equity for an additional investment of $7 million. Graphite
PLC changed its name to UCAR Grafit OAO ("UCAR Grafit").
On January 2, 1997, the Company acquired 70% of the outstanding shares of
Carbone Savoie, a wholly-owned subsidiary of a competitor in the cathode
business, for a purchase price of $33 million. Carbone Savoie is the leading
manufacturer of carbon cathodes which are used in the production of aluminum.
On February 1, 1997, the Company, through a newly formed 70%-owned
subsidiary, UCAR Elektroden, purchased the graphite electrode business of
Elektrokohle Lichtenberg AG ("EKL") in Berlin, Germany. The 30% minority
interest in UCAR Elektroden was held by a private German company. UCAR
Elektroden and UCAR Grafit worked in tandem, with UCAR Elektroden manufacturing
newly formed ungraphitized electrodes and UCAR Grafit baking, pitch
impregnating, rebaking and graphitizing those electrodes. The aggregate purchase
price paid by UCAR Elektroden for the EKL assets was $15 million.
73
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(1) DISCUSSION OF BUSINESS AND STRUCTURE -- (CONTINUED)
On April 22, 1997, the Company purchased the shares of its then 50%-owned
joint venture affiliate, EMSA, held by the Company's joint venture partner. EMSA
operates a graphite electrode manufacturing facility and sales office in South
Africa. The purchase price was $75 million, plus expenses.
These acquisitions were accounted for as purchases and, accordingly, the
purchase prices have been allocated to the assets purchased and liabilities
assumed based upon the fair values at the dates of purchase. The Company
recorded $20 million and $6 million of goodwill in connection with the
acquisitions of EMSA and UCAR Grafit, respectively. The Consolidated Financial
Statements have not been restated to reflect the increased ownership of EMSA at
any date or for any period prior to the date of purchase.
On September 24, 1998, the Company announced that it was closing its
manufacturing operations in Berlin, Germany and Welland, Canada and downsizing
its manufacturing operations in Vyazma, Russia.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Consolidated Financial Statements present the consolidated financial
position, results of operations and cash flows of the Company for all periods
presented. All significant intercompany transactions have been eliminated in
consolidation.
CASH EQUIVALENTS
Cash equivalents are considered to be all highly liquid investments that
are readily convertible to known amounts of cash and so near to maturity that
they present insignificant risk of changes in value because of changes in
interest rates.
SHORT-TERM INVESTMENTS
Investment securities at December 31, 1998 consisted of government
securities and other debt securities. The Company classifies these securities as
held-to-maturity and, accordingly, has recorded them at amortized cost.
INVENTORIES
Inventories are stated at cost or market, whichever is lower. Cost is
determined generally on the "first-in first-out" ("FIFO") method in the United
States. The "average cost" method is used elsewhere.
74
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
FIXED ASSETS AND DEPRECIATION
Fixed assets are carried at cost. Expenditures for replacements are
capitalized and the replaced items are retired. Gains and losses from the sale
of property are included in other (income) expense (net).
Depreciation is calculated on a straight-line basis over the estimated
useful lives of the assets. The Company generally uses accelerated depreciation
methods for tax purposes, where appropriate. Depreciation expense was $36
million in 1996, $48 million in 1997 and $50 million in 1998.
The carrying value of fixed assets is assessed annually and when factors
indicating an impairment are present. The Company determines such impairment by
measuring undiscounted future cash flows. If an impairment is present, the
assets are reported at the lower of discounted cash flows or fair value.
GOODWILL
Goodwill, which represents the excess of purchase price over fair value of
net assets acquired, is amortized on a straight-line basis over the expected
periods to be benefited, generally 20 years. When circumstances warrant, the
Company assesses the recoverability of this intangible asset by determining
whether the amortization of the goodwill balance over its remaining life can be
recovered through undiscounted future operating cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured based on
projected discounted future operating cash flows.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company does not use derivative financial instruments for trading
purposes. They are used to manage well-defined interest rate risk and specific
financial market risk caused by currency exchange rate fluctuations.
The Company enters into foreign currency instruments to manage exposure to
currency exchange rate fluctuations. These foreign currency instruments, which
include forward exchange contracts, purchased currency options and currency
option collars, hedge primarily U.S. dollar denominated debt held by several of
the Company's foreign subsidiaries and identifiable foreign currency
receivables, payables and commitments held by the Company's
75
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
foreign and domestic subsidiaries. Forward exchange contracts are agreements to
exchange different currencies at a specified future date and at a specified
rate. Purchased foreign currency options are instruments which give the holder
the right, but not the obligation, to exchange different currencies at a
specified rate at a specified date or over a range of specified dates. Currency
option collars are financial arrangements for simultaneous purchases and sales
of currency options having the same maturity and the same principal amount. The
result is the creation of a range in which a best and worst price is defined,
while minimizing option cost. Premiums and discounts on forward exchange
contracts are amortized over the life of the contracts. Net premiums on options
purchased (or sold under currency collar strategies) are amortized over the life
of the options. Forward exchange contracts, purchased currency options and
currency option collars are carried at market value. Gains and losses due to
revaluation of these contracts or option positions are recognized currently as
other (income) expense (net) and are intended to mitigate income or expense
caused by the accounting revaluation of the Company's foreign and domestic
subsidiaries' net foreign exchange positions.
The Company enters into agreements with financial institutions which are
intended to limit, or cap, its exposure to the incurrence of additional interest
expense due to increases in variable interest rates. Fees related to these
interest rate cap agreements (as well as proceeds received under their
provisions) are charged (or credited) to interest expense over the term of the
agreements.
RESEARCH AND DEVELOPMENT
Research and development costs are charged to expense as incurred.
INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and for operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rate is recognized in income in the period that includes the
enactment date.
STOCK-BASED COMPENSATION PLANS
The Company accounts for stock-based compensation plans using the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to
76
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Employees" ("APB 25"). As such, compensation expense is recorded on the date of
grant only if the market price of the underlying stock exceeded the exercise
price or if vesting is subject to performance conditions. The total amount of
recorded compensation expense, if any, is based on the number of instruments
that eventually vest. No compensation expense is recognized for forfeited
awards, failure to satisfy a service requirement or failure to satisfy a
performance condition. The Company's accruals of compensation expense for awards
subject to performance conditions are based on the Company's assessment of the
probability of satisfying the performance conditions.
RETIREMENT PLAN
The cost of pension benefits under the Company's retirement plans is
determined by independent actuarial firms using the "projected unit credit"
actuarial cost method. Contributions to the U.S. plan are made in accordance
with the requirements of the Employee Retirement Income Security Act of 1974.
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
The estimated cost of future medical and life insurance benefits is
determined by independent actuarial firms using the "projected unit credit"
actuarial cost method. Such costs are recognized as employees render the service
necessary to earn the postretirement benefits. Benefits have been accrued, but
not funded.
POSTEMPLOYMENT BENEFITS
The Company accrues postemployment benefits expected to be paid before
retirement, principally severance, over employees' active service periods.
USE OF ESTIMATES
Management has made a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare the Consolidated Financial Statements in conformity with
generally accepted accounting principles. Actual results could differ from those
estimates.
FOREIGN CURRENCY TRANSLATION
Generally, except for operations in Brazil in 1996 and 1997 and Russia and
Mexico in 1997 and 1998, unrealized gains and losses resulting from translating
foreign subsidiaries' assets and liabilities into U.S. dollars are accumulated
in other comprehensive income on the balance sheet until such time as the
operations are sold or substantially or completely liquidated. Translation gains
and losses relating to operations, where high inflation exists, are included in
income in the Consolidated Financial Statements.
77
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
ACCOUNTING CHANGES
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") 130, "Reporting Comprehensive Income". SFAS 130
established standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. Earlier
periods have been restated to conform with SFAS 130. Comprehensive income (loss)
of the Company consists of net income (loss) and foreign currency translation
adjustments. The Company does not provide for U.S. income taxes on foreign
currency translation since the existing tax and reporting basis differences in
foreign investments are considered essentially permanent in duration.
Effective January 1, 1998, the Company adopted SFAS 131, "Disclosures about
Segments of an Enterprise and Related Information," and SFAS 132, "Employers'
Disclosures about Pension and Other Postretirement Benefits," which are
effective for fiscal years beginning after December 15, 1997. These statements
address presentation and disclosure matters and have no impact on the Company's
financial position, results of operations or cash flows. The presentation for
1996 and 1997 has been restated to conform with the presentation for 1998.
In 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 is effective for
financial statements for fiscal years beginning after December 15, 1998. The
Company has adopted the provisions of SOP 98-1 in 1998. The implementation of
SOP 98-1 did not have a material impact on the Company's financial position,
results of operations or cash flows.
In 1998, the Company changed its method of accounting for the cost of
certain U.S. inventories from the last-in first-out method (LIFO) to the
first-in first-out (FIFO) method. The Company believes the new method to be
preferable because it provides improved consistency in accounting for worldwide
inventories and avoids potential distortion of future profits from anticipated
decrements. The Consolidated Financial Statements for all periods have been
restated to reflect this change in accordance with the requirements of
Accounting Principles Board Opinion 20, "Accounting Changes." The restatement
did not have a material impact on consolidated net income (loss) or related per
share amounts in 1996 (adjusted, as discussed below), 1997 or 1998. The
restatement has no cash flow impact.
The analyses performed by the Company in considering its change to the FIFO
method in 1998 revealed that the LIFO method adopted in 1996 produced
unrepresentative results for certain new items. The Company had previously
changed its method of application of LIFO to provide specific parameters for
defining new items within the LIFO calculation and had recognized a $7 million
increase (net of taxes of $4 million) in net income as the cumulative
78
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
effect of a change in accounting in 1996. As a result of these analyses, the
Company revised its previous LIFO calculations and reduced 1996 net income by
the cumulative effect of the change in accounting of $7 million ($0.15 per
share). This revision eliminated the impact of the unrepresentative results for
certain new items.
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
The Company is presently evaluating the impact of this statement on its
financial position, results of operations and cash flows in the period of
adoption.
(3) UCAR GLOBAL ENTERPRISES INC.
UCAR has no material assets, liabilities or operations other than those
that result from its ownership of 100% of the outstanding common stock of Global
and intercompany debt. Separate financial statements of Global are not presented
because they would not be material to holders of the Subordinated Notes.
The following table summarizes the consolidated assets and liabilities of
Global and its subsidiaries at December 31, 1997 and 1998 and their consolidated
results of operations for the three years ended December 31, 1998:
AT DECEMBER 31,
---------------
1997 1998
---- ----
(Dollars in millions)
Assets:
Current assets............................... $ 595 $ 578
Non-current assets........................... 667 559
----- -----
Total assets.............................. $ 1,262 $ 1,137
===== =====
Liabilities:
Current liabilities.......................... $ 501 $ 375
Non-current liabilities...................... 975 1,036
----- -----
Total liabilities........................ $ 1,476 $ 1,411
===== =====
Minority stockholders' equity in consolidated
entities....................................... $ 13 $ 13
===== =====
79
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(3) UCAR GLOBAL ENTERPRISES INC. -- (CONTINUED)
FOR THE YEAR ENDED
DECEMBER 31,
------------------
1996 1997 1998
---- ---- ----
(Dollars in millions)
Net sales.................................. $ 948 $ 1,097 $ 947
Gross profit............................... 365 411 343
Income (loss) before extraordinary item 145 (160) (30)
Net income (loss).......................... 145 (160) (37)
(4) FINANCIAL INSTRUMENTS
The Company does not use derivative financial instruments for trading
purposes. They are used to manage well-defined interest rate risk and specific
financial market risk caused by currency exchange rate fluctuations.
FOREIGN CURRENCY CONTRACTS
The amount of foreign exchange contracts used by the Company to minimize
foreign currency exposure was $350 million at December 31, 1996, $353 million at
December 31, 1997 and $484 million at December 31, 1998. Contracts hedging U.S.
dollar denominated debt totaled $169 million at December 31, 1996, $214 million
at December 31, 1997 and $209 million at December 31, 1998. Of the total foreign
exchange contracts, approximately $144 million (41%) were offsetting at December
31, 1996, approximately $93 million (26%) were offsetting at December 31, 1997
and approximately $142 million (29%) were offsetting at December 31, 1998.
SALE OF RECEIVABLES
Certain of the Company's foreign subsidiaries sold receivables of $15
million in 1996, $16 million in 1997 and $16 million in 1998 without recourse
and sold receivables of $65 million in 1996, $74 million in 1997 and $52 million
in 1998 with recourse to banking institutions. Receivables sold with recourse
remaining uncollected from customers were $15 million at December 31, 1996, $16
million at December 31, 1997 and $6 million at December 31, 1998.
INTEREST RATE RISK MANAGEMENT
The Company enters into agreements with financial institutions which are
intended to limit, or cap, its exposure to the incurrence of additional interest
expense due to increases in variable interest rates. During 1995, the Company
purchased interest rate caps on up to $375 million of debt, limiting the
floating interest rate factor on this debt to a weighted-average rate of 8.5%
through 1997. During 1997, the Company purchased interest rate caps on up to
$250 million of
80
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UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(4) FINANCIAL INSTRUMENTS -- (CONTINUED)
debt, limiting the floating interest rate factor on this debt to a
weighted-average rate of 8.2% for the period commencing February 1998 and
continuing through various dates ending February 2001. Fees related to these
agreements are charged to interest expense over the term of the agreements.
FAIR MARKET VALUE DISCLOSURES
SFAS 107, "Disclosure about Fair Market Value of Financial Instruments,"
defines the fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing parties.
Such fair values must often be determined by using one or more methods that
indicate value based on estimates of quantifiable characteristics as of a
particular date. Values were estimated as follows:
CASH AND CASH EQUIVALENTS, SHORT-TERM INVESTMENTS, SHORT-TERM RECEIVABLES,
ACCOUNTS PAYABLE AND OTHER CURRENT PAYABLES--The carrying amount approximates
fair value because of the short maturity of these instruments.
DEBT--Fair values of debt and related interest rate risk agreements
approximate carrying value at December 31, 1996, 1997 and 1998, except for the
Subordinated Notes which are carried at $200 million and had an estimated fair
value of $230 million at December 31, 1996, $224 million at December 31, 1997
and $216 million at December 31, 1998.
FOREIGN CURRENCY CONTRACTS--Foreign currency contracts are carried at
market value.
(5) SEGMENT REPORTING
The Company has two reportable operating segments: graphite electrodes; and
graphite and carbon products. The graphite electrode segment produces and
markets graphite electrodes to electric arc furnace and ladle furnace
steelmakers. The graphite and carbon products segment produces and markets
carbon electrodes, flexible graphite, cathodes and graphite and carbon
specialties. These reportable segments are managed separately because of the
different products and markets they serve.
The accounting policies of the reportable segments are the same as those
described in Note 2. The Company evaluates the performance of its operating
segments based on gross profit. Intersegment sales and transfers are not
material.
81
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UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(5) SEGMENT REPORTING -- (CONTINUED)
The following tables summarize financial information concerning the
Company's reportable segments. The line item entitled "Other" includes corporate
related items.
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1996 1997 1998
---- ---- ----
(Dollars in millions)
Net sales to external customers:
Graphite electrodes............. $ 696 $ 788 $ 652
Graphite and carbon products.... 252 309 295
----- ----- -----
Consolidated net sales......... $ 948 $ 1,097 $ 947
===== ===== =====
Gross profit:
Graphite electrodes............. $ 284 $ 309 $ 247
Graphite and carbon products.... 81 102 96
----- ----- -----
Consolidated gross profit...... $ 365 $ 411 $ 343
===== ===== =====
Depreciation and amortization:
Graphite electrodes............. $ 27 $ 35 $ 36
Graphite and carbon products.... 7 10 11
Other........................... 2 4 4
----- ----- -----
Consolidated depreciation and
amortization................. $ 36 $ 49 $ 51
===== ===== =====
The Company does not report assets by business segment. Assets are managed
based on geographic location because certain facilities are shared by both
business segments.
82
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UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(5) SEGMENT REPORTING -- (CONTINUED)
The following tables summarize information as to the Company's operations
in different geographic areas:
FOR THE YEAR ENDED DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
Net sales (a):
United States.................... $ 388 $ 393 $ 321
Canada........................... 46 54 56
Mexico........................... 88 98 65
Brazil........................... 61 64 57
France........................... 250 287 148
Italy............................ 56 54 47
Switzerland (b).................. -- -- 107
South Africa..................... -- 53 59
Other Countries.................. 59 94 87
----- ----- -----
Total.......................... $ 948 $ 1,097 $ 947
===== ===== =====
(a) Net sales are based on location of seller.
(b) During 1998, the ownership of certain existing export sales were
transferred to our Swiss subsidiary.
AT DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
Long-lived assets (c):
United States.................... $ 160 $ 172 $ 166
Canada........................... 24 23 1
Mexico........................... 28 30 28
Brazil........................... 73 71 61
France........................... 51 87 97
Italy............................ 35 40 43
Russia........................... 45 65 2
South Africa..................... -- 81 62
Other Countries.................. 19 21 23
----- ----- -----
Total.......................... $ 435 $ 590 $ 483
===== ===== =====
(c) Long-lived assets represent net fixed assets and goodwill, net of
accumulated amortization.
83
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(6) COMPANY CARRIED AT EQUITY
On April 21, 1997, the Company purchased the 50% interest in EMSA that it
did not already own for $75 million, plus expenses. Commencing April 22, 1997,
EMSA's assets, liabilities and results of operations are included in the
Consolidated Financial Statements. During 1998, the Company did not account for
any companies using the equity method. The following tables summarize
information for EMSA during the period it was a 50%-owned company carried at
equity:
FOR THE YEAR FOR THE PERIOD
ENDED JANUARY 1 TO
DECEMBER 31, 1996 APRIL 21, 1997
----------------- --------------
(Dollars in millions)
Net sales.............................. $ 65 $ 21
Cost of sales.......................... 39 12
Selling, administrative and other expenses 4 1
Other (income) expense (net)........... (1) 2
Income taxes........................... 9 2
---- ----
Net income........................... $ 14 $ 4
==== ====
UCAR share of net income............... $ 7 $ 2
==== ====
AT DECEMBER 31, 1996
(Dollars in millions)
Current assets.............................. $ 40
Non-current assets.......................... 16
---
Total assets.............................. 56
---
Current liabilities......................... 16
Non-current liabilities..................... 4
---
Total liabilities......................... 20
---
Net assets................................ $ 36
===
UCAR share of net assets.................... $ 18
===
The Company recorded net sales to EMSA of $22 million in 1996 and $3
million from January 1, 1997 to April 21, 1997.
84
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(7) LONG-TERM DEBT
The following table presents the long-term debt of the Company:
AT DECEMBER 31,
1997 1998
---- ----
(Dollars in millions)
Senior Bank Facilities:
Tranche A Facility (letters of credit) ... $ 214 $ 209
Tranche A Facility (term loans) .......... 45 1
Tranche B Facility........................ 120 119
Tranche C Facility........................ -- 210
Revolving Facility........................ 65 35
---- ---
Total Senior Bank Facilities............ 444 574
Subordinated Notes........................... 200 200
Italian lire loans and obligations........... 2 1
Deutsche mark loans.......................... 10 10
---- ---
Subtotal.................................. 656 785
Less: payments due within one year.......... 52 63
---- ---
Total................................... $ 604 $ 722
==== ===
On March 19, 1997, the Senior Bank Facilities were amended to reduce
interest rates, increase the Revolving Facility (as defined below) to $250
million from $100 million and change certain covenants to allow greater
flexibility in uses of free cash flow for acquisitions, capital expenditures and
stock repurchases and other restricted payments.
On April 10, 1998, the Company obtained a limited waiver of a breach, if
any, of certain covenants relating to compliance with laws prior to March 13,
1998 and its obligation to deliver certain financial information within 90 days
of the end of the prior year. In connection with the waiver, the Company agreed
to grant a security interest in substantially all of its assets. We also agreed
to amend certain provisions of the Senior Bank Facilities. These amendments had
the effect of increasing interest rates. In addition, in reliance on the waiver,
the Company was able to borrow an additional $35 million under the Revolving
Facility. The waiver was not, however, effective for any additional borrowings
and provided that it would terminate no later than July 10, 1999.
Under the Subordinated Notes, subject to certain exceptions, the Company
may not incur additional indebtedness if its adjusted coverage ratio is less
than certain specified ratios. As a result of the $340 million charge against
results of operations for 1997 as a reserve for estimated potential liabilities
and expenses in connection with antitrust investigations and related lawsuits
and claims, its adjusted coverage ratio was less than those specified ratios
and, under the Subordinated Note Indenture, it could not, with limited
exceptions, incur additional indebtedness (even under the Senior Bank
Facilities).
85
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(7) LONG-TERM DEBT -- (CONTINUED)
On November 3, 1998, the Company amended the Subordinated Notes. On
November 10, 1998, the Company refinanced the Senior Bank Facilities. The
refinancing consisted of the addition of the Tranche C Facility (as defined
below) and amendments to, among other things, modify covenants and
representations relating to compliance with laws, absence of material legal
proceedings and absence of material adverse changes insofar as they relate to
antitrust, shareholder derivative and securities investigations, lawsuits and
claims.
The amendments to the Subordinated Notes, among other things, eliminated
the $340 million charge from the calculation of the Company's adjusted coverage
ratio.
As a result of the refinancing and the amendment of the Subordinated Notes,
the Company has the ability (subject to compliance with applicable covenants,
conditions and other terms in the future under both the Senior Bank Facilities
and the Subordinated Notes) to borrow under the Revolving Facility. At December
31, 1998, $200 million was available for borrowing under the Revolving Facility.
SENIOR BANK FACILITIES
The Senior Bank Facilities consist of:
o A Tranche A Facility in the initial amount of $270 million consisting of:
(i) a Tranche A Letter of Credit Facility providing for the initial
issuance of up to $225 million (including reserves for interest rate and,
if applicable, currency exchange rate fluctuations) of U.S.
dollar-denominated letters of credit for the purpose of supporting U.S.
dollar-denominated or foreign-currency denominated loans to certain of
foreign subsidiaries under facilities arranged with local lending
institutions; (ii) a Tranche A Term Loan Facility providing for initial
term loans of $45 million to Global; and (iii) a Tranche A Reimbursement
Loan Facility to reimburse drawings under those letters of credit or
refinance those local facilities. The Tranche A Facility amortizes in
quarterly installments over four years, commencing March 31, 1998, with
installments ranging from $50 million in 1998 to $85 million in 2001, with
the final installment payable on December 31, 2001.
o A Tranche B Facility providing for initial term loans of $120 million to
Global. The Tranche B Facility amortizes over five years, commencing March
31, 1998, with nominal quarterly installments during the first four years,
and quarterly installments aggregating $116 million in 2002, with the final
installment payable on December 31, 2002.
86
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(7) LONG-TERM DEBT -- (CONTINUED)
o A Revolving Facility providing for revolving and swingline loans to, and
the issuance of U.S. dollar-denominated letters of credit for the account
of, Global and certain other U.S. subsidiaries in an aggregate principal
and stated amount at any time not to exceed $250 million. The Revolving
Facility terminates on December 31, 2001. As a condition to each borrowing
under the Revolving Facility, the Company is required to represent, among
other things, that the sum of payments and reserves relating to specified
litigation liabilities has not and is not reasonably expected to exceed
$400 million.
o A Tranche C Facility providing for initial term loans of $125 million to
Global and $85 million to its Swiss subsidiary. The Tranche C Facility was
added in connection with the refinancing. The Tranche C Facility amortizes
over five years, commencing March 31, 1999, with nominal quarterly
installments during the first four years, and quarterly installments
aggregating $206 million in 2003, with the final installment payable on
December 31, 2003.
The Company paid in advance $60 million in 1995 and $25 million in 1996 of
installments due on the Tranche A Facility and $25 million in 1995 and $30
million in 1996 of installments due on the Tranche B Facility. The Company has
made no such advance payments since 1996.
The Company is required to make mandatory prepayments in the amount of :
o Either 75% or 50% (depending on the ratio of (i) adjusted total debt plus
adjusted reserves relating to specified litigation liabilities to (ii)
adjusted total EBITDA) of adjusted excess cash flow. Adjusted excess cash
flow is determined after taking into account, among other things, debt
service on the Senior Bank Facilities and the Subordinated Notes. The
obligation to make these prepayments, if any, arises after the end of each
year with respect to adjusted excess cash flow during the prior year. Any
mandatory prepayments would be reduced by voluntary prepayments made during
the prior year. The refinancing increased the percentage of excess cash
flow required to be applied to these prepayments.
o 100% of the net proceeds of certain asset sales or incurrence of certain
indebtedness.
o 50% of the net proceeds of the issuance of any equity securities by UCAR.
Mandatory prepayments require either prepayment of loans, reduction of
letters of credit or both. No mandatory prepayments were required in 1996, 1997
or 1998. The Company may make voluntary prepayments under the Senior Bank
Facilities up to four times each year. There is no penalty or premium due in
connection with prepayments (whether voluntary or mandatory), except that, as a
result of the refinancing, a premium equal to 1% of the principal amount prepaid
is due on prepayments under the Tranche B or Tranche C Facilities prior to
December 31, 1999.
87
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(7) LONG-TERM DEBT -- (CONTINUED)
UCAR unconditionally and irrevocably guaranteed the obligations of Global
and the other borrowers under the Senior Bank Facilities. This guarantee is
secured, with certain exceptions, by first priority security interests in all of
the outstanding capital stock of Global and all of the intercompany debt owed to
UCAR.
Each of Global's subsidiaries has guaranteed, with certain exceptions, the
obligations of Global and its other subsidiaries under the Senior Bank
Facilities, except that its U.S. subsidiaries have not guaranteed obligations of
our foreign subsidiaries. The obligations of Global and the other borrowers
under the Senior Bank Facilities as well as these guarantees are secured, with
certain exceptions, by first priority security interests in substantially all of
the Company's assets, except that no more than 65% of the capital stock or other
equity interests in its foreign subsidiaries held directly by its U.S.
subsidiaries and no other foreign assets secure obligations or guarantees of its
U.S. subsidiaries (including Global).
After the refinancing, the interest rates applicable to the Tranche A and
Revolving Facilities are, at the Company's option, either adjusted LIBOR plus a
margin ranging from 2.25% to 2.75% (depending on the same ratio) or the
alternate base rate plus a margin ranging from 1.25% to 1.75% (depending on the
same ratio). The interest rate applicable to the Tranche B and Tranche C
Facilities is, at the Company's option, either adjusted LIBOR plus 3.25% or the
alternate base rate plus 2.25%. The alternate base rate is the higher of Chase
Manhattan Bank's prime rate or the federal funds effective rate plus 0.50%. At
the option of foreign borrowers under local facilities, the interest rate under
the local facilities is either adjusted LIBOR plus 0.25%, an alternate base rate
(which varies from facility to facility) or, in the case of local
currency-denominated loans, the local interbank offered rate plus 0.25%. After
the refinancing, Global pays a per annum fee ranging from 2.25% to 2.75%
(depending on the same ratio) of the aggregate face amount of outstanding
letters of credit under the Tranche A and Revolving Facilities and a per annum
fee of 0.50% on the undrawn portion of the commitments under the Revolving
Facility. The effect of the refinancing has been to increase interest rates by
approximately 2.00% per annum and commitment fees by approximately 0.25% per
annum from those which would otherwise have been payable in the absence of both
the waiver and the refinancing.
The Company enters into agreements with financial institutions which are
intended to limit, or cap, its exposure to incurrence of additional interest
expense due to increases in variable interest rates. Use of these agreements
satisfies requirements under the Senior Bank Facilities.
The weighted-average interest rate on the Senior Bank Facilities was 7.93%
during 1996, 7.38% during 1997 and 7.08% during 1998.
88
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(7) LONG-TERM DEBT -- (CONTINUED)
The Senior Bank Facilities contain a number of significant covenants that,
among other things, restrict the Company's ability to sell assets, incur
additional indebtedness, repay or refinance other debt or amend other debt
instruments, create liens on assets, enter into leases, investments or
acquisitions, engage in mergers or consolidations, make capital expenditures,
engage in transactions with affiliates, or pay dividends or make other
restricted payments and that otherwise restrict corporate activities. In
addition, the Company is required to comply with specified minimum interest
coverage and maximum leverage ratios. The refinancing effected changes to these
covenants to make them generally more restrictive. Among the changes is a change
to the calculation of the leverage ratio so as to include reserves relating to
specified litigation liabilities as debt.
In addition to the failure to pay principal, interest and fees when due,
events of default under the Senior Bank Facilities include: failure to comply
with applicable covenants; failure to pay when due, or other defaults permitting
acceleration of, other indebtedness exceeding $7.5 million; judgment defaults in
excess of $7.5 million to the extent not covered by insurance; certain events of
bankruptcy; and certain changes in control.
Under the Senior Bank Facilities, UCAR is permitted to pay dividends on and
repurchase common stock, and Global is permitted to pay dividends to UCAR for
those purposes, only in an aggregate amount of up to $15 million in 1999 and $20
million in 2000 and thereafter. UCAR and Global are also permitted to repurchase
common stock from present or former directors, officers or employees in an
aggregate amount of up to the lesser of $5 million per year (with unused amounts
permitted to be carried forward) or $25 million on a cumulative basis since
October 19, 1995. In addition, Global is permitted to pay dividends to UCAR (i)
in respect of UCAR's administrative fees and expenses and (ii) to fund payments
in connection with antitrust investigations, lawsuits and claims and securities
and shareholder derivative lawsuits and claims. The total amount of dividends to
fund those payments, plus the total amount paid on intercompany debt owed to
UCAR for the same purpose, may not exceed $400 million (adjusted for certain
imputed interest expense).
SUBORDINATED NOTES
Global has $200 million aggregate principal amount of Subordinated Notes
outstanding. Interest on the Subordinated Notes is payable semiannually at the
rate of 12% per annum. The Subordinated Notes mature on January 15, 2005.
Except as described below, Global may not redeem the Subordinated Notes
prior to January 15, 2000. On or after that date, Global may redeem the
Subordinated Notes in whole or in part at specified redemption prices beginning
at 104.5% of the principal amount redeemed for the year commencing January 15,
2000 and reducing to 100% of the principal amount redeemable for the years
January 15, 2003 and thereafter, in each case together with accrued and unpaid
interest.
89
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(7) LONG-TERM DEBT -- (CONTINUED)
Upon the occurrence of a change of control, (i) Global will have the option
to redeem the Subordinated Notes in whole but not in part at a redemption price
equal to 100% of the principal amount redeemed, plus a specified premium, plus
accrued and unpaid interest and (ii) if Global does not so redeem the
Subordinated Notes, Global will be required to make an offer to repurchase the
Subordinated Notes at a price equal to 101% of the principal amount redeemed,
together with accrued and unpaid interest.
The Subordinated Notes are unsecured and subordinated to all existing and
future senior indebtedness of Global. The Subordinated Notes will rank pari
passu with any future senior subordinated indebtedness of Global and senior to
all other subordinated indebtedness of Global. UCAR has unconditionally
guaranteed the Subordinated Notes on a senior subordinated basis.
The indenture relating to the Subordinated Notes contains a number of
covenants that, among other things, restrict the Company's ability to incur
additional indebtedness, pay dividends, make investments, create or permit to
exist restrictions on distributions from subsidiaries, sell assets, repurchase
Subordinated Notes, engage in certain transactions with affiliates or enter into
certain mergers and consolidations. It also prohibits UCAR from engaging in any
business activities other than holding the stock of Global and certain permitted
investments.
In addition to the failure to pay principal and interest when due or
repurchase the Subordinated Notes when required, events of default under the
Subordinated Notes include: failure to comply with applicable covenants; failure
to pay at maturity or upon acceleration of other indebtedness exceeding $25
million, judgment defaults in excess of $25 million to the extent not covered by
insurance; and certain events of bankruptcy.
The indenture restricts the payment of dividends by Global to UCAR if (i)
at the time of the proposed dividend, Global is unable to meet certain
indebtedness incurrence and income tests or (ii) the total amount of the
dividends paid exceeds specified aggregate limits based on consolidated net
income, net proceeds from asset and stock sales and certain other transactions.
These restrictions are not applicable to dividends paid to UCAR (i) in respect
of UCAR's administrative fees and expenses and (ii) to purchase common stock
held by present or former officers or employees subject to limits similar to
those under the Senior Bank Facilities.
DEUTSCHE MARK LOANS
In order to consummate the purchase by UCAR Elektroden of net working
capital assets from EKL (approximate U.S. dollar equivalent of $12 million),
UCAR Elektroden arranged a bank facility with BHF Bank Aktiengesellschaft.
90
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(7) LONG-TERM DEBT -- (CONTINUED)
The facility consists of a committed term loan of deutsche mark 17.3
million (U.S. dollar equivalent of approximately $10 million in December 1998)
and a revolving line of credit for deutsche mark 2.5 million (U.S. dollar
equivalent of approximately $1.5 million in December 1998).
The term portion of the facility is committed through December 2000, with
repayment of the outstanding balance of deutsche mark 17.3 million due on
December 31, 2000. The revolving portion of the facility is committed for one
year, with an option to renew annually.
Credit support is provided by Global's guarantee of UCAR Elektroden's
obligations under the facility. The facility requires that Global remain in
compliance with the Senior Bank Facilities and that the facility not be
subordinate to the obligations of the Senior Bank Facilities. It also restricts
the withdrawal of capital from UCAR Elektroden. The shareholders of UCAR
Elektroden have undertaken not to dispose of their capital contributions during
the term of the facility.
EXTRAORDINARY ITEM
In November 1998, the Company recorded a charge of $11 million ($7 million
after tax) related to the refinancing of the Senior Bank Facilities. The
extraordinary charge represents $8 million of fees paid to amend the Senior Bank
Facilities and the write-off of $3 million of deferred debt issuance costs.
OTHER
At December 31, 1998, payments due on long-term debt in the four years
after 1999 are: $77 million in 2000; $87 million in 2001; $117 million in 2002;
and $206 million in 2003.
The Company's weighted-average interest rate on short-term borrowings
outstanding was 7.2% at December 31, 1997 and 9.1% at December 31, 1998.
(8) INCOME TAXES
Total income taxes were allocated as follows:
FOR THE YEAR ENDED
DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
Income from operations.................... $ 68 $ 39 $ 32
Extraordinary item........................ -- -- (4)
Stockholders' equity (deficit)............ (4) (5) --
---- ---- ----
$ 64 $ 34 $ 28
==== ==== ====
91
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(8) INCOME TAXES -- (CONTINUED)
The income taxes credited to stockholders' equity (deficit) in 1996 and
1997 relate to the tax benefit arising from the exercise of employee stock
options.
The following table summarizes the U.S. and non-U.S. components of income
(loss) before provision for income taxes:
FOR THE YEAR ENDED
DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
U.S....................................... $ 43 $ (275) $ (39)
Non-U.S................................... 164 153 43
---- ---- ----
$ 207 $ (122) $ 4
==== ==== ====
Income tax expense attributable to income from operations consists of:
CURRENT DEFERRED TOTAL
------- -------- -----
(Dollars in millions)
For the year ended December 31, 1996
U.S. federal income taxes........ $ (1) $ 16 $ 15
Non-U.S. income taxes............ 50 3 53
---- ---- ----
$ 49 $ 19 $ 68
==== ==== ====
For the year ended December 31, 1997
U.S. federal income taxes........ $ 11 $ (41) $ (30)
Non-U.S. income taxes............ 66 3 69
---- ---- ----
$ 77 $ (38) $ 39
==== ==== ====
For the year ended December 31, 1998
U.S. federal income taxes........ $ 10 $ (4) $ 6
Non-U.S. income taxes............ 46 (20) 26
---- ---- ----
$ 56 $ (24) $ 32
==== ==== ====
In December 1992, the Company obtained an income tax exemption from the
Brazilian government on income generated from graphite electrode production
through 1999. The exemption reduced the net expense associated with income taxes
by $4 million in 1996, $6 million in 1997 and $5 million in 1998.
92
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(8) INCOME TAXES -- (CONTINUED)
Income tax expense attributable to income from operations differed from the
amounts computed by applying the U.S. federal income tax rate of 35 percent to
pretax income from operations as a result of the following:
FOR THE YEAR ENDED
DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
Tax at statutory U.S. federal rate........... $ 72 $ (43) $ 2
Nondeductible (deductible) portion of estimated
liabilities and expenses associated with
antitrust investigations and related lawsuits
and claims................................. -- 85 (18)
Nondeductible portion of impairment loss..... -- -- 19
Nondeductible imputed interest associated with
antitrust fines............................ -- -- 2
U.S. investment losses related to restructuring
charge..................................... -- -- (32)
Other taxes related to restructuring charge.. -- -- 9
Foreign earnings taxed at different rates.... 3 4 (13)
Foreign operating losses with no benefit
provided................................... -- -- 9
Brazilian tax exemption...................... (4) (6) (5)
Net taxes related to foreign dividends and
other remittances.......................... 4 -- 8
Adjustments to deferred tax asset valuation
allowance:
Foreign tax credits........................ (8) -- 12
Restructuring.............................. -- -- 32
Antitrust investigations and related lawsuits
and claims.............................. -- -- 11
Other........................................ 1 (1) (4)
---- --- ---
$ 68 $ 39 $ 32
==== === ===
93
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(8) INCOME TAXES -- (CONTINUED)
The significant components of deferred income tax expense attributable to
income from operations are as follows:
FOR THE YEAR ENDED
DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
Deferred tax expense (exclusive of the
effects of other components below)..... $ 27 $ (38) $ (79)
Increase (decrease) in beginning-of-
the-year balance of the valuation
allowance for deferred tax assets...... (8) -- 55
---- --- ----
$ 19 $ (38) $ (24)
==== === ====
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1998 are presented below:
AT DECEMBER 31,
1997 1998
(Dollars in millions)
Deferred tax assets:
Depreciation.................................. $ 9 $ 8
Estimated liabilities and expenses associated
with antitrust investigations and related
lawsuits and claims......................... 28 23
Sales and product allowances.................. 1 1
Compensation and benefit plans................ 55 55
Excess foreign tax credits.................... 18 30
Inventory..................................... 2 2
Provision for scheduled plant closings and
other restructurings........................ 1 61
AMT tax credit carryforwards.................. 1 4
Debt issuance costs........................... 4 3
Other......................................... 6 9
--- ---
Total gross deferred tax assets............. 125 196
Less: valuation allowance.................. (3) (58)
--- ---
Deferred tax assets........................ $ 122 $ 138
--- ---
94
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(8) INCOME TAXES -- (CONTINUED)
AT DECEMBER 31,
---------------
1997 1998
---- ----
(Dollars in millions)
Deferred tax liabilities:
Depreciation................................ $ 87 $ 86
Compensation and benefit plans.............. 1 1
Inventory................................... 17 13
Other....................................... 11 5
-- ---
Total gross deferred tax liabilities....... 116 105
--- ---
Net deferred tax asset.................... $ 6 $ 33
=== ===
Deferred income tax assets and liabilities are classified on a net current
and noncurrent basis within each tax jurisdiction. Deferred income tax assets
are included in prepaid expenses in the amount of $30 million at December 31,
1997 and $35 million at December 31, 1998 and in other assets in the amount of
$43 million at December 31, 1997 and $52 million at December 31, 1998. Deferred
tax liabilities are also included in accrued income and other taxes in the
amount of $9 million at December 31, 1997 and $6 million at December 31, 1998.
The net change in the total valuation allowance for 1998 was an increase of
$55 million. The increase results primarily from deferred taxes associated with
the Canadian ($28 million) and German ($4 million) restructurings, antitrust
claims ($11 million) and excess foreign tax credits ($12 million) where the
Company considers realizability unlikely. There was no change in the valuation
allowance in 1997. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies in making this
assessment.
The Company had excess foreign tax credit carryforwards of $18 million at
December 31, 1997 and $30 million at December 31, 1998. Of these tax credit
carryforwards, $1 million expire in 1999, $1 million expire in 2000, $1 million
expire in 2001, $5 million expire in 2002 and $22 million in 2003. The Company
used foreign tax credits to reduce U.S. current tax liabilities in the amount of
$30 million in 1996, $53 million in 1997 and $38 million in 1998. Based upon the
level of historical taxable income and projections for future taxable income
over the periods during which these credits are utilizable, management believes
it is more likely than not the Company will realize the benefits of these
deferred tax assets net of the existing valuation allowances at December 31,
1998.
95
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(8) INCOME TAXES -- (CONTINUED)
U.S. income taxes have not been provided on undistributed earnings of
foreign subsidiaries. The Company's intention is to reinvest these earnings
permanently or to repatriate the earnings only when it is tax efficient to do
so. Accordingly, the Company believes that any U.S. tax on repatriated earnings
would be substantially offset by U.S. foreign tax credits.
(9) OTHER (INCOME) EXPENSE (NET)
The following table presents an analysis of other (income) expense (net):
FOR THE YEAR ENDED
DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
Interest income....................... $ (9) $ (9) $ (14)
Global integration project consulting
fees................................ -- 4 9
Bank fees............................. 2 2 3
Amortization of goodwill.............. -- 1 1
Other................................. 6 7 9
---- ---- ----
Total other (income) expense (net).. $ (1) $ 5 $ 8
==== ==== ====
(10) INTEREST EXPENSE
The following table presents an analysis of interest expense:
FOR THE YEAR ENDED
DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
Interest incurred on debt............. $ 59 $ 62 $ 66
Amortization of debt issuance costs... 2 2 2
Interest imputed on antitrust fines... -- -- 5
---- ---- ----
Total interest expense........... $ 61 $ 64 $ 73
==== ==== ====
96
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(11) SUPPLEMENTARY BALANCE SHEET DETAIL
AT DECEMBER 31,
1997 1998
(Dollars in millions)
Notes and accounts receivable:
Trade....................................... $ 220 $ 172
Other....................................... 28 31
----- -----
248 203
Allowance for doubtful accounts............. (6) (5)
----- -----
$ 242 $ 198
===== =====
Property, plant and equipment:
Land and improvements....................... $ 45 $ 43
Buildings................................... 231 199
Machinery and equipment..................... 949 946
Construction in progress and other.......... 64 32
----- -----
$ 1,289 $ 1,220
===== =====
Other assets:
Goodwill (net).............................. $ 25 $ 15
Deferred income taxes....................... 43 52
Benefits protection trust................... 10 2
Long-term receivables....................... 5 8
Other....................................... 19 14
----- -----
$ 102 $ 91
===== =====
Accounts payable:
Trade....................................... $ 63 $ 54
Other....................................... 13 13
----- -----
$ 76 $ 67
===== =====
Other accrued liabilities:
Accrued accounts payable.................... $ 26 $ 13
Payrolls.................................... 8 7
Restructuring............................... 2 57
Employee compensation and benefits.......... 47 31
Estimated liabilities and expenses associated
with antitrust investigations and related
lawsuits and claims...................... 174 78
Other....................................... 5 12
----- -----
$ 262 $ 198
===== =====
97
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(11) SUPPLEMENTARY BALANCE SHEET DETAIL -- (CONTINUED)
AT DECEMBER 31,
1997 1998
(Dollars in millions)
Other long-term obligations:
Postretirement benefits..................... $ 83 $ 83
Employee severance costs.................... 23 12
Pension and related benefits................ 22 21
Estimated liabilities and expenses associated
with antitrust investigations and related
lawsuits and claims...................... 163 117
Other....................................... 22 33
---- ----
$ 313 $ 266
==== ====
The following table presents an analysis of the allowance for doubtful
accounts:
AT DECEMBER 31,
1997 1998
(Dollars in millions)
Balance at beginning of year.................... $ 6 $ 6
Deductions...................................... -- (1)
---- ----
Balance at end of year.......................... $ 6 $ 5
==== ====
(12) LEASES
Lease commitments under noncancelable operating leases extending for one
year or more will require the following future payments:
(Dollars in millions)
1999................................................ $ 5
2000................................................ 3
2001................................................ 2
2002................................................ 2
2003................................................ 2
After 2003.......................................... 3
Total lease and rental expenses under noncancelable operating leases
extending one month or more were $4 million in 1996, $5 million in 1997 and $5
million in 1998.
98
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(13) BENEFIT PLANS
RETIREMENT PLANS AND POSTRETIREMENT BENEFIT PLANS
Until February 25, 1991, the Company participated in the U.S. retirement
plan of Union Carbide Corporation ("Union Carbide"). Effective February 26,
1991, the Company formed its own U.S. retirement plan which covers substantially
all U.S. employees. Retirement and death benefits related to employee service
through February 25, 1991 are covered by the Union Carbide plan. Benefits paid
by the Union Carbide plan are based on final average pay through February 25,
1991, plus salary increases (not to exceed 6% per year) until January 26, 1995
when Union Carbide ceased to own at least 50% of the equity of the Company. All
Company employees who retired prior to February 25, 1991 are covered under the
Union Carbide plan.
Pension benefits under the Company plan are based primarily on years of
service and compensation levels prior to retirement. Net pension cost for the
U.S. retirement plan were $6 million in each of 1996 and 1997 and $7 million for
1998.
Pension coverage for employees of foreign subsidiaries is provided, to the
extent deemed appropriate, through separate plans. Obligations under such plans
are systematically provided for by depositing funds with trustees, under
insurance policies or by book reserves. Net pension costs for plans of foreign
subsidiaries amounted to $1 million in 1996, $1 million in 1997 and $7 million
in 1998 which includes a $7 million curtailment loss for the Canadian pension
plan recorded in conjunction with the Company's restructuring charge.
The Company also provides health care and life insurance benefits for
eligible retired employees. These benefits are provided through various
insurance companies and health care providers. The Company accrues the estimated
net postretirement benefit costs during the employees' credited service periods.
The components of the Company's consolidated net pension costs are as
follows:
FOR THE YEAR ENDED DECEMBER 31,
1996 1997 1998
---- ---- ----
(Dollars in millions)
Service cost............................... $ 7 $ 7 $ 8
Interest cost.............................. 9 12 13
Expected return on assets.................. (9) (12) (14)
Amortization of transition obligation (asset) -- -- (1)
Settlement loss............................ -- -- 1
Curtailment loss........................... -- -- 7
--- --- ---
Net pension cost........................ $ 7 $ 7 $ 14
=== === ===
99
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(13) BENEFIT PLANS -- (CONTINUED)
The components of the Company's consolidated net postretirement benefits
costs are as follows:
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1996 1997 1998
---- ---- ----
(Dollars in millions)
Service cost................................ $ 2 $ 2 $ 3
Interest cost............................... 5 6 5
Amortization of prior service cost.......... (3) (3) (3)
--- --- ---
Net postretirement benefit cost.......... $ 4 $ 5 $ 5
=== === ===
The reconciliation of beginning and ending balances of benefit obligations
and fair value of plan assets, and the funded status of the plan, are as
follows:
POSTRETIREMENT
PENSION BENEFITS BENEFITS
AT DECEMBER 31, AT DECEMBER 31,
---------------- ---------------
1997 1998 1997 1998
---- ---- ---- ----
(Dollars in millions)
Changes in benefit obligation:
Net benefit obligation at beginning of
year............................... $ 140 $ 172 $ 74 $ 81
Service cost......................... 7 8 2 3
Interest cost........................ 12 13 6 5
Plan amendments...................... -- 1 1 --
Foreign currency exchange rate changes (4) (4) (1) (1)
Actuarial loss....................... 8 10 4 2
Acquisition of EMSA.................. 14 -- -- --
Curtailment.......................... -- 4 -- (1)
Settlement........................... -- (3) -- --
Special termination benefits......... -- 3 -- --
Gross benefits paid.................. (5) (5) (5) (5)
----- ----- ----- -----
Net benefit obligation at end of
year............................ $ 172 $ 199 $ 81 $ 84
===== ===== ===== =====
Changes in plan assets:
Fair value of plan assets at beginning
of year............................ $ 123 $ 165 $ -- $ --
Actual return on plan assets......... 21 17 -- --
Acquisition of EMSA.................. 20 -- -- --
Foreign currency exchange rate changes (4) (5) -- --
Employer contributions............... 10 2 5 5
Gross benefits paid.................. (5) (5) (5) (5)
----- ----- ----- -----
Fair value of plan assets at end of
year............................ $ 165 $ 174 $ -- $ --
===== ===== ===== =====
100
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(13) BENEFIT PLANS -- (CONTINUED)
POSTRETIREMENT
PENSION BENEFITS BENEFITS
AT DECEMBER 31, AT DECEMBER 31,
---------------- ----------------
1997 1998 1997 1998
---- ---- ---- ----
(Dollars in millions)
Reconciliation of funded status:
Funded status at end of year........ $ (7) $ (25) $ (81) $ (84)
Unrecognized net transition
obligation (asset)................. (8) (6) 1 --
Unrecognized prior service cost..... 3 4 (5) (1)
Unrecognized net actuarial (gain) loss (8) (1) 2 2
----- ----- ----- -----
Net amount recognized at end of
year............................ $ (20) $ (28) $ (83) $ (83)
===== ===== ===== =====
Assumptions used to determine net pension costs, pension projected benefit
obligation, net postretirement benefit costs and postretirement benefits
projected benefit obligation are as follows:
POSTRETIREMENT
PENSION BENEFITS BENEFITS
AT DECEMBER 31, AT DECEMBER 31,
---------------- ----------------
1997 1998 1997 1998
---- ---- ---- ----
Weighted-average assumptions as of
measurement date:
Discount rate....................... 7.48% 7.61% 7.00% 7.34%
Expected return on plan assets ..... 8.93% 8.83% N/A N/A
Rate of compensation increase....... 5.12% 4.85% 4.50% 4.58%
Health care cost trend on covered
charges:
Initial......................... N/A N/A 8.70% 8.14%
Ultimate........................ N/A N/A 5.23% 5.11%
Years to ultimate............... N/A N/A 7 6
Assumed health care cost trend rates have a significant effect on the
amounts reported for net postretirement benefits. A one-percentage-point change
in the health care cost trend rate would change the accumulated postretirement
benefit obligation by approximately $7 million as of December 31, 1998 and
change net postretirement benefit costs by approximately $1 million for 1998.
101
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(13) BENEFIT PLANS -- (CONTINUED)
OTHER NON-QUALIFIED PLANS
Since January 1, 1995, the Company has established various unfunded,
non-qualified supplemental retirement and deferred compensation programs for
certain eligible employees. In 1995, the Company established a benefits
protection trust (the "Trust") to partially provide for the benefits of
employees participating in these plans. At December 31, 1997 and 1998, the Trust
had assets of approximately $10 million and $2 million, respectively, which are
included in other assets on the Consolidated Balance Sheet.
SAVINGS PLAN
The Company's employee savings plan provides eligible employees the
opportunity for long-term savings and investment. Participating employees can
contribute 1.0% to 7.5% of employee compensation as basic contributions and an
additional 0.5% to 10.0% of employee compensation as supplemental contributions.
The Company contributes on behalf of each participating employee an amount equal
to 30% for 1996 and 1997 and 50% for 1998 of the employee's basic contribution.
The Company contributed $2 million in each of 1996, 1997 and 1998.
INCENTIVE PLAN
In 1996 and 1997, the Company provided group profit sharing plans for
employees in various subsidiaries. Costs for these profit sharing plans were $17
million in 1996 and $19 million in 1997. Effective January 1, 1998, the Company
implemented a global profit sharing plan for the Company's worldwide employees.
This plan is based on the global financial performance of the Company. In 1998,
the cost for the plan was $10 million.
(14) RESTRUCTURING PLAN
In September 1998, the Company recorded a restructuring charge of $86
million in connection with a global restructuring and rationalization plan to
reduce costs and improve operating efficiencies. The principal actions of the
plan involve the closure of manufacturing operations in Welland, Canada and
Berlin, Germany, and the centralization and consolidation of administrative and
financial functions. These actions, which will result in the elimination of
approximately 430 administrative and manufacturing positions, are expected to be
completed in 1999.
102
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(14) RESTRUCTURING PLAN -- (CONTINUED)
The major components of the restructuring charge and the remaining accrual
balance as of December 31, 1998 were as follows:
BALANCE AT
ORIGINAL 1998 ACTIVITY DECEMBER 31,
CHARGE/ACCRUAL CASH NONCASH 1998
Severance and related costs $ 30 $ -- $ -- $ 30
Write-off of property, plant
and equipment 28 -- 28 --
Plant shut down and related 19 -- 1 18
costs
Postmonitoring and environmental 9 -- -- 9
---- ----- ----- ----
$ 86 $ -- $ 29 $ 57
==== ===== ===== ====
(15) MANAGEMENT COMPENSATION AND INCENTIVE PLANS
In January 1995, the Company entered into three-year employment agreements
with certain officers which automatically renew annually for additional one-year
terms. The employment agreements provide the officers with the opportunity to
receive bonuses based in part on the achievement of designated EBITDA targets.
The Company recorded expenses applicable to these bonuses of $5 million in 1996
and $3 million in 1997. At December 31, 1998, only one officer was subject to
such an agreement.
In June 1998, the Company entered into a five-year employment agreement
with its new president and chief executive officer.
UCAR has adopted several stock option plans. The aggregate number of shares
subject to the plans was 6,387,000 at December 31, 1997 and 9,500,000 at
December 31, 1998. The plans permit options to be granted to employees, and in
the case of one plan, since March 1998, also to non-employee directors.
In January 1995, UCAR granted 12-year options to management to purchase
4,761,000 shares at an exercise price of $7.60 per share, of which options for
3,967,400 shares vested fully at the time of UCAR's initial public offering and
the balance were performance options, one-half of which vest in each of 1998 and
1999 if EBITDA for those years is equal to or exceeds a target amount. In
December 1997, UCAR's Board of Directors approved the accelerated vesting of the
outstanding performance options associated with the 1998 performance targets
and, accordingly, the Company recorded compensation expense of $12 million ($9
million after tax). In addition, because the Company has not met the probability
criterion associated with achieving the 1999 performance targets, no
compensation expense associated with those performance options has been
recorded.
103
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(15) MANAGEMENT COMPENSATION AND INCENTIVE PLANS -- (CONTINUED)
In February 1997, UCAR granted fully vested 10-year options to management
to purchase 155,000 shares at an exercise price of $37.59 per share.
UCAR granted 10-year options to management to purchase shares throughout
1998, as follows:
o Options for 621,000 shares were granted to certain officers at exercise
prices ranging from $29.22 to $34.36 per share. Options for 300,000 shares
vest one year from the grant date, options for 221,000 shares vest two
years from the grant date and the remaining options for 100,000 shares vest
three years from the grant date.
o Options for 1,935,000 shares were issued to certain officers and
management, at exercise prices ranging from $15.50 to $17.06 per share.
Options for 17,000 shares were vested on the grant date and options for
628,000 shares vest one year from the grant date. The remaining options for
1,290,000 shares vest seven years from the grant date. Accelerated vesting
occurs as the market price for the common stock equals or exceeds specified
amounts.
In September 1998, UCAR adopted a loan program under which management
received approximately $3 million in 1998.
In September 1998, UCAR adopted stock purchase programs under which
management may purchase common stock at fair market value on the date of
purchase. During 1998, 201,373 shares of common stock were sold to management.
In February 1996, UCAR granted 10-year options to management to purchase
960,000 shares at an exercise price of $35.00 per share. In May 1996, UCAR
granted additional 10-year options to management to purchase 4,000 shares at an
exercise price of $40.44 per share. In February 1997, UCAR granted additional
10-year options to management to purchase 61,500 shares at an exercise price of
$39.31 per share. The options granted vest eight years from the date of grant.
Accelerated vesting occurs as the market price of the common stock equals or
exceeds specified amounts. At December 31, 1997, 460,350 of such options were
fully vested.
The Company applies APB 25 in accounting for its stock-based compensation
plans. Accordingly, no compensation cost has been recognized for its time
vesting options. The compensation cost that has been charged against income for
its performance vesting options was $12 million in 1997. If compensation cost
for the Company's stock-based compensation plans was determined by the fair
value method prescribed by SFAS 123, the Company's net income (loss) and net
income (loss) per share would have been reduced or increased to the pro forma
amounts indicated below:
104
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(15) MANAGEMENT COMPENSATION AND INCENTIVE PLANS -- (CONTINUED)
FOR THE YEAR ENDED
DECEMBER 31,
1996 1997 1998
(Dollars in millions,
except per share data)
Net income (loss):
As reported.......................... $ 145 $ (160) $ (37)
Pro forma............................ 142 (156) (41)
Diluted net income (loss) per share:
As reported ........................ 3.00 (3.49) (0.83)
Pro forma........................... 2.93 (3.39) (0.91)
A summary of the status of the Company's stock-based compensation plans as
of December 31, 1996, 1997 and 1998, and changes during the years then ended is
presented below:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1996 1997 1998
---- ---- ----
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ ----- ------ ----- ------ -----
(Shares in thousands)
<S> <C> <C> <C> <C> <C> <C>
Time vesting options:
Outstanding at beginning
of year................ 2,787 $ 7.60 3,572 $15.01 3,324 $16.98
Granted at market price.. -- -- -- -- 1,884 17.06
Granted at price exceeding
market.................. 964 35.02 62 39.31 621 32.37
Granted at price below
market.................. -- -- 155 37.59 51 15.50
Exercised................ (176) 8.22 (432) 9.91 (10) 7.60
Forfeited................ (3) 35.00 (33) 35.00 (44) 32.84
----- ----- -----
Outstanding at end of
year.................. 3,572 15.01 3,324 16.98 5,826 18.48
===== ===== =====
Options exercisable at
year end................ 2,853 9.97 2,799 13.55 2,841 13.76
Weighted-average fair
value of options granted
during year:
At market............... -- -- $ 8.53
Exceeding market........ 16.02 16.98 12.49
Below market............ -- 17.47 7.99
</TABLE>
105
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(15) MANAGEMENT COMPENSATION AND INCENTIVE PLANS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1996 1997 1998
---- ---- ----
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ ----- ------ ----- ------ -----
(Shares in thousands)
<S> <C> <C> <C> <C> <C> <C>
Performance vesting options:
Outstanding at beginning
of year................. 1,984 $7.60 1,508 $ 7.60 1,174 $ 7.60
Granted.................. -- -- -- -- -- --
Exercised................ (476) 7.60 (284) 7.60 (45) 7.60
Forfeited................ -- -- (50) 7.60 (191) 7.60
----- ----- -----
Outstanding at end of
year.................. 1,508 7.60 1,174 7.60 938 7.60
===== ====== =====
Options exercisable at
year end................ 714 7.60 842 7.60 566 7.60
</TABLE>
The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions for grants in 1996, 1997 and 1998, respectively: dividend yield of
0.0% for all years; expected volatility of 30% in 1996 and 1997, and 35% in
1998; risk-free interest rates of 5.7% in 1996, 6.4% in 1997 and 4.9% in 1998;
and expected lives of eight years in 1996 and seven years in 1997 and 1998.
The following table summarizes information about stock options outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICES EXERCISABLE PRICES
--------------- ----------- ---- ------ ----------- ------
(Shares in thousands)
<S> <C> <C> <C> <C> <C>
Time vesting options:
$7.60 2,199 8 years $ 7.60 2,199 $ 7.60
$15.50 to $17.06 1,930 9 years 17.02 17 15.50
$29.22 to $40.38 1,697 7 years 33.94 625 35.36
----- --- ---
5,826 8 years 18.39 2,841 13.76
===== =====
Performance vesting
options:
$7.60 938 8 years 7.60 566 7.60
====== ===
</TABLE>
106
<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(16) CONTINGENCIES
ANTITRUST INVESTIGATIONS
On June 5, 1997, the Company was served with subpoenas to produce documents
to a grand jury convened by the U.S. Department of Justice (the "DOJ") and a
related search warrant in connection with a criminal investigation as to whether
there has been any violation of U.S. federal antitrust laws by producers of
graphite electrodes. Concurrently, the antitrust enforcement authorities of the
European Union (the "EU authorities") visited offices of the Company's French
subsidiary for purposes of gathering information in connection with an
investigation as to whether there has been any violation of the antitrust law of
the European Union by those producers. In October 1997, the Company was served
with subpoenas by the DOJ to produce documents relating to, among other things,
its carbon electrode and bulk graphite businesses.
In December 1997, UCAR's Board of Directors appointed a special committee
of outside directors to exercise the power and authority of UCAR's Board of
Directors in connection with antitrust investigations and related lawsuits and
claims. On March 13, 1998, the then Chairman of the Board, President and Chief
Executive Officer and the then Senior Vice President and Chief Operating Officer
retired and resigned from all positions with the Company.
On April 7, 1998, pursuant to a plea agreement between the DOJ and UCAR,
the DOJ charged UCAR and unnamed co-conspirators with participating from at
least July 1992 until at least June 1997 in an international conspiracy
involving meetings and conversations in the Far East, Europe and the United
States resulting in agreements to fix prices and allocate market shares in the
United States and elsewhere, to restrict co-conspirators' capacity and to
restrict non-conspiring producers' access to manufacturing technology for
graphite electrodes. On April 24, 1998, pursuant to the plea agreement, UCAR
pled guilty to a one-count charge of violating U.S. federal antitrust laws in
connection with the sale of graphite electrodes and was sentenced to pay a
non-interest-bearing fine in the aggregate amount of $110 million. The fine is
payable in six annual installments of $20 million, $15 million, $15 million, $18
million, $21 million and $21 million, commencing July 23, 1998. The agreement
was approved by the court and, as a result, under the plea agreement, the
Company will not be subject to prosecution by the DOJ with respect to any other
violations of the U.S. federal antitrust laws occurring prior to April 24, 1998.
The payment due July 23, 1998 was timely made.
In April 1998, the Company became aware that the Canadian Competition
Bureau (the "Competition Bureau") had commenced a criminal investigation as to
whether there has been any violation of Canadian antitrust laws by producers of
graphite electrodes. On January 29, 1999, pursuant to a plea agreement with the
Competition Bureau, the Company's Canadian subsidiary agreed to plead guilty to
a one count charge of violating Canadian antitrust laws in connection with the
sale of graphite electrodes and to pay a fine of Cdn.$11 million. Under the plea
agreement, which is subject to court approval, the Company will not be subject
to prosecution by the Competition Bureau with respect to any antitrust
violations occurring prior to
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UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(16) CONTINGENCIES -- (CONTINUED)
the date of the plea agreement. The plea agreement will be submitted for court
approval. Although the Company does not expect such an outcome, it is possible
that the court could reject the plea agreement. In such event, it is possible
that the Company could be required to either defend any charges which could be
brought or enter into a less favorable plea agreement.
The guilty plea and plea agreements have made it more difficult for the
Company to defend against other investigations as well as civil lawsuits and
claims.
In June 1998, the Company became aware that the Japanese antitrust
enforcement authorities had commenced an investigation as to whether there has
been any violation of Japanese antitrust laws by producers and distributors of
graphite electrodes. On January 14, 1999, the Company received a request from
these authorities to explain, in writing, the purpose of various alleged
meetings which took place between the Company and other producers of graphite
electrodes during the period from 1992 to the present. The Company believes
that, among other things, it has good defenses to any claim that it is subject
to the jurisdiction of these authorities and does not intend to comply with this
request. The independent distributor of the Company's products in Japan has been
required to produce documents and witnesses to these authorities.
The Company has been vigorously protecting, and intends to continue to
vigorously protect, its interests in connection with the investigations
described above. The Company may, however, at any time settle any possible
unresolved charges. The Company is cooperating with the EU authorities in its
investigation and with the DOJ and the Competition Bureau in their investigation
of other producers of graphite electrodes. It is possible that antitrust
investigations seeking, among other things, to impose fines and penalties
against the Company could be initiated by authorities in other jurisdictions.
ANTITRUST LAWSUITS
In 1997, UCAR and other producers of graphite electrodes were served with
complaints commencing various antitrust class action lawsuits. Subsequently, the
complaints were either withdrawn without prejudice to refile or consolidated
into a single complaint (the "antitrust class action lawsuit"). The plaintiffs
allege that the defendants violated U.S. federal antitrust laws in connection
with the sale of graphite electrodes and seek, among other things, an award of
treble damages resulting from such alleged violations. In August 1998, the court
certified a class of plaintiffs consisting of all persons who purchased graphite
electrodes in the United States (the "class") directly from the defendants
during the period from July 1, 1992 through June 30, 1997 (the "class period").
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UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(16) CONTINGENCIES -- (CONTINUED)
In 1998, UCAR and other producers of graphite electrodes were served with a
complaint by 27 steelmakers in the United States commencing a separate civil
antitrust lawsuit (the "opt-out lawsuit"). The plaintiffs allege that the
defendants violated U.S. federal antitrust laws in connection with the sale of
graphite electrodes and seek, among other things, an award of treble damages
resulting from such alleged antitrust violations.
In 1998, the Company, other producers of graphite electrodes, Union Carbide
Corporation and Mitsubishi Corporation were served with a complaint by Nucor
Corporation and an affiliate commencing a civil antitrust and fraudulent
transfer lawsuit (the "Nucor lawsuit"). The plaintiffs allege that the
defendants violated U.S. federal antitrust laws in connection with the sale of
graphite electrodes and that Union Carbide Corporation and Mitsubishi
Corporation violated applicable state fraudulent transfer laws and seek, among
other things, an award of treble damages resulting from such alleged antitrust
violations and an order to have payments made by UCAR to Union Carbide
Corporation and Mitsubishi Corporation in connection with the Company's
leveraged recapitalization in January 1995 declared to be fraudulent conveyances
and returned to UCAR for purposes of enabling UCAR to satisfy any judgments
resulting from such alleged antitrust violations.
In 1998, the Company and other producers of graphite electrodes were served
with a petition by Chaparral Steel Company commencing a separate civil antitrust
lawsuit (the "Texas lawsuit"). The plaintiff alleges that the defendants
violated Texas antitrust laws in connection with the sale of graphite electrodes
and seeks, among other things, an award of treble damages resulting from such
alleged violations.
Certain other steelmakers in the United States and Canada have also served
the Company and other producers of graphite electrodes with complaints
commencing five separate civil antitrust lawsuits (four in the United States and
one in Canada) in various courts (the "other lawsuits"). The plaintiffs allege
that the defendants violated applicable antitrust laws (and applicable
conspiracy laws, in the case of the lawsuit in Canada) in connection with the
sale of graphite electrodes and seek, among other things, an award of treble
damages (in the case of lawsuits in the United States) or actual and punitive
damages (in the case of the lawsuit in Canada) resulting from such alleged
violations.
In February 1999, the Company and other producers of graphite electrodes
were served with a complaint by 23 steelmakers and related parties outside the
United States commencing a separate civil antitrust lawsuit in the United States
(the "foreign customer lawsuit"). The plaintiffs allege that the defendants
violated U.S. federal antitrust laws in connection with the sale of graphite
electrodes sold or sourced from the United States and those sold and sourced
outside the United States. The plaintiffs seek, among other things, an award of
treble damages resulting from such alleged antitrust violations. The Company
believes that, among other things, it has strong defenses against claims
alleging that purchases of graphite electrodes outside the United States are
actionable under U.S. federal antitrust laws.
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<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(16) CONTINGENCIES -- (CONTINUED)
Certain steelmakers in other countries who purchased graphite electrodes
from the Company, and certain customers who purchased other products from the
Company, have threatened to commence antitrust lawsuits against the Company in
the United States and other jurisdictions.
Through February 26, 1999, the Company has settled the antitrust class
action lawsuit, the opt-out lawsuit, the Nucor lawsuit and all of the other
lawsuits (in Canada as well as in the United States), certain of the threatened
lawsuits and certain antitrust claims by certain other steelmakers who
negotiated directly with the Company. The settlements cover virtually all of the
actual and potential claims against the Company (but not other defendants) by
steelmakers in the United States and Canada arising out of alleged antitrust
violations occurring prior to the date of the respective settlements in
connection with the sale of graphite electrodes. The only material exceptions
are the Texas lawsuit, the foreign customer lawsuit and possible claims by
customers in the United States and Canada whose aggregate purchases do not
constitute a material portion of the Company's sales in those countries.
Although each settlement is unique, in the aggregate they consist primarily of
current and deferred cash payments with some product credits and discounts.
Through December 31, 1998, all payments due, an aggregate of $145 million, have
been timely made. As of December 31, 1998 and based on information known to the
Company at February 26, 1999, the aggregate amount remaining due under these
settlements is approximately $29 million, most of which is payable in 1999.
Amounts due under the settlement of the antitrust class action may be increased
if additional claims are filed by members of the class or if it is determined
that steelmakers outside the United States who purchased graphite electrodes
sourced within the United States are members of the class and such steelmakers
file claims thereunder.
The Texas lawsuit and the foreign customer lawsuit have not been settled
and are still in their early stages. The Company has been vigorously defending,
and intends to continue to vigorously defend, against the Texas lawsuit and the
foreign customer lawsuit as well as all threatened lawsuits and possible claims,
including those mentioned above. The Company may at any time, however, settle
the Texas lawsuit and the foreign customer lawsuit as well as any threatened
lawsuits and possible claims and is actively negotiating settlements with
customers who are not parties to any lawsuit to settle certain of these claims.
It is possible that additional civil antitrust lawsuits seeking, among
other things, to recover damages could be commenced against the Company in the
United States and other jurisdictions.
The Company recorded a charge of $340 million against results of operations
for 1997 as a reserve for potential liabilities and expenses in connection with
antitrust investigations and related lawsuits and claims. Actual liabilities and
expenses could be materially higher than $340 million. To the extent that the
Company's liabilities and expenses are reasonably estimable, at February 26,
1999, the Company believes that $340 million represents the best estimate of
such
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UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(16) CONTINGENCIES -- (CONTINUED)
potential liabilities and expenses. The fines and settlements described above
are within the amounts used by the Company to evaluate the $340 million charge.
SHAREHOLDER DERIVATIVE LAWSUIT
In March 1998, UCAR was served with a complaint commencing a shareholder
derivative lawsuit. Certain former and current directors and officers are named
as defendants. UCAR is named as a nominal defendant. The plaintiff alleges that
the defendants breached their fiduciary duties in connection with alleged
non-compliance by the Company and its employees with antitrust laws and that
certain of the defendants sold common stock while in possession of materially
adverse non-public information relating to such non-compliance with antitrust
laws and seeks recovery for UCAR of damages to the Company resulting from these
alleged breaches and sales. In May 1998, UCAR and the individual defendants
filed a motion to dismiss the complaint on the grounds that plaintiff failed to
make a demand upon UCAR's Board of Directors prior to commencing the lawsuit and
to sufficiently allege that such a demand would have been futile. In response to
the motion, plaintiff obtained court permission to file an amended complaint.
The amended complaint was served in July 1998. In August 1998, UCAR and the
individual defendants moved to dismiss the complaint on the same grounds. The
motion has been fully briefed.
This lawsuit is still in its early stages. This lawsuit is being pursued
for recovery from the individual defendants on behalf of (and payable to) UCAR
and any indemnification obligations which UCAR may have to the individual
defendants would result from judgments or settlements in favor of UCAR. As a
result, the Company believes that UCAR's ultimate exposure in this lawsuit is
limited to defense costs and possibly reimbursement of certain plaintiff's
attorneys' fees.
SECURITIES CLASS ACTION LAWSUIT.
In April and May 1998, UCAR was served with complaints commencing
securities class actions. The complaints have been consolidated into a single
complaint and a consolidated amended complaint was served in September 1998. The
defendants named in the consolidated amended complaint are UCAR and certain
former and current directors and officers . The proposed class consists of all
persons (other than the defendants) who purchased common stock during the period
from August 1995 through March 1998. The plaintiffs allege that, during such
period, the defendants violated U.S. federal securities laws in connection with
purchases and sales of common stock by making material misrepresentations and
omissions regarding alleged violations of antitrust laws and seek, among other
things, to recover damages resulting from such alleged violations. UCAR and each
of the individual defendants has filed a motion to dismiss.
This lawsuit is still in its early stages and no evaluation of liability or
exposure related to this lawsuit can yet be made. As mentioned above, the guilty
plea and plea agreements have made it more difficult for UCAR to defend against
claims asserted against it.
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UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(17) EARNINGS PER SHARE
Basic and diluted earnings per share are calculated based upon the
provisions of SFAS 128, adopted in 1997, using the following share data:
1996 1997 1998
---- ---- ----
Weighted-average common shares
outstanding for basic calculation 46,273,820 45,963,407 44,971,598
Add: Effect of stock options...... 2,195,365 -- --
----------- --------- ---------
Weighted-average common shares
outstanding, adjusted for diluted
calculation...................... 48,469,185 45,963,407 44,971,598
========== ========== ==========
No outstanding options were considered in the 1997 and 1998 calculation of
weighted-average common shares outstanding for the diluted calculation as they
are all antidilutive due to net losses in the respective periods. The
calculation of weighted-average common shares outstanding excludes the
consideration of performance options for 794,000 shares in 1996 because the
exercise of these options would not have been dilutive for 1996.
(18) STOCKHOLDER RIGHTS PLAN
Effective August 7, 1998, UCAR adopted a Stockholder Rights Plan (the
"Rights Plan"). Under the Rights Plan, one preferred stock purchase right (a
"Right") was distributed as a dividend on each outstanding share of common
stock. Each share of common stock issued after the distribution is accompanied
by a Right.
When a Right becomes exercisable, it entitles the holder to buy one
one-thousandth of a share of a new series of preferred stock for $110. The
Rights are subject to adjustment upon the occurrence of certain dilutive events.
The Rights will become exercisable only when a person or group becomes the
beneficial owner of 15% or more of the outstanding shares of common stock or 10
days after a person or group announces a tender offer to acquire beneficial
ownership of 15% or more of the outstanding shares of common stock. No
certificates representing the Rights will be issued unless the Rights become
exercisable.
Under certain circumstances, holders of Rights, except a person or group
described above and certain related parties, will be entitled to purchase shares
of common stock at 50% of the price at which the common stock traded prior to
the acquisition or announcement. In addition, if UCAR is acquired after the
Rights become exercisable, the Rights will entitle those holders to buy the
acquiring company's shares at a similar discount.
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<PAGE>
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(18) STOCKHOLDER RIGHTS PLAN -- (CONTINUED)
UCAR is entitled to redeem the Rights for one cent per Right under certain
circumstances. If not redeemed, the Rights will expire on August 7, 2008. For
stockholders who owned more than 15% of the outstanding shares of common stock
on August 7, 1998, the thresholds described above are 22.5% (and not 15%) of the
outstanding shares of common stock.
The preferred stock issuable upon exercise of Rights consists of Series A
Junior Participating Preferred Stock, par value $.01 per share, of UCAR. In
general, each share of that preferred stock will be entitled to a minimum
preferential quarterly dividend declared on the common stock, will be entitled
to a liquidation preference of $110,000 and will have 1,000 votes, voting
together with the common stock.
(19) IMPAIRMENT LOSS
During August 1998, the Russian economic and business climate experienced
significant adverse change. This change, when considered in conjunction with the
current and historical operating and cash flow losses of the Company's
manufacturing operations in Vyazma, Russia, indicated the need for assessing the
recoverability of the long-lived and intangible assets of these operations. The
Company estimated future undiscounted flows expected to result from the use of
these assets and concluded they were less than the carrying amount of these
assets. Accordingly, the Company recorded an impairment loss of $60 million ($58
million after tax) for the unrecoverable portion of these assets, effectively
writing down the carrying value of these assets to their fair value of $2
million. The impairment loss affected the graphite electrode business segment
and consisted of $55 million of long-lived assets and $5 million of goodwill.
Fair value was calculated on the basis of discounted estimated future cash flow.
Estimates of the discounted future cash flows are subject to significant
uncertainties and assumptions. Accordingly, actual results could vary
significantly from such estimates.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEMS 10 TO 13 (INCLUSIVE).
The information required by Items 10, 11, 12 and 13 will appear in the UCAR
International Inc. Proxy Statement for the Annual Meeting of Stockholders to be
held May 11, 1999, which will be filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934 and is incorporated by reference in this Report
pursuant to General Instruction G(3) of Form 10-K (other than the portions
thereof not deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934). In addition, the information set forth below is provided
as required by Item 10.
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information with respect to our current
executive officers and directors.
NAME AGE* POSITION
EXECUTIVE OFFICERS
Robert D. Kennedy.......... 66 Chairman of the Board
Gilbert E. Playford........ 51 President, Chief Executive Officer and
Director
Corrado F. De Gasperis..... 33 Controller
Peter B. Mancino........... 56 Vice President, General Counsel and Secretary
Craig S. Shular............ 45 Vice President and Chief Financial Officer
DIRECTORS
R. Eugene Cartledge........ 69 Director
Alec Flamm................. 72 Director
John R. Hall............... 66 Director
Thomas Marshall............ 70 Director
Michael C. Nahl............ 56 Director
KEY EMPLOYEES
Petrus J. Barnard.......... 49 Director, Electrodes of the Americas
Luiz R. Beling............. 48 Director, International Specialties Business
W. David Cate.............. 52 Director, Pipeline Management
Hermanus L. Pretorius...... 48 Director, Electrodes of Europe and South
Africa
- ------------------------
* As of March 1, 1999
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EXECUTIVE OFFICERS
ROBERT D. KENNEDY became a director in June 1990. He was elected Chairman
of the Board in March 1998 and served as Chief Executive Officer from March 1998
to June 1998. Mr. Kennedy joined Union Carbide in 1955 and held various
marketing and management positions in the United States and Europe. He was a
Senior Vice President of Union Carbide from 1981 to 1985. In 1985, Mr. Kennedy
was elected a director and President of Union Carbide. In 1986, he was elected
Chief Executive Officer and Chairman of the Board of Union Carbide. Mr. Kennedy
retired as Chief Executive Officer and President of Union Carbide in April 1995
and as Chairman of the Board (but not as a director) of Union Carbide in
December 1995. Mr. Kennedy is also a director of Union Camp Corporation, Sun
Company, Inc., K-Mart Corp., LionOre Mining International Ltd. and General
Signal Corp. Mr. Kennedy is a member of the Nominating Committee of UCAR's Board
of Directors.
GILBERT E. PLAYFORD became President and Chief Executive Officer in June
1998. From 1996 until June 1998, Mr. Playford was President, Chief Executive
Officer and a director of LionOre Mining International Ltd. Mr. Playford served
in various positions, including most recently Vice President, Treasurer and
Principal Financial Officer, of Union Carbide from 1972 until 1996. He is a
director of LionOre Mining International Ltd.
CORRADO F. DE GASPERIS became Controller in June 1998. From 1987 through
June 1998, he was with KPMG LLP, who had announced his admittance into their
partnership as a partner. Prior to this announcement, he served as a Senior
Assurance Manager in the Manufacturing, Retail and Distribution Practice.
PETER B. MANCINO joined the Law Department of Union Carbide in 1975 and
became Division Counsel of the Industrial Gases and Carbon Products Divisions in
1980. In 1989, he became General Counsel of the UCAR Group. Mr. Mancino has been
a Vice President and the Secretary since 1991.
CRAIG S. SHULAR became a Vice President and Chief Financial Officer in
January 1999. From 1976 through 1998, he held various finance and auditing
positions in various divisions of Union Carbide, including the Carbon Products
Division from 1976 to 1979.
DIRECTORS
R. EUGENE CARTLEDGE became a director in February 1996. From 1986 until his
retirement in 1994, he was the Chairman of the Board and Chief Executive Officer
of Union Camp Corporation. Mr. Cartledge retired as Chairman of the Board of
Savannah Foods & Industries Inc. in December 1997. He is a director of Union
Camp Corporation, Chase Brass Industries, Inc., Sun Company, Inc., Delta Air
Lines, Inc. and Blount, Inc. Mr. Cartledge is a member of the Organization,
Compensation and Pension Committee of UCAR's Board of Directors.
ALEC FLAMM became a director in April 1998. From January 1982 to August
1985, Mr. Flamm served as President and Chief Operating Officer of Union
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Carbide. Mr. Flamm joined Union Carbide in 1949 and held various marketing and
management positions. He retired as a Vice Chairman and a director of Union
Carbide in March 1986. Mr. Flamm served Union Carbide as Vice Chairman from
August 1985 and as a director from 1981. Mr. Flamm is Chairman of the Audit
Committee and the Nominating Committee of UCAR's Board of Directors.
JOHN R. HALL became a director in November 1995. Since July 1997, he has
been the non-employee Chairman of Arch Coal, Inc. He retired as Chairman
effective January 31, 1997 and as Chief Executive Officer effective October 1,
1996 of Ashland Inc., which positions he had held since 1981. Mr. Hall served in
various engineering and managerial capacities at Ashland Inc. since 1957. Mr.
Hall is a director of Banc One Corporation, Canada Life Assurance Company, CSX
Corporation, Humana Inc., Reynolds Metals Company, Arch Coal Inc., and USEC Inc.
Mr. Hall is Chairman of the Organization, Compensation and Pension Committee of
UCAR's Board of Directors.
THOMAS MARSHALL became a director in June 1998. He retired in 1995 as
Chairman of the Board and Chief Executive Officer of Aristech Chemical
Corporation, a spinoff of USX Corp., which positions he had held since 1986. Mr.
Marshall had previously served in various positions, including Executive Vice
President and Chief Operating Officer - Manufacturing, Fabricating and
Chemicals, for the former U.S. Steel Corp. Mr. Marshall is a member of the Audit
Committee and the Organization, Compensation and Pension Committee of UCAR's
Board of Directors.
MICHAEL C. NAHL became a director in January 1999. He is Senior Vice
President and Chief Financial Officer of Albany International Corp. He joined
Albany International Corp. as a Corporate Group Vice president and was appointed
to his present position in 1983. He is a member of the Chase Regional Advisory
Board. Mr. Nahl is a member of the Audit Committee and Nominating Committee of
UCAR's Board of Directors.
KEY EMPLOYEES
PETRUS J. BARNARD joined our South African subsidiary in 1972. Since then,
he has held various management positions in our South African subsidiary and in
the Carbon Products Division of Union Carbide in the United States. He became
Director of Operations for Europe and South Africa in 1994, General Manager of
the Graphite Electrode Business for Europe and South Africa in 1995, and has
been Vice President, Electrodes for the Americas in 1997 and Director,
Electrodes for the Americas in 1998.
LUIZ R. BELING joined our Brazilian subsidiary in 1975. He held various
sales and management positions in our Brazilian subsidiary, including President
and Managing Director, until August 1997. He became General Manager, Specialties
Business Worldwide, in 1997 and Director, International Specialties Business, in
1998.
W. DAVID CATE joined Union Carbide in 1969 and held various manufacturing
and management positions in the Carbon Products Division. He became General
Manager for Graphite Specialties and Flexible Graphite in 1991, General Manager
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<PAGE>
for North America in 1994, Vice President, Electrodes for Europe and South
Africa, in 1997 and Director, Pipeline Management, in 1998.
HERMANUS L. PRETORIUS joined our South African subsidiary in 1977. Since
then, he has held various management positions in our South African subsidiary
and our Swiss subsidiary. He became Director, Electrodes of Europe and South
Africa, in 1998.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
See Index to Consolidated Financial Statements at page 66 of this
Report.
(2) Financial Statement Schedules
None.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the year for which this
Report is filed.
(c) Exhibits
The exhibits listed in the following table have been filed as part of
this Report.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
2.1(1) - Recapitalization and Stock Purchase and Sale Agreement dated
as of November 14, 1994 among Union Carbide Corporation,
Mitsubishi Corporation, UCAR International Inc. and UCAR
International Acquisition Inc. and Guaranty made by Blackstone
Capital Partners II Merchant Banking Fund L.P. and Blackstone
Offshore Capital Partners II L.P.
2.2(2) - Amended and Restated Stockholders' Agreement dated as of
February 29, 1996
2.3 - [omitted]
2.4(3) - Form of Management Pledge and Security Agreement, together
with form of Promissory Note
2.5(2) - Amendment, Waiver and Release in connection with such
Management Common Stock Subscription Agreements, Management
Pledge and Security Agreements and Promissory Notes
2.6(1) - Indemnification Agreement dated as of January 26, 1995 among
Mitsubishi Corporation, Union Carbide Corporation and UCAR
International Inc.
2.7* - Form of Letters dated April 16, 1996 and April 28, 1997
Amending Repayment and Collateral Terms for Investor Notes
2.8 - [omitted]
2.9 - [omitted]
2.10 - [omitted]
2.11 - [omitted]
2.12 - [omitted]
2.13 - [omitted]
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<PAGE>
2.14 - [omitted]
2.15(1) - Exchange Agreement dated as of December 15, 1993 by and among
Union Carbide Corporation, Union Carbide Chemicals and
Plastics Company Inc., Mitsubishi Corporation and UCAR
International Inc.
2.16(1) - Stock Purchase and Sale Agreement dated as of November 9, 1990
among Mitsubishi Corporation, Union Carbide Corporation and
UCAR Carbon Company Inc.
2.17(1) - Letter Agreement dated January 26, 1995 with respect to
termination of the Stockholders' Agreement dated as of
November 9, 1990 among Mitsubishi Corporation, Union Carbide
Corporation and UCAR Carbon Company Inc.
2.18(1) - Settlement Agreement dated as of November 30, 1993 among
Mitsubishi Corporation, Union Carbide Corporation and UCAR
Carbon Company Inc.
2.19(1) - Transfer Agreement dated January 1, 1989 between Union Carbide
Corporation and UCAR Carbon Company Inc.
2.20(1) - Amendment No. 1 to such Transfer Agreement dated December 31,
1989
2.21(1) - Amendment No. 2 to such Transfer Agreement dated July 2, 1990.
2.22(1) - Amendment No. 3 to such Transfer Agreement dated as of
February 25, 1991
2.23(1) - Amended and Restated Realignment Indemnification Agreement
dated as of June 4, 1992 among Union Carbide Corporation,
Union Carbide Chemicals and Plastics Company Inc., Union
Carbide Industrial Gases Inc., UCAR Carbon Company Inc. and
Union Carbide Coatings Service Corporation
2.24(1) - Environmental Management Services and Liabilities Allocation
Agreement dated as of January 1, 1990 among Union Carbide
Corporation, Union Carbide Chemicals and Plastics Company
Inc., UCAR Carbon Company Inc., Union Carbide Industrial Gases
Inc. and Union Carbide Coatings Service Corporation
2.25(1) - Amendment No. 1 to such Environmental Management Services and
Liabilities Allocation Agreement dated as of June 4, 1992
2.26 - [omitted]
2.27 - [omitted]
2.28(4) - Trade Name and Trademark License Agreement dated March 1, 1996
between Union Carbide Corporation and UCAR Carbon Technology
Corporation
2.29(1) - Employee Benefit Services and Liabilities Agreement dated
January 1, 1990 between Union Carbide Corporation and UCAR
Carbon Company Inc.
2.30(1) - Amendment to such Employee Benefit Services and Liabilities
Agreement dated January 15, 1991
2.31 - Supplemental Agreement to such Employee Benefit Services and
Liabilities Agreement dated February 25, 1991
2.32(1) - Letter Agreement dated December 31, 1990 among Union Carbide
Chemicals and Plastics Company Inc., UCAR Carbon Company Inc.,
Union Carbide Grafito, Inc. and Union Carbide Corporation
2.33(8) - Stock Repurchase Agreement among UCAR International, Inc.,
Blackstone Capital Partners II Merchant Banking Fund L.P.,
Blackstone Offshore Capital Partners II L.P., Blackstone
Family Investment Partnership II L.P. and Chase Equity
Associates, L.P.
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2.34(9) - Share Sale Agreement between Samancor Limited and UCAR Carbon
Company Inc. dated April 21, 1997.
3.1(3) - Amended and Restated Certificate of Incorporation of UCAR
International Inc.
3.1(a)* - Certificate of Designations of Series A Junior Participating
Preferred Stock
3.2(3) - Amended and Restated By-Laws of UCAR International Inc.
3.2(a)* - Amendment to By-Laws
4.1(1) - Indenture dated as of January 15, 1995 among UCAR
International Inc., UCAR Global Enterprises Inc. and the
United States Trust Company of New York, as Trustee
4.2(12) - First Supplemental Indenture dated as of November 12, 1998
among UCAR International Inc., UCAR Global Enterprises Inc.
and United States Trust Company of New York, as Trustee
4.3* - Rights Agreement dated as of August 7, 1998 between UCAR
International Inc. and The Bank of New York, as Rights Agent
10.1* - Credit Agreement dated as of October 19, 1995 among UCAR
International Inc., UCAR Global Enterprises Inc., the other
Credit Parties named therein, the Lenders named therein, the
Fronting Banks named therein and The Chase Manhattan Bank, as
Administrative Agent and Collateral Agent, amended and
restated as of March 19, 1997 and November 10, 1998
10.1(a)* - Credit Agreement dated as of November 10, 1998 among UCAR
International Inc., UCAR Global Enterprises Inc., UCAR S.A.,
the Lenders (as defined therein), The Chase Manhattan Bank, as
Administrative Agent and Collateral Agent, Credit Suisse First
Boston, as Syndication Agent, and Morgan Guaranty Trust
Company of New York, as Syndication Agent
10.2* - Parent Guarantee Agreement dated as of October 19, 1995 made
by UCAR International Inc. and UCAR Global Enterprises Inc. in
favor of Chemical Bank as Collateral Agent for the Secured
Parties named therein, amended as of November 10, 1998
10.3* - Subsidiary Guarantee Agreement dated as of October 19, 1995
executed and delivered by each U.S. Subsidiary of UCAR Global
Enterprises Inc. in favor of Chemical Bank as Collateral Agent
for the Secured Parties named therein, amended as of November
10, 1998
10.4* - Indemnity, Subrogation and Contribution Agreement dated as of
October 19, 1995 among UCAR Global Enterprises Inc., the U.S.
Subsidiaries of UCAR Global Enterprises Inc. and Chemical Bank
as Collateral Agent for the Secured Parties named therein,
amended as of November 10, 1998
10.5* - Pledge Agreement dated October 19, 1995 among UCAR
International Inc., UCAR Global Enterprises Inc., certain U.S.
Subsidiaries of UCAR Global Enterprises Inc. and Chemical Bank
as Collateral Agent for the Secured Parties named therein,
amended as of November 10, 1998
10.6* - Intellectual Property Security Agreement dated as of April 22,
1998, amended and restated as of November 10, 1998, among UCAR
International Inc., UCAR Global Enterprises Inc. and the U.S.
Subsidiaries of UCAR Global Enterprises Inc. in favor of The
Chase Manhattan Bank, as Collateral Agent
120
<PAGE>
10.7* - Security Agreement dated as of October 19, 1995 among UCAR
International Inc., UCAR Global Enterprises Inc., the U.S.
Subsidiaries of UCAR Global Enterprises Inc. and Chemical Bank
as Collateral Agent for the Secured Parties named therein,
amended as of November 10, 1998
10.8* - 35% Pledge Agreement dated as of November 10, 1998 among UCAR
Global Enterprises Inc., UCAR Carbon Company Inc., UCAR
Holdings Inc., UCAR Holdings II Inc., UCAR Holdings III Inc.
and UCAR International Inc. in favor of The Chase Manhattan
Bank, as Collateral Agent
10.9(5) - Local Facility Credit Agreement dated as of October 19, 1995
between UCAR Holdings S.r.l. and Chemical Bank, Milan Branch,
as Administrative Agent
10.9(a)* - Amendment dated as of November 10, 1998 to Local Facility
Credit Agreement dated as of October 19, 1995 between UCAR
Holdings S.r.l. and Chemical Bank, Milan Branch, as
Administrative Agent
10.10(5) - Local Facility Credit Agreement dated as of October 19, 1995
between UCAR Electrodos S.L. and Chemical Bank, Madrid Branch,
as Administrative Agent
10.10(a)* - Amendment dated as of November 10, 1998 to Local Facility
Credit Agreement dated as of October 19, 1995 between UCAR
Electrodos S.L. and Chemical Bank, Madrid Branch, as
Administrative Agent
10.11(5) - Local Facility Credit Agreement dated as of October 19, 1995
between UCAR Holdings S.A. and Chemical Bank, Paris Branch, as
Administrative Agent
10.11(a)* - Amendment dated as of November 10, 1998 to Local Facility
Credit Agreement dated as of October 19, 1995 between UCAR
Holdings S.A. and Chemical Bank, Paris Branch, as
Administrative Agent
10.12(5) - Local Facility Credit Agreement dated as of October 19, 1995
between UCAR Inc. and Chemical Bank of Canada, as
Administrative Agent
10.12(a)* - Amendment dated as of November 10, 1998 to Local Facility
Credit Agreement dated as of October 19, 1995 between UCAR
Inc. and Chemical Bank of Canada, as Administrative Agent
10.13(1) - Tax Sharing Agreement made as of January 26, 1995 among UCAR
International Inc. and certain of its subsidiaries
10.14 - [omitted]
10.15 - [omitted]
10.16(l) - Employment Agreement dated as of January 26, 1995 between UCAR
International Inc. and Robert P. Krass
10.17(1) - Employment Agreement dated as of January 26, 1995 between UCAR
International Inc. and Robert J. Hart
10.18(1) - Employment Agreement dated as of January 26, 1995 between UCAR
International Inc. and Peter B. Mancino
10.19(1) - Employment Agreement dated as of January 26, 1995 between UCAR
International Inc. and William P. Wiemels
10.20(1) - Employment Agreement dated as of January 26, 1995 between UCAR
International Inc. and Fred C. Wolf
10.21(1) - Form of Non-Qualified Stock Option Agreement (Original Version)
10.22* - UCAR International Inc. Management Stock Option Plan as
amended and restated through September 29, 1998
121
<PAGE>
10.22(a)* UCAR International Inc. Management Stock Option Plan effective
as of September 29, 1998 (Senior Management Version)
10.23(12) - Employment Agreement dated as of June 22, 1998 between UCAR
International Inc. and Gilbert E. Playford
10.24* - Form of Non-Qualified Stock Option Agreement (Standard Option
Version and Directors Version)
10.25(1) - UCAR International Inc. Bonus II Plan effective as of January
26, 1995
10.25(a)(6)- First Amendment to such Bonus II Plan dated May 7, 1996
10.26(5) - UCAR International Inc. Compensation Deferral Program amended
and restated effective November 6, 1995
10.27(1) - First Amendment to such Compensation Deferral Program effective
as of January 1, 1995
10.28(2) - Second Amendment to such Compensation Deferral Program
effective as of March 15, 1996
10.29(6) - Third Amendment to such Compensation Deferral Program effective
as of January 1, 1996
10.30(10) - Fourth Amendment to such Compensation Deferral Plan effective
as of January 1, 1997
10.31(6) - Amended and Restated UCAR International Inc. Officers'
Incentive Plan dated May 7, 1996
10.32 - [omitted]
10.33* - UCAR International Inc. Executive Employee Stock Purchase
Program (Senior Management Version)
10.34* - UCAR International Inc. Executive Employee Loan Program
10.35 - [omitted]
10.36* - UCAR Carbon Company Inc. Equalization Benefit Plan amended and
restated as of January 1, 1997
10.37* - Amendment to Equalization Benefit Plan
10.38* - UCAR Carbon Company Inc. Supplemental Retirement Income Plan
amended and restated as of January 1, 1997
10.39* - UCAR Carbon Company Inc. Enhanced Retirement Income Plan
effective as of January 1, 1997
10.40* - Form of Severance Compensation Agreement (U.S. Version and
International Version)
10.41(3) - UCAR International Inc. Benefits Protection Trust effective as
of July 27, 1995
10.41(a)(10) - First Amendment to such Benefits Protection Trust effective
as of July 27, 1995
10.42(7) - Second Amendment to such Benefits Protection Trust effective
as of January 1, 1996
10.42(a)(14) - Third Amendment to such Benefits Protection Trust effective
as of January 1, 1997
10.43(3) - UCAR International Inc. 1995 Equity Incentive Plan effective
as of August 15, 1995
10.43(a)(6)- First Amendment to such Equity Incentive Plan dated July 29,
1996
122
<PAGE>
10.44(3) - UCAR International Inc. 1995 Directors Stock Plan effective as
of August 15, 1995
10.45(5) - First Amendment to such Directors Stock Plan effective
September 1, 1995
10.45(a)(6)- Second Amendment to such Directors Stock Plan dated July 29,
1996
10.45(b)(14) - Third Amendment to such Directors Stock Plan effective
September 8, 1997
10.45(c)(14) - Fourth Amendment to such Directors Stock Plan effective
April 8, 1997
10.46(5) - UCAR International Inc. 1996 Mid-Management Equity Incentive
Plan effective as of February 6, 1996
10.47(6) - Amendment to such Mid-Management Equity Incentive Plan dated
July 29, 1996
10.48 - [omitted]
10.49(13) - Plea Agreement between the United States of America and UCAR
International Inc. executed April 7, 1998
18.1* - Letter re: change in accounting principle
21.1* - List of subsidiaries of UCAR International Inc.
23.1* - Consent of KPMG LLP
24.1* - Powers of Attorney (included on signature pages)
27.1* - Financial Data Schedule for fiscal 1998 (for Commission use
only)
27.2* - Restated Financial Data Schedule for fiscal 1997 and 1996 (for
SEC use only)
- ---------------
* Filed herewith.
(1) Incorporated by reference to the Registration Statement of UCAR
International Inc. and UCAR Global Enterprises Inc. on Form S-1 (File No.
33-84850).
(2) Incorporated by reference to the Annual Report of the registrant on Form
10-K for the year ended December 31, 1995.
(3) Incorporated by reference to the Registration Statement of the registrant on
Form S-1 (File No. 33-94698).
(4) Incorporated by reference to the Quarterly Report of the registrant on Form
l0-Q for the quarter ended March 31, 1996.
(5) Incorporated by reference to the Registration Statement of the registrant on
Form S-1 (File No. 333-1090).
(6) Incorporated by reference to the Quarterly Report of the registrant on Form
10-Q for the quarter ended June 30, 1996.
(7) Incorporated by reference to the Quarterly Report of the registrant on Form
10-Q for the quarter ended September 30, 1996.
(8) Incorporated by reference to the Quarterly Report of the registrant on Form
10-Q for the quarter ended March 31, 1997.
(9) Incorporated by reference to the Quarterly Report of the registrant on Form
l0-Q for the quarter ended September 30, 1997.
(10)Incorporated by reference to the Annual Report of the registrant on Form
10-K for the year ended December 31, 1996.
(11)Incorporated by reference to the Quarterly Report of the registrant on Form
10-Q for the quarter ended June 30, 1997.
123
<PAGE>
(12)Incorporated by reference to the Quarterly Report of the registrant on Form
10-Q for the quarter ended September 30, 1998.
(13)Incorporated by reference to the Quarterly Report of the registrant on Form
10-Q for the quarter ended March 31, 1998.
(14)Incorporated by reference to the Annual Report of the registrant on Form
10-K for the year ended December 31, 1997.
124
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
UCAR INTERNATIONAL INC.
March 26, 1999 By: /S/ CORRADO F. DE GASPERIS
------------------------------
Corrado F. De Gasperis
Title: CONTROLLER (PRINCIPAL
ACCOUNTING OFFICER)
Know All Men By These Presents, that each individual whose signature
appears below hereby constitutes and appoints Gilbert E. Playford, Craig S.
Shular, Peter B. Mancino, Corrado F. De Gasperis and Karen G. Narwold, and each
of them individually, his true and lawful agent, proxy and attorney-in-fact,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to (i) act on, sign and file with
the Securities and Exchange Commission any and all amendments to this report
together with all schedules and exhibits thereto, (ii) act on, sign and file
with the Securities and Exchange Commission any and all exhibits to this report,
(iii) act on, sign and file any and all such certificates, instruments,
agreements and other documents as may be necessary or appropriate in connection
therewith and (iv) take any and all such actions which may be necessary or
appropriate in connection therewith, granting unto such agents, proxies and
attorneys-in-fact, and each of them individually, full power and authority to do
and perform each and every act and thing necessary or appropriate to be done, as
fully for all intents and purposes as he might or could do in person, hereby
approving, ratifying and confirming all that such agents, proxies and
attorneys-in-fact, any of them or any of his or their substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/S/ GILBERT E. PLAYFORD President, Chief March 26, 1999
- ---------------------------- Executive Officer and
Gilbert E. Playford Director (Principal
Executive Officer)
/S/ CRAIG S. SHULAR Vice President and Chief March 26, 1999
- ---------------------------- Financial Officer
Craig S. Shular (Principal Financial
Officer)
125
<PAGE>
/S/ CORRADO F. DE GASPERIS Controller (Principal March 26, 1999
- ---------------------------- Accounting Officer)
Corrado F. De Gasperis
/S/ ROBERT D. KENNEDY Chairman of the Board March 26, 1999
- ----------------------------
Robert D. Kennedy
/S/ R. EUGENE CARTLEDGE Director March 26, 1999
- ----------------------------
R. Eugene Cartledge
/S/ ALEC FLAMM Director March 26, 1999
- ----------------------------
Alec Flamm
/S/ JOHN R. HALL Director March 26, 1999
- ----------------------------
John R. Hall
/S/ THOMAS MARSHALL Director March 26, 1999
- ----------------------------
Thomas Marshall
/S/ MICHAEL C. NAHL Director March 26, 1999
- ----------------------------
Michael C. Nahl
126
<PAGE>
EXHIBIT INDEX
Exhibit
NUMBER
DESCRIPTION PAGE NO.
2.7* - Form of Letters dated April 16, 1996 and April
28, 1997 Amending Repayment and Collateral
Terms of Investor Notes
3.1(a)* - Certificate of Designations of Series A Junior
Participating Preferred Stock
3.2(a)* - Amendment to By-Laws
4.3* - Rights Agreement dated as of August 7, 1998
between UCAR International Inc. and The Bank of
New York, as Rights Agent
10.1* - Credit Agreement dated as of October 19, 1995
among UCAR International Inc., UCAR Global
Enterprises Inc., the other Credit Parties
named therein, the Lenders named therein, the
Fronting Banks named therein and The Chase
Manhattan Bank, as Administrative Agent and
Collateral Agent, amended and restated as of
March 19, 1997 and November 10, 1998
10.1(a)* - Credit Agreement dated as of November 10, 1998
among UCAR International Inc., UCAR Global
Enterprises Inc., UCAR S.A., the Lenders (as
defined therein), The Chase Manhattan Bank, as
Administrative Agent and Collateral Agent,
Credit Suisse First Boston, as Syndication
Agent, and Morgan Guaranty Trust Company of New
York, as Syndication Agent
10.2* - Parent Guarantee Agreement dated as of October
19, 1995 made by UCAR International Inc. and
UCAR Global Enterprises Inc. in favor of
Chemical Bank as Collateral Agent for the
Secured Parties named therein, amended as of
November 10, 1998
10.3* - Subsidiary Guarantee Agreement dated as of
October 19, 1995 executed and delivered by each
U.S. Subsidiary of UCAR Global Enterprises Inc.
in favor of Chemical Bank as Collateral Agent
for the Secured Parties named therein, amended
as of November 10, 1998
10.4* - Indemnity, Subrogation and Contribution
Agreement dated as of October 19, 1995 among
UCAR Global Enterprises Inc., the U.S.
Subsidiaries of UCAR Global Enterprises Inc.
and Chemical Bank as Collateral Agent for the
Secured Parties named therein, amended as of
November 10, 1998
127
<PAGE>
10.5* - Pledge Agreement dated October 19, 1995 among
UCAR International Inc., UCAR Global
Enterprises Inc., certain U.S. Subsidiaries of
UCAR Global Enterprises Inc. and Chemical Bank
as Collateral Agent for the Secured Parties
named therein, amended as of November 10, 1998
10.6* - Intellectual Property Security Agreement dated
as of April 22, 1998, amended and restated as
of November 10, 1998, among UCAR International
Inc., UCAR Global Enterprises Inc. and the U.S.
Subsidiaries of UCAR Global Enterprises Inc. in
favor of The Chase Manhattan Bank, as
Collateral Agent
10.7* - Security Agreement dated as of October 19, 1995
among UCAR International Inc., UCAR Global
Enterprises Inc., the U.S. Subsidiaries of UCAR
Global Enterprises Inc. and Chemical Bank as
Collateral Agent for the Secured Parties named
therein, amended as of November 10, 1998
10.8* - 35% Pledge Agreement dated as of November 10,
1998 among UCAR Global Enterprises Inc., UCAR
Carbon Company Inc., UCAR Holdings Inc., UCAR
Holdings II Inc., UCAR Holdings III Inc. and
UCAR International Inc. in favor of The Chase
Manhattan Bank, as Collateral Agent
10.9(a)* - Amendment dated as of November 10, 1998 to
Local Facility Credit Agreement dated as of
October 19, 1995 between UCAR Holdings S.r.l.
and Chemical Bank, Milan Branch, as
Administrative Agent
10.10(a)* - Amendment dated as of November 10, 1998 to
Local Facility Credit Agreement dated as of
October 19, 1995 between UCAR Electrodos S.L.
and Chemical Bank, Madrid Branch, as
Administrative Agent
10.11(a)* - Amendment dated as of November 10, 1998 to
Local Facility Credit Agreement dated as of
October 19, 1995 between UCAR Holdings S.A. and
Chemical Bank, Paris Branch, as Administrative
Agent
10.12(a)* - Amendment dated as of November 10, 1998 to
Local Facility Credit Agreement dated as of
October 19, 1995 between UCAR Inc. and Chemical
Bank of Canada, as Administrative Agent
128
<PAGE>
10.22* - UCAR International Inc. Management Stock Option
Plan amended and restated through September 29,
1998
10.22(a)* - UCAR International Inc. Management Stock Option
Plan effective as of September 29, 1998 (Senior
Management Version)
10.24* - Form of Non-Qualified Stock Option Agreement
(Standard Option Version and Directors Version)
10.33* - UCAR International Inc. Executive Employee
Stock Purchase Program (Senior Management
Version)
10.34* - UCAR International Inc. Executive Employee Loan
Program
10.36* - UCAR Carbon Company Inc. Equalization Benefit
Plan amended and restated as of January 1, 1997
10.37* - Amendment to Equalization Benefit Plan
10.38* - UCAR Carbon Company Inc. Supplemental
Retirement Income Plan amended and restated as
of January 1, 1997
10.39* - UCAR Carbon Company Inc. Enhanced Retirement
Income Plan amended and restated as of January
1, 1997
10.40* - Form of Severance Compensation Agreement (U.S.
Version and International Version)
18.1* - Letter re: change in accounting principle
21.1* - List of subsidiaries of UCAR International Inc.
23.1* - Consent of KPMG LLP
24.1* - Powers of Attorney (included on signature pages)
27.1* - Financial Data Schedule for fiscal 1998 (for
Commission use only)
27.2* - Restated Financial Data Schedule for fiscal
1997 and 1996 (for Commission use only)
- ---------------
* Filed herewith.
129
<PAGE>
EXHIBIT 2.7
April 16, 1996
- ------------------------
- ------------------------
- ------------------------
Subject: REDUCTION IN REPAYMENT TERMS OF INVESTOR NOTE
Dear ________________:
As you know, UCAR made a loan to you relating to the shares of UCAR
Common Stock you purchased, and the matched shares you received, on January 26,
1995 in connection with the Recapitalization. This loan is evidenced by your
Investor Note. The Board of Directors recently changed the repayment provision
of your loan so that only 20% of the net proceeds from the sale of option shares
or previously purchased (or matched) shares must be used to pay down your loan
obligation, RATHER THAN 100% of such proceeds as previously required by the
terms of your loan. As you do your cashless transactions in the future, 20% of
the net proceeds will be automatically deducted from the amount due to you up to
the face amount of your Investor Note.
You may, of course, choose to prepay your note at any time. You
should contact me to coordinate the arrangements for a prepayment if you wish to
do so.
This letter will evidence your acceptance of such change and will be
attached to your Investor Note. Please sign the enclosed copy of this letter and
return it to me.
Very truly yours,
Peter B. Mancino
ACCEPTED:
_________________________
Signature -
<PAGE>
April 28, 1997
- ----------------------------
- ----------------------------
- ----------------------------
Re: UCAR EQUITY OWNERSHIP PROGRAM AND RELATED LOANS
Dear ______________:
In connection with the recently completed Public Offering of shares
of UCAR common stock by the Blackstone Group, various restrictions in the Equity
Ownership have been changed as described below:
Collateral for your Loan will no longer include any options granted
under the management Stock Option Plan (Your 1995 Time and Performance Stock
Options with a $7.60 option price, or the shares purchased on exercise of those
options). This means that when you sell any of these shares, UCAR will no longer
take any portion of the proceeds from the sale for Loan repayment.
In addition, collateral for your Loan will now consist solely of a
portion of shares of UCAR common stock (your Purchased and Matched Shares) that
you acquired under the Equity Ownership Program.
Currently, the Company holds ALL of these Purchased and Matched
Shares as collateral for your Loan. From now on, only that number of these
shares with an aggregate value (at $35.00 per share) equal to your Loan balance
will be retained as collateral for your Loan. The balance of the shares will
soon be transferred to you on an unrestricted basis. If, however, the market
price of the UCAR common stock falls below $35.00 per share, you will be
required to deliver to UCAR additional shares so that the value of the
collateral is always at least equal to your Loan balance. The Loan must be
repaid when you retire or your employment with UCAR otherwise terminates or when
any of the shares held as collateral are sold.
When you decide to sell the shares held as collateral (most likely
at retirement) contact my office and we will make the necessary arrangements for
the Loan repayment. One simple method would be for you to write a check made out
to UCAR Global Enterprises Inc. to cover the outstanding Loan and for the
Company to release the collateral shares to you along with your cancelled
Investor Note.
Your current Loan balance is $______________. The Company has
_______ original pledged shares held as collateral and will release _________
unrestricted shares to you as soon as possible. _______ shares will then be
retained as collateral by the Company. Please sign the letter to The Bank of New
York (BNY) attached to this memo and return to me. I will see to it that these
documents are forwarded to BNY for processing.
Sincerely,
Peter B. Mancino
Attachment
P.S. In addition to the above mentioned stock transaction there will be the
usual paperwork, e.g., a modified Loan Agreement and Pledge and Security
Agreement. These will be sent to you in due time.
<PAGE>
EXHIBIT 3.1(a)
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
UCAR INTERNATIONAL INC.
The undersigned hereby certifies that he is Vice President, General
Counsel and Secretary of UCAR INTERNATIONAL INC. (the "Corporation"), that the
Corporation is a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Law") and that, pursuant to
authority vested in the Board of Directors of the Corporation in accordance with
the provisions of the Amended and Restated Certificate of Incorporation of the
Corporation, the following resolution was duly adopted by the Board of Directors
of the Corporation as required by Section 151 of the Law at a meeting duly
called and held on August 7, 1998:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Corporation in accordance with the
provisions of the Amended and Restated Certificate of Incorporation
of the Corporation, the Board of Directors of the Corporation hereby
creates a series of Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Corporation and hereby states the
designation and number of shares, and fixes the voting and other
powers, preferences and relative, participating, optional or other
rights thereof and the qualifications, limitations and restrictions
thereon, as follows:
Section I. DESIGNATION AND AMOUNT. There shall be a series of
Preferred Stock designated as "Series A Junior Participating Preferred Stock"
(the "Series A Preferred Stock") and the number of shares constituting the
Series A Preferred Stock shall be 1,000,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; PROVIDED,
HOWEVER, that no decrease shall reduce the number of shares to a number less
than the number of shares then outstanding plus the number of shares then
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion or exchange of outstanding securities issued by
the Corporation convertible into or exchangeable for Series A Preferred Stock.
<PAGE>
Section II. DIVIDENDS AND DISTRIBUTIONS.
A. Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of Common
Stock, par value $.01 per share, of the Corporation (the "Common Stock") or
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on the 15th day of April, July, October and January in each year (each such
date being called as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10.00 or (b) the Adjustment
Number (as defined below) times the aggregate per share amount of all cash
dividends, plus the fair value, as determined by the Board of Directors upon the
advice of a nationally recognized investment banking firm selected in good faith
by the Board of Directors, of all non-cash dividends and other distributions
(other than dividends payable in shares of Common Stock) declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. The "Adjustment
Number" shall initially be 1,000. In the event the Corporation shall at any time
after August 20, 1998 (the "Rights Declaration Date") (i) declare and pay any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event. (References herein to the Adjustment Amount shall mean the
Adjustment Amount as in effect at the relevant time.
B. The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on Common Stock (other
than a dividend payable in shares of Common Stock); PROVIDED, that, in the event
no dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series A
Preferred Stock shall nevertheless be declared for payment on such subsequent
Quarterly Dividend Payment Date.
C. Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of first issuance of any shares of Series A Preferred Stock
such shares, unless the date of issuance of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
shares of Series A Preferred Stock shall begin to accrue from the date of
issuance thereof, or unless the date of issuance of such shares is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
cases dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on shares of Series A Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section III. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
A. Subject to the provision for adjustment set forth herein, each
share of Series A Preferred Stock shall entitle the holder thereof to a number
of votes equal to the Adjustment Number (as then adjusted) on all matters
submitted to a vote of the holders of Common Stock.
B. Except as otherwise provided herein or required by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of holders of Common Stock.
C. Except as otherwise set forth herein or required by law, the
holders of Series A Preferred Stock shall have no voting or approval rights
separate or apart from their right to vote with holders of shares of Common
Stock as set forth herein.
Section IV. CERTAIN RESTRICTIONS.
A. Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on the Series A Preferred Stock shall have been paid in full,
the Corporation shall not:
1. declare or pay dividends, or make any other distributions, on any
shares of Common Stock or other stock ranking junior (either as to
dividends or upon liquidation or dissolution) to the Series A Preferred
Stock;
2. declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation or dissolution) with the Series A Preferred Stock, except
dividends paid ratably on Series A Preferred Stock and shares of such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
3. redeem, purchase or otherwise acquire shares of any Common Stock
or other stock ranking junior (either as to dividends or upon liquidation
or dissolution) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any other stock of the
Corporation ranking junior (both as to dividends and upon dissolution or
liquidation) to the Series A Preferred Stock; or
4. redeem, purchase or otherwise acquire any shares of Series A
Preferred Stock or any shares of stock ranking on a parity with the Series
A Preferred Stock, except in accordance with a purchase offer made to the
holders of all such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
B. The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section V. REACQUIRED SHARES. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation or any subsidiary
of the Corporation in any manner shall be promptly retired. All such shares
shall upon their retirement become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock created in
accordance with the Amended and Restated Certificate of Incorporation and the
Law.
Section VI. LIQUIDATION OR DISSOLUTION.
(A) Upon any liquidation or dissolution of the Corporation (which terms
include a winding up of the Corporation, voluntary or otherwise), no
distribution shall be made on any shares of stock ranking junior (either as to
dividends or upon liquidation or dissolution) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received an amount per share (the "Series A Liquidation Preference") equal
to the greater of (i) $110,000 plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment or (ii) the Adjustment Number times the per share amount of all
cash and other property to be distributed on the Common Stock upon such
liquidation or dissolution.
(B) If there are not sufficient assets available to permit payment in full
of the Series A Liquidation Preference and the liquidation preferences of all
other classes and series of stock of the Corporation that rank on a parity with
the Series A Preferred Stock in respect thereof, then the assets available for
such distribution shall be distributed ratably to the holders of the Series A
Preferred Stock and the holders of such parity stock in proportion to their
respective liquidation preferences.
(C) Neither the merger or consolidation of the Corporation into or with
another corporation (or other entity) nor the merger or consolidation of another
corporation (or other entity) into or with the Corporation shall be deemed to be
a liquidation or dissolution of the Corporation within the meaning of this
Section 6.
Section VII. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
shares of Common Stock are exchanged for or changed into other stock,
securities, cash and/or other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share equal to the Adjustment Number times the
aggregate amount of stock, securities, cash and/or other property, as the case
may be, into which or for which each share of Common Stock is changed or
exchanged.
Section VIII. NO REDEMPTION. The shares of Series A Preferred
Stock shall not be redeemable.
Section IX. RANKING. The Series A Preferred Stock shall, with respect to
payments of dividends and rights upon liquidation or dissolution, rank (a)
senior and prior to (i) the Common Stock and (ii) any series of preferred stock
of the Corporation which is stated to be junior to the Series A Preferred Stock;
(b) PARI PASSU with (i) any series of preferred stock of the Corporation which
is not stated to be senior to or junior to the Series A Preferred Stock; and (c)
junior and subordinate to any series of preferred stock of the Corporation which
is stated to be senior to the Series A Preferred Stock. Determination as to
whether any such statements has shall be made by reference to the Certificate of
Incorporation of the Corporation, as then in effect.
Section X. AMENDMENT. At any time that shares of Series A Preferred Stock
are outstanding, the Certificate of Incorporation of the Corporation as then in
effect shall not be amended in any manner which would materially alter or change
the powers, preferences or rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
Section XI. FRACTIONAL SHARES. Series A Preferred Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
Section XII. MISCELLANEOUS. The rights of holders of Series A
Preferred Stock shall, to the extent not inconsistent with this resolution,
be the same as those of holders of Common Stock.
IN WITNESS WHEREOF, this Certificate of Designations has been executed by
this 7th day of August, 1998.
By: /S/ PETER B. MANCINO
-----------------------------------
Title: Vice President, General
Counsel & Secretary
<PAGE>
EXHIBIT 3.2(a)
Amendment to the UCAR International Inc. Amended and Restated By-Laws:
RESOLVED, that the By-laws be, and they hereby are, amended so
that, after the annual meeting of stockholders for 1999: (i)
the fourth sentence of Section 8(a) shall be and read as
follows: "To be timely, such notice must be delivered or
mailed to, and received at, the principal executive office of
the Corporation not less than one hundred five (105) days
prior to the meeting; provided, however, that if less than one
hundred five (105) days' notice or prior public disclosure of
the date of such meeting is given to stockholders or made,
such notice must be so delivered or mailed, and received, not
later than the close of business on the tenth (10th) day
following the day on which notice or public disclosure of the
date of such meeting is given to stockholders or made (except
that this proviso shall not apply if such meeting is an annual
meeting which will be held on the date specified in clause (i)
of Section 2 of Article I or within thirty (30) days
thereafter)"; and (ii) the fourth sentence of Section 8(b)
shall be and read as follows: "To be timely, such notice must
be delivered or mailed to, and received at, the principal
executive office of the Corporation not less than one hundred
five (105) days prior to such meeting; provided, however, that
if less than one hundred five (105) days' notice or prior
public disclosure of the date of such meeting is given to
stockholders or made, such notice must be so delivered or
mailed, and received, not later than the close of business on
the tenth (10th) day following the day on which notice or
public disclosure of the date of such meeting is given to
stockholders or made (except that this proviso shall not apply
if such meeting is an annual meeting which will be held on the
date specified in clause (i) of Section 2 of Article I or
within thirty (30) days thereafter)"[.]
Dated: December 18, 1998
<PAGE>
EXHIBIT 4.3
- --------------------------------------------------------------------------------
UCAR INTERNATIONAL INC.
and
THE BANK OF NEW YORK, as Rights Agent
AGREEMENT
Dated as of August 7, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions...............................................1
Section 2. Appointment of Rights Agent.......................................7
Section 3. Issue of Right Certificates.......................................7
Section 4. Form of Right Certificates.......................................10
Section 5. Countersignature and Registration................................10
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates...............................................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights...........................................................12
Section 8. Cancellation of Right Certificates...............................14
Section 9. Availability of Preferred Shares.................................15
Section 10 Preferred Shares Record Date.....................................17
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
and Number of Rights.............................................17
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.......30
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................31
Section 14. Fractional Rights and Fractional Shares..........................36
Section 15. Rights of Action.................................................38
Section 16. Agreement of Right Holders.......................................39
Section 17. Right Certificate Holder not Deemed a Stockholder................40
Section 18. Concerning the Rights Agent......................................40
Section 19. Merger or Consolidation or Change of Name of Rights Agent........41
Section 20. Duties of Rights Agent...........................................42
Section 21. Change of Rights Agent...........................................46
Section 22. Issuance of New Right Certificates...............................47
Section 23. Redemption.......................................................48
Section 24. Exchange.........................................................49
Section 25. Notice of Certain Events.........................................51
Section 26. Notices..........................................................52
Section 27. Supplements and Amendments.......................................53
Section 28. Successors.......................................................54
Section 29. Benefits of this Agreement.......................................54
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
Section 30. Determinations and Actions by the Board of Directors.............54
Section 31. Severability.....................................................55
Section 32. Governing Law....................................................55
Section 33. Counterparts.....................................................55
Section 34. Descriptive Headings.............................................55
-ii-
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of August 7, 1998, between UCAR International
Inc., a Delaware corporation (the "Company"), and The Bank of New York, a New
York banking corporation as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Preferred Share Purchase Right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding as of the Close of Business
(as hereinafter defined) on August 20, 1998 (the "Record Date"), each Right
representing the right to purchase (subject to adjustment as provided herein)
one one-thousandth of a Preferred Share (as hereinafter defined), upon the terms
and subject to the conditions set forth herein, and has further authorized and
directed the issuance of one Right (subject to adjustment as provided herein)
with respect to each Common Share that shall become outstanding between the
Record Date (as hereinafter defined) and the earliest of the Distribution Date
(as hereinafter defined) and the Expiration Date (as hereinafter defined);
PROVIDED, HOWEVER, that Rights may be issued with respect to Common Shares that
become outstanding after the Distribution Date and prior to the Expiration Date
in accordance with Section 22.
Accordingly, in consideration of the premises and the mutual agreements set
forth herein, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter defined)
who or which, together with all Affiliates and Associates (as hereinafter
defined) of such Person, shall be the Beneficial Owner (as hereinafter defined)
of 15% or more of the Common Shares then outstanding, but shall not include an
Exempt Person (as hereinafter defined). Notwithstanding the foregoing; (i) if
(based on reports filed with the Securities and Exchange Commission and
delivered to the Company prior to the date hereof) any Person would, but for
<PAGE>
this sentence, be an "Acquiring Person," then such Person shall not be or become
an "Acquiring Person" unless and until such time as such Person together with
all Affiliates and Associates of such Person shall be or become the Beneficial
Owner of 22.5% or more of the outstanding Common Shares (other than pursuant to
a dividend or distribution in Common Shares paid or made by the Company on the
outstanding Common Shares or pursuant to a split or subdivision of the
outstanding Common Shares), PROVIDED, HOWEVER, that this clause (i) shall cease
to apply to such Person at and after such time as such Person together with its
Affiliates and Associates ceases to be the Beneficial Owner of 15% or more of
the Common Shares then outstanding; and (ii) no Person shall be or become an
"Acquiring Person" as the result of an acquisition of Common Shares by the
Company which, by reducing the number of Common Shares outstanding, increases
the proportionate number of Common Shares beneficially owned by such Person
together with its Affiliates and Associates to 15% or more of the Common Shares
then outstanding; PROVIDED, HOWEVER, that if a Person together with all
Affiliates and Associates of such Person shall be or become the Beneficial Owner
of 15% or more of the Common Shares then outstanding by reason of such an
acquisition and such Person or its Affiliates or Associates shall, after such an
acquisition, become the Beneficial Owner of any additional Common Shares (other
than pursuant to a dividend or distribution in Common Shares paid or made by the
Company on the outstanding Common Shares or pursuant to a split or subdivision
of the outstanding Common Shares), then such Person shall be deemed to be an
"Acquiring Person," unless, upon becoming the Beneficial Owner of such
additional Common Shares, such Person together with all Affiliates and
Associates of such Person is not the Beneficial Owner of 15% or more of the
Common Shares then outstanding. Notwithstanding the foregoing, if the Board of
Directors determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
Section 1(a), has become such inadvertently and without any intention of
changing or influencing control of the Company and if such Person divests itself
as promptly as practicable of Beneficial Ownership of a sufficient number of
Common Shares so that such Person would no longer be an Acquiring Person," as
defined pursuant to the foregoing provisions of this Section 1(a), then such
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<PAGE>
Person shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement. For all purposes of this Agreement, any calculation of the number of
Common Shares outstanding at any particular time, including for purposes of
determining the particular percentage of outstanding Common Shares of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to have "Beneficial Ownership" of and shall be deemed to "beneficially
own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own, directly or indirectly,
within the meaning of Rule 13d-3 of the General Rules and Regulations
under the Exchange Act as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon
3
<PAGE>
the exercise of any conversion rights, exchange rights, rights,
warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own,
(x) securities tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, (y) securities which such Person has a right to acquire upon
the exercise of Rights at any time prior to the time that any Person
becomes an Acquiring Person or (z) securities issuable upon the
exercise of Rights from and after the time that any Person becomes an
Acquiring Person if such Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 ("Original Rights") or
pursuant to Section 11(i) or Section 11(n) with respect to an
adjustment to Original Rights; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security by reason of such agreement, arrangement or
understanding if the agreement, arrangement or understanding to vote
such security (l) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person and with respect to which such Person or any of
such Person's Affiliates or Associates has any agreement, arrangement
or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(c) (ii) (B)) or disposing of any securities of the Company;
4
<PAGE>
PROVIDED, HOWEVER, that no Person who is an officer, director or
employee of an Exempt Person shall be deemed, solely by reason of such
Person's status or authority as such, to be the "Beneficial Owner" of,
to have "Beneficial Ownership" of or to "beneficially own" any
securities that are "beneficially owned" (as defined in this Section
1(c)), including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or employee of an
Exempt Person.
(d) "Board of Directors" shall mean the members of the Company's Board
of Directors at the relevant time.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of New York or the city in
which the principal stock transfer office of the Rights Agent is located are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., City
of New York time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M. City of New York time, on the next
succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall mean
shares of common stock, par value $.01 per share, of the Company.
(h) "Common Stock" when used with reference to any Person other than
the Company shall mean the common stock (or other equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately controls or
control, respectively, such first-mentioned Person.
(i) "Current Value" shall have the meaning set forth in Section
11(a)(iii).
(j) "Distribution Date" shall have the meaning set forth in Section 3.
5
<PAGE>
(k) "equivalent preferred shares" shall have the meaning set forth in
Section 11(b).
(l) "Exempt Person" shall mean the Company or any Subsidiary (as is
hereinafter defined) of the Company, in each case including, without limitation
any such entity, in its fiduciary capacity, or any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity or trustee holding
Common Shares for or pursuant to the terms of any such plan or for the purpose
of funding any such plan or funding any other employee benefits for employees of
the Company or any Subsidiary of the Company.
(m) "Exchange Ratio" shall have the meaning set forth in Section 24.
(n) "Expiration Date" shall have the meaning set forth in Section 7.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7.
(p) "Flip-In Event" shall have the meaning set forth in Section 11.
(q) "New York Stock Exchange" shall mean New York Stock Exchange, Inc.
(r) "Person" shall mean any individual, firm, partnership, limited
liability company, business trust, corporation or other entity and shall include
any successor (by merger or otherwise) thereof.
(s) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the Form of Certificate of Designations
attached to this Agreement as EXHIBIT A.
(t) "Principal Party" shall have the meaning set forth in Section
13(b).
(u) "Purchase Price" shall have the meaning set forth in Section 4.
(v) "Redemption Date" shall have the meaning set forth in Section 7.
(w) "Redemption Price" shall have the meaning set forth in Section 23.
(x) "Rights Certificate" shall have the meaning set forth in Section
3.
6
<PAGE>
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(z) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii).
(aa) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such or such
earlier date as a majority for the Board of Directors shall become aware of the
existence of an Acquiring Person.
(bb) "Spread" shall have the meaning set forth in Section 11(a)(iii).
(cc) "Subsidiary" of any Person shall mean any Person of which a
majority of the voting power of the voting equity securities or equity interest
is owned or controlled, directly or indirectly, by such Person.
(dd) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii).
(ee) "Summary of Rights" shall have the meaning set forth in Section
3.
(ff) "Trading Day" shall have the meaning set forth in Section
11(d)(i).
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such co-Rights Agent.
Section 3. (a) ISSUE OF RIGHT CERTIFICATES. Until the Close of Business on
the earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by action of the
Board of Directors prior to such time as any Person becomes an Acquiring Person)
7
<PAGE>
after the date of the commencement by any Person other than an Exempt Person, or
of the first public announcement of the intention of any Person (other than an
Exempt Person) to commence, a tender or exchange offer the consummation of which
would result in any Person (other than an Exempt Person) becoming the Beneficial
Owner of Common Shares aggregating 15% or more of the then outstanding Common
Shares (including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being herein
called the "Distribution Date"), (x) the Rights will be evidenced (subject to
the provisions of Section 3(b)) by the certificates for Common Shares registered
in the names of the holders thereof (which certificates shall also be deemed to
be Right Certificates) and not by separate Right Certificate, and (y) the Rights
will be transferable only in connection with the transfer of Common Shares. The
Company shall give the Rights Agent prompt written notice of the Distribution
Date. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and the Company will send
or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date (other than any
Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the
address of such holder shown on the records of the Company, a Right Certificate,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each Common
Share so held. As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of EXHIBIT C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
8
<PAGE>
shown on the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights. Until the Distribution Date
(or, if earlier, the Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates issued for Common Shares (including, without
limitation, certificates issued upon transfer of outstanding Common Shares,
disposition of Common Shares out of treasury stock or issuance or reissuance of
Common Shares out of authorized but unissued Common Shares) after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date
shall have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Agreement between UCAR International Inc. (the
"Company") and The Bank of New York, as Rights Agent, dated as of August
7, 1998 as the same may be amended from time to time (the "Agreement"),
the terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder of this
certificate a copy of the Agreement without charge after receipt of a
written request therefor. As described in the Agreement, under certain
circumstances, Rights issued to any Person who becomes an Acquiring Person
(as defined in the Agreement) shall become null and void and will not be
transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
9
<PAGE>
herein, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Company purchases or
otherwise acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer outstanding.
Notwithstanding this Section 3(c), the omission of a legend shall not affect the
enforceability of any part of this Agreement or the rights of any holder of the
Rights.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as EXHIBIT B hereto (in
a format that is machine printable and reasonably satisfactory to the Rights
Agent) and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or as may be
appropriate to conform to usage. Subject to the provisions of Sections 11, 13
and 22, the Right Certificates shall entitle the holders thereof to purchase
such number of one one-thousandth of a Preferred Share as shall be set forth
therein at the price per one one-thousandth of a Preferred Share set forth
therein (the "Purchase Price"), but the number of such one one-thousandths of a
Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any of its Vice Presidents,
either manually or by facsimile signature, shall have affixed thereto the
10
<PAGE>
Company's seal or a facsimile thereof, and shall be attested by the Secretary or
the Treasurer of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights Agent and shall
not be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery thereof by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the signatory had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any individual who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Agreement any such individual was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at an office or agency designated for such purposes, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATE; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii), 13 and 14,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Right Certificate or
Right Certificates (other than Right Certificates representing Rights that have
been exchanged pursuant to Section 24) may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of one one-thousandths of a
Preferred Share as the Right Certificate or Right Certificates surrendered then
11
<PAGE>
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office or agency of the Rights Agent designated for
such purpose, along with a signature guarantee and other and further
documentation as the Rights Agent may reasonably request. Thereupon, the Rights
Agent shall countersign and deliver to the requested holder a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax (which word shall be deemed
to include any other type of governmental charge) that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Subject to the provisions of Section 11(a)(ii), at any time after
the Distribution Date and prior to the Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and, at the Company's request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date and thereafter the registered holder of any
Right Certificate may, subject to Section 11(a)(iii) and except as otherwise
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provided herein, exercise the Rights evidenced thereby in whole or in part upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the office or agency
of the Rights Agent designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number of one one-thousandths
of a share of Preferred Stock (or other securities, cash or assets, as the case
may be) as to which the Rights are exercised, at any time both subsequent to the
Distribution Date and prior to the time (the "Expiration Date") that is the
earliest of (i) the Close of Business on August 7, 2008 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
(the "Redemption Date") or (iii) the time at which such Rights are exchanged as
provided in Section 24.
(b) The Purchase Price for each one one-thousandth of a Preferred
Share purchasable upon exercise of a Right shall initially be $110. The Purchase
Price and the number of one one-thousandths of a share of Preferred Stock (or
other securities or property) to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13 and
shall be payable in lawful money of the United States of America in accordance
with this Section 7(b).
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for the
Preferred Shares to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Right Certificate in accordance
with Sections 6 and 9 hereof, in cash or by certified or cashier's check or
money order payable to the order of the Company, the Rights Agent shall
thereupon (i) promptly (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased (and the
Company hereby irrevocably authorizes such transfer agent to comply with all
such requests) or (B) requisition from the depositary agent (if any, pursuant to
Section 14) depositary receipts representing interests in such number of one
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one-thousandths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by such transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14, (iii) promptly
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered holder
of any Right Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Sections 6 and 14.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the occurrence of any
purported transfer or exercise of Rights pursuant to Section 6 or this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or form of election to purchase
set forth on the reverse side of the Rights Certificate surrendered for such
transfer or exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) thereof as the Company
shall reasonably request.
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Section 8. CANCELLATION OF RIGHTS CERTIFICATES. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
the provisions of this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company.
Section 9. AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of Preferred Shares that will
be sufficient to permit the exercise in full of all outstanding Rights in
accordance with Section 7.
(b) So long as the Preferred Shares issuable upon the exercise of
Rights may be listed or admitted to trading on the New York Stock Exchange or
any other national securities exchange, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all
Preferred Shares reserved for such issuance to be listed or admitted to trading
on such exchange upon official notice of issuance upon such exercise.
(c) From and after the Distribution Date, the Company shall use its
best efforts, if then necessary to permit the issuance of Preferred Shares upon
the exercise of Rights, to register and qualify Preferred Shares under the
Securities Act and any applicable state securities or "Blue Sky" laws (to the
extent exemptions therefrom are not available), cause such registration
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statement and qualifications to become effective as soon as possible after such
filing and keep such registration and qualifications effective until the earlier
of the date as of which the Rights are no longer exercisable for Preferred
Shares and the Expiration Date. The Company may temporarily suspend, for a
period of time not to exceed 90 days, the exercisability of the Rights to
prepare and file a registration statement under the Securities Act and permit it
to become effective. Upon any such suspension, the Company shall issue a public
announcement that the exercisability of the Rights has been temporarily
suspended as well as a public announcement at such time as the suspension is no
longer in effect, in each case with simultaneous written notice to the Rights
Agent. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective. The Rights Agent may assume that any Right exercised is
permitted to be exercised under applicable law and shall have no liability for
acting in reliance upon such assumption.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
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Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes required to be
paid by the exercising holder of Rights) was made; PROVIDED, HOWEVER, that if
the date of such surrender and payment is a date upon which the transfer books
for Preferred Shares are closed, such Person shall be deemed to have become the
record holder of such Preferred Shares on, and such certificate shall be dated,
the next succeeding Business Day on which the transfer books Preferred Shares
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without limitation,
the right to vote or to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES AND
NUMBER. The Purchase Price, the number of Preferred Shares or other securities
or property purchasable upon exercise of each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) If the Company shall at any time after the date hereof (A)
declare a dividend in Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
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Preferred Shares into a smaller number of Preferred Shares or (D) issue any
shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
transfer books for Preferred Shares were open, the holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; PROVIDED, HOWEVER, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24, if any Person becomes an Acquiring Person
(the first occurrence of such event being called the "Flip-In Event"), then (A)
the Purchase Price shall be adjusted to be the Purchase Price in effect
immediately prior to the Flip-In Event multiplied by the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such Flip-In Event, whether or not such Right was then
exercisable, and (B) each holder of a Right, except as otherwise provided in
this Section 11(a)(ii) and Section 11(a)(iii), shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then Purchase Price (as
so adjusted), in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares as shall equal the result
obtained by dividing the Purchase Price (as so adjusted) by 50% of the then
current per share market price of the Common Shares (determined pursuant to
Section 11(d)) on the date of such Flip-In Event; PROVIDED, HOWEVER, that the
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Purchase Price (as so adjusted) and the number of Common Shares so receivable
upon exercise of a Right shall, following the Flip-In Event, be subject to
further adjustment as appropriate in accordance with this Section 11. If any
Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary, however,
from and after the Flip-In Event, any Rights that are beneficially owned by (x)
any Acquiring Person (or any Affiliate or Associate of any Acquiring Person),
(y) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who becomes a transferee after the Flip-In Event or (z) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who become a transferee
prior to or concurrently with the Flip-In Event pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 11, and subsequent
transferees of such Persons, shall be void without any further action and any
holder of such Rights shall thereafter have no rights whatsoever with respect to
such Rights under any provision of this Agreement. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are
complied with, but shall have no liability to any holder of Right Certificates
or other Persons as a result of its failure to make any determinations with
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respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. From and after the Flip-In Event, no Right Certificate shall be
issued pursuant to Section 3 or upon the transfer of any Rights that represents
Rights that are or have become void pursuant to the preceding sentence, and any
Right Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the preceding sentence shall be cancelled. From
and after the occurrence or an event specified in Section 13(a), any Rights that
theretofore have not been exercised pursuant to this Section 11(a)(ii) shall
thereafter be exercisable only in accordance with Section 13 and not pursuant to
this Section 11(a)(ii).
(iii) The Company may at its option substitute for a Common Share
issuable upon the exercise of Rights in accordance with Section 11(a)(ii), a
number of Preferred Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share. If, after the
occurrence of a Flip-In Event, there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with Section 11(a)(ii), the Company shall take
all such action as may be necessary to authorize additional Common Shares for
issuance upon exercise of the Rights. If the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such
additional Common Shares, the Board of Directors shall, to the extent permitted
any applicable law and any material agreements then in effect to which the
Company is a party, (A) determine the excess (such excess being called the
"Spread') of (1) the value of the Common Shares issuable upon the exercise of a
Right in accordance with Section 11(a)(ii) hereof (the "Current Value") over (2)
the Purchase Price (as adjusted) and (B) with respect to each Right (other than
Rights which have become void), make adequate provision to substitute for the
Common Shares issuable in accordance with Section 11(a)(ii), upon exercise of
the Right and payment of the Purchase Price (as adjusted), (1) cash, (2) a
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reduction in such Purchase Price, (3) Preferred Shares or other equity
securities of the Company (including, without limitation, shares or fractions of
preferred stock which, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the Common Shares, are deemed in
good faith by the Board of Directors to have substantially the same value as the
Common Shares (such Preferred Shares and shares or fractions of shares of
preferred stock being called "Common Share Equivalents")), (4) debt securities
of the Company, (5) other assets or (6) any combination of the foregoing, having
a value which, when added to the value of the Common Shares issued upon exercise
of such Right, shall have an aggregate value equal to the Current Value (less
the amount of any reduction in such Purchase Price), where such aggregate value
has been determined by the Board of Directors upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors; PROVIDED, HOWEVER, that if the Company shall not make adequate
provision to deliver value pursuant to clause (B) above within 30 days following
the Flip-In Event (the "Section 11(a)(ii) Trigger Date"), then the Company shall
be obligated to deliver, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of such Purchase
Price, Common Shares (to the extent available) and then, if necessary, such
number or fractions of Preferred Shares (to the extent available) and then, if
necessary, cash, which Preferred Shares, Common Shares and/or cash have an
aggregate value equal to the Spread. If, upon the occurrence of the Flip-In
Event, the Board of Directors shall determine in good faith that it is likely
that sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights, then, if the Board of Directors so elects, the
period set forth above may be extended to the extent necessary, but not more
than 90 days after the Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such additional Shares.
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Such period, as it may be extended, is herein called the "Substitution Period."
To the extent that the Company determines that some action need be taken
pursuant to the third and/or fourth sentence of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 11(a)(ii) and the last sentence of
this Section 11(a)(iii), that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period to seek any authorization of
additional Shares and/or to decide the appropriate form of distribution to be
made pursuant to such third sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common Shares
shall be the current per share market price (as determined pursuant to Section
11(d)(i) on the Section 11(a)(ii) Trigger Date) and the per share or fractional
value of any Common Share Equivalents shall be deemed to equal the current per
share market price of the Common Shares. The Board of Directors may, but shall
not be required to, establish procedures to allocate the right to receive Common
Shares upon the exercise of the Rights among holders of the Rights pursuant to
this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to holders of Preferred Shares entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preferred Shares (or shares having the same rights, privileges and
preferences as Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares at a price per
Preferred Share or equivalent preferred share (or having a conversion price per
share, if it is a security convertible into Preferred Shares or equivalent
preferred shares) less than the then current per share market price of the
Preferred Shares (determined pursuant to Section 11(d)) on such record date,
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then the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares and equivalent preferred shares outstanding on such record date
plus the number of Preferred Shares and equivalent preferred shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares and equivalent preferred shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); PROVIDED, HOWEVER, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. Preferred Shares and equivalent preferred
shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. In case such subscription
or purchase price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent. Such adjustment to the
Purchase Price shall be made successively whenever such a record date is fixed.
If such rights, options or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to holders of Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
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continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in Preferred
Shares) or subscription rights or warrants (excluding those described in Section
11(b)), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current per
share market price (determined pursuant to Section 11(d)) of Preferred Shares on
such record date, less the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants applicable to
one Preferred Share and the denominator of which shall be such current per share
market price of Preferred Shares; PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be issued
upon exercise of one Right. Such adjustments to the Purchase Price shall be made
successively whenever such a record date is fixed. If such distribution is not
so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) (i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any date shall be deemed
to be the average of the daily closing prices per share of such Security for the
thirty (30) consecutive Trading Days (as hereinafter defined) immediately prior
to such date; PROVIDED, HOWEVER, that if the current per share market price of
such Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
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payable in shares of such Security or securities convertible into such shares or
(B) any subdivision, combination or reclassification of such Security, and prior
to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported by the principal consolidated transaction reporting system with to the
principal national securities exchange or over-the-counter market on which such
Security is listed or admitted to trading or, if such Security is not listed or
admitted, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date such
Security is not quoted or any such system, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in such
Security selected by the Board of Directors. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which such Security
is listed or admitted to trading is open for the transaction of business or, if
such Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if the Preferred
Shares are publicly traded, the "current per share market price" of the
Preferred Shares shall be determined in accordance with the method set forth in
Section 11(d)(i). If Common Shares are publicly traded at a time when the
Preferred Shares are not publicly traded, the "current per share market price"
of the Preferred Shares shall be conclusively deemed to be the current per share
market price of the Common Shares as determined pursuant to Section 11(d)(i)
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multiplied by then applicable Adjustment Number (as defined in and determined in
accordance with the Certificate of Designation for the Preferred Shares). If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; PROVIDED, HOWEVER, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-hundred thousandth of a
Preferred Share or one-hundredth of a Common Share or of any other share or
security, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Shares,
thereafter the Purchase Price and the number of such other shares so receivable
upon exercise of a Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Sections 11(a), 11(b), 11(c),
11(e), 11(h), 11(i), 11(m), 11(n) and the provisions of Sections 7, 9, 10, 13
and 14 with respect to the Preferred Shares shall apply on like terms to any
such other shares.
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(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and 11(c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a Preferred Share (calculated to the nearest one
one-hundred-thousandth of a Preferred Share) obtained by (i) multiplying (x) the
number of one one-thousandths of a Preferred Share purchasable upon exercise of
a Right immediately prior to such adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price pursuant to Section 11(b) or 11(c) to adjust the number of
Rights, in substitution for any adjustment in the number of one one-thousandths
of a Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a Preferred Share for which
a Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment and, if
known at the time, the amount of the adjustment to be made. Such record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
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if the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company may, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a Preferred Share issuable upon the
exercise of a Right, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-thousandths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the fraction of the
Common Shares or Preferred Shares issuable upon exercise of a Right, the Company
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shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Common Shares or Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (until the occurrence of such
event) issuing to the holder of any Right exercised after such record date the
Common Shares, Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Common Shares,
Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional Common Shares, Preferred Shares and other capital
stock or securities of the Company upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of Preferred Shares, issuance wholly
for cash of any preferred stock at less than the current market price, issuance
wholly for cash of preferred stock or other securities which by their terms are
convertible into or exchangeable for Preferred Shares, dividends on Preferred
Shares payable in Preferred Shares or issuance of rights, options or warrants
referred to in Section 11(b), hereafter made by the Company to holders of
Preferred Shares shall not be taxable to such holders.
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(n) Anything in this Agreement to the contrary notwithstanding, if, at
any time after the date of this Agreement and prior to the Distribution Date,
the Company shall (i) declare and pay any dividend on Common Shares payable in
Common Shares or (ii) effect a subdivision, combination or consolidation of
Common Shares (by reclassification or otherwise than by payment of a dividend
payable in Common Shares) into a greater or lesser number of Common Shares, then
in each such case (A) the number of one one-thousandths of a Preferred Share
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-thousandths of a Preferred Share
so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Shares outstanding immediately before such event
and the denominator of which is the number of Common Shares outstanding
immediately after such event and (B) each Common Share outstanding immediately
after such event shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to such event had issued
with respect to it. The adjustments provided in this Section 11(n) shall be made
successively whenever such a dividend is declared and paid or such a
subdivision, combination or consolidation is effected.
(o) The Company agrees that, after the earlier of the Distribution
Date or the Shares Acquisition Date, it will not, except as permitted by
Sections 23, 24 or 27 hereof, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or eliminate the benefits intended to be
afforded by the Rights.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or 13, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) file with the
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Rights Agent and with the transfer agents for each of the Common Shares and the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of such
adjustment unless and until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) If directly or indirectly, at any time after a Flip-In Event, (x)
the Company shall consolidate with, or merge with and into, any other Person,
(y) any Person shall merge with and into the Company and the Company shall be
the continuing or surviving corporation of such merger and, in connection with
such merger, all or part of the Common Shares shall be changed into or exchanged
for stock or other securities of any other Person (or of the Company) or cash or
any other property or (z) the Company (or one or more of its Subsidiaries) shall
sell or otherwise transfer, in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
one or more wholly-owned Subsidiaries of the Company), then, and in each such
case, proper provision shall be made so that (i) each holder of a Right (other
than Rights which have become void pursuant to Section 11(a)(ii)) shall
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price (as theretofore adjusted in accordance with Section 11(a)(ii)), in
accordance with the terms of this Agreement and in lieu of Preferred Shares or
Common Shares, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable shares of Common Stock of the Principal Party
not subject to liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by dividing the Purchase Price (as
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adjusted pursuant to Section 11(a)(ii)) by 50% of the then current per share
market price of the Common Stock of such Principal Party (determined pursuant to
Section 11(d)) on the date of consummation of such consolidation, merger, sale
or transfer; PROVIDED, HOWEVER, that the Purchase Price (as theretofore adjusted
in accordance with Section 11(a)(ii) hereof) and the number of shares of Common
Stock of such Principal Party so receivable upon exercise of a right shall be
subject to further adjustment as appropriate in accordance with this Section 13
to reflect any events occurring in respect of the Common Stock of such Principal
Party after the occurrence of such consolidation, merger, sale or transfer; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with Section 9) in
connection with such consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
practicable, in relation to the Common Stock of such Principal Party thereafter
deliverable upon the exercise of the Rights; PROVIDED, that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13(a), such cash,
shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned the
Common Stock of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property.
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(b) "Principal Party shall mean: (i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section 13(a): (A) the
Person that is the issuer of the securities into which the Common Shares are
converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer of the shares of Common Stock which have the greatest
aggregate market value of shares outstanding or (B) if no securities are so
issued, (x) the Person that is the other party to the merger, if such Person
survives such merger or, if there is more than one such Person, the Person the
shares of Common Stock of which have the greatest aggregate market value of
shares outstanding or (y) if the Person that is the other party to the merger
does not survive such merger, the Person that does survive such merger
(including the Company, if it survives) or (z) the Person resulting from such
consolidation; and (ii) in the case of any transaction described in clause (z)
of the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons is the
issuer of Common Stock having the greatest aggregate market value of shares
outstanding; PROVIDED, HOWEVER, that in any case described in the foregoing
clause (b)(i) or (b)(ii), if the Common Stock of such Persons is not at such
time or has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, then (1) if such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has been
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so registered, the term "Principal Party" shall refer to such other Person, or
(2) if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stock of all of which is and has been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares outstanding or
(3) if such Person is owned, directly or indirectly, by a joint venture formed
by two or more Persons that are not owned, directly or indirectly, by the same
Person, the provisions set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers and
the Principal Party in each case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total
of such interests.
(c) The Company shall not consummate any consolidation, merger, sale
or transfer described to in Section 13(a) unless prior thereto the Company and
the Principal Party involved therein shall have executed and delivered to the
Rights Agent an agreement confirming that the requirements of Sections 13(a) and
13(b) shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a default
by the Principal Party under this Agreement as the same shall have been assumed
by the Principal Party pursuant to Sections 13(a) and 13(b) and that, as soon as
practicable after executing such agreement pursuant to this Section 13, the
Principal Party will:
(i) prepare and file a registration statement under such Securities
Act, if necessary, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date and similarly comply with
applicable state securities laws;
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(ii) use its best efforts, if the Common Stock of such Principal Party
shall be listed or admitted to trading on the New York Stock Exchange or on
another national securities exchange, to list or admit to trading (or continue
the listing of) the Rights and the securities purchasable upon exercise of the
Rights on the New York Stock Exchange or such other national securities exchange
or, if the Common Stock of such Principal Party shall not be listed or admitted
to trading on the New York Stock Exchange or a national securities exchange, to
cause the Rights and the securities receivable upon exercise of the Rights to be
authorized for quotation on NASDAQ or some other similar system then in use;
(iii) deliver to holders of Rights historical financial statements for
such Principal Party which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of such Principal Party subject to
purchase upon exercise of outstanding Rights;
(d) In case such Principal Party has a provision in any of its
authorized securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs which would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with or as a consequence of, the consummation
of a transaction described to in this Section 13, shares of Common Stock of such
Principal Party or other equity securities of such Principal Party (including,
without limitation, shares or fractions of preferred stock, which by virtue of
having dividend, voting or liquidation rights substantially comparable to those
of the Common Stock of such Principal Party are deemed in good faith by the
Board of Directors to have substantially the same value as the Common Stock of
such Principal Party) at less than such then current market price or (ii)
providing for any special payment, tax or similar provision in connection with
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the issuance of the Common Stock of such Principal Party pursuant to the
provisions of this Section 13, then the Company hereby agrees with each holder
of Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that such provision shall have
been cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that such provision will have no effect in connection with or as a
consequence of the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time
after the Flip-In Event, enter into any transaction of the type described in
clauses (x), (y) and (z) of Section 13(a) if (i) at the time of or immediately
after such consolidation, merger, sale, transfer or other transaction, there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights, (ii) prior to,
simultaneously with or immediately after such consolidation, merger, sale,
transfer or other transaction, the stockholders of the Person who constitutes or
would constitute such Principal Party for purposes of Section 13(b) shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (iii) the form or nature of organization of such
Principal Party would preclude or limit the exercisability of the Rights.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights except prior
to the Distribution Date in accordance with Section 11(n). In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
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market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the principal national securities
exchange or over-the-counter market on which the Rights are listed or admitted
to trading or, if the Rights are not so listed or admitted to trading, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market as reported by NASDAQ or some other
similar system then in use or, if on any such date the Rights are not quoted on
any such system, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the Board
of Directors. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise or exchange of Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-thousandth of a Preferred Share).
Interests in fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts pursuant to an appropriate agreement between
the Company and a depositary selected by it; PROVIDED, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as Beneficial Owners of
the Preferred Shares represented by such depositary receipts. In lieu of
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fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Preferred
Shares would otherwise be issuable at the time such Rights are exercised or
exchanged as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the closing price
of a Preferred Share (as determined pursuant to Section 11(d)(i)) for the
Trading Day immediately prior to the date of such exercise.
(c) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares
upon the exercise or exchange of Rights. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional Common Shares would otherwise
be issuable at the time such Rights are exercised or exchanged as herein
provided an amount in cash equal to the same fraction of the current market
value of a Common Share (as determined in accordance with Section 14(a)) for the
Trading Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Section 14).
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of any Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
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Distribution Date, of any other Common Shares), on his own behalf and for his
own benefit, may enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise the Rights evidenced by such Right Certificate (or
prior to the Distribution Date, such Common Shares), in the manner provided in
such Right Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to holders of Rights, it is specifically acknowledged
that holders of Rights would not have an adequate remedy at law for any breach
of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, Rights will be transferable only
in connection with the transfer of Common Shares;
(b) after the Distribution Date, Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office or
agency of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Right Certificate (or, prior to the Distribution Date, a
certificate for Common Shares) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on such Right Certificates or such certificate for Common Shares made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary; and
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(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission or of any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; PROVIDED, that the Company shall use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Shares, Common Shares
or other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised or exchanged in accordance with the
provisions hereof.
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Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent such compensation as
shall be agreed in writing between the Company and the Rights Agent for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and its reasonable counsel fees and
counsel disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim
(whether asserted by the Company, a holder of a Right Certificate or any other
Person) of liability arising therefrom, directly or indirectly. The provisions
of this Section 18(a) shall survive the expiration of the Rights and the
termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for Preferred Shares or Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent, opinion,
certificate, statement or other paper or document believed by it to be genuine
and to be signed by the proper Person or Persons, and, where necessary, to be
verified or acknowledged or otherwise upon the advice of counsel as set forth in
Section 20.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
all or substantially all of the stock transfer or corporate trust powers of the
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Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; PROVIDED, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations expressly imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
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(a) The Rights Agent may consult with legal counsel of its own
selection (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof), nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate, nor shall it
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be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii)) or any adjustment in the
terms of the Rights provided in Sections 3, 11, 13, 23 and 24 or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after the Rights Agent's actual receipt of a certificate furnished
pursuant to Section 12, describing such change or adjustment) nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or other securities to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or other securities will, when issued, be validly authorized
and issued, fully paid and nonassessable, nor shall the Rights Agent be
responsible for the legality of the terms hereof in its capacity as an
administrative agent.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action shall
be taken or such omission shall be effective. The Rights Agent shall not be
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liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in such application on or after the date specified in
such application (which date shall not be less than three Business Days after
the date any officer of the Company actually receives such application, unless
any such officer shall have consented in writing to any earlier date) unless
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company, or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company, or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
45
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(k) No implied duties or obligations shall be read into this Agreement
against the Rights Agent. No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(l) In addition to the foregoing, the Rights Agent shall be protected
and shall incur no liability for, or in respect of, any action taken or omitted
by it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached hereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue or (ii) the
non-execution of such certification is including, without limitation, any
refusal to honor any otherwise permissible assignment or election by reason of
such non-execution.
(m) The Company agrees to give the Rights Agent prompt written notice
of any event or ownership known to it which would prohibit the exercise or
transfer of the right Certificates.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
46
<PAGE>
notice in writing mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares and Preferred
Shares by registered or certified mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the Rights Agent or the registered holder of any Right
Certificate may, at the expense of the Company, apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
any state of the United States or the District of Columbia, in good standing,
having an office in the State of New York, authorized under such laws to
exercise corporate trust or stock transfer powers and subject to supervision or
examination by federal or state authority, and having at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
or Preferred Shares, and following the Distribution Date mail a notice thereof
in writing to the registered holders of Right Certificates. Failure to give any
notice provided in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
47
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Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such forms as
may be approved by the Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable upon exercise of the Rights made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and prior to the
Expiration Date, the Company may with respect to Common Shares so issued or sold
pursuant to (i) the exercise of stock options, (ii) under any employee plan or
arrangement, (iii) upon the exercise, conversion or exchange of securities,
notes or debentures issued by the Company or (iv) a contractual obligation of
the Company, in each case existing prior to the Distribution Date, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale.
Section 23. REDEMPTION.
(a) The Board of Directors may, at any time prior to the Flip-In
Event, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(the redemption price being called the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. The
Redemption Price shall be payable, at the option of the Company, in cash, Common
Shares or such other form of consideration as the Board of Directors shall
determine.
48
<PAGE>
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to this Section 23 (or at such later time as
the Board of Directors may establish for the effectiveness of such redemption),
and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice, with simultaneous written notice to the Rights Agent, of any such
redemption; PROVIDED, HOWEVER, that the failure to give, or any defect in, any
such notice shall not effect the validity of such redemption. Within 10 days
after the action of the Board of Directors ordering the redemption of the Rights
(or such later time as the Board of Directors may establish for the
effectiveness of such redemption), the Company shall mail a notice of redemption
to all the holders of the then outstanding Rights at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice which is mailed in the manner herein provided shall be deemed
to have been duly given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 or other than in connection with the purchase of Common Shares prior
to the Distribution Date.
Section 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time after the
Flip-In Event, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Shares or Common Stock
Equivalents at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock divided or similar transaction
49
<PAGE>
occurring after the date hereof (such amount per Right being called the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after an Acquiring Person
shall have become the Beneficial Owner of Common Shares aggregating 50% or more
of the Common Shares then outstanding. From and after the occurrence of an event
specified in Section 13(a), any Rights that theretofore have not been exchanged
pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
24(a). The exchange of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the effectiveness of the action of the Board of
Directors ordering the exchange of any Rights pursuant to this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of Rights shall
be to receive that number of Common Shares or Common Share Equivalents equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice, with simultaneous written notice
to the Rights Agent, of any such exchange; PROVIDED, HOWEVER, that the failure
to give, or any defect in, such notice shall not affect the validity of such
exchange. The Company shall promptly mail a notice of any such exchange to all
of the holders of the Rights so exchanged at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed to have been duly given, whether or not
the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares or Common Share Equivalents
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
50
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(c) If there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exchange of the Rights. If the Company shall, after good faith effort, be
unable to take all such action as may be necessary to authorize such additional
Common Shares, the Company shall substitute, to the extent of the insufficiency,
for each Common Share that would otherwise be issuable upon exchange of a Right,
a number of Preferred Shares or fraction thereof (or equivalent preferred
shares, as such term is defined in Section 11(b)) such that the current per
share market price (determined pursuant to Section 11(a)) of one Preferred Share
or equivalent preferred share multiplied by such number or fraction is equal to
the current per share market price (determined pursuant to Section 11(a)) of one
Common Share as of the date of such exchange.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall at any time after the earlier of the
Distribution Date or the Shares Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of Preferred Shares or to make any
other distribution to the holders of Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of Preferred Shares (other than a
reclassification involving only the subdivision or combination of outstanding
Preferred Shares), (iv) to effect the liquidation, dissolution or winding up of
51
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the Company or (v) to pay any dividend on Common Shares payable in Common Shares
or to effect a subdivision, combination or consolidation of Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend or
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of Common
Shares and/or Preferred Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least 10 days prior to the record date for determining holders of Common
Shares and/or Preferred Shares for purposes of such action, and in the case of
any such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of Common
Shares and/or Preferred Shares, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii) or Section 13
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or, if occurring prior to the Distribution
Date, each holder of Common Shares), in accordance with Section 26, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences to holders of Rights of such event under Section 11(a)(ii) and
Section 13.
Section 26. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
52
<PAGE>
UCAR International Inc.
39 Old Ridgebury Road
Danbury, Connecticut 06817
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
The Bank of New York
101 Barclay Street
Floor 12 West
New York, New York 10286
Attention: Stock Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the relevant
registry books.
Section 27. SUPPLEMENTS AND AMENDMENTS. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole discretion, and the Rights Agent shall
if the Company so directs, supplement or amend any provision of this Agreement
in any respect without the approval of any holders of the Rights. At any time
when the Rights are no longer redeemable, except as provided in the penultimate
sentence of this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, (iii) shorten or lengthen any time period hereunder or (iv)
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable; PROVIDED, that, no such supplement or amendment
53
<PAGE>
shall adversely affect the interests of the holders of Rights, as such (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
and no such amendment may cause the Rights again to become redeemable or cause
this Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment shall be made which changes the Redemption Price.
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment. Notwithstanding any other provision hereof, the Rights Agent's
consent must be obtained regarding any amendment or supplement pursuant to this
Section 27 which alters the Rights Agent's rights or duties.
Section 28. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of Right Certificates (and, prior to the Distribution Date,
Common Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of Right Certificates (and,
prior to the Distribution Date, Common Shares).
Section 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. The Board
of Directors shall have the exclusive power and authority to administer this
Agreement and to exercise the rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary or advisable in the
54
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administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not to redeem the
Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
of Directors in good faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of Rights, as such, and all other parties
and (y) not subject the Board of Directors to any liability to the holders of
Rights.
Section 31. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. GOVERNING LAW. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed entirely within the State of Delaware, provided, however, that the
rights and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York.
Section 33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
55
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
UCAR INTERNATIONAL INC.
By /S/ PETER B. MANCINO
-----------------------------------
Title: Vice President
THE BANK OF NEW YORK,
as Rights Agent
By /S/ ROBERT DRITZ
-----------------------------------
Title: Vice President
57
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EXHIBIT 10.1
CONFORMED COPY
------------------------------------------------------------
CREDIT AGREEMENT
Dated as of October 19, 1995,
As Amended and Restated as of March 19, 1997,
and November 10, 1998
Among
UCAR INTERNATIONAL INC.,
UCAR GLOBAL ENTERPRISES INC.,
THE SUBSIDIARY BORROWERS PARTY HERETO,
THE LENDERS PARTY HERETO,
THE FRONTING BANKS PARTY HERETO,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
and Collateral Agent
----------------------------
CHASE SECURITIES INC.,
as Lead Arranger
------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms............................................... 2
SECTION 1.02. Terms Generally............................................. 37
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments................................................. 38
SECTION 2.02. Loans....................................................... 41
SECTION 2.03. Borrowing Procedure......................................... 43
SECTION 2.04. Evidence of Debt; Repayment of Loans........................ 43
SECTION 2.05. Fees........................................................ 44
SECTION 2.06. Interest on Loans........................................... 45
SECTION 2.07. Default Interest............................................ 46
SECTION 2.08. Alternate Rate of Interest.................................. 46
SECTION 2.09. Termination and Reduction of Commitments.................... 46
SECTION 2.10. Conversion and Continuation of Borrowings................... 47
SECTION 2.11. Repayment of Term Borrowings and Reduction
of the Tranche A Exposure; Reallocation of
the Tranche A Exposure...................................... 49
SECTION 2.12. Prepayment.................................................. 52
SECTION 2.13. Reserve Requirements; Change in
Circumstances............................................... 55
SECTION 2.14. Change in Legality.......................................... 57
SECTION 2.15. Indemnity................................................... 58
SECTION 2.16. Pro Rata Treatment.......................................... 59
SECTION 2.17. Sharing of Setoffs.......................................... 59
SECTION 2.18. Payments.................................................... 60
SECTION 2.19. Taxes....................................................... 60
SECTION 2.20. Letters of Credit........................................... 64
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers........................................ 73
SECTION 3.02. Authorization............................................... 74
SECTION 3.03. Enforceability.............................................. 74
SECTION 3.04. Governmental Approvals...................................... 74
SECTION 3.05. Financial Statements........................................ 75
SECTION 3.06. No Material Adverse Change.................................. 75
SECTION 3.07. Title to Properties; Possession Under Leases................ 75
SECTION 3.08. Subsidiaries................................................ 76
SECTION 3.09. Litigation; Compliance with Laws............................ 76
SECTION 3.10. Agreements.................................................. 76
SECTION 3.11. Federal Reserve Regulations................................. 77
<PAGE>
SECTION 3.12. Investment Company Act; Public Utility
Holding Company Act....................................... 77
SECTION 3.13. Use of Proceeds............................................. 77
SECTION 3.14. Tax Returns................................................. 77
SECTION 3.15. No Material Misstatements................................... 78
SECTION 3.16. Employee Benefit Plans...................................... 78
SECTION 3.17. Environmental Matters....................................... 79
SECTION 3.18. Capitalization of UCAR and the Borrower..................... 80
SECTION 3.19. Security Documents.......................................... 80
SECTION 3.20. Labor Matters............................................... 81
SECTION 3.21. No Foreign Assets Control Regulation
Violation................................................. 82
SECTION 3.22. Insurance................................................... 82
SECTION 3.23. Location of Real Property and Leased
Premises.................................................. 82
SECTION 3.24. Litigation Liabilities...................................... 82
SECTION 3.25. Year 2000................................................... 83
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date.............................................. 83
SECTION 4.02. Each Credit Event........................................... 85
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Existence; Businesses and Properties........................ 87
SECTION 5.02. Insurance................................................... 87
SECTION 5.03. Taxes....................................................... 89
SECTION 5.04. Financial Statements, Reports, etc.......................... 89
SECTION 5.05. Litigation and Other Notices................................ 91
SECTION 5.06. Employee Benefits........................................... 92
SECTION 5.07. Maintaining Records; Access to Properties
and Inspections........................................... 92
SECTION 5.08. Use of Proceeds............................................. 93
SECTION 5.09. Compliance with Environmental Laws.......................... 93
SECTION 5.10. Preparation of Environmental Reports........................ 93
SECTION 5.11. Further Assurances.......................................... 93
SECTION 5.12. Significant Subsidiaries.................................... 93
SECTION 5.13. Fiscal Year................................................. 94
SECTION 5.14. Dividends................................................... 94
SECTION 5.15. Interest/Exchange Rate Protection Agreements................ 94
SECTION 5.16. Corporate Separateness...................................... 94
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Indebtedness................................................ 94
SECTION 6.02. Liens....................................................... 98
SECTION 6.03. Sale and Lease-Back Transactions............................ 101
SECTION 6.04. Investments, Loans and Advances............................. 101
<PAGE>
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions.............................................. 103
SECTION 6.06. Dividends and Distributions................................. 106
SECTION 6.07. Transactions with Affiliates................................ 107
SECTION 6.08. Business of UCAR, the Borrower and the
Subsidiaries.............................................. 108
SECTION 6.09. Indebtedness and Other Material
Agreements................................................ 108
SECTION 6.10. Capital Expenditures........................................ 109
SECTION 6.11. Interest Coverage Ratio..................................... 109
SECTION 6.12. Leverage Ratio.............................................. 110
SECTION 6.13. Capital Stock of the Subsidiaries........................... 110
ARTICLE VII
EVENTS OF DEFAULT......................................................... 110
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND
THE COLLATERAL AGENT.................................................... 114
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices...................................................... 117
SECTION 9.02. Survival of Agreement........................................ 117
SECTION 9.03. Binding Effect............................................... 118
SECTION 9.04. Successors and Assigns....................................... 118
SECTION 9.05. Expenses; Indemnity.......................................... 122
SECTION 9.06. Right of Setoff.............................................. 125
SECTION 9.07. Applicable Law............................................... 125
SECTION 9.08. Waivers; Amendment........................................... 125
SECTION 9.09. Interest Rate Limitation..................................... 127
SECTION 9.10. Entire Agreement............................................. 127
SECTION 9.11. Waiver of Jury Trial......................................... 127
SECTION 9.12. Severability................................................. 127
SECTION 9.13. Counterparts................................................. 128
SECTION 9.14. Headings..................................................... 128
SECTION 9.15. Jurisdiction; Consent to Service of Process.................. 128
SECTION 9.16. Conversion of Currencies..................................... 128
SECTION 9.17. Confidentiality ............................................. 129
SECTION 9.18. Release of Liens and Guarantees.............................. 129
SECTION 9.19 Subsidiary Borrowers......................................... 130
<PAGE>
EXHIBITS AND SCHEDULES
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Indemnity, Subrogation and Contribution
Agreement
Exhibit E Form of Local Facility Credit Agreement
Exhibit F Form of Parent Guarantee Agreement
Exhibit G Form of Domestic Pledge Agreement
Exhibit H Form of Subsidiary Guarantee Agreement
Exhibit I Form of Tranche A Letter of Credit
Exhibit J Form of Domestic Security Agreement
Exhibit K Form of Intellectual Property Security
Agreement
Exhibit L Form of Subsidiary Borrower Agreement
Exhibit M Form of Subsidiary Borrower Termination
Exhibit N-1 Form of Opinion of Kelley Drye & Warren LLP
Exhibit N-2 Form of Opinion of General Counsel
Exhibit N-3 Forms of Opinion of Local Counsel
Schedule A Adjustments
Schedule 2.01(a) Lenders, Commitments and Outstanding Loans on
date hereof
Schedule 2.01(b) Lenders, Commitments and Outstanding Loans on
Effective Date
Schedule 2.20 Fronting Banks, Tranche A Letters of Credit and
Credit Parties
Schedule 3.08 Subsidiaries and outstanding subscriptions,
options, warrants, etc.
Schedule 3.09 Litigation
Schedule 3.14 Taxes
Schedule 3.17 Environmental Matters
Schedule 3.18 Capitalization
Schedule 3.20 Labor Matters
Schedule 3.23(a) Location of Real Property and Mortgages
Schedule 3.23(b) Location of Leased Premises
Schedule 4.01 Local Jurisdictions Where Opinion Required
Schedule 6.01 Indebtedness
Schedule 6.02 Liens
Schedule 6.04 Investments
Schedule 6.07 Transactions with Affiliates
Schedule 6.09 Restrictive Agreements
Schedule 9.01 Notice Information for Fronting Banks and
Credit Parties (other than the Borrower)
<PAGE>
CREDIT AGREEMENT (this "AGREEMENT") dated as
of October 19, 1995, as amended and restated as of
March 19, 1997, and November 10, 1998, among UCAR
INTERNATIONAL INC., a Delaware corporation ("UCAR"),
UCAR GLOBAL ENTERPRISES INC., a Delaware corporation
(the "BORROWER"), the SUBSIDIARY BORROWERS party
hereto, the LENDERS party hereto, the FRONTING BANKS
party hereto and THE CHASE MANHATTAN BANK, a New York
banking corporation, as administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT") and as
collateral agent (in such capacity, the "COLLATERAL
AGENT").
The parties hereto have entered into a Credit Agreement dated
as of October 19,1995, as amended and restated as of March 19, 1997 (the
"EXISTING CREDIT AGREEMENT"). The parties hereto have agreed that, effective on
the Effective Date (such term, and each other capitalized term used and not
otherwise defined herein, having the meaning assigned to it in Article I), the
Existing Credit Agreement will be amended in the form of and replaced with two
credit agreements, consisting of (a) this Agreement and (b) the Tranche C
Facility Credit Agreement, under which the Lenders or lenders under the Tranche
C Facility Credit Agreement, as applicable, will maintain existing credit and
extend new credit to the Borrower and certain Subsidiaries in an aggregate
original principal amount as of the Effective Date of $819,400,000. From and
after the Effective Date, (a) this Agreement will govern (i) the Tranche A Term
Loans, (ii) the Tranche A Letters of Credit and Tranche A Reimbursement Loans,
(iii) the Tranche B Term Loans and (iv) the Revolving Credit Commitments,
Revolving Loans and Swingline Loans and (b) the Tranche C Facility Credit
Agreement will govern the Tranche C Term Loans.
On the Second Closing Date, the Lenders extended credit to the
relevant Credit Parties in the form of (a) Tranche A Term Loans, the aggregate
outstanding principal amount of which is $20,467,843.22 on the date hereof, (b)
Tranche A Letters of Credit supporting Local Facilities, the aggregate
outstanding stated amount of which is $219,532,156.78 on the date hereof, and
(c) Tranche B Term Loans, the aggregate outstanding principal amount of which is
$119,400,000 on the date hereof. The proceeds of the Term Loans and the Local
Facilities were used to provide funding for the refinancing of all the
outstanding term loans and letters of credit under this Agreement and local
facilities on the Second Closing Date and the payment of related fees, expenses
and other transaction costs. The Tranche A Letters of Credit were, and will
continue to be, used to support Indebtedness under the Local Facilities.
The Lenders extended, and, subject to the terms and conditions
set forth herein, will continue to extend, credit to the relevant Credit Parties
in the form of (a) Revolving Loans and Swingline Loans from time to time during
the Revolving Availability Period, in an aggregate principal amount at any time
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2
outstanding not in excess of $250,000,000 less the Revolving L/C Exposure at
such time, (b) Revolving Letters of Credit from time to time during the
Revolving Availability Period, in an aggregate stated amount at any time
outstanding not in excess of the lesser of (i) $200,000,000 and (ii)
$250,000,000 less the principal amount of outstanding Revolving Loans and
Swingline Loans at such time and (c) Tranche A Letters of Credit and Tranche A
Reimbursement Loans issued or made as described in Section 2.11(b) from time to
time prior to the Tranche A Maturity Date, in an aggregate principal and stated
amount that will not result in the Tranche A Exposure exceeding $219,532,156.78,
subject to increases in the stated amount of Tranche A Letters of Credit
effected pursuant to Section 2.11(b)(iii) and resulting from the proportionate
repayment of Tranche A Term Borrowings.
The Revolving Letters of Credit and the proceeds of Revolving
Loans and Swingline Loans have been, and will continue to be, used for general
corporate purposes of the Borrower and its Subsidiaries, including the financing
of Litigation Payments.
The Lenders are willing to extend such credit to the Credit
Parties and the Fronting Banks are willing to issue Letters of Credit for the
account of the Credit Parties, in each case on the terms and subject to the
conditions set forth herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this
Agreement, the following terms shall have the meanings specified
below:
"ABR BORROWING" shall mean a Borrowing comprised of
ABR Loans.
"ABR LOAN" shall mean any ABR Term Loan, ABR Tranche A
Reimbursement Loan, ABR Revolving Loan or Swingline Loan.
"ABR REVOLVING LOAN" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"ABR TERM LOAN" shall mean any Term Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR TERM OR REIMBURSEMENT BORROWING" shall mean a Borrowing
comprised of ABR Term Loans or a Borrowing comprised of ABR Tranche A
Reimbursement Loans, as applicable.
"ABR TERM, REIMBURSEMENT OR REVOLVING BORROWING" shall mean a
Borrowing comprised of ABR Term Loans, a Borrowing comprised of ABR Tranche A
Reimbursement Loans or a Borrowing comprised of ABR Revolving Loans, as
applicable.
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3
"ABR TRANCHE A REIMBURSEMENT LOAN" shall mean any Tranche A
Reimbursement Loan bearing interest at a rate determined by reference to the
Alternate Base Rate in accordance with the provisions of Article II.
"ADJUSTED LIBO RATE" shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of
(a) the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.
"ADMINISTRATIVE AGENT FEES" shall have the meaning given such
term in Section 2.05(c).
"ADMINISTRATIVE QUESTIONNAIRE" shall mean an
Administrative Questionnaire in the form of Exhibit A.
"AFFILIATE" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
person specified.
"AGENT LETTER" shall mean the letter agreement dated October
9, 1998, between the Borrower and The Chase Manhattan
Bank.
"AGGREGATE REVOLVING CREDIT EXPOSURE" shall mean the
aggregate amount of the Lenders' Revolving Credit Exposures.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate, including the failure of the Federal Reserve Bank of New
York to publish rates or the inability of the Administrative Agent to obtain
quotations in accordance with the terms thereof, the Alternate Base Rate shall
be determined without regard to clause (b) of the preceding sentence until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE PERCENTAGE" of any Tranche A Lender or Revolving
Credit Lender at any time shall mean the percentage of the Total Tranche A
Reimbursement Commitment or the Total Revolving Credit Commitment, as
applicable, represented by such Lender's Tranche A Reimbursement Commitment or
Revolving Credit Commitment, as applicable. In the event the Tranche A
Reimbursement Commitments or the Revolving Credit Commitments shall have expired
or been terminated, the Applicable Percentages shall be determined on the basis
of the Tranche A Reimbursement Commitments or the Revolving Credit Commitments,
as applicable,
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4
most recently in effect, but giving effect to any assignments
pursuant to Section 9.04.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent and the Borrower, in the form of Exhibit B or such other
form as shall be approved by the Administrative Agent.
"BOARD" shall mean the Board of Governors of the
Federal Reserve System of the United States.
"BORROWING" shall mean (a) a group of Loans of a single Class
and Type made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect or (b) a
Swingline Loan.
"BORROWING REQUEST" shall mean a request by a Credit Party in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C.
"BRAZIL" shall mean UCAR Carbon S.A., a Brazilian corporation
and the direct or indirect owner of virtually all of the business of the
Borrower and the Subsidiaries in Brazil.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or day on which banks in New York City are authorized or required by law
to close; PROVIDED, HOWEVER, that when used in connection with a Eurodollar
Loan, the term "BUSINESS DAY" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, for any person in respect
of any period, the sum of (a) the aggregate of all expenditures by such person
during such period that, in accordance with GAAP, are or should be included in
"additions to property, plant or equipment" or similar items reflected in the
statement of cash flows of such person and (b) to the extent not covered by
clause (a) above, the aggregate of all expenditures by such person to acquire by
purchase or otherwise the business or fixed assets of, or stock or other
evidence of beneficial ownership of, any other person (other than the Borrower
or any person that is a Wholly Owned Subsidiary prior to such acquisition);
PROVIDED, HOWEVER, that Capital Expenditures for the Borrower and the
Subsidiaries shall not include (i) expenditures made to make any acquisition
constituting a Specified Permitted Transaction or Permitted Other Acquisition,
(ii) expenditures to the extent they are made (A) with the proceeds of the
issuance of Capital Stock of UCAR after the Original Closing Date (to the extent
not previously used to prepay Indebtedness (other than Revolving Loans or
Swingline Loans), make any investment or capital expenditure or otherwise for
any purpose resulting in a deduction to Excess Cash Flow in any fiscal year) or
(B) with funds that if not so spent would constitute Net Proceeds under clause
(a) of the definition of "NET PROCEEDS" (subject to the limitation set forth in
the second proviso to such clause (a)), (iii) expenditures of proceeds of
insurance settlements, condemnation awards and other settlements in respect of
lost, destroyed, damaged or condemned
<PAGE>
5
assets, equipment or other property to the extent such expenditures are made to
replace or repair such lost, destroyed, damaged or condemned assets, equipment
or other property or otherwise to acquire assets or properties useful in the
business of the Borrower and the Subsidiaries within 12 months of receipt of
such proceeds, (iv) expenditures that are accounted for as capital expenditures
of such person and that actually are paid for by a third party (excluding UCAR
or any subsidiary thereof) and for which neither UCAR nor any subsidiary thereof
has provided or is required to provide or incur, directly or indirectly, any
consideration or obligation to such third party or any other person (whether
before, during or after such period), (v) the book value of any asset owned by
such person prior to or during such period to the extent that such book value is
included as a capital expenditure during such period as a result of such person
reusing or beginning to reuse such asset during such period without a
corresponding expenditure actually having been made in such period; PROVIDED
that any expenditure necessary in order to permit such asset to be reused shall
be included as a Capital Expenditure during the period that such expenditure
actually is made and such book value shall have been included in Capital
Expenditures when such asset was originally acquired or (vi) expenditures made
in respect of closures of the Welland, Canada and Berlin, Germany facilities in
an aggregate amount not in excess of $11,000,000 (as evidenced by a certificate
of the Borrower signed by a Responsible Officer of the Borrower).
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the
obligations of such person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for purposes hereof, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in accordance with GAAP.
"CAPITAL STOCK" of any person shall mean any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such person,
including any preferred stock, any limited or general partnership interest and
any limited liability company membership interest, but excluding any debt
securities convertible into such equity.
"CASH INTEREST EXPENSE" shall mean, with respect to UCAR, the
Borrower and the Subsidiaries on a consolidated basis for any period, Interest
Expense for such period less the sum of (a) pay-in-kind Interest Expense, (b) to
the extent included in Interest Expense, the amortization of fees paid by UCAR,
the Borrower or any Subsidiary on or prior to the Original Closing Date in
connection with the transactions consummated on such date, on or prior to the
Second Closing Date in connection with the transactions consummated on such date
or on or prior to the Effective Date in connection with the Transactions and (c)
the amortization of debt discounts, if any, or fees in respect of
Interest/Exchange Rate Protection Agreements.
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6
"CERCLA" shall have the meaning given such term in the
definition of "ENVIRONMENTAL LAW".
A "CHANGE IN CONTROL" shall be deemed to have occurred if (a)
UCAR should fail to own directly, beneficially and of record, free and clear of
any and all Liens (other than Liens in favor of the Collateral Agent pursuant to
the Domestic Pledge Agreement), 100% of the issued and outstanding capital stock
of the Borrower; (b) any person or group (within the meaning of Rule 13d-5 of
the Securities Exchange Act of 1934 as in effect on the Effective Date), other
than members of management of UCAR or the Borrower holding voting stock of UCAR
or options to acquire such stock on the Effective Date (collectively, the
"DESIGNATED PERSONS"), shall own beneficially, directly or indirectly, shares
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of UCAR at a time when Designated
Persons fail to own beneficially, directly or indirectly, shares representing at
least a majority of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of UCAR; (c) a majority of the seats
(excluding vacant seats) on the board of directors of UCAR shall at any time
after the Effective Date be occupied by persons who were neither (i) nominated
by any one or more Designated Persons or by a majority of the board of directors
of UCAR, nor (ii) appointed by directors so nominated; or (d) a change in
control with respect to UCAR or the Borrower (or similar event, however
denominated) shall occur under and as defined in the Senior Subordinated
Indenture or the Refinancing Note Indenture (in each case so long as any
Indebtedness for borrowed money is outstanding thereunder) or in any other
indenture or agreement in respect of Indebtedness in an aggregate outstanding
principal amount in excess of $7,500,000 to which UCAR, the Borrower or any
Subsidiary is party. For purposes of clause (b) of this definition, the term
"DESIGNATED PERSON" shall be deemed to include any other holder or holders of
shares of UCAR having ordinary voting power if UCAR shall have the power to vote
(or cause to be voted at its discretion), pursuant to contract, irrevocable
proxy or otherwise, the shares held by such holder.
"CLASS", when used in reference to any Borrowing, refers to
whether the Loans comprising such Borrowing are Revolving Loans, Tranche A Term
Loans, Tranche A Reimbursement Loans, Tranche B Term Loans or Swingline Loans
and, when used in reference to any Commitment, refers to whether such Commitment
is a Revolving Credit Commitment, Tranche A Term Loan Commitment, Tranche A
Reimbursement Commitment, Tranche B Term Loan Commitment or Swingline Loan
Commitment.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"COLLATERAL" shall mean all the "Collateral" as defined
in any Security Document.
"COLLATERAL REQUIREMENT" shall mean, at any time, that:
(a)(i) the Domestic Pledge Agreement (or a supplement
thereto) shall have been duly executed and delivered by UCAR, the
<PAGE>
7
Borrower and each domestic Subsidiary existing at such time and directly owning
any outstanding Capital Stock or Indebtedness of any other Subsidiary, and there
shall have been duly and validly pledged to the Collateral Agent thereunder, for
the ratable benefit of the Secured Parties, as security for all the Obligations,
(A) all the outstanding Capital Stock of or other equity interests in each
domestic Subsidiary owned directly by UCAR, the Borrower or any domestic
Subsidiary and (B) 65% of the outstanding Capital Stock of or other equity
interests in (or, in each case, such lesser percentages as shall be owned by
UCAR, the Borrower and the domestic Subsidiaries) each foreign Subsidiary owned
in whole or in part directly by UCAR, the Borrower or any domestic Subsidiary
and (C) all Indebtedness in excess of $10,000,000 of UCAR, the Borrower or any
Subsidiary owed to UCAR, the Borrower or any domestic Subsidiary; (ii) one or
more other Pledge Agreements shall have been duly executed and delivered by each
foreign Credit Party that has borrowed (or will at such time borrow) Revolving
Loans or that has had (or will at such time have) a Revolving Letter of Credit
issued for its account, and by each foreign Subsidiary that is required pursuant
to the terms hereof to Guarantee the Obligations of such foreign Credit Party in
respect of such Revolving Loans or Revolving Letters of Credit, and there shall
have been duly and validly pledged thereunder, for the ratable benefit of the
Secured Parties holding Obligations of such foreign Credit Party or foreign
Guarantor in respect of such Revolving Loans, Revolving Letters of Credit or
Guarantees, as security for all such Obligations of such foreign Credit Party or
foreign Guarantor (but not as security for the Obligations of the Borrower or
any other Subsidiary) (A) all the outstanding Capital Stock of or other equity
interests in any Subsidiary that is at such time directly owned by such foreign
Credit Party or foreign Guarantor, (B) all the outstanding Capital Stock of or
other equity interests in such foreign Credit Party or foreign Guarantor, and of
any Subsidiary directly or indirectly owning any outstanding Capital Stock of or
other equity interests in such foreign Credit Party or foreign Guarantor that
shall not have been pledged pursuant to the Domestic Pledge Agreement and (C)
all Indebtedness in excess of $10,000,000 of UCAR, the Borrower or any
Subsidiary owed to such foreign Credit Party or foreign Guarantor; (iii) one or
more other Pledge Agreements shall have been duly executed and delivered by each
domestic Guarantor directly owning any Capital Stock of a foreign Credit Party
or a foreign Guarantor referred to in clause (ii) above, and there shall have
been duly and validly pledged thereunder, for the ratable benefit of the Secured
Parties holding Obligations of such foreign Credit Party or foreign Guarantor in
respect of such Revolving Loans, Revolving Letters of Credit or Guarantees, as
security for all such Obligations of such foreign Credit Party or foreign
Guarantor (but not as security for the Obligations of the Borrower or any other
Subsidiary) all the outstanding Capital Stock of or other equity interests in
such foreign Credit Party or foreign Guarantor that shall not have been pledged
pursuant to the Domestic Pledge Agreement; (iv) one or more other Pledge
Agreements shall have been duly executed and delivered by each domestic
Guarantor directly owning any Capital Stock of (A) a foreign Credit Party that
has borrowed (or will at such time borrow) under a Local Facility or that has
had (or will at such time have) a Tranche A Letter of Credit issued for its
account and (B) any foreign
<PAGE>
8
Guarantor of the Obligations of such foreign Credit Party described in (A)
above, and there shall have been duly and validly pledged thereunder, for the
ratable benefit of the Secured Parties holding Obligations of such foreign
Credit Party or foreign Guarantor in respect of such loans under a Local
Facility, Tranche A Letters of Credit or Guarantees, as security for all such
Obligations of such foreign Credit Party or foreign Guarantor (but not as
security for the Obligations of the Borrower or any other Subsidiary) all the
outstanding Capital Stock of or other equity interests in such foreign Credit
Party or foreign Guarantor that shall not have been pledged pursuant to the
Domestic Pledge Agreement; and (v) certificates or other instruments
representing the shares or Indebtedness pledged under the Pledge Agreements,
accompanied by stock powers or other instruments of transfer endorsed in blank,
shall be in the actual possession of the Collateral Agent and all other steps
required under applicable law or requested by the Collateral Agent to ensure
that the Pledge Agreements create valid, first priority, perfected Liens on all
the Collateral subject thereto shall have been taken;
(b)(i) the Domestic Security Agreement (or a supplement
thereto) shall have been duly executed and delivered by UCAR, the Borrower and
each domestic Subsidiary existing at such time, and the Domestic Security
Agreement shall create in favor of the Collateral Agent, for the ratable benefit
of the Secured Parties, as security for all the Obligations, perfected security
interests in (subject only to the Liens permitted by Section 6.02 and by the
Tranche C Facility Credit Agreement) all the Collateral (as such term is defined
in the Domestic Security Agreement) owned by UCAR, the Borrower and each
domestic Subsidiary; (ii) one or more other Security Agreements shall have been
duly executed and delivered by each foreign Credit Party that has borrowed (or
will at such time borrow) Revolving Loans or that has had (or will at such time
have) a Revolving Letter of Credit issued for its account, and by each foreign
Subsidiary that is required pursuant to the terms hereof to Guarantee the
Obligations of such foreign Credit Party in respect of such Revolving Loans or
Revolving Letters of Credit, and such Security Agreements shall create in favor
of the Collateral Agent, for the ratable benefit of the Secured Parties holding
Obligations of such foreign Credit Party or foreign Guarantor in respect of such
Revolving Loans, Revolving Letters of Credit or Guarantees, as security for all
such Obligations of such foreign Credit Party or foreign Guarantor (but not as
security for the Obligations of the Borrower or any other Subsidiary), perfected
security interests in (subject only to Liens permitted by Section 6.02 and by
the Tranche C Facility Credit Agreement) all the Collateral (as such term is
defined in such Security Agreements) owned by such foreign Credit Party or
foreign Guarantor; and (iii) all steps required under applicable law or
requested by the Collateral Agent to ensure that the Security Agreements create
valid, first priority, perfected Liens (subject only to the Liens permitted by
Section 6.02 and the Tranche C Facility Credit Agreement) on all the Collateral
subject thereto shall have been taken;
(c)(i) all real properties owned or leased directly by UCAR,
the Borrower or any domestic Subsidiary are Mortgaged Properties, and all steps
required under applicable law or
<PAGE>
9
requested by the Collateral Agent to ensure that the Mortgages on such Mortgaged
Properties create in favor of the Collateral Agent for the benefit of the
Secured Parties, as security for all the Obligations, perfected Liens on and
security interests in (subject only to the Liens permitted by Section 6.02 and
by the Tranche C Facility Credit Agreement) (A) such Mortgaged Properties and
(B) all proceeds thereof shall have been taken; and (ii) all real properties
owned or leased directly by any foreign Credit Party that has borrowed (or will
at such time borrow) Revolving Loans or that has had (or will at such time have)
a Revolving Letter of Credit issued for its account, and by each foreign
Subsidiary that is required to Guarantee the Obligations of such foreign Credit
Party in respect of such Revolving Loans or Revolving Letters of Credit, are
Mortgaged Properties, and all steps required under applicable law or requested
by the Collateral Agent to ensure that the Mortgages on such Mortgaged
Properties create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties holding Obligations of such foreign Credit Party or foreign
Guarantor in respect of such Revolving Loans, Revolving Letters of Credit or
Guarantees, as security for all such Obligations of such foreign Credit Party or
foreign Guarantor (but not as security for the Obligations of the Borrower or
any other Subsidiary), perfected Liens on and security interests in (subject
only to the Liens permitted by Section 6.02 and by the Tranche C Facility Credit
Agreement) (A) such Mortgaged Properties and (B) all proceeds thereof shall have
been taken; PROVIDED that, notwithstanding the foregoing, it is understood that
leasehold mortgages will not be obtained in respect of any real property leased
by a Loan Party unless the Collateral Agent, in its discretion, shall request
that a leased property become a Mortgaged Property (in which case any such
Mortgage shall be subject to such limitations as may be contained in the lease
relating to such real property); and
(d) the Intellectual Property Security Agreement (or a
supplement thereto) shall have been duly executed and delivered by UCAR, the
Borrower and each domestic Subsidiary existing at such time, and that all steps
required under applicable law or requested by the Collateral Agent to ensure
that the Intellectual Property Security Agreement creates in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, as security
for all the Obligations, perfected security interests in (subject only to the
Liens permitted by Section 6.02 and by the Tranche C Facility Credit Agreement)
all the Collateral (as such term is defined in the Intellectual Property
Security Agreement) owned by UCAR, the Borrower and each domestic Subsidiary
shall have been taken;
PROVIDED that a Collateral Requirement with respect to a foreign Credit Party or
foreign Subsidiary shall not be required to be satisfied hereunder to the extent
that (i) satisfaction of such Collateral Requirement is not permitted under
applicable law or (ii) the Administrative Agent determines that the expense, tax
consequences or difficulty of satisfying such Collateral Requirement does not
justify satisfying such Collateral Requirement.
<PAGE>
10
"COMMITMENTS" shall mean, with respect to any Lender, such
Lender's Revolving Credit Commitment, Tranche A Reimbursement Commitment,
Tranche A Term Loan Commitment, Tranche B Term Loan Commitment and Swingline
Loan Commitment and, with respect to any Fronting Bank, its Tranche A L/C
Commitment and its Revolving L/C
Commitment.
"COMMITMENT FEE" shall have the meaning given such term
in Section 2.05(a).
"CONTROL" shall mean the possession, directly or indirectly,
of the power 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, and "CONTROLLING" and "CONTROLLED" shall have meanings correlative
thereto.
"CREDIT EVENT" shall have the meaning given such term in
Section 4.02.
"CREDIT PARTIES" shall mean the Borrower and the
Subsidiary Borrowers.
"CURRENT ASSETS" shall mean, with respect to UCAR, the
Borrower and the Subsidiaries on a consolidated basis at any date of
determination, all assets (other than cash and Permitted Investments or other
cash equivalents) which would, in accordance with GAAP, be classified on a
consolidated balance sheet of UCAR, the Borrower and the Subsidiaries as current
assets at such date of determination.
"CURRENT LIABILITIES" shall mean, with respect to UCAR, the
Borrower and the Subsidiaries on a consolidated basis at any date of
determination, all liabilities which would, in accordance with GAAP, be
classified on a consolidated balance sheet of UCAR, the Borrower and the
Subsidiaries as current liabilities at such date of determination, other than
(a) the current portion of long term debt, (b) accruals of Interest Expense
(excluding Interest Expense which is due and unpaid), (c) Revolving Loans or
Swingline Loans classified as current and (d) accruals prior to the Effective
Date of any costs or expenses related to severance or termination of employees.
"DEBT SERVICE" shall mean, with respect to UCAR, the Borrower
and the Subsidiaries on a consolidated basis for any period, Interest Expense
for such period PLUS scheduled principal amortization of Total Debt for such
period (whether or not such payments are made).
"DEFAULT" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"DESIGNATED LENDERS" shall mean, at any time, Lenders having
Loans (other than Swingline Loans), Letter of Credit Exposures, Swingline
Exposures and unused Commitments (excluding commitments to issue Letters of
Credit or make Swingline Loans) representing at least 66-2/3% of the sum of all
Loans (other than Swingline Loans) outstanding, Letter of Credit Exposures,
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11
Swingline Exposures and unused Commitments (except commitments to issue Letters
of Credit or make Swingline Loans) at such time.
"DOLLAR EQUIVALENT" shall mean, with respect to any amount in
a currency other than Dollars on any date, the equivalent in Dollars of such
amount, determined by the Administrative Agent as provided in the applicable
Local Facility Credit Agreement.
"DOLLARS" or "$" shall mean lawful money of the
United States of America.
"DOMESTIC PLEDGE AGREEMENT" shall mean the Pledge Agreement
dated as of October 19, 1995, as amended and restated as of November 10, 1998,
substantially in the form of Exhibit G, among UCAR, the Borrower, certain
domestic Subsidiaries and the Collateral Agent for the benefit of the Secured
Parties.
"DOMESTIC SECURITY AGREEMENT" shall mean the Security
Agreement dated as of April 22, 1998, as amended and restated as of November 10,
1998, substantially in the form of Exhibit J, among UCAR, the Borrower and the
domestic Subsidiaries and the Collateral Agent for the benefit of the Secured
Parties.
"DOMESTIC SUBSIDIARY BORROWER" shall have the meaning given
such term in Section 2.19(f).
"EBITDA" shall mean, with respect to UCAR, the Borrower and
the Subsidiaries on a consolidated basis for any period, the consolidated net
income of UCAR, the Borrower and the Subsidiaries for such period PLUS, to the
extent deducted in computing such consolidated net income, without duplication,
the sum of (a)(i) income tax expense and (ii) withholding tax expense incurred
in connection with cross border transactions involving non-domestic
subsidiaries, (b) interest expense, (c) depreciation and amortization expense,
(d) any special charges (including, without limitation, any non-cash fees or
expenses incurred in connection with the Recapitalization, the redemption of
subordinated notes in September 1995, the refinancing effected on October 19,
1995, the refinancing effected on March 19, 1997 or the Transactions) and any
extraordinary or non-recurring losses, (e) other noncash items reducing
consolidated net income and (f) noncash exchange, translation or performance
losses relating to any foreign currency hedging transactions or currency
fluctuations, MINUS, to the extent added in computing such consolidated net
income, without duplication, (i) interest income, (ii) extraordinary or
non-recurring gains, (iii) other noncash items increasing consolidated net
income and (iv) noncash exchange, translation or performance gains relating to
any foreign currency hedging transactions or currency fluctuations.
"EFFECTIVENESS AGREEMENT" shall mean the Effectiveness
Agreement dated as of March 17, 1997, among UCAR, the Borrower, the Lenders, the
Departing Lenders (as defined therein), the Fronting Banks, the Administrative
Agent and the Collateral Agent.
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12
"EFFECTIVE DATE" shall mean the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.08).
"ENVIRONMENT" shall mean ambient air, surface water and
groundwater (including potable water, navigable water and wetlands), the land
surface or subsurface strata, the workplace or as otherwise defined in any
Environmental Law.
"ENVIRONMENTAL CLAIM" shall mean any written accusation,
allegation, notice of violation, claim, demand, order, directive, cost recovery
action or other cause of action by, or on behalf of, any Governmental Authority
or any person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), Remedial Action costs, tangible or
intangible property damage, natural resource damages, nuisance, pollution, any
adverse effect on the environment caused by any Hazardous Material, or for
fines, penalties or restrictions, resulting from or based upon: (a) the threat,
the existence, or the continuation of the existence of a Release (including
sudden or non-sudden, accidental or non-accidental Releases); (b) exposure to
any Hazardous Material; (c) the presence, use, handling, transportation,
storage, treatment or disposal of any Hazardous Material; or (d) the violation
or alleged violation of any Environmental Law or Environmental Permit.
"ENVIRONMENTAL LAW" shall mean any and all applicable present
and future treaties, laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
treatment, storage, disposal, Release or threatened Release of any Hazardous
Material or to human health or safety, including the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss. 1801 ET seq., the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss. 9601
ET seq. ("CERCLA"), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. ss.ss. 6901, ET seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. ss.ss. 1251 ET
seq., the Clean Air Act of 1970, as amended 42 U.S.C. ss.ss. 7401 ET seq., the
Toxic Substances Control Act of 1976, 15 U.S.C. ss.ss. 2601 ET seq., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. ss.ss.
11001 ET seq., the National Environmental Policy Act of 1975, 42 U.S.C. ss.ss.
4321 ET SEQ., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. ss.ss.
300(F) ET seq., and any similar or implementing state or foreign law, and all
amendments or regulations promulgated thereunder.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
authorization, certificate, license, variance, filing or permission required by
or from any Governmental Authority pursuant to any Environmental Law.
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13
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or
not incorporated) that, together with the Borrower, is treated as a single
employer under Section 414 of the Code.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised
of Eurodollar Loans.
"EURODOLLAR LOAN" shall mean any Eurodollar Term Loan,
Eurodollar Tranche A Reimbursement Loan or Eurodollar Revolving
Loan.
"EURODOLLAR REVOLVING LOAN" shall mean any Revolving Loan
bearing interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"EURODOLLAR TERM LOAN" shall mean any Term Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"EURODOLLAR TERM OR REIMBURSEMENT BORROWING" shall mean a
Borrowing comprised of Eurodollar Term Loans or a Borrowing comprised of
Eurodollar Tranche A Reimbursement Loans, as applicable .
"EURODOLLAR TERM, REIMBURSEMENT OR REVOLVING LOAN" shall mean
a Borrowing comprised of Eurodollar Term Loans, a Borrowing comprised of
Eurodollar Tranche A Reimbursement Loans or a Borrowing comprised of Eurodollar
Revolving Loans, as applicable.
"EURODOLLAR TRANCHE A REIMBURSEMENT LOAN" shall mean any
Tranche A Reimbursement Loan bearing interest at a rate determined by reference
to the Adjusted LIBO Rate in accordance with the provisions of Article II.
"EUROPEAN HOLDING COMPANY STRATEGY" shall have the meaning
given such term in Section 6.04(m).
"EVENT OF DEFAULT" shall have the meaning given such
term in Article VII.
"EXCESS CASH FLOW" shall mean, with respect to UCAR, the
Borrower and the Subsidiaries on a consolidated basis for any fiscal year,
EBITDA of UCAR, the Borrower and the Subsidiaries on a consolidated basis for
such fiscal year, MINUS, without duplication, (a) Debt Service for such fiscal
year, (b) permitted Capital Expenditures by the Borrower and the Subsidiaries on
a consolidated basis during such fiscal year which are paid in cash, (c) taxes
paid in cash by UCAR, the Borrower and the Subsidiaries on a consolidated basis
during such fiscal year, including income tax expense and withholding tax
expense incurred in connection with cross border transactions involving
non-domestic Subsidiaries, (d) an amount equal to any increase in Working
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14
Capital of UCAR, the Borrower and the Subsidiaries for such fiscal year, (e)
Permitted Other Acquisitions and acquisitions constituting Specified Foreign
Transactions during such fiscal year to the extent paid in cash, (f) cash
expenditures made in respect of Interest/Exchange Rate Protection Agreements
during such fiscal year, to the extent not reflected in the computation of
EBITDA or Interest Expense, (g) permitted dividends or repurchase of its Capital
Stock paid in cash by UCAR or the Borrower during such fiscal year and permitted
dividends paid by any Subsidiary to any person other than the Borrower or any of
its other Subsidiaries during such fiscal year, in each case in accordance with
Section 6.06, (h) amounts paid in cash during such fiscal year on account of
items that were accounted for as noncash reductions of consolidated net income
of UCAR, the Borrower and the Subsidiaries in the current or a prior period, (i)
special charges or any extraordinary or non-recurring loss paid in cash during
such fiscal year, (j) to the extent not deducted in the computation of Net
Proceeds in respect of any asset disposition or condemnation giving rise
thereto, mandatory prepayments of Indebtedness (other than Indebtedness created
hereunder or under any other Loan Document), (k) cash Restricted Debt Payments
made pursuant to the first proviso contained in Section 6.09(b)(i) and (l) to
the extent included in determining EBITDA, all items which did not result from a
cash payment to UCAR, the Borrower and the Subsidiaries on a consolidated basis
during such fiscal year PLUS, without duplication, (i) an amount equal to any
decrease in Working Capital for such fiscal year, (ii) all proceeds received
during such fiscal year of Capital Lease Obligations, purchase money
Indebtedness, Sale and Lease-Back Transactions pursuant to Section 6.03(a) and
any other Indebtedness to the extent used to finance any Permitted Other
Acquisition, acquisition constituting a Specified Permitted Transaction or
Capital Expenditure (other than Indebtedness under this Agreement or the Tranche
C Facility Agreement to the extent there is no corresponding deduction to Excess
Cash Flow above in respect of the use of such Indebtedness) and all proceeds
received during such fiscal year of Sale and Lease-Back Transactions pursuant to
Section 6.03(b), (iii) all amounts referred to in (b) and (e) above to the
extent funded with the proceeds of the issuance of Capital Stock of UCAR after
the Original Closing Date (to the extent not previously used to prepay
Indebtedness (other than Revolving Loans or Swingline Loans), make any
investment or capital expenditure or otherwise for any purpose resulting in a
deduction to Excess Cash Flow in any fiscal year) or any amount that would have
constituted Net Proceeds under clause (a) of the definition of "NET PROCEEDS" if
not so spent, in each case to the extent there is a corresponding deduction to
Excess Cash Flow above, (iv) cash payments received in respect of
Interest/Exchange Rate Protection Agreements during such fiscal year to the
extent not (A) included in the computation of EBITDA or (B) reducing Interest
Expense, (v) any extraordinary or non-recurring gain realized in cash during
such fiscal year (except to the extent such gain is subject to Section 2.12(d)
of this Agreement or the Tranche C Facility Credit Agreement), (vi) to the
extent deducted in the computation of EBITDA, interest income and (vii) to the
extent subtracted in determining EBITDA, all items which did not result from a
cash payment by UCAR, the Borrower and the Subsidiaries on a consolidated basis
during such fiscal year.
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15
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"FEES" shall mean the Commitment Fees, the L/C
Participation Fees, the Fronting Bank Fees and the Administrative
Agent Fees.
"FINANCIAL OFFICER" of any corporation shall mean the chief
financial officer, principal accounting officer, Treasurer, Assistant Treasurer
or Controller of such corporation.
"FOREIGN CURRENCY COMPONENT" shall mean, with respect to (a)
any portion of the stated amount of a Tranche A Letter of Credit issued in
respect of borrowings under a Local Facility denominated in a currency other
than Dollars, the difference between (i) the amount of such portion and (ii) the
quotient obtained by dividing the amount of such portion by 1.0526, and (b) the
principal amount of any Local Facility denominated in a currency other than
Dollars, an amount in Dollars equal to 5.00% of the Dollar Equivalent of such
amount as of the date of issuance of the applicable Tranche A Letter of Credit.
"FRONTING BANKS" shall mean the persons listed on Schedule
2.20 and any other person that may become a Fronting Bank hereunder from time to
time, each in its capacity as the issuer of Letters of Credit hereunder and its
successors in such capacity.
"FRONTING BANK FEES" shall have the meaning given to such term
in Section 2.05(b).
"GAAP" shall mean generally accepted accounting principles in
effect from time to time in the United States applied on a consistent basis or,
when reference is made to another jurisdiction, generally accepted accounting
principles in effect from time to time in such jurisdiction applied on a
consistent basis.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body or, in the case of references to "Governmental Authority" in
Article II and Section 9.17, the National Association of Insurance
Commissioners.
"GUARANTEE" of or by any person shall mean (a) any obligation,
contingent or otherwise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness
<PAGE>
16
(whether arising by virtue of partnership arrangements, by agreement to keep
well, to purchase assets, goods, securities or services, to take-or-pay or
otherwise) or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase or lease
property, securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or (iv) entered into for the purpose of assuring in any other
manner the holders of such Indebtedness of the payment thereof or to protect
such holders against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of such person securing any Indebtedness of any other person,
whether or not such Indebtedness is assumed by such person; PROVIDED, HOWEVER,
that the term "GUARANTEE" shall not include endorsements for collection or
deposit, in either case in the ordinary course of business, or customary and
reasonable indemnity obligations in effect on the Effective Date or entered into
in connection with any acquisition or disposition of assets permitted under this
Agreement.
"GUARANTEE AGREEMENTS" shall mean (a) the Parent Guarantee
Agreement, (b) the Subsidiary Guarantee Agreement and (c) any other guarantee
agreements or similar agreements with respect to the Obligations or a Local
Facility in form and substance reasonably satisfactory to the Collateral Agent.
"GUARANTEE REQUIREMENT" shall mean, at any time, that (a) the
Parent Guarantee Agreement shall have been duly executed by UCAR and the
Borrower, shall have been delivered to the Collateral Agent and shall be in full
force and effect; (b) the Subsidiary Guarantee Agreement (or a supplement
thereto) shall have been duly executed by each domestic Subsidiary existing at
such time, shall have been delivered to the Collateral Agent and shall be in
full force and effect; (c) in the event that any foreign Credit Party has
borrowed or obtained (or will at such time borrow or obtain) Revolving Loans or
Revolving Letters of Credit, a Guarantee Agreement shall have been duly executed
(i) by each foreign Subsidiary existing at such time that is a direct or
indirect parent of such foreign Credit Party and (ii) by each other foreign
Subsidiary, shall have been delivered to the Collateral Agent and shall be in
full force and effect; and (d) the Indemnity, Subrogation and Contribution
Agreement (or a supplement thereto) shall have been executed by UCAR, the
Borrower and each Subsidiary party to the Subsidiary Guarantee Agreement or the
Domestic Pledge Agreement, shall have been delivered to the Collateral Agent and
shall be in full force and effect ; PROVIDED that a Guarantee Requirement with
respect to a foreign Credit Party or foreign Subsidiary shall not be required to
be satisfied hereunder to the extent that (i) satisfaction of such Guarantee
Requirement is not permitted under applicable law or (ii) the Administrative
Agent determines that the expense, tax consequences or difficulty of satisfying
such Guarantee Requirement does not justify satisfying such Guarantee
Requirement.
"GUARANTORS" shall mean UCAR, the Borrower and the
Subsidiary Guarantors.
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17
"HAZARDOUS MATERIAL" shall mean any material meeting the
definition of a "hazardous substance" in CERCLA 42 U.S.C. ss.9601(14) and all
explosive or radioactive substances or wastes, toxic substances or wastes,
pollutants, solid, liquid or gaseous wastes, including petroleum, petroleum
distillates or fractions or residues, asbestos or asbestos containing materials,
polychlorinated biphenyls ("PCBS") or materials or equipment containing PCBs in
excess of 50 ppm, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law,
or that reasonably could form the basis of an Environmental Claim.
"INDEBTEDNESS" of any person shall mean, without duplication,
(a) all obligations of such person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
person upon which interest charges are customarily paid (other than trade
payables incurred in the ordinary course of business), (d) all obligations of
such person under conditional sale or other title retention agreements relating
to property or assets purchased by such person, (e) all obligations of such
person issued or assumed as the deferred purchase price of property or services
(other than current trade liabilities incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (g) all Guarantees by such person
of Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all payments that such person would have to make in the event of an early
termination, on the date Indebtedness of such person is being determined, in
respect of outstanding interest rate protection agreements, foreign currency
exchange agreements or other interest or exchange rate hedging arrangements and
(j) all obligations of such person as an account party in respect of letters of
credit and bankers' acceptances. The Indebtedness of any person shall include
the Indebtedness of any partnership in which such person is a general partner,
other than to the extent that the instrument or agreement evidencing such
Indebtedness expressly limits the liability of such person in respect thereof;
PROVIDED that, if the sole asset of such person is its general partnership
interest in such partnership, the amount of such Indebtedness shall be deemed
equal to the value of such general partnership interest and the amount of any
Indebtedness in respect of any Guarantee of such partnership Indebtedness shall
be limited to the same extent as such Guarantee may be limited.
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" shall mean
the Indemnity, Subrogation and Contribution Agreement dated as of October 15,
1995, as amended and restated as of November 10, 1998, substantially in the form
of Exhibit D, among UCAR, the Borrower, the Subsidiary Guarantors and the
Collateral Agent.
"INFORMATION MEMORANDUM" shall have the meaning given
such term in Section 3.15.
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18
"INSTALLMENT DATE" shall have the meaning given such
term in Section 2.11(a).
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean the
Intellectual Property Security Agreement dated as of April 22, 1998, as amended
and restated as of November 10, 1998, substantially in the form of Exhibit K,
among UCAR, the Borrower, the domestic Subsidiaries and the Collateral Agent for
the benefit of the Secured Parties.
"INTEREST COMPONENT" shall mean, with respect to (a) any
portion of the stated amount of a Tranche A Letter of Credit issued in respect
of borrowings under a Local Facility denominated in Dollars, the difference
between (i) the amount of such portion and (ii) the quotient obtained by
dividing the amount of such portion by 1.0103, and (b) the principal amount of
any Local Facility or any Tranche A Reimbursement Loan or Tranche A Term Loan,
an amount equal to 1.03% of such principal amount.
"INTEREST COVERAGE RATIO" shall have the meaning given such
term in Section 6.11.
"INTEREST EXPENSE" shall mean, with respect to UCAR, the
Borrower and the Subsidiaries on a consolidated basis for any period, the sum of
(a) gross interest expense of UCAR, the Borrower and the Subsidiaries for such
period on a consolidated basis, including (i) the amortization of debt
discounts, (ii) the amortization of all fees (including fees with respect to
interest rate protection agreements) payable in connection with the incurrence
of Indebtedness to the extent included in interest expense and (iii) the portion
of any payments or accruals with respect to Capital Lease Obligations allocable
to interest expense and (b) capitalized interest of UCAR, the Borrower and the
Subsidiaries on a consolidated basis. For purposes of the foregoing, gross
interest expense shall be determined after giving effect to any net payments
made or received by the Borrower and the Subsidiaries with respect to interest
rate protection agreements.
"INTEREST PAYMENT DATE" shall mean, (a) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day that would have
been an Interest Payment Date had successive Interest Periods of three months'
duration been applicable to such Borrowing, and, in addition, the date of any
refinancing or conversion of such Borrowing with or to a Borrowing of a
different Type and (b) with respect to any ABR Loan, the last day of each
calendar quarter.
"INTEREST PERIOD" shall mean as to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter, as the applicable Credit Party may elect, and the
date any Eurodollar Borrowing is converted to an
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19
ABR Borrowing in accordance with Section 2.10 or repaid or prepaid in accordance
with Section 2.11 or 2.12; PROVIDED, HOWEVER, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day. Interest shall accrue from and including
the first day of an Interest Period to but excluding the last day of such
Interest Period.
"INTEREST/EXCHANGE RATE PROTECTION AGREEMENT" shall mean any
interest rate or currency hedging agreement or arrangement approved by the
Administrative Agent (such approval not to be unreasonably withheld) entered
into by the Borrower or a Subsidiary and designed to protect against
fluctuations in interest rates or currency exchange rates.
"L/C DISBURSEMENTS" shall mean Tranche A L/C Disbursements and
Revolving L/C Disbursements.
"L/C PARTICIPATION FEE" shall have the meaning given such term
in Section 2.05(b).
"LENDERS" shall mean the persons listed on Schedule 2.01 and
any other person that shall have become a Lender hereunder pursuant to an
Assignment and Acceptance, other than any person that ceases to be a Lender
hereunder pursuant to an Assignment and Acceptance. Unless the context otherwise
requires, the term "Lenders" shall include the Swingline Lender.
"LETTER OF CREDIT COMMITMENT" shall mean, with respect to any
Fronting Bank, such Fronting Bank's Tranche A L/C Commitment and Revolving L/C
Commitment.
"LETTER OF CREDIT EXPOSURE" shall mean, with respect to any
Lender at any time, such Lender's Tranche A L/C Exposure and Revolving L/C
Exposure at such time.
"LETTERS OF CREDIT" shall mean Tranche A Letters of Credit and
Revolving Letters of Credit.
"LEVERAGE RATIO" shall have the meaning given such term
in Section 6.12.
"LIBO RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the rate (rounded upwards, if necessary, to
the next 1/16 of 1%) at which dollar deposits approximately equal in principal
amount to the Administrative Agent's portion of such Eurodollar Borrowing and
for a maturity comparable to such Interest Period are offered to the principal
London office of the Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"LIEN" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset, (b) the interest of a
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20
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement relating to such asset and (c) in the case of securities,
any purchase option, call or similar right of a third party with respect to such
securities.
"LITIGATION LIABILITIES" shall mean liabilities and expenses
of UCAR, the Borrower and the Subsidiaries associated with (a) antitrust
investigations and related lawsuits, settlements and claims of the type
described in UCAR's Annual Report on Form 10-K for the year ended December 31,
1997, and UCAR's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998 and June 30, 1998 (together, the "SEC REPORTS"), (b) shareholder derivative
lawsuits and claims of the type described in the SEC Reports and (c) securities
lawsuits and claims of the type described in the SEC Reports and any
investigations that may arise relating to the subject matter of such securities
lawsuits and claims.
"LITIGATION PAYMENTS" shall mean payments, credits, discounts,
transfers of assets and any other transfers of value made in respect of
Litigation Liabilities which are or would be applied against the Reserves in
accordance with GAAP.
"LOAN DOCUMENTS" shall mean this Agreement, the Tranche C
Facility Credit Agreement, the Notes, if any, the notes, if any, issued under
the Tranche C Facility Credit Agreement, the Guarantee Agreements, the Security
Documents, the Indemnity, Subrogation and Contribution Agreement, the Local
Facility Loan Documents and the Letters of Credit.
"LOAN PARTIES" shall mean the Borrower, the other Credit
Parties, the Guarantors and the Pledgors.
"LOANS" shall mean the Revolving Loans, the Term Loans,
and the Swingline Loans.
"LOCAL FACILITY" shall mean each loan facility permitting
borrowings by a Credit Party located outside the United States (a) which are
made pursuant to a Local Facility Credit Agreement and supported by a Tranche A
Letter of Credit or (b) which are supported by the Guarantee of any Guarantor or
a pledge of or a security interest in any Collateral or in any assets of such
Credit Party and the existence and terms of which (including the existence and
terms of any such Guarantee, pledge or security interest) have been submitted
for approval to the Administrative Agent by the Borrower and approved in writing
by the Administrative Agent.
"LOCAL FACILITY CREDIT AGREEMENT" shall mean each credit
agreement between a foreign Credit Party and one or more lenders in
substantially the form of Exhibit E, with such changes therefrom as shall in the
reasonable judgment of the Administrative Agent be necessary or advisable under
applicable law.
"LOCAL FACILITY LENDERS" shall mean each lender under a Local
Facility.
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21
"LOCAL FACILITY LOAN DOCUMENTS" shall mean each agreement or
instrument evidencing or securing any obligation of a borrower under, guarantor
of, or grantor of collateral to secure, any Local Facility that does not also
evidence, guarantee or secure any other Obligation.
"MARGIN STOCK" shall have the meaning given such term
in Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse
effect on the assets, business, properties, financial condition or results of
operations of UCAR, the Borrower and the Subsidiaries, taken as a whole, (b) a
material impairment of the ability of UCAR, the Borrower or any Subsidiary to
perform any of its material obligations under any Loan Document (other than the
Local Facility Loan Documents) to which it is or will be a party or (c) an
impairment of the validity or enforceability of, or a material impairment of the
material rights, remedies or benefits available to the Lenders, the Fronting
Banks, the Administrative Agent or the Collateral Agent under any Loan Document
(other than Local Facility Loan Documents).
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MORTGAGE" shall mean a mortgage, deed of trust, assignment of
leases and rents, leasehold mortgage or other security document granting a Lien
on any Mortgaged Property or interest therein to secure all or a portion of the
Obligations. Each Mortgage shall be reasonably satisfactory in form and
substance to the Collateral Agent.
"MORTGAGED PROPERTIES" shall mean, initially, each parcel of
real property and improvements thereto owned by a Loan Party and identified on
Schedule 3.23(a), and shall include each other parcel of real property and
improvements thereto with respect to which a Mortgage is granted pursuant to
Section 5.11.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Code Section 414) is making or accruing an obligation
to make contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"NET PROCEEDS" shall mean (a) 100% of the cash proceeds
actually received by UCAR, the Borrower or any Subsidiary (including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise and
including casualty insurance settlements and condemnation awards, but only as
and when received), net of (i) attorneys' fees, accountants' fees, investment
banking fees, survey costs, title insurance premiums, and related search and
recording charges, transfer taxes, deed or mortgage recording taxes, required
debt payments (other than pursuant hereto or pursuant to the Tranche C Facility
Credit Agreement), other customary expenses and brokerage, consultant and other
customary fees actually incurred in connection therewith and (ii) taxes paid or
payable as a result
<PAGE>
22
thereof (including withholding taxes incurred in connection with cross-border
transactions, if applicable, and including taxes estimated by the Borrower to be
payable as a result thereof or as a result of such transactions), from any loss,
damage, destruction or condemnation of, or any sale, transfer or other
disposition (including any sale and leaseback of assets and any lease of real
property) to any person of any asset or assets of UCAR, the Borrower or any
Subsidiary (other than those pursuant to Sections 6.03, 6.05(a), 6.05(b),
6.05(e), 6.05(f)and 6.05(h) or any other financing subject to clause (ii) of the
definition of "EXCESS CASH FLOW"); PROVIDED HOWEVER that if the Borrower shall
deliver a certificate of the Borrower signed by a Responsible Officer of the
Borrower to the Administrative Agent promptly following receipt of any such
proceeds setting forth the Borrower's intention to use any portion of such
proceeds to purchase assets useful in the business of the Borrower and the
Subsidiaries (including by way of a purchase of Capital Stock of any person
holding such assets) within 12 months of such receipt, such portion of such
proceeds shall not constitute Net Proceeds except to the extent not so used
within such 12-month period; PROVIDED that the aggregate amount of net proceeds
that may be excluded from Net Proceeds pursuant to the immediately preceding
proviso shall not exceed 25% of the book value of Total Assets set forth in
UCAR's and its subsidiaries' June 30, 1998 quarterly consolidated financial
statements (which book value equals $1,273,000,000); and PROVIDED FURTHER that
(x) no proceeds realized in a single transaction or series of related
transactions shall constitute Net Proceeds unless such proceeds shall exceed
$75,000 and (y) no such proceeds shall constitute Net Proceeds in any fiscal
year until the aggregate amount of all such proceeds in such fiscal year shall
exceed $1,000,000 or the aggregate of all such proceeds received after the
Effective Date shall exceed $3,000,000, (b) 100% of the cash proceeds from the
incurrence, issuance or sale by UCAR, the Borrower or any Subsidiary of any
Indebtedness (other than Indebtedness permitted pursuant to Section 6.01), net
of all taxes (including withholding taxes incurred in connection with
cross-border transactions, if applicable, and including taxes estimated by the
Borrower to be payable as a result thereof or as a result of such transactions)
and fees (including investment banking fees), commissions, costs and other
expenses incurred in connection with such incurrence, issuance or sale and (c)
50% of the cash proceeds from the issuance or the sale by UCAR of any equity
security of UCAR (other than sales of Capital Stock of UCAR to directors,
officers or employees of UCAR, the Borrower or any Subsidiary in connection with
permitted employee compensation and incentive arrangements), net of all taxes
and fees (including investment banking fees), commissions, costs and other
expenses incurred in connection with such issuance or sale. For purposes of
calculating "NET PROCEEDS", fees, commissions and other costs and expenses
payable to UCAR or the Borrower or any Affiliate of either of them shall be
disregarded.
"NOTES" shall mean any promissory note of the Borrower or any
Credit Party issued pursuant to this Agreement.
"OBLIGATIONS" shall mean (a) the unpaid principal of and
premium, if any, and interest (including interest accruing at the then
applicable rate provided in this Agreement after the maturity of the Loans and
interest accruing at the then applicable rate provided in this Agreement after
the filing of any petition in
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23
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any Credit Party whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) on the Loans, when and
as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (b) the unpaid principal of and premium, if any, and
interest (including interest accruing at the then applicable rate provided in
the Tranche C Facility Credit Agreement after the maturity of the loans
thereunder and interest accruing at the applicable rate provided in the Tranche
C Facility Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to any borrower thereunder whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) on the loans under the
Tranche C Facility Credit Agreement, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (c) each
payment required to be made by any Credit Party under this Agreement, when and
as due, including payments in respect of reimbursements of L/C Disbursements,
interest thereon and obligations to provide cash collateral, (d) each payment
required to be made by any borrower party to the Tranche C Facility Credit
Agreement, when and as due, and (e) all other obligations and liabilities of
every nature of the Credit Parties and the borrowers under the Tranche C
Facility Credit Agreement from time to time owed to the Secured Parties or any
of them, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred (including monetary obligations
incurred during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding), which may arise under, out of, or in connection with, this
Agreement, the Tranche C Facility Credit Agreement, any Guarantee Agreement, any
Security Document or any other Loan Document and any obligation of the Borrower
to a Lender or a lender under the Tranche C Facility Credit Agreement under an
Interest/Exchange Rate Protection Agreement or under any other document made,
delivered or given in connection with any of the foregoing, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including all fees and disbursements of counsel to
the Collateral Agent or to the Secured Parties that are required to be paid by
UCAR, a Credit Party or a borrower under the Tranche C Facility Credit Agreement
pursuant to the terms of this Agreement, the Tranche C Facility Credit
Agreement, any Guarantee Agreement, any Security Document, any other Loan
Document or any Interest/Exchange Rate Protection Agreement with a Lender or a
lender under the Tranche C Facility Credit Agreement).
"ORIGINAL CLOSING DATE" shall mean October 19, 1995.
"PARENT GUARANTEE AGREEMENT" shall mean the Parent Guarantee
Agreement dated as of October 19, 1995, as amended and restated as of November
10, 1998, substantially in the form of Exhibit F, made by UCAR and the Borrower
in favor of the Collateral Agent for the benefit of the Secured Parties.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
<PAGE>
24
"PERMITTED BUSINESS ACQUISITION" shall mean any acquisition of
all or substantially all the assets of, or shares or other equity interests in,
a person or division or line of business of a person (or any subsequent
investment made in a previously acquired Permitted Business Acquisition) and any
investment in Brazil if immediately after giving effect thereto: (a) no Default
or Event of Default shall have occurred and be continuing or would result
therefrom, (b) all transactions related thereto shall be consummated in
accordance with applicable laws, (c) at least 90% of the outstanding Capital
Stock of any acquired or newly formed corporation, partnership, association or
other business entity are owned directly by the Borrower or a domestic Wholly
Owned Subsidiary (unless there is a material tax or legal or other economic
disadvantage in not having a foreign Subsidiary hold such Capital Stock, in
which case such Capital Stock may be held directly by a foreign Subsidiary) and
all actions required to be taken, if any, with respect to such acquired or newly
formed Subsidiary under Section 5.11 shall have been taken, (d) UCAR shall be in
compliance, on a PRO FORMA basis after giving effect to such acquisition or
formation, with the covenants contained in Sections 6.11 and 6.12 recomputed as
at the last day of the most recently ended fiscal quarter of UCAR as if such
acquisition had occurred on the first day of each relevant period for testing
such compliance, and the Borrower shall have delivered to the Administrative
Agent a certificate of the Borrower signed by a Responsible Officer of the
Borrower to such effect, together with all relevant financial information for
such subsidiary or assets, (e) the Total Revolving Credit Commitment shall
exceed the Aggregate Revolving Credit Exposure by at least $75,000,000 following
such acquisition and payment of all related costs and expenses, (f) the Borrower
shall have delivered to the Administrative Agent a certificate of the Borrower
signed by a Responsible Officer of the Borrower representing that in the
Borrower's good faith judgment, based on such analysis as it shall deem
appropriate, it will have liquidity it deems adequate following such acquisition
or formation, and (g) any acquired or newly formed subsidiary shall not be
liable for any Indebtedness (except for Indebtedness permitted by Section 6.01).
"PERMITTED FOREIGN TRANSFER" shall mean (a) any Specified
Permitted Transaction or (b) the transfer by means of Indebtedness, investment
or otherwise (PROVIDED that each transfer of cash (other than a transfer
pursuant to clause (iii) below) shall be made by means of intercompany
Indebtedness (which shall be pledged to the extent required under the Pledge
Agreements if no material tax disadvantage shall result therefrom) unless there
is a material tax or other economic or legal disadvantage in structuring the
transfer as Indebtedness instead of as an equity investment) from the Borrower
or any Subsidiary to any foreign Subsidiary at least 90% of the outstanding
Capital Stock of which is owned by the Borrower or a Wholly Owned Subsidiary of
(i) inventory and equipment in the ordinary course of business consistent with
past practice; (ii) cash to fund (A) working capital needs and capital
expenditures, in each case in accordance with the strategic plan described in
the Information Memorandum or in the ordinary course of business consistent with
past practice, and (B) debt service on Indebtedness permitted under this
Agreement paid in the ordinary course of business, and, in the case of any
transaction under clause (A) or
<PAGE>
25
clause (B), solely to the extent internally generated funds of the applicable
transferee are insufficient for such purposes and the Borrower shall have
delivered to the Administrative Agent a certificate of the Borrower signed by a
Responsible Officer of the Borrower to such effect; and (iii) any cash borrowed
in one jurisdiction and transferred to another to repay Indebtedness under any
Local Facility or this Agreement as a direct consequence of any reallocation
made pursuant to Section 2.11(b).
"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of
the United States of America or any agency thereof or obligations guaranteed by
the United States of America or any agency thereof; (b) time deposit accounts,
certificates of deposit and money market deposits maturing within 180 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $250,000,000 (or the
foreign currency equivalent thereof) and whose long-term debt, or whose parent
holding company's long-term debt, is rated A at the time of deposit (or such
similar equivalent rating or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities Act
of 1933, as amended)); (c) repurchase obligations with a term of not more than
30 days for underlying securities of the types described in clause (a) above
entered into with a bank meeting the qualifications described in clause (b)
above; (d) commercial paper, maturing not more than 180 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Borrower)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of P-1 (or higher) according to
Moody's, or A-1 (or higher) according to S&P; (e) securities with maturities of
six months or less from the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least A by S&P
or A2 by Moody's; (f) in the case of any Subsidiary organized in a jurisdiction
outside the United States: (i) direct obligations of the sovereign nation (or
any agency thereof) in which such Subsidiary is organized and is conducting
business or in obligations fully and uncondi tionally guaranteed by such
sovereign nation (or any agency thereof); PROVIDED that such obligations have a
rating of at least A by S&P or A2 by Moody's (or the equivalent thereof from
comparable foreign rating agencies), (ii) investments of the type and maturity
described in clauses (a) through (e) above of foreign obligors, which
investments or obligors (or the parents of such obligors) have ratings described
in such clauses or equivalent ratings from comparable foreign rating agencies or
(iii) investments of the type and maturity described in clauses (a) through (e)
above of foreign obligors (or the parents of such obligors), which investments
or obligors (or the parents of such obligors) are not rated as provided in such
clauses or in clause (ii) above but which are, in the reasonable judgment of the
Borrower, comparable in investment quality to such investments and obligors (or
the parents of such obligors); PROVIDED that the aggregate face amount
outstanding at any time of such investments of all foreign Subsidiaries made
<PAGE>
26
pursuant to clause (iii) does not exceed $50,000,000; (g) mutual funds whose
investment guidelines restrict such funds' investments to those satisfying the
provisions of clauses (a) through (e) above; and (h) time deposit accounts,
certificates of deposit and money market deposits in an aggregate face amount
not in excess of 1/2 of 1% of Total Assets as of the end of the Borrower's most
recently completed fiscal year.
"PERMITTED OTHER ACQUISITIONS" shall mean acquisitions of any
assets of, or any shares or other equity interests in, a person or division or
line of business of any person if immediately after giving effect thereto: (a)
no Default or Event of Default shall have occurred and be continuing, (b) all
transactions related thereto shall be consummated in accordance with applicable
laws, (c) the Borrower shall on or prior to the making of such acquisition have
delivered to the Administrative Agent a certificate of the Borrower signed by a
Responsible Officer of the Borrower designating such acquisition as a Permitted
Other Acquisition for purposes of this Agreement, (d) either (i) the acquisition
shall constitute a Permitted Business Acquisition, (ii) the acquired asset shall
constitute or be held in an Unrestricted Subsidiary or (iii) solely if at the
time of acquisition thereof the Borrower shall not be entitled to make any
additional Capital Expenditure pursuant to Section 6.11, the acquisition shall
be of real property, improvements thereto or equipment; PROVIDED that if such
acquisition shall be an acquisition of the type described in clause (ii) or
(iii) above, (A) UCAR shall be in compliance, on a PRO FORMA basis after giving
effect to such acquisition, with the covenants contained in Sections 6.11 and
6.12 recomputed as of the last day of the most recently ended fiscal quarter of
UCAR as if such acquisition had occurred on the first day of each relevant
period for testing such compliance, and the Borrower shall have delivered to the
Administrative Agent a certificate of the Borrower signed by a Responsible
Officer of the Borrower to such effect, together with all relevant information
for such acquisition, (B) the Total Revolving Credit Commitment shall exceed the
Aggregate Revolving Credit Exposure by at least $75,000,000 following the
acquisition and the payment of all related costs and expenses, and (C) the
Borrower shall have delivered a certificate of the Borrower signed by a
Responsible Officer of the Borrower representing that in the Borrower's good
faith judgment, based on such analysis as it shall deem adequate, it will have
liquidity it deems adequate following the acquisition.
"PERSON" shall mean any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.
"PLAN" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), subject to
the provisions of Title IV of ERISA or Section 412 of the Code and in respect of
which the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PLEDGE AGREEMENTS" shall mean (a) the Domestic Pledge
Agreement and (b) any other pledge agreements or similar agreements
<PAGE>
27
securing the Obligations or a Guarantee thereof in form and substance reasonably
satisfactory to the Collateral Agent.
"PLEDGORS" shall mean UCAR, the Borrower and each Subsidiary
that becomes party to a Pledge Agreement, a Security Agreement, the Intellectual
Property Security Agreement or a
Mortgage.
"PRIME RATE" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent as its prime
rate in effect at its principal office in New York City; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective.
"RECAPITALIZATION" shall mean the recapitalization of UCAR on
January 26, 1995, and the related transactions, as defined in the Credit
Agreement of UCAR and the Borrower dated as of January 26, 1995.
"REFINANCING NOTE INDENTURE" shall mean one or more indentures
pursuant to which the Refinancing Notes are issued.
"REFINANCING NOTES" shall mean one or more series of
subordinated debentures or notes issued by the Borrower, the net proceeds of
which are used by the Borrower to redeem or repurchase Senior Subordinated
Notes.
"REGISTER" shall have the meaning given such term in
Section 9.04(d).
"REGULATION D" shall mean Regulation D of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"REGULATION U" shall mean Regulation U of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"REGULATION X" shall mean Regulation X of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"RELATED BUSINESS" shall mean any business or business
activity conducted by UCAR or its subsidiaries on the date hereof and any
business or business activities incidental or related thereto or incidental or
related to the procurement, manufacture or sale of products or services
manufactured or provided by UCAR or any of its subsidiaries on the date hereof.
"RELATED FUND" shall mean, with respect to any Lender that is
a fund that invests in bank loans, any other fund that invests in bank loans and
is advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"RELEASE" shall have the meaning given such term in
CERCLA, 42 U.S.C. ss.9601(22).
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28
"REMEDIAL ACTION" shall mean (a) "remedial action" as such
term is defined in CERCLA, 42 U.S.C. ss. 9601(24), and (b) all other actions,
including studies and investigations, required by any Governmental Authority or
voluntarily undertaken to: (i) clean up, remove, treat, abate or in any other
way respond to any Hazardous Material in the environment; or (ii) prevent the
Release or threat of Release, or minimize the further Release, of any Hazardous
Material.
"REPORTABLE EVENT" shall mean any reportable event as defined
in Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"REQUIRED LENDERS" shall mean, at any time, Lenders having
Loans (other than Swingline Loans), Letter of Credit Exposures, Swingline
Exposures and unused Commitments (excluding commitments to issue Letters of
Credit or make Swingline Loans) representing at least 51% of the sum of all
Loans (other than Swingline Loans) outstanding, Letter of Credit Exposures,
Swingline Exposures and unused Commitments (excluding commitments to issue
Letters of Credit or make Swingline Loans) at such time.
"REQUIRED SECURED PARTIES" shall mean, at any time, (a) the
Required Lenders under this Agreement (unless all Commitments under this
Agreement shall have expired or been terminated and the principal of and
interest on each Loan, all Fees and other amounts payable hereunder shall have
been paid in full and all Letters of Credit shall have been canceled or expired
and all amounts drawn thereunder shall have been reimbursed in full) and (b) the
"Required Lenders" under the Tranche C Facility Credit Agreement (unless all
commitments under the Tranche C Facility Credit Agreement shall have expired or
been terminated and the principal of and interest on each loan, all fees and
other amounts payable under the Tranche C Facility Credit Agreement shall have
been paid in full).
"RESERVES" shall mean, with respect to UCAR, the Borrower and
its subsidiaries on a consolidated basis at any date of determination, all
reserves in respect of Litigation Liabilities which are or would be disclosed on
a consolidated balance sheet of UCAR, the Borrower and its subsidiaries prepared
in accordance with GAAP at such date of determination.
"RESPONSIBLE OFFICER" of any corporation shall mean any
executive officer or Financial Officer of such corporation and any other officer
or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"RESTRICTED DEBT PAYMENTS" shall have the meaning given such
term in Section 6.09(b)(i).
"RESTRICTED EQUITY PAYMENTS" shall have the meaning given such
term in Section 6.06.
"RESTRICTED JUNIOR PAYMENT AMOUNT" shall mean, with
respect to any fiscal year, an amount equal to (a) $15,000,000 for
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29
the 1999 fiscal year and (b) $20,000,000 for each fiscal year
thereafter.
"RESTRICTED JUNIOR PAYMENTS" shall mean the collective
reference to Restricted Equity Payments made pursuant to Section 6.06(c) and
Restricted Debt Payments made pursuant to the first proviso contained in Section
6.09(b)(i). The amount of Restricted Equity Payments made pursuant to Section
6.06(c) shall be determined without double counting in the case of Restricted
Equity Payments made to UCAR, the Borrower or any Subsidiary to the extent used
by such person to make a Restricted Equity Payment.
"REVOLVING AVAILABILITY PERIOD" shall mean the period from and
including the Effective Date to but excluding the earlier of the Revolving
Credit Maturity Date and the date of the termination of the Revolving Credit
Commitments.
"REVOLVING CREDIT BORROWING" shall mean a Borrowing
comprised of Revolving Loans.
"REVOLVING CREDIT COMMITMENT" shall mean, with respect to each
Lender, the commitment, if any, of such Lender to make Revolving Loans and to
acquire participations in Revolving Letters of Credit and Swingline Loans
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to Section 9.04. The initial amount of each Lender's
Revolving Credit Commitment is set forth on Schedule 2.01(a), or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Credit Commitment, as applicable.
"REVOLVING CREDIT EXPOSURE" shall mean, with respect to any
Lender at any time, the aggregate principal amount at such time of all
outstanding Revolving Loans of such Lender PLUS the amount at such time of such
Lender's Revolving L/C Exposure PLUS the amount at such time of such Lender's
Swingline Exposure.
"REVOLVING CREDIT LENDER" shall mean a Lender with a
Revolving Credit Commitment.
"REVOLVING CREDIT MATURITY DATE" shall mean December 31,
2001.
"REVOLVING L/C COMMITMENT" shall mean, with respect to any
Fronting Bank, the commitment of such Fronting Bank to issue Letters of Credit
pursuant to Section 2.20(b).
"REVOLVING L/C DISBURSEMENT" shall mean a payment or
disbursement made by a Fronting Bank pursuant to a Revolving Letter of Credit.
"REVOLVING L/C EXPOSURE" shall mean at any time the sum of (a)
the aggregate undrawn amount of all outstanding Revolving Letters of Credit at
such time PLUS (b) the aggregate principal amount of all Revolving L/C
Disbursements that have not yet been reimbursed at such time. The Revolving L/C
Exposure of any
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30
Revolving Credit Lender at any time shall mean its Applicable Percentage of the
aggregate Revolving L/C Exposure at such time.
"REVOLVING LETTER OF CREDIT" shall mean any letter of credit
issued pursuant to Section 2.20(b).
"REVOLVING LOANS" shall mean the revolving loans made by the
Lenders to the Credit Parties pursuant to Section 2.01(b)(i). Each Revolving
Loan shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"S&P" shall mean Standard & Poor's Ratings Group.
"SALE AND LEASE-BACK TRANSACTION" shall have the meaning given
such term in Section 6.03.
"SEC REPORTS" shall have the meaning given such term in the
definition of "Litigation Liabilities".
"SECOND CLOSING DATE" shall mean March 19, 1997.
"SECURED PARTIES" shall mean the Lenders, the lenders under
the Tranche C Facility Credit Agreement, the lenders under the Local Facility
Credit Agreements, the Fronting Banks, the Administrative Agent, the
administrative agent under the Tranche C Facility Credit Agreement, the
administrative agent under the Local Facility Credit Agreements and the
Collateral Agent.
"SECURITY AGREEMENTS" shall mean (a) the Domestic Security
Agreement and (b) any other security agreements or similar agreements securing
the Obligations or a Guarantee thereof in form and substance reasonably
satisfactory to the Collateral Agent.
"SECURITY DOCUMENTS" shall mean the Security Agreements, the
Intellectual Property Security Agreement, the Pledge Agreements, the Mortgages
and each of the agreements and other instruments and documents executed and
delivered pursuant thereto or pursuant to Section 5.11.
"SENIOR SUBORDINATED GUARANTEE" shall mean the senior
subordinated Guarantee by UCAR in effect on the Original Closing Date, and any
subsequent senior subordinated Guarantee by UCAR on terms no less favorable to
the Lenders, of the Indebtedness of the Borrower under the Senior Subordinated
Notes or the Refinancing Notes.
"SENIOR SUBORDINATED INDENTURE" shall mean the indenture
pursuant to which the Senior Subordinated Notes were issued, dated as of January
15, 1995, among the Borrower, UCAR, as guarantor, and United States Trust
Company of New York, as Trustee, as amended from time to time in accordance with
Section 6.09.
"SENIOR SUBORDINATED NOTES" shall mean up to $200,000,000
aggregate principal amount of Senior Subordinated Notes of the Borrower issued
pursuant to the Senior Subordinated Indenture.
"SIGNIFICANT SUBSIDIARY" shall mean the Borrower, any
other Credit Party and any other subsidiary of UCAR that at the date
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31
of any determination (a) accounts for 2.5% or more of the consolidated assets of
UCAR, (b) has accounted for 2.5% or more of EBITDA for each of the two
consecutive periods of four fiscal quarters immediately preceding the date of
determination or (c) has been designated by the Borrower in writing to the
Administrative Agent as a Significant Subsidiary and such designation has not
subsequently been withdrawn.
"SPECIFIED PERMITTED TRANSACTION" shall mean, if immediately
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing or would result therefrom: (a) any acquisition of Capital
Stock of a person that (i) does not constitute a Permitted Business Acquisition
solely because after giving effect thereto less than 90% of the outstanding
Capital Stock of such person is owned as required under clause (b) of the
definition of "Permitted Business Acquisition" but (ii) after giving effect to
which at least 70% of the outstanding Capital Stock of such person is owned
directly by the Borrower or a domestic Wholly Owned Subsidiary (unless there is
a material tax or legal or other economic disadvantage in not having a foreign
Subsidiary hold such Capital Stock, in which case such Capital Stock may be held
directly by a foreign Subsidiary), (b) any acquisition of Capital Stock of a
person that (i) does not constitute a Permitted Business Acquisition solely
because after giving effect thereto less than 90% of the outstanding Capital
Stock of such person is owned as required under clause (b) of the definition of
"Permitted Business Acquisition" but (ii) after giving effect to which at least
50% of the outstanding Capital Stock of such person is owned directly by the
Borrower or a domestic Wholly Owned Subsidiary (unless there is a material tax
or legal or other economic disadvantage in not having a foreign Subsidiary hold
such Capital Stock, in which case such Capital Stock may be held directly by a
foreign Subsidiary); PROVIDED that the aggregate amount of consideration
(whether cash or property, valued at the time each such investment is made) for
acquisitions made in reliance on this clause (b) shall not exceed $125,000,000,
(c) any acquisition (or redemption or repurchase) of additional Capital Stock of
UCAR Elektroden GmbH, Carbone Savoie, UCAR Grafit OAO or any other Subsidiary
acquired in a Specified Permitted Transaction by the Borrower or any Subsidiary,
unless such transaction shall constitute a Permitted Business Acquisition, and
(d) any advance, loan or capital contribution by the Borrower or any Subsidiary
to UCAR Elektroden GmbH, Carbone Savoie, UCAR Grafit OAO or any other Subsidiary
acquired in a Specified Permitted Transaction at any time prior to such person
becoming a Wholly Owned Subsidiary (other than a Permitted Foreign Transfer of
the type described in clause (b) of the definition thereof); PROVIDED that after
giving effect to any transaction described in clause (a), (b),(c) or (d) above,
(i) UCAR shall be in compliance, on a PRO FORMA BASIS after giving effect to
such transaction, with the covenants contained in Sections 6.11 and 6.12
recomputed as of the last day of the most recently ended fiscal quarter of UCAR
as if such acquisition had occurred on the first day of each relevant period for
testing such compliance, and the Borrower shall have delivered to the
Administrative Agent a certificate of the Borrower signed by a Responsible
Officer of the Borrower to such effect, together with all relevant financial
information for such transaction, (ii) the Total Revolving Credit Commitment
shall exceed the Aggregate Revolving Credit Exposure by $75,000,000 following
<PAGE>
32
such transaction and payment of all related costs and expenses and (iii) the
Borrower shall have delivered to the Administrative Agent a certificate of the
Borrower signed by a Responsible Officer of the Borrower representing that in
the Borrower's good faith judgment, it will have liquidity it deems adequate
following such transaction. For purposes of determining compliance with Section
6.04(k), the aggregate outstanding amount of Specified Permitted Transactions at
any time shall mean the sum at such time of (i) the aggregate outstanding
principal amount of advances and loans made under clause (d) of the immediately
preceding sentence and (ii) the aggregate amount (net of return of capital of
(but not return on) any such investment) of capital contributions made under
clause (d) of the immediately preceding sentence and consideration paid in
respect of acquisitions (or redemptions or repurchases) of Capital Stock made
under clause (a), (b) or (c) of the immediately preceding sentence; PROVIDED
that the aggregate amount of Specified Permitted Transactions in respect of any
person (A) made under clause (a), (b) and (c) shall be deemed to be zero after
any acquisition in respect of such person that constitutes a Permitted Business
Acquisition (it being understood that the aggregate amount of all prior such
transactions in respect of such person shall thereafter be treated as Permitted
Other Acquisitions for purposes of Section 6.04(k)) and (B) made under clause
(d) shall be zero at any time that such person is a Wholly Owned Subsidiary.
"STATUTORY RESERVES" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and any other banking authority, domestic
or foreign, to which the Administrative Agent is subject with respect to
Eurocurrency Liabilities (as defined in Regulation D of the Board) or other
categories of liabilities or deposits by reference to which the LIBO Rate is
determined. Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets which may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, partnership, association or other
business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at the time any
determination is being made, directly or indirectly, owned, controlled or held,
or (b) which is, at the time any determination is made, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
"Subsidiary" shall mean each subsidiary of the Borrower.
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33
"SUBSIDIARY BORROWER" shall mean each Subsidiary that (a) was
a party hereto immediately prior to the Effective Date, but only for purposes of
constituting an eligible account party under a Letter of Credit issued
hereunder, or (b) is a Wholly Owned Subsidiary of the Borrower designated as a
Subsidiary Borrower by the Borrower pursuant to Section 9.19 and approved by the
Administrative Agent that has not ceased to be a Subsidiary Borrower pursuant to
such Section; PROVIDED that any such Subsidiary Borrower described under this
clause (b) that is to be an account party under a Letter of Credit issued
hereunder must also be approved by the applicable Fronting Bank.
"SUBSIDIARY BORROWER AGREEMENT" shall mean a Subsidiary
Borrower Agreement substantially in the form of Exhibit L.
"SUBSIDIARY BORROWER TERMINATION" shall mean a Subsidiary
Borrower Termination substantially in the form of Exhibit M.
"SUBSIDIARY GUARANTEE AGREEMENT" shall mean the Subsidiary
Guarantee Agreement date as of October 15, 1995, as amended and restated as of
November 10, 1998, substantially in the form of Exhibit H, made by the domestic
Subsidiary Guarantors in favor of the Collateral Agent for the benefit of the
Secured Parties.
"SUBSIDIARY GUARANTOR" shall mean any Subsidiary that is
a party to a Guarantee Agreement.
"SWINGLINE EXPOSURE" shall mean at any time the aggregate
principal amount of all outstanding Swingline Loans at such time. The Swingline
Exposure of any Revolving Credit Lender at any time shall mean its Applicable
Percentage of the aggregate Swingline Exposure at such time.
"SWINGLINE LENDER" shall mean The Chase Manhattan Bank in
its capacity as Swingline Lender hereunder.
"SWINGLINE LOAN COMMITMENT" shall mean the commitment of the
Swingline Lender to make Swingline Loans as set forth in Section 2.01(c).
"SWINGLINE LOANS" shall mean the swingline loans made by the
Swingline Lender to the Borrower pursuant to Section 2.01(c).
"TAX SHARING AGREEMENT" means (a) that certain agreement dated
January 26, 1995, between the Borrower and UCAR, and (b) any other tax
allocation agreement by the Borrower or any of its Subsidiaries and the Borrower
or UCAR with respect to consolidated or combined tax returns including the
Borrower or any of its Subsidiaries but only to the extent that amounts payable
from time to time by the Borrower or any such Subsidiary under any such
agreement do not exceed the corresponding tax payments that the Borrower or such
Subsidiary would have been required to make to any relevant taxing authority had
the Borrower or such Subsidiary not joined in such consolidated or combined
return, but instead had filed returns including only the Borrower or its
Subsidiaries (PROVIDED that any such agreement may provide that, if the Borrower
or any such Subsidiary ceases to be a member of the affiliated group
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34
of corporations of which UCAR is the common parent for purposes of filing a
consolidated federal income tax return (such cessation, a "DECONSOLIDATION
EVENT"), then the Borrower or such Subsidiary will indemnify UCAR with respect
to any Federal, state or local income, franchise or other tax liability
(including any related interest, additions or penalties) imposed on UCAR as the
result of an audit or other adjustment with respect to any period prior to such
Deconsolidation Event that is attributable to the Borrower, such Subsidiary or
any predecessor business thereof (computed as if the Borrower, such Subsidiary
or such predecessor business, as the case may be, were a stand-alone entity that
filed separate tax returns as an independent corporation), but only to the
extent that any such tax liability exceeds any liability for taxes recorded on
the books of the Borrower or such Subsidiary with respect to any such period).
"TERM BORROWING" shall mean a Borrowing comprised of Term
Loans.
"TERM COMMITMENTS" shall mean the Tranche A Term Loan
Commitments and the Tranche B Term Loan Commitments.
"TERM LOANS" shall mean the term loans made by the
Lenders to the Borrower as described in Section 2.01(a) and
Section 2.01(b)(ii). Each Term Loan shall be a Eurodollar Term Loan
or an ABR Term Loan.
"TOTAL ASSETS" shall mean, with respect to UCAR, the Borrower
and the Subsidiaries on a consolidated basis at any date of determination, all
assets which would, in accordance with GAAP, be classified on a consolidated
balance sheet of UCAR, the Borrower and the Subsidiaries as assets at such date
of determination.
"TOTAL DEBT" shall mean, with respect to UCAR, the Borrower
and the Subsidiaries on a consolidated basis at any time, all Capital Lease
Obligations, Indebtedness for borrowed money and Indebtedness in respect of the
deferred purchase price of property or services of UCAR, the Borrower and the
Subsidiaries at such time.
"TOTAL REVOLVING CREDIT COMMITMENT" shall mean, at any
time, the aggregate amount of the Revolving Credit Commitments, as
in effect at such time. The Total Revolving Credit Commitment as of
the date hereof is $250,000,000.
"TOTAL TRANCHE A REIMBURSEMENT COMMITMENT" shall mean, at any
time, the aggregate amount of the Tranche A Reimbursement Commitments, as in
effect at such time. The Total Tranche A Reimbursement Commitment as of the date
hereof is $219,532,156.78.
"TRANCHE A EXPOSURE" shall mean at any time the aggregate
principal amount at such time of all Tranche A Reimbursement Loans PLUS the
amount at such time of the Tranche A L/C Exposure PLUS an amount equal to the
aggregate amounts of the Interest Components and Foreign Currency Components
held in reserve pursuant to Section 2.11(b)(ii) and not subsequently applied
pursuant to Section 2.11(b)(iv). The Tranche A Exposure of any Tranche A Lender
at any time shall mean its Applicable Percentage of the Tranche A Exposure at
such time.
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35
"TRANCHE A L/C COMMITMENT" shall mean, with respect to each
Fronting Bank, the commitment of such Fronting Bank to issue Letters of Credit
pursuant to Section 2.20(a).
"TRANCHE A L/C DISBURSEMENT" shall mean a payment or
disbursement made by a Fronting Bank pursuant to a Tranche A Letter of Credit.
"TRANCHE A L/C EXPOSURE" shall mean at any time the sum of (a)
the aggregate undrawn amount of all outstanding Tranche A Letters of Credit at
such time PLUS (b) the aggregate principal amount of all Tranche A L/C
Disbursements that have not yet been reimbursed (by the making of Tranche A
Reimbursement Loans or otherwise) at such time. The Tranche A L/C Exposure of
any Tranche A Lender at any time shall mean its Applicable Percentage of the
aggregate Tranche A L/C Exposure at such time.
"TRANCHE A LENDER" shall mean a Lender with a Tranche A
Reimbursement Commitment, a Tranche A Term Loan Commitment or
Tranche A Exposure.
"TRANCHE A LETTER OF CREDIT" shall mean any letter of credit
issued as described in Section 2.20(a).
"TRANCHE A LOANS" shall mean Tranche A Term Loans and Tranche
A Reimbursement Loans.
"TRANCHE A MATURITY DATE" shall mean December 31, 2001.
"TRANCHE A REIMBURSEMENT BORROWING" shall mean a Borrowing
comprised of Tranche A Reimbursement Loans.
"TRANCHE A REIMBURSEMENT COMMITMENT" shall mean, with respect
to each Lender, the commitment, if any, of such Lender to make Tranche A
Reimbursement Loans and to acquire participations in Tranche A Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender's Tranche A Exposure hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.09, (b) increased from time to
time pursuant to 2.11(b) and (c) reduced or increased from time to time pursuant
to Section 9.04. The initial amount of each Lender's Tranche A Reimbursement
Commitment is set forth on Schedule 2.01(a), or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Tranche A Reimbursement
Commitment, as applicable.
"TRANCHE A REIMBURSEMENT LOANS" shall mean the loans made by
the Lenders to the Borrower pursuant to Section 2.01(b)(ii). Each Tranche A
Reimbursement Loan shall be a Eurodollar Tranche A Reimbursement Loan or an ABR
Tranche A Reimbursement Loan.
"TRANCHE A TERM BORROWING" shall mean a Borrowing comprised of
Tranche A Term Loans.
"TRANCHE A TERM LOAN COMMITMENT" shall mean, with respect to
each Lender, the commitment pursuant to which such Lender made its Tranche A
Term Loan hereunder as set forth in Section 2.01(a)(i).
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36
"TRANCHE A TERM LOANS" shall mean the term loans made by the
Lenders to the Borrower as described in Section 2.01(a)(i).
"TRANCHE B MATURITY DATE" shall mean December 31, 2002.
"TRANCHE B TERM BORROWING" shall mean a Borrowing comprised of
Tranche B Term Loans.
"TRANCHE B TERM LOAN COMMITMENT" shall mean, with respect to
each Lender, the commitment pursuant to which such Lender made its Tranche B
Term Loans hereunder as set forth in Section 2.01(a)(ii).
"TRANCHE B TERM LOANS" shall mean the term loans made by the
Lenders to the Borrower as described in Section 2.01(a)(ii).
"TRANCHE C FACILITY" shall mean the senior secured term loan
facility of the Borrower and UCAR S.A., a Wholly Owned Subsidiary of the
Borrower organized under the laws of Switzerland, in an aggregate principal
amount of $210,000,000.
"TRANCHE C FACILITY CREDIT AGREEMENT" shall mean the Credit
Agreement dated as of the date hereof among UCAR, the Borrower, UCAR S.A., the
lenders party thereto, The Chase Manhattan Bank, as administrative agent and
collateral agent, Credit Suisse First Boston, as syndication agent and Morgan
Guaranty Trust Company of New York, as syndication agent.
"TRANCHE C TERM LOANS" shall mean the term loans made under
the Tranche C Facility Credit Agreement.
"TRANSACTIONS" shall have the meaning given such term in
Section 3.02.
"TYPE", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, the term "RATE"
shall include the Adjusted LIBO Rate and the Alternate Base Rate.
"UNRESTRICTED SUBSIDIARY" shall mean (a) any subsidiary of
UCAR (other than the Borrower) or any other direct or indirect investment by
UCAR or any such subsidiary in the Capital Stock of any other person (other than
the Borrower) so long as (i) none of the Capital Stock or other ownership
interests of such subsidiary or other person is owned by the Borrower or any of
the Subsidiaries, (ii) UCAR shall have notified the Administrative Agent of its
acquisition or creation of such subsidiary or such other investment and its
ownership interest therein concurrently with such acquisition, creation or
investment and the intended purposes of such subsidiary or investment, (iii) any
such subsidiary (unless it is a foreign subsidiary) shall have entered into the
Tax Sharing Agreement existing at the time of such acquisition or creation (or
another tax sharing agreement containing terms which, in the reasonable judgment
of the Administrative Agent, are customary in similar circumstances to provide
an appropriate allocation of tax liabilities and benefits), (iv) except in the
case of UCAR as permitted in the proviso below, none of UCAR, the Borrower and
the
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37
Subsidiaries shall have any contingent liability in respect of such subsidiary
or investment and (v) any such subsidiary or investment shall be capitalized
solely from the following sources: (A) any investment by any person other than
UCAR, the Borrower and the Subsidiaries; (B) Indebtedness issued by such
subsidiary or any of its subsidiaries that is nonrecourse to UCAR, the Borrower
and the Subsidiaries (except in the case of UCAR as otherwise permitted by the
proviso below), or proceeds thereof; (C) Capital Stock of such subsidiary or any
other Unrestricted Subsidiary, or proceeds thereof; (D) proceeds of Capital
Stock of UCAR issued by UCAR after the Original Closing Date remaining after
making the prepayment of Obligations required under Section 2.12(d) (to the
extent not previously used to prepay Indebtedness (other than Revolving Loans or
Swingline Loans), make any investment or capital expenditure or otherwise for
any purpose resulting in a deduction to Excess Cash Flow in any fiscal year);
and (E) investments permitted to be made in Unrestricted Subsidiaries pursuant
to Section 6.04; PROVIDED that UCAR may incur a contingent liability or
Indebtedness in a specified and limited amount in respect of such a subsidiary
or investment if it would at the time of such incurrence be permitted to make an
additional investment in such subsidiary or investment in the amount of such
incurrence and the amount so incurred shall thereafter constitute an investment
in such subsidiary or investment in such amount for purposes of calculating
compliance with Section 6.04; and (b) any subsidiary of an Unrestricted
Subsidiary.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary of the Borrower,
(a) at least 99% of the Capital Stock of which (other than directors' qualifying
shares) is owned by the Borrower or another Wholly Owned Subsidiary or (b)
solely in the case of any Subsidiary included in Brazil or UCAR Grafit OAO, at
least 97% of the Capital Stock of which (other than directors' qualifying
shares) is owned by the Borrower or another Wholly Owned Subsidiary.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"WORKING CAPITAL" shall mean, with respect to UCAR, the
Borrower and the Subsidiaries on a consolidated basis at any date of
determination, Current Assets at such date of determination MINUS Current
Liabilities at such date of determination.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
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38
time to time; PROVIDED, HOWEVER, that for purposes of determining compliance
with the covenants contained in Section 2.12(e) and Article VI all accounting
terms herein shall be interpreted and all accounting determinations hereunder
(in each case, unless otherwise provided for or defined herein) shall be made in
accordance with GAAP as in effect on the Effective Date and applied on a basis
consistent with the application used in the financial statements referred to in
Section 3.05; and PROVIDED FURTHER that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Section
2.12(e) or Article VI or any related definition to eliminate the effect of any
change in GAAP occurring after the date of this Agreement on the operation of
such covenant (or if the Administrative Agent notifies the Borrower that the
Required Lenders wish to amend Section 2.12(e) or Article VI or any related
definition for such purpose), then (i) the Borrower and the Administrative Agent
shall negotiate in good faith to agree upon an appropriate amendment to such
covenant and (ii) the Borrower's compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective until such covenant is amended in a manner satisfactory
to the Borrower and the Required Lenders. For the purposes of determining
compliance under Sections 6.01, 6.02, 6.04, 6.05 and 6.10 with respect to any
amount in a currency other than Dollars, such amount shall be deemed to equal
the Dollar equivalent thereof at the time such amount was incurred or expended,
as the case may be (except that, where measurement of a financial statement
amount is contemplated, such determination shall be based upon currency
translation rules according to GAAP).
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. (a) Subject to the terms
and conditions and relying upon the representations and warranties
of UCAR and the Borrower set forth herein as of the Second Closing
Date and in the Effectiveness Agreement, as applicable, each Lender,
severally and not jointly:
(i) made a Tranche A Term Loan to the Borrower on the Second
Closing Date, the outstanding principal amount of which as of the date
hereof is set forth opposite its name on Schedule 2.01(a); and
(ii) made a Tranche B Term Loan to the Borrower on the Second
Closing Date, the outstanding principal amount of which as of the date
hereof is set forth opposite its name on Schedule 2.01(a).
(b) Subject to the terms and conditions and relying upon the
representations and warranties of UCAR and the Borrower set forth herein, each
Lender agrees, severally and not jointly:
(i) to make U.S. dollar-denominated Revolving Loans to the
Borrower and any other Credit Party from time to time during the
Revolving Availability Period, in an aggregate principal amount at any
time outstanding that will not result
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39
in such Lender's Revolving Credit Exposure exceeding its
Revolving Credit Commitment; and
(ii) to make Tranche A Reimbursement Loans to the Borrower, as
contemplated herein, at any time and from time to time on or after the
Effective Date, and until the earlier of the Tranche A Maturity Date
and the termination of the Tranche A Reimbursement Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding that will not result in such Lender's
Tranche A Exposure exceeding its Tranche A Reimbursement Commitment.
(c) (i) The Swingline Lender hereby agrees, subject to the
terms and conditions and relying upon the representations and warranties of UCAR
and the Borrower herein set forth, and subject to the limitations set forth
below with respect to the maximum amount of Swingline Loans permitted to be
outstanding from time to time, to make a portion of the Revolving Credit
Commitments available to the Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount not to exceed the Swingline
Loan Commitment, by making Swingline Loans to the Borrower. Swingline Loans may
be made notwithstanding the fact that such Swingline Loans, when aggregated with
the Swingline Lender's outstanding Revolving Loans, Revolving L/C Exposure and
outstanding Swingline Loans, may exceed the Swingline Lender's Revolving Credit
Commitment. The original amount of the Swingline Loan Commitment is $10,000,000.
The Swingline Loan Commitment shall expire on the date the Revolving Credit
Commitments are terminated and all Swingline Loans and all other amounts owed
hereunder with respect to Swingline Loans shall be paid in full no later than
that date. The Borrower shall give the Swingline Lender telephonic, written or
telecopy notice (in the case of telephonic notice, such notice shall be promptly
confirmed in writing or by telecopy) not later than 12:00 (noon), New York City
time, on the day of a proposed borrowing. Such notice shall be delivered on a
Business Day, shall be irrevocable, shall refer to this Agreement and shall
specify the requested date (which shall be a Business Day) and amount of such
Swingline Loan. The Swingline Lender shall give the Administrative Agent, which
shall in turn give to each Lender, prompt written or telecopy advice of any
notice received from the Borrower pursuant to this paragraph.
(ii) In no event shall (A) the aggregate principal amount of
Swingline Loans outstanding at any time exceed the aggregate Swingline Loan
Commitment in effect at such time, (B) the Aggregate Revolving Credit Exposure
at any time exceed the Total Revolving Credit Commitment at such time or (C) the
aggregate Swingline Loan Commitment exceed at any time the Total Revolving
Credit Commitment in effect at such time. Swingline Loans may only be made as
ABR Loans.
(iii) With respect to any Swingline Loans which have not been
voluntarily prepaid by the Borrower, the Swingline Lender (by request to the
Administrative Agent) or Administrative Agent at any time may, and shall at any
time Swingline Loans in an amount not less than $5,000,000 shall have been
outstanding for more than 10 days, on one Business Day's notice, require each
Revolving Credit
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40
Lender, including the Swingline Lender, and each Lender hereby agrees, subject
to the provisions of this Section 2.01(c), to make a Revolving Loan (which shall
be funded as an ABR loan) in an amount equal to such Lender's Applicable
Percentage of the amount of the Swingline Loans ("REFUNDED SWINGLINE LOANS")
outstanding on the date notice is given which the Swingline Lender requests the
Lenders to prepay; PROVIDED that so long as no Default or Event of Default shall
have occurred and be continuing, the Lenders shall not be required to make such
Revolving Loans if the aggregate principal amount of Swingline Loans outstanding
as of the most recent Tuesday (or the first Business Day occurring after any
such Tuesday if such Tuesday is not a Business Day) is less than $1,000,000.
(iv) In the case of Revolving Loans made by Lenders other than
the Swingline Lender under the immediately preceding paragraph (iii), each such
Lender shall make the amount of its Revolving Loan available to the
Administrative Agent, in same day funds, at the office of the Administrative
Agent located at 270 Park Avenue, New York, New York, not later than 1:00 p.m.,
New York City time, on the Business Day next succeeding the date such notice is
given. The proceeds of such Revolving Loans shall be immediately delivered to
the Swingline Lender (and not to the Borrower) and applied to repay the Refunded
Swingline Loans. On the day such Revolving Loans are made, the Swingline
Lender's Applicable Percentage of the Refunded Swingline Loans shall be deemed
to be paid with the proceeds of a Revolving Loan made by the Swingline Lender
and such portion of the Swingline Loans deemed to be so paid shall no longer be
outstanding as Swingline Loans and shall be outstanding as Revolving Loans of
Lenders. The Borrower authorizes the Administrative Agent and the Swingline
Lender to charge the Borrower's account with the Administrative Agent (up to the
amount available in such account) in order to pay immediately to the Swingline
Lender the amount of such Refunded Swingline Loans to the extent amounts
received from Lenders, including amounts deemed to be received from the
Swingline Lender, are not sufficient to repay in full such Refunded Swingline
Loans. If any portion of any such amount paid (or deemed to be paid) to the
Swingline Lender should be recovered by or on behalf of the Borrower from the
Swingline Lender in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be ratably shared among all
Lenders in the manner contemplated by Section 2.17. Subject to the compliance by
the Swingline Lender with the provisions of subparagraph (vii) below, each
Lender's obligation to make the Revolving Loans referred to in this paragraph
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Lender may have against the Swingline Lender, the
Borrower or any other person for any reason whatsoever; (B) the occurrence or
continuance of an Event of Default or a Default; (C) any adverse change in the
condition (financial or otherwise) of UCAR or any of its subsidiaries; (D) any
breach of this Agreement by UCAR, the Borrower, the other Credit Parties or any
other Lender; or (E) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. Nothing in this Section 2.01(c)
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that the Borrower may have
against any Lender as a result of any default by such Lender hereunder.
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(v) A copy of each notice given by the Swingline Lender or the
Administrative Agent pursuant to this Section 2.01(c) shall be promptly
delivered by the Swingline Lender to the Administrative Agent and the Borrower.
Upon the making of a Revolving Loan by a Lender pursuant to this Section
2.01(c), the amount so funded shall no longer be owed in respect of Swingline
Loans.
(vi) If as a result of any bankruptcy or similar proceeding
Revolving Loans are not made pursuant to this Section 2.01(c) sufficient to
repay any amounts owed to the Swingline Lender as a result of a nonpayment of
outstanding Swingline Loans, each Lender agrees to purchase, and shall be deemed
to have purchased, a participation in such outstanding Swingline Loans in an
amount equal to its Applicable Percentage of the unpaid amount together with
accrued interest thereon. Upon one Business Day's notice from the Swingline
Lender, each Lender shall deliver to the Swingline Lender an amount equal to its
respective participation in same day funds at the office of the Swingline Lender
in New York, New York. In order to evidence such participation each Lender
agrees to enter into a participation agreement at the request of the Swingline
Lender in form and substance reasonably satisfactory to all parties. In the
event any Lender fails to make available to the Swingline Lender the amount of
such Lender's participation as provided in this Section 2.01(c), the Swingline
Lender shall be entitled to recover such amount on demand from such Lender
together with interest at the customary rate set by the Swingline Lender for
correction of errors among banks in New York City for one Business Day and
thereafter at the Alternate Base Rate.
(vii) Notwithstanding anything herein to the contrary, the
Swingline Lender shall not make any Swingline Loans at any time the Swingline
Lender is aware that the conditions to the making of such Swingline Loan set
forth in Section 4.02 have not been satisfied unless such conditions shall have
been waived in accordance with this Agreement.
(d) Within the limits set forth in paragraphs (b) and (c)
above, the Credit Parties may borrow, pay or prepay and reborrow Revolving Loans
and Swingline Loans. Amounts paid or prepaid in respect of Term Loans or Tranche
A Reimbursement Loans may not be reborrowed, except as contemplated by Section
2.11(b) with respect to Tranche A Reimbursement Loans.
SECTION 2.02. LOANS. (a) Each Loan (other than a Swingline
Loan) shall be made as part of a Borrowing consisting of Loans of the same Class
and Type made by the Lenders ratably in accordance with their Commitments of the
applicable Class; PROVIDED, HOWEVER, that the failure of any Lender to make any
Loan shall not relieve any other Lender of its obligation to lend hereunder (it
being understood, however, that no Lender shall be responsible for the failure
of any other Lender to make any Loan required to be made by such other Lender).
The Loans comprising any Borrowing shall be in an aggregate principal amount
which is (i) an integral multiple of $1,000,000 (or, in the case of Swingline
Loans, $500,000) and not less than $5,000,000 (or, in the case of Swingline
Loans, $500,000), (ii) equal to the remaining available balance of the
applicable Class of Commitments or (iii) in the case of any Tranche A
Reimbursement Borrowing made pursuant to Section 2.11(b)(ii), an
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42
amount not less than $2,000,000; PROVIDED that Revolving Loans used to pay
Refunded Swingline Loans may be in the amount of such Refunded Swingline Loans.
(b) Subject to Sections 2.08 and 2.14, each Borrowing shall be
comprised entirely of ABR Loans or (except in the case of Swingline Loans)
Eurodollar Loans as the applicable Credit Party may request pursuant to Section
2.03. Each Lender may at its option make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
PROVIDED that any exercise of such option shall not affect the obligation of the
applicable Credit Party to repay such Loan in accordance with the terms of this
Agreement and such Lender shall not be entitled to any amounts payable under
Section 2.13 or Section 2.19 in respect of increased costs arising as a result
of such exercise (and that would not have arisen but for such exercise).
Borrowings of more than one Type may be outstanding at the same time; PROVIDED,
HOWEVER, that the Credit Parties shall not be entitled to request any Borrowing
which, if made, would result in more than twenty Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Subject to Section 2.10, each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer to such
account as the Administrative Agent may designate in federal funds not later
than 11:00 a.m., New York City time, and the Administrative Agent shall by 12:00
(noon), New York City time, (a) in the case of any Loan made to reimburse any
L/C Disbursement or to refund any Swingline Loan, apply the amounts so received
to effect such reimbursement or refund as contemplated by Section 2.20 or
Section 2.01(c) and (b) in the case of each Loan the proceeds of which are to be
received by a Credit Party, credit the amounts so received to an account
designated by such Credit Party in the applicable Borrowing Request; PROVIDED,
HOWEVER, that if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, the Administrative Agent
shall return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and may, in reliance upon such assumption,
make available to the applicable Credit Party on such date a corresponding
amount. If the Administrative Agent shall have so made funds available then, to
the extent that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the applicable Credit Party severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the applicable Credit Party until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
applicable Credit Party, the interest rate applicable at the time to the Loans
comprising such Borrowing and
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43
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, a
Credit Party shall not be entitled to request any Tranche A Reimbursement
Borrowing or Revolving Credit Borrowing if the Interest Period requested with
respect thereto would end after the Tranche A Maturity Date or the Revolving
Credit Maturity Date,
as applicable.
SECTION 2.03. BORROWING PROCEDURE. In order to request a
Borrowing, a Credit Party shall hand deliver or telecopy to the Administrative
Agent a duly completed Borrowing Request substantially in the form of Exhibit C
(a) in the case of a Eurodollar Borrowing, not later than 12:00 (noon), New York
City time, three Business Days before a proposed Borrowing, and (b) in the case
of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business
Day before a proposed Borrowing; PROVIDED, HOWEVER, that Borrowing Requests with
respect to Tranche A Reimbursement Borrowings being made to reimburse any
Tranche A L/C Disbursement may be delivered by no later than 12:00 (noon), New
York City time, on the date of such Borrowing. Each Borrowing Request shall be
irrevocable, shall be signed by or on behalf of the applicable Credit Party and
shall specify the following information: (i) the name of the applicable Credit
Party; (ii) whether the Borrowing then being requested is to be a Term
Borrowing, a Tranche A Reimbursement Borrowing or a Revolving Credit Borrowing
(and in the case of a Term Borrowing the Class of Commitments pursuant to which
the Loans comprising such Borrowing are to be made), and whether such Borrowing
is to be a Eurodollar Borrowing or an ABR Borrowing; (iii) the date of such
Borrowing (which shall be a Business Day), (iv) in the case of a Borrowing the
proceeds of which are to be received by the applicable Credit Party, the number
and location of the account to which funds are to be disbursed (which account
shall be maintained in the United States of America); (v) the amount of such
Borrowing; and (vi) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto; PROVIDED, HOWEVER, that, notwithstanding
any contrary specification in any Borrowing Request, each requested Borrowing
shall comply with the requirements set forth in Section 2.02. If no election as
to the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the applicable Credit
Party shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall promptly (and in any event on the same
day that the Administrative Agent receives such notice, if received by 1:00
p.m., New York City time, on such day) advise the applicable Lenders of any
notice given pursuant to this Section 2.03 and of each Lender's portion of the
requested Borrowing.
SECTION 2.04. EVIDENCE OF DEBT; REPAYMENT OF LOANS.
(a) The outstanding principal balance of each Loan shall be payable
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44
(i) in the case of a Revolving Loan or a Swingline Loan, on the Revolving Credit
Maturity Date and (ii) in the case of a Term Loan or Tranche A Reimbursement
Loan, as provided in Section 2.11.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from any
Credit Party to each Lender hereunder and (iii) the amount of any sum received
by the Administrative Agent hereunder from any Credit Party and each Lender's
share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) and (c) of this Section 2.04 shall be prima facie evidence of the
existence and amounts of the obligations therein recorded; PROVIDED, HOWEVER,
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of
any Credit Party to repay the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in
the event any Lender shall request and receive a Note as provided in Section
9.04(h) or otherwise the interests represented by that Note shall at all times
(including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more Notes payable to the payee named
therein or its registered assigns.
SECTION 2.05. FEES. (a) The Borrower agrees to pay to each
Lender, through the Administrative Agent, on the last day of March, June,
September and December in each year, and on the date on which the Commitments of
all the Lenders shall be terminated as provided herein, a commitment fee (a
"COMMITMENT FEE") on the average daily unused amount of the Commitments of such
Lender during the preceding quarter (or other period commencing with the date of
this Agreement or ending with the date on which the last of the Commitments of
such Lender shall be terminated) at the rate of 0.50% per annum. All Commitment
Fees shall be computed on the basis of the actual number of days elapsed in a
year of 365 or 366 days, as applicable. For the purpose of calculating any
Lender's Commitment Fee, the outstanding Swingline Loans during the period for
which such Lender's Commitment Fee is calculated shall be deemed to be zero. The
Commitment Fee due to each Lender shall commence to accrue on the date of this
Agreement and shall cease to accrue on the date on which the last of the
Commitments of such Lender shall be terminated as provided herein. For purposes
of calculating the Commitment Fee, the Tranche A Reimbursement Commitments shall
be deemed to be used to the extent there are outstanding Tranche A Reimbursement
Loans, Tranche A L/C Disbursements or Tranche A Letters of Credit and shall
otherwise be deemed to be unused.
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45
(b) The applicable Credit Party agrees to pay (i) to each
Tranche A Lender and Revolving Credit Lender, through the Administrative Agent,
on the last day of March, June, September and December of each year and on the
date on which the Tranche A Reimbursement Commitments or the Revolving Credit
Commitments, as applicable, of all the Lenders shall have been terminated as
provided herein and no further Tranche A Letters of Credit or Revolving Letters
of Credit, as applicable, shall be outstanding, a fee (an "L/C PARTICIPATION
FEE") on such Lender's Applicable Percentage of the average daily aggregate
Tranche A L/C Exposure or Revolving L/C Exposure, as applicable (excluding in
each case the portion thereof attributable to unreimbursed L/C Disbursements),
during the preceding quarter (or shorter period commencing with the date of this
Agreement or ending with the Tranche A Maturity Date or the Revolving Credit
Maturity Date, as applicable, or the date on which the Tranche A Reimbursement
Commitments or the Revolving Credit Commitments, as applicable, shall be
terminated) at the rate per annum effective for each day in such period as set
forth on Schedule A and (ii) to each Fronting Bank, the fees separately agreed
upon by the Borrower and such Fronting Bank PLUS, in connection with the
issuance, amendment or transfer of any such Letter of Credit or any L/C
Disbursement thereunder, each applicable Fronting Bank's customary documentary
and processing charges (collectively, the "FRONTING BANK FEES"). All L/C
Participation Fees and Fronting Bank Fees that are payable on a per annum basis
shall be computed on the basis of the actual number of days elapsed in a year of
360 days.
(c) The Borrower agrees to pay to the Administrative Agent,
for its own account, the fees set forth in the Agent Letter at the times
specified therein (the "ADMINISTRATIVE AGENT FEES").
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders, except that the Fronting Bank Fees shall be paid
directly to the applicable Fronting Banks. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions
of Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times) at a rate per annum equal to the
Alternate Base Rate PLUS, the ABR Margin applicable to the Class of Loans
comprising such ABR Borrowing and effective for such date as set forth on
Schedule A.
(b) Subject to the provisions of Section 2.07, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) at a rate per
annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing PLUS, the LIBOR Margin applicable to the Class of Loans comprising
such Eurodollar Borrowing and effective for such date as set forth on Schedule
A.
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46
(c) Interest on each Loan shall be payable on the Interest
Payment Dates applicable to such Loan except as otherwise provided in this
Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each
Interest Period or day within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error. The Administrative Agent shall give the
Borrower prompt notice of each such determination.
SECTION 2.07. DEFAULT INTEREST. If any Credit Party shall
default in the payment of the principal of or interest on any Loan or any other
amount becoming due hereunder, by acceleration or otherwise, such Credit Party
shall on demand from time to time pay interest, to the extent permitted by law,
on such defaulted amount for the period beginning on the date of such default up
to (but not including) the date of actual payment (after as well as before
judgment) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 360 days) equal to (a) in the case of (i) overdue
Loans, overdue interest thereon, overdue Commitment Fees or other overdue
amounts owing in respect of Loans or other obligations (or the related
Commitments) under a particular Tranche or in respect of the Revolving Credit
Commitments or (ii) other overdue amounts owing to a Lender participating in no
more than one of the Tranches or the Revolving Credit Commitments, the rate that
would otherwise be applicable to ABR Loans of the applicable Class pursuant to
Section 2.06 PLUS 2% or (b) in the case of any other overdue amount, the
Alternate Base Rate PLUS 2%.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on
each occasion, that on the day two Business Days prior to the commencement of
any Interest Period for a Eurodollar Borrowing the Administrative Agent shall
have determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market, or that the rates at which such dollar deposits are being offered will
not adequately and fairly reflect the cost to any Lender of making or
maintaining its Eurodollar Loan during such Interest Period, or that reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative
Agent shall, as soon as practicable thereafter, give written or telecopy notice
of such determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a)
The Tranche A Reimbursement Commitments shall be automatically and permanently
terminated at 5:00 p.m., New York City time, on the Business Day next preceding
the Tranche A Maturity Date. The Revolving Credit Commitments shall be
automatically and permanently terminated at 5:00 p.m., New York City time, on
the Revolving Credit Maturity Date.
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47
(b) Upon at least three Business Days' prior irrevocable
written or telecopy notice to the Administrative Agent, the Borrower may at any
time in whole permanently terminate, or from time to time in part permanently
reduce, any of the Tranche A Reimbursement Commitments or the Revolving Credit
Commitments; PROVIDED, HOWEVER, that (i) each partial reduction of any
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
principal amount of $5,000,000 (or, if less, the remaining amount of the
Commitments of the applicable Class), (ii) the Total Tranche A Reimbursement
Commitment shall not be reduced to an amount that is less than the Tranche A
Exposure at the time and (iii) the Total Revolving Credit Commitment shall not
be reduced to an amount that is less than the Aggregate Revolving Credit
Exposure at the time.
(c) The Tranche A Reimbursement Commitments shall be
automatically and permanently reduced at 5:00 p.m., New York City time, on each
Installment Date by the portion of the amount set forth in Section 2.11(a) for
such Installment Date under the caption "Tranche A Term Loan Amount and Tranche
A Exposure" allocated to reduce the Tranche A Exposure pursuant to Section
2.11(c).
(d) The Tranche A Reimbursement Commitments shall be
automatically and permanently reduced by an amount equal to any amount applied
to reduce the Tranche A Exposure pursuant to paragraph (a), (d), (e) or (f) of
Section 2.12.
(e) The Revolving Credit Commitments shall be automatically
and permanently reduced by an amount equal to any amount applied under paragraph
(d), (e) or (f) of Section 2.12 to prepay Revolving Credit Borrowings (or that
would have been required to be so applied if Revolving Credit Borrowings equal
to such amount had been outstanding).
(f) Each reduction in a Class of Commitments hereunder shall
be made ratably among the Lenders in accordance with their respective
Commitments for such Class. The Borrower shall pay to the Administrative Agent
for the account of the Lenders, on the date of each termination or reduction,
the Commitment Fees and, to the extent applicable, L/C Participation Fees on the
amount of the Commitments so terminated or reduced accrued to but excluding the
date of such termination or reduction.
SECTION 2.10. CONVERSION AND CONTINUATION OF BORROWINGS. A
Credit Party shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (a) not later than 12:00 (noon), New York City time,
one Business Day prior to conversion, to convert any Eurodollar Term,
Reimbursement or Revolving Borrowing into an ABR Term, Reimbursement or
Revolving Borrowing, (b) not later than 10:00 a.m., New York City time, three
Business Days prior to conversion or continuation, to convert any ABR Term,
Reimbursement or Revolving Borrowing into a Eurodollar Term, Reimbursement or
Revolving Borrowing or to continue any Eurodollar Term, Reimbursement or
Revolving Borrowing as a Eurodollar Term, Reimbursement or Revolving Borrowing
for an additional Interest Period, and (c) not later than 10:00 a.m., New York
City time, three Business Days prior to conversion, to convert the Interest
Period with respect to any Eurodollar Term,
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48
Reimbursement or Revolving Borrowing to another permissible Interest Period,
subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the relevant Lenders in accordance with the respective principal
amounts of the Loans comprising the converted or continued Term
Borrowing, Tranche A Reimbursement Borrowing or Revolving Borrowing, as
applicable;
(ii) if less than all the outstanding principal amount of any
Term Borrowing, Tranche A Reimbursement Borrowing or Revolving
Borrowing shall be converted or continued, then each resulting Term
Borrowing, Tranche A Reimbursement Borrowing or Revolving Borrowing, as
applicable, shall satisfy the limitations specified in Sections 2.02(a)
and (b) regarding the principal amount and maximum number of Borrowings
of the relevant Type;
(iii) each conversion shall be effected by each Lender by
recording for the account of such Lender the new Term Loan, Tranche A
Reimbursement Loan or Revolving Loan, as applicable, of such Lender
resulting from such conversion and reducing the Term Loan, Tranche A
Reimbursement Loan or Revolving Loan, as applicable, (or portion
thereof) of such Lender being converted by an equivalent principal
amount; accrued interest on a Term Loan, Tranche A Reimbursement Loan
or Revolving Loan, as applicable, (or portion thereof) being converted
shall be paid by the applicable Credit Party at the time of conversion;
(iv) if any Eurodollar Term, Reimbursement or Revolving
Borrowing is converted at a time other than the end of the Interest
Period applicable thereto, the applicable Credit Party shall pay, upon
demand, any amounts due to the Lenders pursuant to Section 2.15;
(v) any portion of a Term Borrowing, Tranche A Reimbursement
Borrowing or Revolving Borrowing, as applicable, maturing or required
to be repaid in less than one month may not be converted into or
continued as a Eurodollar Term, Reimbursement or Revolving Borrowing;
(vi) any portion of a Eurodollar Term, Reimbursement or
Revolving Borrowing which Borrowing cannot be converted into or
continued as a Eurodollar Term, Reimbursement or Revolving Borrowing by
reason of the immediately preceding clause shall be automatically
converted at the end of the Interest Period in effect for such
Borrowing into an ABR Term, Reimbursement or Revolving Borrowing, as
applicable; and
(vii) no Interest Period may be selected for any Eurodollar
Term or Reimbursement Borrowing that would end later than an
Installment Date occurring on or after the first day of such Interest
Period if, after giving effect to such selection, the aggregate
outstanding amount of (A) the Eurodollar Term or Reimbursement
Borrowings made pursuant to the same Commitments with Interest Periods
ending on or prior to such Installment Date and (B) the ABR Term or
Reimbursement Borrowings made pursuant to the same Commitments would
not be at least equal to
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49
the principal amount of Term Borrowings and (based on the Borrower's
expected allocation on such Installment Date under Section 2.11(c))
Tranche A Reimbursement Borrowings made pursuant to the same
Commitments to be paid on such Installment
Date.
Each notice pursuant to this Section 2.10 shall be irrevocable
and shall refer to this Agreement and specify (i) the identity and amount of the
Term Borrowing, Tranche A Reimbursement Borrowing or Revolving Borrowing that
the applicable Credit Party requests be converted or continued, (ii) whether
such Term Borrowing, Tranche A Reimbursement Borrowing or Revolving Borrowing is
to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing,
(iii) if such notice requests a conversion, the date of such conversion (which
shall be a Business Day) and (iv) if such Term Borrowing, Tranche A
Reimbursement Borrowing or Revolving Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with respect thereto.
If no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Eurodollar Borrowing, the applicable Credit
Party shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the other Lenders of any notice
given pursuant to this Section 2.10 and of each Lender's portion of any
converted or continued Term Borrowing, Tranche A Reimbursement Borrowing or
Revolving Borrowing. If the applicable Credit Party shall not have given notice
in accordance with this Section 2.10 to continue any Term Borrowing, Tranche A
Reimbursement Borrowing or Revolving Borrowing into a subsequent Interest Period
(and shall not otherwise have given notice in accordance with this Section 2.10
to convert such Term Borrowing, Tranche A Reimbursement Borrowing or Revolving
Borrowing), such Term Borrowing, Tranche A Reimbursement Borrowing or Revolving
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be continued or converted
into an ABR Borrowing.
SECTION 2.11. REPAYMENT OF TERM BORROWINGS AND REDUCTION OF
THE TRANCHE A EXPOSURE; REALLOCATION OF THE TRANCHE A EXPOSURE. (a) The Term
Borrowings shall be payable as to principal and the Tranche A Exposure shall be
reduced in the aggregate annual amounts set forth below in consecutive quarterly
installments on each March 31, June 30, September 30 and December 31 (each an
"INSTALLMENT DATE"), commencing March 31, 1998, with 40% of each annual amount
being paid or reduced on each June 30 and each December 31 and 10% of each
annual amount being paid or reduced on each March 31 and September 30; PROVIDED
that (a) the $20,000,000 repayment of Tranche A Term Loans and/or reduction of
Tranche A Exposure and (b) the $400,000 repayment of Tranche B Term Loans, in
each case required to be effected on the December 31, 1998 Installment Date
shall instead be effected on the Effective Date and such early repayments and
reductions shall satisfy the requirement pursuant to this clause (a) to make
payments and effect reductions on the December 31, 1998 Installment Date:
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50
TRANCHE A
TERM LOAN
AMOUNT AND TRANCHE B
ANNUAL PERIOD ENDING/ TRANCHE A TERM LOAN
INSTALLMENT DATE EXPOSURE AMOUNT
December 31, 1998 50,000,000 1,000,000
December 31, 1999 60,000,000 1,000,000
December 31, 2000 75,000,000 1,000,000
December 31, 2001 85,000,000 1,000,000
December 31, 2002 116,000,000
(b) The Borrower shall have the right at any time and from
time to time, but not more frequently than four times in any fiscal year (and
more frequently with the consent of the Administrative Agent, which consent
shall not be unreasonably withheld), upon at least 3 Business Days' prior
written or telecopy notice (or telephone notice promptly confirmed by written or
telecopy notice) to the Administrative Agent to:
(i) reduce the stated amount of any one or more Tranche A
Letters of Credit and apply all or any portion of the amount of such
reduction to increase or issue any other one or more Tranche A Letters
of Credit on a dollar for dollar basis;
(ii) reduce the stated amount of any Tranche A Letter of
Credit and request a Tranche A Reimbursement Borrowing in an amount not
in excess of the difference between the amount of such reduction and
the Interest Component or Foreign Currency Component, as applicable, in
respect thereof (which Interest Component or Foreign Currency
Component, as applicable, shall be held in reserve and be available for
any reallocation pursuant to clause (iv) below);
(iii) prepay any portion of any Tranche A Term Borrowing or
Tranche A Reimbursement Borrowing and apply all or any portion of such
prepayment to increase or issue any Tranche A Letter of Credit; or
(iv) in connection with any transaction referred to in (iii)
above, apply a portion of any Interest Component or Foreign Currency
Component held in reserve pursuant to clause (ii) above to increase any
Tranche A Letter of Credit increased as part of such transaction;
PROVIDED, HOWEVER, that (A) after giving effect to any such reallocation, (x)
each Tranche A Letter of Credit shall have an unused stated amount not less than
the sum of the principal amount (or the Dollar Equivalent thereof, as
applicable) of the portion of the Local Facility supported by such Tranche A
Letter of Credit and the Interest Component or Foreign Currency Component, as
applicable, in respect of such principal amount (or the Dollar Equivalent
thereof, as applicable) and (y) the Tranche A Exposure shall not exceed the
Total Tranche A Reimbursement Commitment; (B) the Administrative Agent shall not
have advised the Borrower that, in its reasonable judgment, the amount of any
affected Local Facility after giving effect to any such reallocation would
exceed the debt capacity of the applicable Credit Party; and (C) the portion of
the
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51
Tranche A L/C Exposure allocated to any Local Facility or Facilities extended to
the Borrower's Mexican subsidiaries shall not exceed $50,000,000 in the
aggregate outstanding at any time. In the event of any prepayment of a Tranche A
Term Borrowing under clause (iii) above, the aggregate Tranche A Reimbursement
Commitments shall be increased on a dollar for dollar basis by the aggregate
amount of such prepayment and the Tranche A Reimbursement Commitment of each
Tranche A Lender shall be increased by its Applicable Percentage thereof. No
issuance or increase of a Tranche A Letter of Credit or making of a Tranche A
Reimbursement Loan pursuant to this paragraph (b) shall constitute a "Credit
Event" for any purpose hereunder.
(c) Except as set forth in paragraph (b) above or in paragraph
(d) below, each prepayment of principal of the Term Borrowings and reduction of
the Tranche A Exposure pursuant to Section 2.12 shall be applied to (i) the
Tranche A Term Borrowings and the Tranche A Exposure and (ii) the Tranche B Term
Borrowings ratably in accordance with the respective amounts thereof and shall
reduce scheduled payments and reductions required under paragraph (a) above
after the date of such prepayment or reduction in the scheduled order of
maturity. Amounts to be applied to the Tranche A Term Borrowings and the Tranche
A Exposure under this Section 2.11 shall be allocated as among Tranche A Term
Loans, Tranche A Reimbursement Loans, Tranche A L/C Disbursements and individual
Tranche A Letters of Credit as specified to the Administrative Agent by the
Borrower not less than three Business Days prior to the applicable Installment
Date or other date of prepayment or reduction by written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice). To the
extent not previously paid or reduced, (i) all Tranche A Term Borrowings and all
Tranche A Reimbursement Borrowings shall be due and payable and the Tranche A
Exposure shall be reduced to zero on the Tranche A Maturity Date, and (ii) all
Tranche B Term Borrowings shall be due and payable on the Tranche B Maturity
Date. Each payment of Borrowings pursuant to this Section 2.11 shall be
accompanied by accrued interest on the principal amount paid to but excluding
the date of payment.
(d) Notwithstanding the provisions of paragraph (c) above, the
first $15,000,000 in aggregate optional or mandatory prepayments after the
Effective Date that would otherwise be made pursuant to Section 2.12(a) or (e)
to Lenders holding Tranche B Term Loans shall be applied, until the Tranche A
Term Borrowings shall have been paid in full and the Tranche A Exposure reduced
to zero, to prepay Tranche A Term Borrowings and to reduce the Tranche A
Exposure and shall reduce scheduled payments and reductions in respect of such
Borrowings and the Tranche A Exposure under Section 2.11(a) after the date of
any such prepayment or reduction in the scheduled order of maturity; PROVIDED
that reductions to the Tranche A Exposure in respect of prepayments made under a
Local Facility pursuant to the first proviso of Section 2.12(d) shall reduce the
amount subject to this paragraph (d) on a dollar for dollar basis by the amount
of each such reduction that would otherwise have been applied to prepayment of
Tranche B Term Loans.
(e) Each reference in this Section 2.11 to the reduction of
the Tranche A Exposure shall refer (and be limited) to any combination of (i)
the prepayment of Tranche A Reimbursement Loans,
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(ii) the repayment of Tranche A L/C Disbursements, (iii) the prepayment of
Indebtedness under any Local Facility and the causing of the related Tranche A
Letter of Credit to be reduced by the amount that will result in the stated
amount thereof equaling the sum of the principal amount of the Local Facility
and the Interest Component or Foreign Currency Component, as applicable, in
respect thereof and (iv) the reduction of the Foreign Currency Component, if
any, held in reserve pursuant to Section 2.11(b)(ii).
SECTION 2.12. PREPAYMENT. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing and to reduce
the Tranche A Exposure, in whole or in part, upon at least three Business Days'
prior written or telecopy notice (or telephone notice promptly confirmed by
written or telecopy notice) to the Administrative Agent, and, in the case of a
reduction in the Tranche A Exposure, the applicable Fronting Banks, before 11:00
a.m., New York City time; PROVIDED, HOWEVER, that (i) each partial prepayment or
reduction (other than of a Swingline Loan) shall be in an amount which is an
integral multiple of $1,000,000 and not less than $5,000,000 (or, if less, the
aggregate outstanding amount under the applicable Tranche or Local Facility),
(ii) each prepayment of Term Borrowings or reduction of the Tranche A Exposure
shall be applied as set forth in paragraphs (c) and (d) of Section 2.11 and
(iii) if the Borrower shall prepay any Tranche B Term Borrowing hereunder prior
to January 1, 2000, it shall pay to the Administrative Agent, for the account of
the Lenders of the applicable Class, a premium equal to 1% of the amount so
prepaid.
(b) In the event of any termination of the Revolving Credit
Commitments, the Credit Parties shall on the date of such termination repay or
prepay all its outstanding Swingline Loans and Revolving Credit Borrowings,
reduce the Revolving L/C Exposure to zero and cause all Revolving Letters of
Credit to be canceled and returned to the Fronting Banks. In the event of any
partial reduction of the Revolving Credit Commitments, then (i) at or prior to
the effective date of such reduction, the Administrative Agent shall notify the
Borrower, the Swingline Lender and the Revolving Credit Lenders of the Aggregate
Revolving Credit Exposure and (ii) if the Aggregate Revolving Credit Exposure
would exceed the Total Revolving Credit Commitment after giving effect to such
reduction, then the Credit Parties shall, on the date of such reduction, repay
or prepay Swingline Loans and Revolving Credit Borrowings, or reduce the
Revolving L/C Exposure, in an aggregate amount sufficient to eliminate such
excess. Notwithstanding the foregoing, on the date of any termination or
reduction of the Revolving Credit Commitments pursuant to Section 2.09, the
Borrower shall pay or prepay so much of, FIRST, the Swingline Loans and, SECOND,
the Revolving Credit Borrowings as shall be necessary in order that the
Aggregate Revolving Credit Exposure will not exceed the Total Revolving Credit
Commitment after giving effect to such termination or reduction.
(c) In the event of any termination of the Tranche A
Reimbursement Commitments, the Borrower shall on the date of such termination
repay or prepay all its outstanding Tranche A Reimbursement Borrowings, reduce
the remaining Tranche A Exposure to zero and cause all Tranche A Letters of
Credit to be canceled and returned to the Fronting Banks. In the event of any
partial
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53
reduction of the Tranche A Reimbursement Commitments, then (i) at or prior to
the effective date of such reduction, the Administrative Agent shall notify the
Borrower and the Tranche A Lenders of the Tranche A Exposure and (ii) if the
Tranche A Exposure would exceed the Total Tranche A Reimbursement Commitment
after giving effect to such reduction, then the Borrower shall, on the date of
such reduction, repay or prepay Tranche A Reimbursement Borrowings or otherwise
reduce the Tranche A Exposure in an aggregate amount sufficient to eliminate
such excess.
(d) The Borrower shall apply all Net Proceeds (minus an amount
equal to the lesser of (i) the amount of such Net Proceeds applied to prepay
loans under the Tranche C Facility Credit Agreement and (ii) the amount of such
Net Proceeds multiplied by a fraction the numerator of which is the aggregate
principal amount of loans outstanding under the Tranche C Facility Credit
Agreement and the denominator of which is the aggregate principal and stated
amount of (A) outstanding Term Loans (excluding Tranche A Reimbursement Loans)
and Tranche A Exposure and (B) outstanding loans under the Tranche C Facility
Credit Agreement) promptly upon receipt thereof by UCAR, the Borrower or any
Subsidiary to prepay Term Borrowings and to reduce the Tranche A Exposure (and,
after the Term Loans and the loans under the Tranche C Facility Credit Agreement
have been paid in full and the Tranche A Exposure has been reduced to zero, to
reduce the Revolving Credit Exposure), PROVIDED that the requirements of this
Section 2.12(d) may instead, at the option of the Borrower, be satisfied in
respect of Net Proceeds realized in connection with the disposition of any
property of any Subsidiary that is a borrower under a Local Facility Credit
Agreement (or any of its subsidiaries) by prepaying Indebtedness under such
Local Facility and reducing the stated amount of the applicable Tranche A Letter
of Credit by the amount that will result in the stated amount thereof equaling
the sum of the principal amount of the Local Facility and the Interest Component
or Foreign Currency Component, as applicable, in respect thereof; PROVIDED,
FURTHER that the aggregate prepayments on and after the Effective Date that
would have been made under this paragraph (d) to Lenders holding Tranche B Term
Loans but for the immediately preceding proviso shall not exceed $7,500,000.
(e) Not later than 90 days after the end of each fiscal year
of the Borrower, commencing with the fiscal year ending December 31, 1998, the
Borrower shall calculate Excess Cash Flow for such fiscal year and shall apply
(i) the applicable percentage (determined as set forth in Schedule A) of such
Excess Cash Flow (the "EXCESS CASH FLOW PREPAYMENT AMOUNT") less (ii) (A) any
voluntary prepayments of Term Loans during the period beginning on April 1 of
such fiscal year and ending on March 31 of the immediately succeeding fiscal
year (if such difference is positive) and (B) an amount equal to the lesser of
(i) the amount of such Excess Cash Flow Prepayment Amount applied to prepay
loans under the Tranche C Facility Credit Agreement and (ii) such Excess Cash
Flow Prepayment Amount multiplied by a fraction the numerator of which is the
aggregate principal amount of the loans outstanding under the Tranche C Facility
Credit Agreement and the denominator of which is the aggregate principal and
stated amount of (x) outstanding Term Loans (excluding Tranche A Reimbursement
Loans) and Tranche A Exposure and (y) loans outstanding under the Tranche C
Facility
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54
Credit Agreement to prepay Term Borrowings and to reduce the Tranche A Exposure
(and, after the Term Loans and the loans under the Tranche C Facility Credit
Agreement have been paid in full and the Tranche A Exposure has been reduced to
zero, to reduce the Revolving Credit Exposure). Not later than the date on which
the Borrower is required to deliver financial statements with respect to the end
of each fiscal year under Section 5.04(a), the Borrower will deliver to the
Administrative Agent a certificate of the Borrower signed by a Financial Officer
of the Borrower setting forth the amount, if any, of Excess Cash Flow for such
fiscal year and the calculation thereof in reasonable detail.
(f) At the time of any prepayment of the loans pursuant to
Section 2.12 of the Tranche C Facility Credit Agreement, the Borrower shall
prepay the Term Loans and/or reduce the Tranche A Exposure in an aggregate
amount bearing the same proportion to the aggregate amount of Term Loans
(excluding Tranche A Reimbursement Loans) and Tranche A Exposure outstanding
hereunder as the amount of loans prepaid pursuant to Section 2.12 of the Tranche
C Facility Credit Agreement bears to the aggregate amount of loans outstanding
under the Tranche C Facility Credit Agreement.
(g) Each reference in this Section 2.12 to the reduction of
the Tranche A Exposure shall refer (and be limited) to any combination of (i)
the prepayment of Tranche A Reimbursement Loans, (ii) the repayment of Tranche A
L/C Disbursements, (iii) the prepayment of Indebtedness under any Local Facility
and the causing of the related Tranche A Letter of Credit to be reduced by the
amount that will result in the stated amount thereof equaling the sum of the
principal amount of the Local Facility and the Interest Component or the Foreign
Currency Component, as applicable, in respect thereof and (iv) the reduction of
the Foreign Currency Component, if any, held in reserve pursuant to Section
2.11(b)(ii). Each notice of prepayment or reduction pursuant to this Section
2.12 shall specify the prepayment date and the principal amount of each
Borrowing (or portion thereof) to be prepaid and the portion of the Tranche A
Exposure to be reduced, shall be irrevocable and shall commit the applicable
Credit Party to prepay such Borrowing and to reduce the Tranche A Exposure by
the amount stated therein on the date stated therein. All prepayments and
reductions under this Section 2.12 shall be subject to Section 2.12(a)(iii) and
Section 2.15 but otherwise shall be without premium or penalty. All prepayments
under this Section 2.12 shall be accompanied by accrued interest on the
principal amount being prepaid to but excluding the date of payment.
(h) In the event the amount of any prepayment required to be
made above shall exceed the aggregate principal amount of the ABR Loans
outstanding under the Tranches required to be prepaid (the amount of any such
excess being called the "EXCESS AMOUNT"), the Borrower shall have the right, in
lieu of making such prepayment in full, to prepay all the outstanding applicable
ABR Loans and to deposit an amount equal to the Excess Amount with the
Collateral Agent in a cash collateral account maintained (pursuant to
documentation reasonably satisfactory to the Administrative Agent) by and in the
sole dominion and control of the Collateral Agent. Any amounts so deposited
shall be held by the Collateral Agent as collateral for the Obligations and
applied to the prepayment of the
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55
applicable Eurodollar Loans at the end of the current Interest Periods
applicable thereto. On any Business Day on which (i) collected amounts remain on
deposit in or to the credit of such cash collateral account after giving effect
to the payments made on such day pursuant to this Section 2.12(h) and (ii) the
Borrower shall have delivered to the Collateral Agent a written request or a
telephonic request (which shall be promptly confirmed in writing) that such
remaining collected amounts be invested in the Permitted Investments specified
in such request, the Collateral Agent shall use its reasonable efforts to invest
such remaining collected amounts in such Permitted Investments; PROVIDED,
HOWEVER, that the Collateral Agent shall have continuous dominion and full
control over any such investments (and over any interest that accrues thereon)
to the same extent that it has dominion and control over such cash collateral
account and no Permitted Investment shall mature after the end of the Interest
Period for which it is to be applied. The Borrower shall not have the right to
withdraw any amount from such cash collateral account until the applicable
Eurodollar Loans and accrued interest thereon are paid in full or if a Default
or Event of Default then exists or would result.
(i) Notwithstanding anything to the contrary contained herein,
the borrower under the Local Facility Credit Agreement in Canada shall not be
required to prepay more than 25% of the principal amount of the Indebtedness
thereunder prior to the fifth anniversary of the Original Closing Date, although
such borrower may, at its election, prepay any amounts thereunder.
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or any
Fronting Bank in respect of any Letter of Credit or of the principal of or
interest on any Eurodollar Loan made by such Lender or any Fees or other amounts
payable hereunder (other than changes in respect of (i) taxes imposed on the
overall net income of such Lender or such Fronting Bank by the jurisdiction in
which such Lender or such Fronting Bank has its principal office or by any
political subdivision or taxing authority therein and (ii) any Taxes described
in Section 2.19), or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets or deposits with or for
the account of or credit extended by or, in the case of the Letters of Credit,
participated in by such Lender (except any such reserve requirement which is
reflected in the Adjusted LIBO Rate) or such Fronting Bank or shall impose on
such Lender or such Fronting Bank or the interbank eurodollar market any other
condition affecting this Agreement, any Letter of Credit (or any participation
with respect thereto), the Letter of Credit Exposure, the Letter of Credit
Commitment or any Eurodollar Loans of such Lender or such Fronting Bank, and the
result of any of the foregoing shall be to increase the cost to such Lender or
such Fronting Bank of making or maintaining its Letter of Credit Exposure, its
Letter of Credit Commitment or any Eurodollar Loan (or, in the case of such
Fronting Bank, of making any payment under any Letter of Credit) or to reduce
the amount of any sum
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56
received or receivable by such Lender or such Fronting Bank hereunder (whether
of principal, interest or otherwise) by an amount deemed by such Lender or such
Fronting Bank to be material, then from time to time the Borrower or the
applicable Credit Party will pay to such Lender or such Fronting Bank upon
demand such additional amount or amounts as will compensate such Lender or such
Fronting Bank for such additional costs incurred or reduction suffered.
(b) If any Lender or Fronting Bank shall have determined that
the adoption after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change after the date hereof in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or Fronting Bank or any Lender's or Fronting
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) made or issued after the date hereof by
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or such Fronting Bank's
capital or on the capital of such Lender's or such Fronting Bank's holding
company, if any, as a consequence of this Agreement or its obligations pursuant
hereto to a level below that which such Lender or such Fronting Bank or such
Lender's or such Fronting Bank's holding company would have achieved but for
such adoption, change or compliance (taking into consideration such Lender's or
such Fronting Bank's policies and the policies of such Lender's or such Fronting
Bank's holding company with respect to capital adequacy) by an amount deemed by
such Lender or such Fronting Bank to be material, then from time to time the
Borrower or the applicable Credit Party shall pay to such Lender or such
Fronting Bank upon demand such additional amount or amounts as will compensate
such Lender or such Fronting Bank or such Lender's or such Fronting Bank's
holding company for any such reduction suffered.
(c) A certificate of each Lender or Fronting Bank setting
forth such amount or amounts as shall be necessary to compensate such Lender or
such Fronting Bank or its holding company as specified in paragraph (a) or (b)
above, as the case may be, shall be delivered to the Borrower through the
Administrative Agent and shall be conclusive absent manifest error. The Borrower
or the applicable Credit Party shall pay each Lender or Fronting Bank the amount
shown as due on any such certificate delivered by it within 10 days after the
Borrower's receipt of the same.
(d) In the event any Lender or Fronting Bank delivers a notice
pursuant to paragraph (e) below, the Borrower or the applicable Credit Party may
require, at the Borrower's or the applicable Credit Party's expense and subject
to Section 2.15, such Lender or such Fronting Bank to assign, at par plus
accrued interest and fees, without recourse (in accordance with Section 9.04)
all its interests, rights and obligations hereunder (including, in the case of a
Lender, all of its Commitments and the Loans at the time owing to it and
participations in Letters of Credit and Swingline Loans held by it and its
obligations to acquire such participations) to a financial institution specified
by the Borrower; PROVIDED that
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57
(i) such assignment shall not conflict with or violate any law, rule or
regulation or order of any court or other Governmental Authority, (ii) the
Borrower or the applicable Credit Party shall have received the written consent
of the Administrative Agent (which consent shall not be unreasonably withheld),
the Swingline Lender and each applicable Fronting Bank, as applicable, to such
assignment, (iii) the Borrower or the applicable Credit Party shall have paid to
the assigning Lender or Fronting Bank all monies accrued and owing hereunder to
it (including pursuant to this Section 2.13) and (iv) in the case of a required
assignment by a Fronting Bank, all outstanding Letters of Credit issued by such
Fronting Bank shall be canceled and returned to such Fronting Bank.
(e) Promptly after any Lender or Fronting Bank has determined,
in its sole judgment, that it will make a request for increased compensation
pursuant to this Section 2.13, such Lender or such Fronting Bank will notify the
Borrower thereof. Failure on the part of any Lender or Fronting Bank so to
notify the Borrower or to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of such Lender's or
such Fronting Bank's right to demand compensation with respect to such period or
any other period; PROVIDED that the Borrower or the applicable Credit Party
shall not be under any obligation to compensate any Lender or Fronting Bank
under paragraph (b) above with respect to increased costs or reductions with
respect to any period prior to the date that is six months prior to such request
if such Lender or such Fronting Bank knew or could reasonably have been expected
to be aware of the circumstances giving rise to such increased costs or
reductions and of the fact that such circumstances would in fact result in a
claim for increased compensation by reason of such increased costs or
reductions; PROVIDED FURTHER that the foregoing limitation shall not apply to
any increased costs or reductions arising out of the retroactive application of
any law, regulation, rule, guideline or directive as aforesaid within such six
month period. The protection of this Section 2.13 shall be available to each
Lender and Fronting Bank regardless of any possible contention as to the
invalidity or inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed.
SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any
other provision herein, if the adoption of or any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made
by such Lender hereunder, whereupon any request by a Credit Party for a
Eurodollar Borrowing shall, as to such Lender only, be deemed a request
for an ABR Loan unless such declaration shall be subsequently
withdrawn; and
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(ii) require that all outstanding Eurodollar Loans made by it
be converted to ABR Loans, in which event all such Eurodollar Loans
shall be automatically converted to ABR Loans as of the effective date
of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under subparagraphs (i) and
(ii) above, all payments and prepayments of principal which would otherwise have
been applied to repay the Eurodollar Loans that would have been made by such
Lender or the converted Eurodollar Loans of such Lender shall instead be applied
to repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the
Borrower by any Lender shall be effective as to each Eurodollar Loan, if lawful,
on the last day of the Interest Period currently applicable to such Eurodollar
Loan; in all other cases such notice shall be effective on the date of receipt
by the Borrower.
SECTION 2.15. INDEMNITY. The Borrower shall indemnify each
Lender against any loss or expense (other than taxes) which such Lender may
sustain or incur as a consequence of (a) any failure by a Credit Party to
fulfill on the date of any Borrowing or proposed Borrowing hereunder the
applicable conditions set forth in Article IV, (b) any failure by a Credit Party
to borrow or to refinance, convert or continue any Loan hereunder after
irrevocable notice of such Borrowing, refinancing, conversion or continuation
has been given pursuant to Section 2.03 or 2.10, (c) any payment, prepayment or
conversion of a Eurodollar Loan required by any other provision of this
Agreement or otherwise made or deemed made on a date other than the last day of
the Interest Period applicable thereto, (d) any default in payment or prepayment
of the principal amount of any Loan or any part thereof or interest accrued
thereon, as and when due and payable (at the due date thereof, whether by
scheduled maturity, acceleration, irrevocable notice of prepayment or otherwise)
or (e) the occurrence of any Event of Default, including, in each such case, any
loss or reasonable expense sustained or incurred or to be sustained or incurred
in liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurodollar Loan. Such loss or
reasonable expense shall exclude loss of margin hereunder but shall include an
amount equal to the excess, if any, as reasonably determined by such Lender, of
(i) its cost of obtaining the funds for the Loan being paid, prepaid, converted
or not borrowed, converted or continued (assumed to be the Adjusted LIBO Rate
applicable thereto) for the period from the date of such payment, prepayment,
conversion or failure to borrow, convert or continue to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, convert
or continue, the Interest Period for such Loan which would have commenced on the
date of such failure) over (ii) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the funds
so paid, prepaid, converted or not borrowed, converted or continued for such
period or Interest Period, as the case may be. A certificate of any Lender
setting forth any amount or amounts which such Lender is entitled to receive
pursuant to this Section 2.15 (and the reasons therefor) shall be delivered to
the
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Borrower through the Administrative Agent and shall be conclusive absent
manifest error.
SECTION 2.16. PRO RATA TREATMENT. Except as required under
Section 2.14 and subject to Section 2.11, each Borrowing, each payment or
prepayment of principal of any Borrowing, each payment of interest on the Loans,
each reimbursement of L/C Disbursements, each payment of the Commitment Fees or
L/C Participation Fees, each reduction of the Tranche A Letters of Credit, each
reduction of the Term Commitments, the Tranche A Reimbursement Commitments or
the Revolving Credit Commitments and each refinancing of any Borrowing with,
conversion of any Borrowing to or continuation of any Borrowing as a Borrowing
of any Type shall be allocated (except in the case of Swingline Loans) pro rata
among the Lenders in accordance with their respective applicable Commitments
(or, if such Commitments shall have expired or been terminated, in accordance
with the respective principal amounts of their applicable outstanding Loans or
participations in L/C Disbursements, as applicable). Each Lender agrees that in
computing such Lender's portion of any Borrowing or L/C Disbursement, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing or L/C Disbursement, computed in accordance with Section 2.01, to
the next higher or lower whole dollar amount.
SECTION 2.17. SHARING OF SETOFFS. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrower or another Credit Party, or pursuant to a
secured claim under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar law
or otherwise, or by any other means (including from any realization of
collateral pledged under any Local Facility Loan Document as a result of the
subrogation provisions contained in any Local Facility Credit Agreement), obtain
payment (voluntary or involuntary) in respect of any Loan or Letter of Credit
Exposure as a result of which the unpaid principal or stated portion of its
Loans or Letter of Credit Exposure made or acquired pursuant to any Commitment
(or, after acceleration of the Loans pursuant to Article VII, applicable to any
Loan or Letter of Credit Exposure made or acquired pursuant to all the
Commitments) shall be proportionately less than the unpaid principal portion of
the Loans or Letter of Credit Exposure of any other Lender made or acquired
pursuant to such Commitments (or, after acceleration of the Loans pursuant to
Article VII, applicable to any Loan or Letter of Credit Exposure made or
acquired pursuant to all the Commitments), it shall be deemed simultaneously to
have purchased from such other Lender at face value, and shall promptly pay to
such other Lender the purchase price for, an interest in the Loans or Letter of
Credit Exposure of such other Lender, so that the aggregate unpaid principal
amount of the Loans or Letter of Credit Exposure and interests in Loans or
Letter of Credit Exposure held by each such Lender under such Commitment or
Commitments shall be in the same proportion to the aggregate unpaid principal
amount of all Loans or Letter of Credit Exposure then outstanding under such
Commitment or Commitments as the principal amount of its Loans or Letter of
Credit Exposure under such Commitment or Commitments prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal amount
of all such Loans or Letter of
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Credit Exposure outstanding under such Commitment or Commitments prior to such
exercise of banker's lien, setoff or counterclaim or other event; PROVIDED,
HOWEVER, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.17 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. Each of the Borrower and the other Credit
Parties expressly consents to the foregoing arrangements and agrees that any
Lender holding an interest in a Loan or Letter of Credit Exposure deemed to have
been so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower or such
Credit Party to such Lender by reason thereof as fully as if such Lender had
made a Loan directly to, or had Letter of Credit Exposure directly for the
benefit of, the Borrower or such Credit Party in the amount of such interest.
Solely for purposes of this Section 2.17, all references to Loans shall include
the loans under the Tranche C Facility Credit Agreement and all holders of such
loans shall be third party beneficiaries of this Section 2.17.
SECTION 2.18. PAYMENTS. (a) The Borrower and each other Loan
Party shall make each payment without set off or counterclaim (including
principal of or interest on any Borrowing or L/C Disbursement or any Fees or
other amounts) required to be made by it hereunder and under any other Loan
Document (excluding the Local Facility Loan Documents) not later than 12:00
noon, New York City time, on the date when due in Dollars to the Administrative
Agent at its offices at 270 Park Avenue, New York, New York, Attention of Agent
Bank Services, in immediately available funds, for credit to The Chase Manhattan
Bank, ABA Number 02100120, Account Number 323-2-92771. The Administrative Agent
shall distribute such payments to the Lenders and the Fronting Banks promptly
upon receipt in like funds as received.
(b) Whenever any payment (including principal of or interest
on any Borrowing or L/C Disbursement or any Fees or other amounts) hereunder or
under any other Loan Document (excluding the Local Facility Loan Documents)
shall become due, or otherwise would occur, on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day (except in the case
of payment of principal of a Eurodollar Borrowing if the effect of such
extension would be to extend such payment into the next succeeding month, in
which event such payment shall be due on the immediately preceding Business
Day), and such extension of time shall in such case be included in the
computation of interest or Fees, if applicable.
SECTION 2.19. TAXES. (a) Any and all payments by the Borrower
or any other Loan Party to the Administrative Agent, the Fronting Banks or the
Lenders hereunder or under any other Loan Document (excluding payments by the
applicable borrower under a Local Facility Credit Agreement) shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, EXCLUDING (i) in the case of each Lender, each Fronting Bank
and the Administrative Agent, taxes that would not be imposed but for a
connection between such Lender, such Fronting Bank
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or the Administrative Agent (as the case may be) and the jurisdiction imposing
such tax, other than a connection arising solely by virtue of the activities of
such Lender, such Fronting Bank or the Administrative Agent (as the case may be)
pursuant to or in respect of this Agreement or under any other Loan Document,
including entering into, lending money or extending credit pursuant to,
receiving payments under, or enforcing, this Agreement or any other Loan
Document, and (ii) in the case of each Lender, each Fronting Bank and the
Administrative Agent, any United States withholding taxes payable with respect
to any payments made hereunder or under the other Loan Documents under laws
(including any statute, treaty, ruling, determination or regulation) in effect
on the Initial Date (as hereinafter defined) applicable to such Lender, such
Fronting Bank or the Administrative Agent, as the case may be, but not excluding
any United States withholding taxes payable solely as a result of any change in
such laws occurring after the Initial Date (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). For purposes of this Section 2.19, the term "INITIAL
DATE" shall mean (i) in the case of the Administrative Agent, any Fronting Bank
or any Lender, the date on which such person became a party to this Agreement
and (ii) in the case of any assignment, including any assignment by a Lender or
a Fronting Bank to a new lending office, the date of such assignment. If any
Taxes shall be required by law to be deducted from or in respect of any sum
payable hereunder or under any other Loan Document (excluding sums payable by
the applicable borrower under a Local Facility Credit Agreement) to any Lender,
any Fronting Bank or the Administrative Agent, (i) the sum payable by the
Borrower or any other Loan Party, as the case may be, shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.19) such Lender, such
Fronting Bank or the Administrative Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower or such Loan Party, as the case may be, shall make such
deductions and (iii) the Borrower or such Loan Party, as the case may be, shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law. The Borrower and the other Loan
Parties shall not, however, be required to pay any amounts pursuant to clause
(i) of the preceding sentence to any Lender, any Fronting Bank or the
Administrative Agent (in the case of payments to be made by the Borrower) not
organized under the laws of the United States of America or a state thereof (or,
in the case of payments to be made by another Loan Party, not organized under
the laws of such Loan Party's jurisdiction) if such Lender, such Fronting Bank
or the Administrative Agent fails to comply with the requirements of paragraph
(f) or (g), as the case may be, and paragraph (h) of this Section 2.19.
(b) In addition, the Borrower and each other Loan Party agrees
to pay any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (excluding those arising from such actions by the applicable
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borrower under a Local Facility Credit Agreement) (hereinafter referred to as
"OTHER TAXES").
(c) The Borrower and each other Loan Party, as applicable,
will indemnify each Lender, each Fronting Bank and the Administrative Agent for
the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.19) paid by
such Lender, such Fronting Bank or the Administrative Agent, as the case may be,
and any liability (including penalties, interest and expenses including
reasonable attorney's fees and expenses) arising therefrom or with respect
thereto whether or not such Taxes or Other Taxes were correctly or legally
asserted. A certificate as to the amount of such payment or liability prepared
by a Lender, a Fronting Bank or the Administrative Agent, absent manifest error,
shall be final, conclusive and binding for all purposes; PROVIDED, that if the
Borrower or another Loan Party, as applicable, reasonably believes that such
Taxes were not correctly or legally asserted, such Lender, Fronting Bank or the
Administrative Agent, as the case may be shall use reasonable efforts to
cooperate with the Borrower or such other Loan Party, as applicable, to obtain a
refund of such Taxes or Other Taxes. Such indemnification shall be made within
10 days after the date any Lender, any Fronting Bank or the Administrative
Agent, as the case may be, makes written demand therefor. If a Lender, a
Fronting Bank or the Administrative Agent shall become aware that it is entitled
to receive a refund in respect of Taxes or Other Taxes, it shall promptly notify
the Borrower or such other Loan Party, as applicable, of the availability of
such refund and shall, within 30 days after receipt of a request by the Borrower
or such other Loan Party, pursue or timely claim such refund at the Borrower's
or such other Loan Party's expense. If any Lender, any Fronting Bank or the
Administrative Agent receives a refund in respect of any Taxes or Other Taxes
for which such Lender, such Fronting Bank or the Administrative Agent has
received payment from the Borrower or another Loan Party hereunder, it shall
promptly repay such refund (plus any interest received) to the Borrower or such
other Loan Party, as applicable (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.19 with
respect to the Taxes or Other Taxes giving rise to such refund); PROVIDED that
the Borrower or such other Loan Party, upon the request of such Lender, such
Fronting Bank or the Administrative Agent, agrees to return such refund (plus
any penalties, interest or other charges required to be paid) to such Lender,
such Fronting Bank or the Administrative Agent in the event such Lender, such
Fronting Bank or the Administrative Agent is required to repay such refund to
the relevant taxing authority.
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes withheld by the Borrower or another Loan Party, as the case may be,
in respect of any payment to any Lender, any Fronting Bank or the Administrative
Agent, the Borrower or such Loan Party, as the case may be, will furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.19
shall survive the payment in full of principal
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and interest hereunder, the expiration of the Letters of Credit and
the termination of the Commitments.
(f) In the case of any Borrowing by, or L/C Disbursement for
the benefit of, the Borrower or a Subsidiary Borrower organized under the laws
of the United States (a "DOMESTIC SUBSIDIARY BORROWER"), this paragraph (f)
shall apply. Each Lender, each Fronting Bank and the Administrative Agent that
is not organized under the laws of the United States of America or a state
thereof agrees that at least 10 days prior to the first Interest Payment Date
following the Initial Date in respect of such Fronting Bank or such Lender, it
will deliver to the Borrower and the Administrative Agent (if appropriate) two
duly completed copies of either (i) United States Internal Revenue Service Form
1001 or 4224 or successor applicable form, as the case may be, certifying, as
applicable, that such Fronting Bank, such Lender or the Administrative Agent, as
the case may be, is entitled to receive payments under this Agreement and the
other Loan Documents payable to it without deduction or withholding of any
United States federal income taxes and backup withholding taxes or is entitled
to receive such payments at a reduced rate pursuant to a treaty provision or
(ii) in the case of a Lender that is not a "bank" within the meaning of Section
881(c)(3) of the Code, (A) deliver to the Borrower and the Administrative Agent
(I) a statement under penalties of perjury that such Lender (w) is not a "bank"
under Section 881(c)(3)(A) of the Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been treated as a
bank for purposes of any tax, securities law or other filing or submission made
to any Governmental Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or other legal
requirements, (x) is not a 10-percent shareholder within the meaning of Section
881(c)(3)(B) of the Code, (y) is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(c) of the
Code and (z) is not a "conduit entity" within the meaning of U.S. Treasury
Regulations Section 1.881-3 and (II) an Internal Revenue Service Form W-8 or
successor applicable form; (B) deliver to the Borrower and the Administrative
Agent a further copy of said Form W-8, or any successor applicable form or other
manner of certification on or before the date that any such Form W-8 expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent form previously delivered by such Lender; and (C) obtain such
extensions of time for filing and completing such forms or certifications as may
be reasonably requested by the Borrower or the Administrative Agent; unless in
any such case an event (including any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders any such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender so advises the Borrower and the Administrative Agent. Such Lender
shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to
receive payments under this Agreement without deduction or withholding of any
United States Federal income taxes or is entitled to receive such payments at a
reduced rate pursuant to a treaty provision and (ii) in the case of a Form W-8
or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each person that shall become a participant pursuant to Section
9.04
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shall, upon the effectiveness of the related transfer, be required to provide
all the forms and statements required pursuant to this paragraph (f) to the
Lender from which the related participation shall have been purchased. Unless
the Borrower and the Administrative Agent have received forms, certificates and
other documents required by this Section 2.19(f) indicating that payments
hereunder or under any other Loan Document or the Letters of Credit to or for
any Fronting Bank or Lender not incorporated under the laws of the United States
or a state thereof are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the Borrower
(or the applicable Domestic Subsidiary Borrower) or the Administrative Agent
shall withhold such taxes from such payments at the applicable statutory rate.
(g) In the event any Loan Party other than the Borrower or a
Domestic Subsidiary Borrower is required to pay additional amounts pursuant to
this Section 2.19, this paragraph (g) shall apply. Each Lender, each Fronting
Bank and the Administrative Agent that is not incorporated within or under the
laws of the jurisdiction of such Loan Party and that is claiming such additional
amounts agrees that within a reasonable period of time following the request of
such Loan Party it will, to the extent it is legally entitled to a reduction in
the rate of or exemption from withholding taxes in the jurisdiction of such Loan
Party, deliver to such Loan Party and the Administrative Agent any form or
document required under the laws, regulations, official interpretations or
treaties enacted by, made or entered into with such jurisdiction properly
completed and duly executed by such Fronting Bank, such Lender or Administrative
Agent establishing that any payments hereunder are exempt from withholding tax
or subject to a reduced rate of withholding tax in such jurisdiction as the case
may be; PROVIDED that, in the sole determination of such Lender, such Fronting
Bank or the Administrative Agent, such form or document shall not be otherwise
disadvantageous to such Lender, such Fronting Bank or the Administrative Agent.
(h) Any Fronting Bank and any Lender claiming any additional
amounts payable pursuant to this Section 2.19 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested in writing by the Borrower or any affected Credit Party to
change the jurisdiction of its applicable lending office, if the making of such
a filing or change would avoid the need for or reduce the amount of any such
additional amounts which would be payable or may thereafter accrue and would
not, in the sole determination of such Fronting Bank or such Lender, be
otherwise disadvantageous to such Fronting Bank or such Lender.
(i) Nothing contained in this Section 2.19 shall require any
Lender or Fronting Bank or the Administrative Agent to make available any of its
tax returns (or any other information that it deems to be confidential or
proprietary).
SECTION 2.20. LETTERS OF CREDIT. (a) TRANCHE A LETTERS
OF CREDIT. (i) GENERAL. Subject to the terms and conditions and
relying upon the representations and warranties of UCAR and the
Borrower set forth herein and in the Effectiveness Agreement, each
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Fronting Bank having a Tranche A L/C Commitment on the Second Closing Date
issued the Tranche A Letters of Credit set forth opposite its name on Schedule
2.20, appropriately completed, in each case for the account of the applicable
Credit Party specified on Schedule 2.20. The Borrower may thereafter request the
issuance of Tranche A Letters of Credit from any Fronting Bank having a Tranche
A L/C Commitment, appropriately completed, for the account of the Borrower or
another specified Credit Party, at any time and from time to time while the
Tranche A Reimbursement Commitments remain in effect, but only to give effect to
any reallocation of the Tranche A Exposure permitted under Section 2.11(b) or
any reduction of the stated amount of any Tranche A Letter of Credit pursuant to
this Agreement or in connection with any permitted amendment, renewal or
extension of an existing Tranche A Letter of Credit, including in connection
with the conversion of Dollar borrowings under any Local Facility to borrowings
in another currency. This Section 2.20(a) shall not be construed to impose an
obligation upon any Fronting Bank to issue any Tranche A Letter of Credit that
is inconsistent with the terms and conditions of this Agreement or that would
result in such Fronting Bank having Tranche A Letters of Credit in an aggregate
amount at any time outstanding in excess of such Fronting Bank's Tranche A L/C
Commitment. Each Tranche A Letter of Credit shall be in substantially the form
of Exhibit I with such changes therefrom as shall in the reasonable judgment of
the Administrative Agent and the applicable Fronting Bank be necessary or
advisable.
(ii) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION;
CERTAIN CONDITIONS. In order to request the issuance of a Tranche A Letter of
Credit after the Effective Date (or to request that a Fronting Bank amend, renew
or extend an existing Tranche A Letter of Credit), the Borrower shall hand
deliver or telecopy to the applicable Fronting Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of such Tranche A Letter of Credit,
or identifying any Tranche A Letter of Credit to be amended, renewed or
extended, and specifying the date of issuance, amendment, renewal or extension,
the date on which such Tranche A Letter of Credit is to expire (which shall
comply with paragraph (iii) below), the amount of such Tranche A Letter of
Credit, the name and address of the account party (which shall be the Borrower
or another Credit Party and shall, in the case of any Letter of Credit issued
for the benefit of a Subsidiary, unless resulting in increased costs, be such
Subsidiary) and the beneficiary thereof and such other information as shall be
necessary to prepare such Tranche A Letter of Credit or grant such issuance,
amendment, renewal or extension. Following receipt of such notice and prior to
the issuance, amendment, renewal or extension of any Tranche A Letter of Credit,
the Administrative Agent shall notify the Borrower and the applicable Fronting
Bank of the amount of the Tranche A Exposure after giving effect to (A) the
issuance, amendment, renewal or extension of such Tranche A Letter of Credit,
(B) the issuance or expiration of any other Tranche A Letter of Credit that is
to be issued or will expire prior to the requested date of issuance, amendment,
renewal or extension of such Tranche A Letter of Credit and (C) the borrowing or
repayment of any Tranche A Reimbursement Borrowings that (based upon notices
delivered to the Administrative Agent by the Borrower) are to be borrowed or
repaid
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on or prior to the requested date of issuance of such Tranche A Letter of
Credit. Each Tranche A Letter of Credit shall be issued, amended, renewed or
extended only if, and upon issuance, amendment, renewal or extension of each
Tranche A Letter of Credit the Borrower shall be deemed to represent and warrant
that, after giving effect to such issuance, amendment, renewal or extension the
Tranche A Exposure shall not have been increased (except as contemplated by
Section 2.11(b)(iii)) and each applicable condition set forth in Section 2.11(b)
shall have been satisfied.
(iii) EXPIRATION DATE. Each Tranche A Letter of Credit shall
expire at the close of business on a date no later than the Business Day
immediately preceding the Tranche A Maturity Date. No Tranche A Letter of Credit
shall be issued (nor shall any Tranche A Letter of Credit be amended, renewed or
extended) if (except as contemplated by Section 2.11(b)(iii)) it would result in
the Tranche A Exposure exceeding the Total Tranche A Reimbursement Commitment in
effect at such time.
(iv) PARTICIPATIONS. By the issuance of a Tranche A Letter of
Credit and without any further action on the part of the Fronting Bank issuing
such Letter of Credit or the Lenders, such Fronting Bank will grant to each
Tranche A Lender, and each such Lender will acquire from such Fronting Bank, a
participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit, effective upon the issuance of such Letter of Credit. In consideration
and in furtherance of the foregoing, each Tranche A Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
such Fronting Bank, such Lender's Applicable Percentage of each Tranche A L/C
Disbursement made by such Fronting Bank under such Letter of Credit and not
reimbursed by the Borrower or the relevant Credit Party (or, if applicable,
another party pursuant to its obligations under any other Loan Document) on or
before the next Business Day as provided in paragraph (v) below. Each Tranche A
Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Tranche A Letters of Credit is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or an Event of Default,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
(v) REIMBURSEMENT. If a Fronting Bank shall make any Tranche A
L/C Disbursement in respect of a Tranche A Letter of Credit, the Borrower or the
Credit Party that is account party under such Letter of Credit shall pay
(including by the borrowing of Tranche A Reimbursement Loans) to the
Administrative Agent, on or before the Business Day immediately following the
date of such Tranche A L/C Disbursement, an amount equal to such Tranche A L/C
Disbursement. If the Borrower or such Credit Party shall fail to pay any amount
required to be paid under this paragraph on or before such Business Day (or to
cause payment thereof when due pursuant to a Tranche A Reimbursement Borrowing),
then (A) such unpaid amount shall bear interest, for each day from and including
the day of such Tranche A L/C Disbursement to but excluding the date of payment,
at a rate per annum equal to the interest rate applicable to overdue ABR Loans
that are Tranche A Reimbursement Loans pursuant to
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Section 2.07 (PROVIDED that the 2.00% margin applicable to overdue Loans shall
not be applicable until the first Business Day after the Borrower receives
notice from the Administrative Agent that such L/C Disbursement has been or will
be made), (B) the Administrative Agent shall notify such Fronting Bank and the
Tranche A Lenders thereof, (C) each Tranche A Lender shall comply with its
obligation under paragraph (iv) above by wire transfer of immediately available
funds, in the same manner as provided in Section 2.02(c) with respect to Loans
made by such Lender (and Section 2.02(d) shall apply, MUTATIS MUTANDIS, to the
payment obligations of the Tranche A Lenders) and (D) the Administrative Agent
shall promptly pay to such Fronting Bank amounts so received by it from the
Tranche A Lenders. The Administrative Agent shall promptly pay to each
applicable Fronting Bank on a pro rata basis with respect to outstanding Tranche
A L/C Disbursements any amounts received by it from the Borrower or any other
Credit Party pursuant to this paragraph prior to the time that any Tranche A
Lender makes any payment pursuant to paragraph (iv) above; any such amounts
received by the Administrative Agent thereafter shall be promptly remitted by
the Administrative Agent to the Tranche A Lenders that shall have made such
payments and to such Fronting Bank, as their interests may appear.
(b) REVOLVING LETTERS OF CREDIT. (i) GENERAL. The Borrower may
request the issuance of a Revolving Letter of Credit, in a form reasonably
acceptable to the Administrative Agent and the relevant Fronting Bank,
appropriately completed, for the account of the Borrower or, at the Borrower's
option, another specified Credit Party, at any time and from time to time while
the Revolving Credit Commitments remain in effect. This Section 2.20(b) shall
not be construed to impose an obligation upon any Fronting Bank to issue any
Revolving Letter of Credit that is inconsistent with the terms and conditions of
this Agreement or that would result in (A) its having Revolving Letters of
Credit in an aggregate stated amount at any time outstanding in excess of such
Fronting Bank's Revolving L/C Commitment set forth opposite its name on Schedule
2.20 or (B) there existing Revolving Letters of Credit in an aggregate stated
amount at any time in excess of $200,000,000.
(ii) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION;
CERTAIN CONDITIONS. In order to request the issuance of a Revolving Letter of
Credit (or to request that a Fronting Bank amend, renew or extend an existing
Revolving Letter of Credit), the Borrower shall hand deliver or telecopy to the
applicable Fronting Bank and the Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of such Revolving Letter of Credit, or identifying any
Revolving Letter of Credit to be amended, renewed or extended, and specifying
the date of issuance, amendment, renewal or extension, the date on which such
Revolving Letter of Credit is to expire (which shall comply with paragraph (iii)
below), the amount of such Revolving Letter of Credit to be issued, amended,
renewed or extended, the name and address of the account party (which shall be
the Borrower or another Credit Party, as selected by the Borrower) and the
beneficiary thereof and such other information as shall be necessary to prepare
such Revolving Letter of Credit or grant such issuance, amendment, renewal or
extension. Following receipt of such notice and prior to the issuance,
amendment, renewal or
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extension of any Revolving Letter of Credit, the Administrative Agent shall
notify the Borrower and the applicable Fronting Bank of the amount of the
Aggregate Revolving Credit Exposure and Revolving L/C Exposure after giving
effect to (A) the issuance, amendment, renewal or extension of such Revolving
Letter of Credit, (B) the issuance or expiration of any other Revolving Letter
of Credit that is to be issued or will expire prior to the requested date of
issuance of such Revolving Letter of Credit and (C) the borrowing or repayment
of any Revolving Loans and Swingline Loans that (based upon notices delivered to
the Administrative Agent by the Borrower) are to be borrowed or repaid prior to
the requested date of issuance of such Revolving Letters of Credit. Each
Revolving Letter of Credit shall be issued, amended, renewed or extended subject
to the terms and conditions and relying on the representations and warranties of
UCAR and the Borrower set forth herein, and in any case only if, and upon
issuance, amendment, renewal or extension of each Revolving Letter of Credit the
Borrower shall be deemed to represent and warrant that, after giving effect to
such issuance, amendment, renewal or extension the Aggregate Revolving Credit
Exposure shall not exceed the Total Revolving Credit Commitment in effect at
such time.
(iii) EXPIRATION DATE. Each Revolving Letter of Credit shall
expire at the close of business on the earlier of the date one year after the
date of the issuance of such Revolving Letter of Credit and the date that is
three Business Days prior to the Revolving Credit Maturity Date, unless such
Revolving Letter of Credit expires by its terms on an earlier date; PROVIDED
that a Revolving Letter of Credit shall not be issued (nor shall a Revolving
Letter of Credit be amended, renewed or extended) that would result in the
Aggregate Revolving Credit Exposure exceeding the Total Revolving Credit
Commitment in effect at such time. Compliance with the foregoing proviso shall
be determined based upon the assumption that (A) each Revolving Letter of Credit
remains outstanding and undrawn in accordance with its terms until its
expiration date (taking into account any rights of renewal or extension that do
not require written notice by or consent of any Fronting Bank, in its sole
discretion, in order to effect such renewal or extension) and (B) the Revolving
Credit Commitments will not be reduced pursuant to Section 2.09.
(iv) PARTICIPATIONS. By the issuance of a Revolving Letter of
Credit and without any further action on the part of the Fronting Bank issuing
such Letter of Credit or the Revolving Credit Lenders, such Fronting Bank will
grant to each Revolving Credit Lender, and each such Lender will acquire from
such Fronting Bank, a participation in such Revolving Letter of Credit equal to
such Revolving Credit Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Revolving Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Credit Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of such Fronting
Bank, such Revolving Credit Lender's Applicable Percentage of each Revolving L/C
Disbursement made by such Fronting Bank under such Letter of Credit and not
reimbursed by the Borrower (or, if applicable, another party pursuant to its
obligations under any other Loan Document) on or before the next Business Day as
provided
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in paragraph (v) below. Each Revolving Credit Lender acknowledges and agrees
that its obligation to acquire participations pursuant to this paragraph in
respect of Revolving Letters of Credit is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.
(v) REIMBURSEMENT. If a Fronting Bank shall make any Revolving
L/C Disbursement in respect of a Revolving Letter of Credit, the Borrower or the
Credit Party that is account party under such Letter of Credit shall pay to the
Administrative Agent, on or before the Business Day immediately following the
date of such Revolving L/C Disbursement, an amount equal to such Revolving L/C
Disbursement. If the Borrower or such Credit Party shall fail to pay any amount
required to be paid under this paragraph on or before such Business Day (or to
cause payment thereof when due pursuant to a Revolving Credit Borrowing), then
(A) such unpaid amount shall bear interest, for each day from and including the
day of such Revolving L/C Disbursement to but excluding the date of payment, at
a rate per annum equal to the interest rate applicable to overdue ABR Loans that
are Revolving Credit Loans pursuant to Section 2.07 (PROVIDED that the 2.00%
margin applicable to overdue Loans shall not be applicable until the first
Business Day after the Borrower receives notice from the Administrative Agent
that such L/C Disbursement has been or will be made), (B) the Administrative
Agent shall notify such Fronting Bank and the Revolving Credit Lenders thereof,
(C) each Revolving Credit Lender shall comply with its obligation under
paragraph (iv) above by wire transfer of immediately available funds, in the
same manner as provided in Section 2.02(c) with respect to Loans made by such
Revolving Credit Lender (and Section 2.02(d) shall apply, MUTATIS MUTANDIS, to
the payment obligations of the Revolving Credit Lenders) and (D) the
Administrative Agent shall promptly pay to such Fronting Bank amounts so
received by it from the Revolving Credit Lenders. The Administrative Agent shall
promptly pay to each applicable Fronting Bank on a pro rata basis with respect
to outstanding Revolving L/C Disbursements any amounts received by it from the
Borrower or any other Credit Party pursuant to this paragraph prior to the time
that any Revolving Credit Lender makes any payment pursuant to paragraph (iv)
above; any such amounts received by the Administrative Agent thereafter shall be
promptly remitted by the Administrative Agent to the Revolving Credit Lenders
that shall have made such payments and to such Fronting Bank, as their interests
may appear.
(c) OBLIGATIONS ABSOLUTE. The Borrower's and the other Credit
Parties' obligations to reimburse L/C Disbursements as provided in paragraphs
(a) and (b) above shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under any and
all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
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(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower, any other Credit Party, any other party
guaranteeing, or otherwise obligated with, the Borrower, any other
Credit Party, any Subsidiary or other Affiliate thereof or any other
person may at any time have against the beneficiary under any Letter of
Credit, any Fronting Bank, the Administrative Agent or any Lender
(other than the defense of payment in accordance with the terms of this
Agreement or a defense based on the gross negligence or wilful
misconduct of the applicable Fronting Bank) or any other person,
whether in connection with this Agreement, any other Loan Document or
any other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; PROVIDED that payment by the applicable Fronting Bank shall
not have constituted gross negligence or wilful misconduct of such
Fronting Bank;
(v) payment by any Fronting Bank under a Letter of Credit
against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; PROVIDED that payment by the
applicable Fronting Bank shall not have constituted gross negligence or
wilful misconduct of such Fronting Bank;
(vi) nonpayment by any other Fronting Bank for any reason; and
(vii) any other act or omission to act or delay of any kind of
any Fronting Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section 2.20(c), constitute a legal or equitable discharge of the
Borrower's or any other Credit Party's obligations hereunder; PROVIDED
that such act or omission shall not have constituted gross negligence
or wilful misconduct of such Fronting Bank.
(d) DISBURSEMENT PROCEDURES. Each Fronting Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. Such Fronting Bank
shall as promptly as possible give telephonic notification, confirmed by
telecopy, to the Administrative Agent and the Borrower of such demand for
payment and whether such Fronting Bank has made or will make an L/C Disbursement
thereunder; PROVIDED that any failure to give or delay in giving such notice
shall not relieve the Borrower or any other Credit Party of its obligation to
reimburse such Fronting Bank and the Lenders with respect to any such L/C
Disbursement. The Administrative Agent shall promptly give each Tranche A Lender
or Revolving Credit Lender, as applicable, notice thereof.
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(e) INTERIM INTEREST. If any Fronting Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower or the
Credit Party that is account party under such Letter of Credit shall reimburse
such L/C Disbursement in full on such date, the unpaid amount thereof shall bear
interest for the account of such Fronting Bank, for each day from and including
the date of such L/C Disbursement, to but excluding the earlier of the date of
payment or the date on which interest shall commence to accrue thereon as
provided in subparagraph (a)(v) or (b)(v) above, at the rate per annum that
would apply to such amount if such amount were an ABR Loan.
(f) LIABILITY OF THE FRONTING BANKS. Without limiting the
generality of paragraph (c) above, it is expressly understood and agreed that
the absolute and unconditional obligation of the Borrower and the other Credit
Parties hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or wilful misconduct of any Fronting Bank, except as otherwise
expressly provided in said paragraph (c). However, nothing in this Agreement
shall be construed to excuse any Fronting Bank from liability to the Borrower or
any other Credit Party to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrower and the other Credit Parties to the extent permitted by applicable law)
suffered by the Borrower or any other Credit Party that are caused by such
Fronting Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof. It is understood that each Fronting Bank may accept documents
that appear on their face to be in order, without responsibility for further
investigation in making any payment under any Letter of Credit and, except as
otherwise expressly provided in said paragraph (c), (i) such Fronting Bank's
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount of
any draft presented under such Letter of Credit, whether or not the amount due
to the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute wilful misconduct or gross negligence of such Fronting
Bank.
(g) RESIGNATION OR REMOVAL OF A FRONTING BANK. Any Fronting
Bank may resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to such Fronting Bank, the Administrative Agent
and the Lenders, subject in each case to the appointment by the Borrower of a
replacement Fronting Bank reasonably satisfactory to the Administrative Agent,
PROVIDED that (i) any such replacement Fronting Bank must have credit ratings of
at least A from S&P and A2 from Moody's, (ii) The Chase Manhattan Bank shall not
resign as Fronting Bank hereunder for any reason other than compliance with
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applicable legal and regulatory requirements and (iii) no Fronting Bank may
resign as to any Letter of Credit previously issued by it. Subject to the next
succeeding sentences of this paragraph (g), upon the acceptance of any
appointment as the Fronting Bank hereunder by a successor Fronting Bank, such
successor shall succeed to and become vested with all the interests, rights and
obligations of the retiring Fronting Bank and the retiring Fronting Bank shall
be discharged from its obligations to issue additional Letters of Credit
hereunder to the extent of the commitment of the successor Fronting Bank to
provide Letters of Credit. At the time such removal or resignation shall become
effective, the Borrower or each Credit Party that is account party under any
Letter of Credit of such Fronting Bank shall pay all accrued and unpaid fees of
such Fronting Bank pursuant to Section 2.05(b)(ii). The acceptance of any
appointment as Fronting Bank hereunder by a successor Fronting Bank shall be
evidenced by an agreement entered into by such successor, in a form satisfactory
to the Borrower and the Administrative Agent, and, from and after the effective
date of such agreement, (i) such successor Fronting Bank shall have all the
rights and obligations of its predecessor Fronting Bank under this Agreement and
the other Loan Documents and (ii) references herein and in the other Loan
Documents to the term "FRONTING BANK" shall be deemed to refer to such successor
or to such predecessor Fronting Bank, or to such successor and all predecessor
and current Fronting Banks, as the context shall require. After the resignation
or removal of a Fronting Bank hereunder, such retiring Fronting Bank shall
remain a party hereto and shall continue to have all the rights and obligations
of a Fronting Bank under this Agreement and the other Loan Documents with
respect to Letters of Credit issued by it prior to such resignation or removal,
but shall not be required to issue additional Letters of Credit.
(h) CASH COLLATERALIZATION. If any Event of Default shall
occur and be continuing, the Borrower and the other Credit Parties shall, on the
Business Day the Borrower receives notice from the Administrative Agent or the
Required Lenders (or, if the maturity of the Loans has been accelerated, Tranche
A Lenders or Revolving Credit Lenders, as applicable, holding participations in
outstanding Letters of Credit representing a majority of the aggregate undrawn
amount of all outstanding Tranche A Letters of Credit or Revolving Letters of
Credit, as applicable) thereof and of the amount to be deposited, deposit in an
account with the Collateral Agent, for the benefit of the Tranche A Lenders or
Revolving Credit Lenders, as applicable, an aggregate amount in cash equal to
the Tranche A L/C Exposure or Revolving L/C Exposure, as applicable, as of such
date; PROVIDED, that no Credit Party that is a foreign Subsidiary shall deposit
any amount in excess of the portion of the Tranche A L/C Exposure or Revolving
L/C Exposure in respect of which foreign Credit Parties are the account parties
and such deposited amount shall serve to secure only the obligations of foreign
Credit Parties in respect of such portion. If requested by the Borrower, the
Administrative Agent will create separate collateral accounts for each Credit
Party or take any other action, at the sole cost of the Borrower, that is
reasonably requested to avoid taxes. Such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
Obligations. The Collateral Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account.
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Other than any interest earned on the investment of such deposits in Permitted
Investments, which investments shall be made at the option and sole discretion
of the Collateral Agent (PROVIDED that the Collateral Agent shall use reasonable
efforts to make such investments), such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall (a) automatically be applied by the
Administrative Agent to reimburse the Fronting Banks on a pro rata basis for
Tranche A L/C Disbursements or Revolving L/C Disbursements, as applicable, which
have not been reimbursed, (b) be held for the satisfaction of the reimbursement
obligations of the Borrower and the other Credit Parties for the Tranche A L/C
Exposure or Revolving L/C Exposure, as applicable, and (c) if the maturity of
the Loans has been accelerated (but subject to the consent of Tranche A Lenders
or Revolving Credit Lenders, as applicable, holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Tranche A Letters of Credit or Revolving
Letters of Credit, as applicable), be applied to satisfy the Obligations. If the
Borrower and the other Credit Parties are required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrower and the other Credit Parties within three Business Days after all
Events of Default have been cured or waived.
(i) ADDITIONAL FRONTING BANKS. From time to time, the Borrower
may by notice to the Administrative Agent designate additional Fronting Banks
reasonably satisfactory to the Administrative Agent; PROVIDED that such
additional Fronting Banks must have credit ratings of at least A from S&P and A2
from Moody's. Such additional Fronting Banks shall execute a counterpart of this
Agreement upon approval of the Administrative Agent (which shall not be
unreasonably withheld) and shall thereafter be Fronting Banks hereunder for all
purposes and shall have the Tranche A L/C Commitment or Revolving L/C Commitment
noted under their signature and, if applicable, the Tranche A L/C Commitment or
Revolving L/C Commitment of any other Fronting Bank shall be reduced by the
amount or amounts specified to the Administrative Agent and each affected
Fronting Bank and delivered concurrently with any notice of designation of an
additional Fronting Bank.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of UCAR and the Borrower represents and warrants to each
of the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of UCAR, the Borrower
and each of the Subsidiaries (a) is a corporation duly organized, validly
existing and in good standing (or, if applicable in a foreign jurisdiction,
enjoys the equivalent status under the laws of any jurisdiction of organization
outside the United States) under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
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conducted, (c) is qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under each of the Loan Documents and each other agreement or instrument
contemplated thereby to which it is or will be a party and, in the case of the
Credit Parties, to borrow and otherwise obtain credit hereunder.
SECTION 3.02. AUTHORIZATION. The execution, delivery and
performance by UCAR, the Borrower and each of the Subsidiaries of each of the
Loan Documents to which it is or will be a party and, in the case of the Credit
Parties, the borrowings and other extensions of credit hereunder, and the other
transactions contemplated hereby and thereby (collectively, the "TRANSACTIONS")
(a) have been duly authorized by all corporate and stockholder action required
to be obtained by UCAR, the Borrower and the Subsidiaries and (b) will not (i)
violate (A) any provision of any law, statute, rule or regulation or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of UCAR, the Borrower or any Subsidiary, (B) any applicable order of any
court or any rule, regulation or order of any Governmental Authority or (C) any
provision of any indenture, certificate of designation for preferred stock,
agreement or other instrument to which UCAR, the Borrower or any Subsidiary is a
party or by which any of them or any of their property is or may be bound, (ii)
be in conflict with, result in a breach of or constitute (alone or with notice
or lapse of time or both) a default under any such indenture, certificate of
designation for preferred stock, agreement or other instrument, where any such
conflict, violation, breach or default referred to in clause (i) or (ii) of this
Section 3.02, individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect, or (iii) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or hereafter
acquired by UCAR, the Borrower or any Subsidiary, other than the Liens created
by the Loan Documents.
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly
executed and delivered by UCAR, the Borrower and each other Credit Party which
is party hereto and constitutes, and each other Loan Document when executed and
delivered by UCAR, the Borrower and each other Loan Party which is party thereto
will constitute, a legal, valid and binding obligation of UCAR, the Borrower and
such Loan Party enforceable against UCAR, the Borrower and such Loan Party in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally and except as enforceability may be
limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.04. GOVERNMENTAL APPROVALS. No action, consent or
approval of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) filings and recording necessary to satisfy the Collateral Requirement, (b)
such as have been made or obtained and are in full force and effect and (c) such
actions, consents, registrations, filings and approvals the
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failure to obtain or make which could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.05. FINANCIAL STATEMENTS. UCAR has heretofore
furnished to the Lenders its consolidated balance sheets and consolidated
statements of operations, cash flows and stockholders' equity as of and for the
fiscal year ended December 31, 1997, audited by and accompanied by the opinion
of KPMG Peat Marwick LLP, independent public accountants. Such financial
statements present fairly the financial condition and results of operations of
UCAR and its consolidated subsidiaries as of such dates and for such periods.
Except as disclosed in the Information Memorandum, none of UCAR, the Borrower
and the Subsidiaries has or shall have as of the Effective Date any material
Guarantee, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including any interest rate or
foreign currency hedging transaction, which is not reflected in the foregoing
statements or the notes thereto. Such financial statements were prepared in
accordance with GAAP applied on a consistent basis.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. There has been no
material adverse change in the assets, liabilities (including contingent
liabilities), business, properties, financial condition or results of operations
of UCAR and its subsidiaries, taken as a whole, since December 31, 1997 (other
than those matters specifically disclosed in the Information Memorandum and then
only to the extent reflected in the financial projections contained therein; it
being understood that general references in the Information Memorandum to the
possibility of the development of adverse or worsening circumstances shall not
constitute specific disclosure for purposes of this exception).
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES.
(a) Each of UCAR, the Borrower and the Subsidiaries has good and marketable
title to, or valid leasehold interests in, or easements or other limited
property interests in, all its material properties and assets, except for minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties and assets for their
intended purposes. All such material properties and assets are free and clear of
Liens, other than Liens expressly permitted by Section 6.02.
(b) Each of UCAR, the Borrower and the Subsidiaries has
complied with all obligations under all material leases to which it is a party,
except where the failure to comply would not have a Material Adverse Effect, and
all such leases are in full force and effect, except leases in respect of which
the failure to be in full force and effect could not reasonably be expected to
have a Material Adverse Effect. Each of UCAR, the Borrower and the Subsidiaries
enjoys peaceful and undisturbed possession under all such material leases, other
than leases which, individually or in the aggregate, are not material to the
Borrower and the Subsidiaries, taken as a whole, and in respect of which the
failure to enjoy peaceful and undisturbed possession could not reasonably be
expected to, individually or in the aggregate, result in a Material Adverse
Effect.
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(c) Each of UCAR, the Borrower and the Subsidiaries owns or
has licenses to use, or could obtain ownership of or licenses to use, on terms
not materially adverse to it, all patents, trademarks, service marks, trade
names, copyrights and rights with respect thereto necessary for the present
conduct of its business, without any known conflict with the rights of others,
and free from any burdensome restrictions, except where such conflicts and
restrictions could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
SECTION 3.08. SUBSIDIARIES. (a) Schedule 3.08 sets
forth as of the Effective Date the name and jurisdiction of
incorporation of each Subsidiary and, as to each such Subsidiary,
the percentage of each class of Capital Stock owned by the Borrower
or by any Subsidiary.
(b) As of the Effective Date, there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than those granted to employees, consultants or directors and
directors' qualifying shares) of any nature relating to any Capital Stock of
UCAR, the Borrower or any Subsidiary, except under the Loan Documents or as set
forth on Schedule 3.08.
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) Except as
set forth in Schedule 3.09, there are not any material actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending or, to the knowledge of the Borrower, threatened against or affecting
UCAR, the Borrower or any Subsidiary or any business, property or rights of any
such person (i) which involve any Loan Document or, as of the Effective Date,
the Transactions or (ii) as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined, could, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(b) None of UCAR, the Borrower, the Subsidiaries and their
respective material properties or assets is in violation of (nor will the
continued operation of their material properties and assets as currently
conducted violate) any law, rule or regulation (including any Environmental
Law), or is in default with respect to any judgment, writ, injunction or decree
of any Governmental Authority, where such violation or default could reasonably
be expected to result in a Material Adverse Effect. It is understood that the
violations that occurred prior to March 13, 1998, and that gave rise to the
Litigation Liabilities shall not be deemed a breach of this Section 3.09(b).
SECTION 3.10. AGREEMENTS. (a) None of UCAR, the
Borrower and the Subsidiaries is a party to any agreement or
instrument or subject to any corporate restriction that has resulted
or could reasonably be expected to result in a Material Adverse
Effect.
(b) None of UCAR, the Borrower and the Subsidiaries is in
default in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which
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it or any of its properties or assets are or may be bound, in either case where
such default could reasonably be expected to result in a Material Adverse
Effect. Immediately after giving effect to the Transactions, no Default or Event
of Default shall have occurred and be continuing.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) None of
UCAR, the Borrower and the Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan or Letter of Credit
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to purchase or carry Margin Stock or to extend
credit to others for the purpose of purchasing or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose, or (ii) for any
purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Board, including Regulation U or X.
SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT. None of UCAR, the Borrower and the Subsidiaries is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. USE OF PROCEEDS. The Credit Parties have used,
and will use, the proceeds of the Loans and have requested, and will request,
the issuance of Letters of Credit only for the purposes specified in the
preamble to this Agreement.
SECTION 3.14. TAX RETURNS. Each of UCAR, the Borrower and the
Subsidiaries has timely filed or caused to be timely filed all Federal, and all
material state and local, tax returns required to have been filed by it and has
paid or caused to be paid all taxes shown thereon to be due and payable by it
and all assessments in excess of $2,000,000 in the aggregate received by it,
except taxes or assessments that are being contested in good faith by
appropriate proceedings in accordance with Section 5.03 and for which such
person has set aside on its books adequate reserves and taxes, assessments,
charges, levies or claims in respect of property taxes for property that UCAR,
the Borrower or a Subsidiary has determined to abandon where the sole recourse
for such tax, assessment, charge, levy or claim is to such property. Each of
UCAR, the Borrower and the Subsidiaries has paid in full or made adequate
provision (in accordance with GAAP) for the payment of all taxes due with
respect to all periods ending on or before the Effective Date, which taxes, if
not paid or adequately provided for, could reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 3.14, as of the
Effective Date, with respect to each of UCAR, the Borrower and the Subsidiaries,
(a) no material claims are being asserted in writing with respect to any taxes,
(b) no presently effective waivers or extensions of statutes of limitation with
respect to taxes have been given or requested, (c) no tax returns are being
examined by, and no written notification of intention to examine has been
received from, the Internal Revenue Service or,
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with respect to any material potential tax liability, any other taxing authority
and (d) no currently pending issues have been raised in writing by the Internal
Revenue Service or, with respect to any material potential tax liability, any
other taxing authority. For purposes hereof, "TAXES" shall mean any present or
future tax, levy, impost, duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto) that is imposed by any
Governmental Authority.
SECTION 3.15. NO MATERIAL MISSTATEMENTS. (a) The written
information, reports, financial statements, exhibits and schedules furnished by
or on behalf of UCAR, the Borrower or any of the Subsidiaries to the
Administrative Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto (including the
Confidential Information Memorandum (the "INFORMATION MEMORANDUM") dated October
1998 relating to UCAR and its subsidiaries), when taken as a whole, did not
contain, and as they may be amended, supplemented or modified from time to time,
will not contain, as of the Effective Date any material misstatement of fact and
did not omit, and as they may be amended, supplemented or modified from time to
time, will not omit, to state as of the Effective Date any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not materially misleading in their
presentation of the refinancing (as described in the Information Memorandum) or
of UCAR, the Borrower, and the Subsidiaries, taken as a whole.
(b) All financial projections concerning UCAR, the Borrower
and the Subsidiaries that are or have been made available to the Administrative
Agent or any Lender by UCAR, the Borrower or any Subsidiary, including those
contained in the Information Memorandum, unless otherwise disclosed, have been
or will be prepared in good faith based upon assumptions believed by UCAR and
the Borrower to be reasonable.
SECTION 3.16. EMPLOYEE BENEFIT PLANS. Each of UCAR, the
Borrower and the ERISA Affiliates is in compliance with the applicable
provisions of ERISA and the provisions of the Code relating to ERISA and the
regulations and published interpretations thereunder and any similar applicable
non-U.S. law except for such noncompliance which could not reasonably be
expected to result in a Material Adverse Effect. No Reportable Event has
occurred as to which UCAR, the Borrower or any ERISA Affiliate was required to
file a report with the PBGC, other than reports for which the 30 day notice
requirement is waived, reports that have been filed and reports the failure of
which to file could not reasonably be expected to result in a Material Adverse
Effect. As of the Effective Date, the present value of all benefit liabilities
under each Plan of UCAR, the Borrower and the ERISA Affiliates (on a termination
basis and based on the actual assumptions used by such Plan under Section 412 of
the Code) did not, as of the last annual valuation date applicable thereto for
which a valuation is available, exceed by more than $7,500,000 the value of the
assets of such Plan, and the present value of all benefit liabilities of all
underfunded Plans (based on the actual assumptions used by such Plan under
Section 412 of the Code) did not, as of the last annual valuation dates
applicable thereto for which valuations are
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available, exceed by more than $15,000,000 the value of the assets of all such
underfunded Plans. None of UCAR, the Borrower and the ERISA Affiliates has
incurred or could reasonably be expected to incur any Withdrawal Liability that
could reasonably be expected to result in a Material Adverse Effect. None of
UCAR, the Borrower and the ERISA Affiliates has received any written
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated, where such
reorganization or termination has resulted or could reasonably be expected to
result, through increases in the contributions required to be made to such Plan
or otherwise, in a Material Adverse Effect.
SECTION 3.17. ENVIRONMENTAL MATTERS. Except as set
forth in Schedule 3.17:
(a) There has not been a Release or threatened Release of
Hazardous Materials at, on, under or around the properties currently owned or
currently or formerly operated by UCAR, the Borrower and the Subsidiaries (the
"PROPERTIES") in amounts or concentrations which (i) constitute or constituted a
violation of Environmental Laws, except as could not reasonably be expected to
have a Material Adverse Effect, (ii) would reasonably be expected to give rise
to an Environmental Claim which, in any such case or in the aggregate, is
reasonably likely to result in a Material Adverse Effect or (iii) could
reasonably be expected to impair materially the fair saleable value of any
material Property.
(b) The Properties and all operations of UCAR, the Borrower
and the Subsidiaries are in compliance, and in all prior periods have been in
compliance, with all Environmental Laws, and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate, are
not reasonably likely to result in a Material Adverse Effect.
(c) None of UCAR, the Borrower and the Subsidiaries has
received any written notice of an Environmental Claim in connection with the
Properties or the operations of the Borrower or the Subsidiaries or with regard
to any person whose liabilities for environmental matters UCAR, the Borrower or
the Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in either such case or in the aggregate,
is reasonably likely to result in a Material Adverse Effect.
(d) Hazardous Materials have not been transported from the
Properties, nor have Hazardous Materials been generated, treated, stored or
disposed of at, on, under or around any of the Properties in a manner that could
reasonably be expected to give rise to liability of UCAR, the Borrower or any
Subsidiary under any Environmental Law, nor have any of UCAR, the Borrower and
the Subsidiaries retained or assumed any liability, contractually, by operation
of law or otherwise, with respect to the generation, treatment, storage or
disposal of Hazardous Materials, which, in each case, individually or in the
aggregate, is reasonably likely to result in a Material Adverse Effect.
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(e) No Lien in favor of any Governmental Authority for (i) any
liability under any Environmental Law or (ii) damages arising from or costs
incurred by such Governmental Authority in response to a Release or threatened
Release of Hazardous Materials into the environment has been recorded with
respect to the Properties except for Liens permitted by Section 6.02 or by the
Tranche C Facility Credit Agreement.
(f) During the period from the date of the environmental
assessment report prepared by ENVIRON Corporation in connection with the
Recapitalization to the Effective Date, no event has occurred or been
discovered, no liability has been incurred and no Environmental Claim has been
asserted that, had it been in existence at the time such report was issued,
would have materially adversely altered the conclusions contained therein with
respect to the properties, activities and operations covered thereby.
SECTION 3.18. CAPITALIZATION OF UCAR AND THE BORROWER. The
authorized Capital Stock, the par value thereof and the amount of such
authorized Capital Stock issued and outstanding for each of UCAR and the
Borrower as of October 31, 1998 is set forth on Schedule 3.18 (except for
changes in the outstanding common stock of UCAR due to exercises under employee
stock option or employee stock purchase plans in the ordinary course since
August 31, 1998). All outstanding shares of Capital Stock of the Borrower are
fully paid and nonassessable, are owned beneficially and of record by UCAR and
are free and clear of all Liens and encumbrances whatsoever other than the Liens
created by the Loan Documents.
SECTION 3.19. SECURITY DOCUMENTS. (a) Each Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties secured thereby, a legal, valid and enforceable security
interest in the Collateral described therein and, when certificates or
promissory notes representing the Collateral (as defined in the applicable
Pledge Agreement) are delivered to the Collateral Agent and the other actions
specified in such Pledge Agreement have been taken, each such Pledge Agreement
will constitute a duly perfected first priority Lien on, and security interest
in, all right, title and interest of each Pledgor thereunder in such Collateral,
in each case prior and superior in right to any other person, subject to the
agreements listed in Schedule 3.08.
(b) Each Security Agreement is effective to create in favor of
the Collateral Agent, for the ratable benefit of the Secured Parties secured
thereby, a legal, valid and enforceable security interest in the Collateral
described therein and, when financing statements in appropriate form are filed
in the offices specified on the schedules to each such Security Agreement and
the other actions specified in such Security Agreement have been taken, each
such Security Agreement will constitute a duly perfected Lien on, and security
interest in, all right, title and interest of the Pledgors thereunder in such
Collateral and, to the extent contemplated therein and subject to ss. 9-306 of
the Uniform Commercial Code, the proceeds thereof, in each case prior and
superior in right to any other person, other than with respect to Liens
expressly permitted by Section 6.02 and by the Tranche C Facility Credit
Agreement.
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(c) Each Mortgage is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties secured
thereby, a legal, valid and enforceable Lien on all of the Loan Parties' right,
title and interest in and to the Mortgaged Properties thereunder and, to the
extent contemplated therein and subject to ss. 9-306 of the Uniform Commercial
Code, the proceeds thereof, and when each such Mortgage is filed in the offices
specified on the schedules thereto, when financing statements in appropriate
form are filed in the offices specified on the schedules thereto and when the
other actions required by applicable law and specified on the schedules thereto
have been taken, each Mortgage will constitute an enforceable mortgage Lien on,
and duly perfected security interest in, all right, title and interest of the
Loan Parties in the Mortgaged Property subject thereto and, to the extent
contemplated therein and subject to ss. 9-306 of the Uniform Commercial Code,
the proceeds thereof, in each case prior and superior in right to any other
person, other than with respect to the rights of persons pursuant to Liens
expressly permitted by Section 6.02 and by the Tranche C Facility Credit
Agreement.
(d) The Intellectual Property Security Agreement is effective
to create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties secured thereby, a legal, valid and enforceable security
interest in the Collateral described therein, and when financing statements in
appropriate form are filed in the offices specified in the schedules thereto and
the Intellectual Property Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the
Intellectual Property Security Agreement will constitute a duly perfected Lien
on, and security interest in, all right, title and interest of the Pledgors in
such Collateral and, to the extent contemplated therein and subject to ss. 9-306
of the Uniform Commercial Code, the proceeds thereof, in each case prior and
superior in right to any other person (it being understood that subsequent
recordings in the United States Patent and Trademark Office and the United
States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the Pledgors after
the date hereof), other than with respect to the rights of persons pursuant to
Liens expressly permitted by Section 6.02 and by the Tranche C Facility Credit
Agreement.
SECTION 3.20. LABOR MATTERS. Except as set forth in Schedule
3.20, there are no strikes pending or threatened against UCAR, the Borrower or
any Subsidiary which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. The hours worked and payments
made to employees of UCAR, the Borrower and the Subsidiaries have not been in
violation in any material respect of the Fair Labor Standards Act or any other
applicable law dealing with such matters. All material payments due from UCAR,
the Borrower or any Subsidiary or for which any claim may be made against UCAR,
the Borrower or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of UCAR, the Borrower or such Subsidiary to the extent required by
GAAP. None of the consummation of the Recapitalization, the consummation of the
refinancing effected in October 1995, the consummation of the refinancing
effected in March 1997 and the Transactions has given or
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will give rise to a right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which UCAR, the
Borrower or any Subsidiary (or any predecessor) is a party or by which UCAR, the
Borrower or any Subsidiary (or any predecessor) is bound, other than collective
bargaining agreements which, individually or in the aggregate, are not material
to UCAR, the Borrower and the Subsidiaries taken as a whole.
SECTION 3.21. NO FOREIGN ASSETS CONTROL REGULATION VIOLATION.
None of the Transactions will result in a violation of any of the foreign assets
control regulations of the United States Treasury Department, 31 C.F.R.,
Subtitle B, Chapter V, as amended (including the Foreign Assets Control
Regulations, the Transaction Control Regulations, the Cuban Assets Control
Regulations, the Foreign Funds Control Regulations, the Iranian Assets Control
Regulations, the Nicaraguan Trade Control Regulations, the South African
Transactions Regulations, the Libyan Sanctions Regulations, the Soviet Gold Coin
Regulations, the Panamanian Transactions Regulations, the Kuwaiti Assets Control
Regulations and the Iraqi Sanctions Regulations contained in said Chapter V), or
any ruling issued thereunder or any enabling legislation or Presidential
Executive Order granting authority therefor, nor will the proceeds of the Loans
or the Letters of Credit be used by any of the Credit Parties in a manner that
would violate any thereof.
SECTION 3.22. INSURANCE. Each of UCAR, the Borrower and the
Subsidiaries carries and maintains with respect to its insurable properties
insurance (including, to the extent consistent with past practices,
self-insurance) with financially sound and reputable insurers of the types, to
such extent and against such risks as is customary with companies in the same or
similar businesses.
SECTION 3.23. LOCATION OF REAL PROPERTY AND LEASED PREMISES.
(a) Schedule 3.23(a) lists completely and correctly as of the Effective Date all
real property owned by UCAR, the Borrower, each domestic Subsidiary, each
Subsidiary that is a borrower under a Local Facility and each other Subsidiary
that is required to grant a Mortgage pursuant to the Collateral Requirement and
the address thereof. As of the Effective Date, UCAR, the Borrower and the
Subsidiaries own in fee all the real property set forth as being owned by them
on Schedule 3.23(a).
(b) Schedule 3.23(b) lists completely and correctly as of the
Effective Date, all real property leased by UCAR, the Borrower, each domestic
Subsidiary, each Subsidiary that is a borrower under a Local Facility and each
other Subsidiary that is required to grant a leasehold mortgage pursuant to the
Collateral Requirement and the address thereof. As of the Effective Date, UCAR,
the Borrower and the Subsidiaries have valid leases in all the real property set
forth as being leased by them on Schedule 3.23(b).
SECTION 3.24. LITIGATION LIABILITIES. The sum of the aggregate
Litigation Payments plus Reserves in respect of Litigation Liabilities does not,
and is not reasonably expected to, exceed $400,000,000 (including $90,000,000
(calculated on a present value basis) of payments to the Department of Justice);
PROVIDED that it is understood that all other Litigation Payments and Reserves
will
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be calculated on a gross dollar basis for purposes of determining
the accuracy of this representation.
SECTION 3.25. YEAR 2000. Any reprogramming required to permit
the proper functioning, in and following the year 2000, of (i) UCAR's, the
Borrower's and each Subsidiaries' computer systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which their systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed in all material respects by
June 30, 1999. The cost to UCAR, the Borrower and each Subsidiary of such
reprogramming and testing and of the reasonably foreseeable consequences of year
2000 to UCAR, the Borrower and each Subsidiary (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) could not
reasonably be expected to result in a Default or a Material Adverse Effect.
Except for such of the reprogramming referred to in the preceding sentence as
may be necessary, the computer and management information systems of UCAR, the
Borrower and each Subsidiary are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient to
permit UCAR, the Borrower and each Subsidiary to conduct its businesses without
Material Adverse Effect.
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. This amendment and
restatement shall not become effective until the date on which each
of the following conditions is satisfied (or waived in accordance
with Section 9.08):
(a) The Administrative Agent (or its counsel) shall have
received from UCAR, the Borrower and the Required Lenders either (i) a
counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent, the Collateral
Agent, the Lenders and the Fronting Banks and dated the Effective Date)
of each of (i) Kelley Drye & Warren LLP, counsel for UCAR and the
Borrower, substantially to the effect set forth in the form of Exhibit
N-1, (ii) the General Counsel of UCAR and the Borrower, substantially
to the effect set forth in the form of Exhibit N-2, and (iii) local
counsel in each jurisdiction listed on Schedule 4.01, substantially to
the effect set forth in the forms of such opinions set forth in Exhibit
N-3, and, in the case of each such opinion required by this paragraph,
covering such other matters relating to the Loan Parties, the Loan
Documents or the Transactions as the Required Lenders shall reasonably
request. The Borrower hereby requests such counsel to deliver such
opinions.
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(c) The Administrative Agent shall have received (i) in the
case of each domestic Loan Party, each of the items referred to in
clauses (A), (B) and (C) below and, in the case of each other Loan
Party, as requested by the Administrative Agent, the equivalent
documentation in its jurisdiction of organization: (A) a copy of the
certificate or articles of incorporation, including all amendments
thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate
as to the good standing of each Loan Party as of a recent date from
such Secretary of State; (B) a certificate of the Secretary or
Assistant Secretary of each Loan Party dated the Effective Date and
certifying (w) that attached thereto is a true and complete copy of the
by-laws of such Loan Party as in effect on the Effective Date and at
all times since a date immediately prior to the date of the resolutions
described in clause (x) below, (x) that attached thereto is a true and
complete copy of the resolutions duly adopted by the Board of Directors
of such Loan Party authorizing the execution, delivery and performance
of the Loan Documents to which such person is a party and, in the case
of the Borrower and the other Credit Parties, the borrowings and
issuances of Letters of Credit under this Agreement and the borrowings
under the Local Facility Credit Agreements, and that such resolutions
have not been modified, rescinded or amended and are in full force and
effect, (y) that the certificate or articles of incorporation of such
Loan Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (A) above, and (z) as to the incumbency and specimen signature
of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such Loan Party; and (C)
a certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (B) above; and (ii) such other documents as the
Lenders, the Fronting Banks, Cravath, Swaine & Moore, counsel for the
Administrative Agent, or, in the case of any Local Facility or foreign
Credit Party, counsel for the Administrative Agent in the jurisdiction
of such Local Facility or foreign Credit Party, may reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the President, a
Vice President or a Financial Officer of the Borrower, confirming
compliance with the conditions set forth in paragraphs (b) and (c) of
Section 4.02.
(e) The Collateral Requirement shall have been satisfied.
(f) The Guarantee Requirement shall have been satisfied.
(g) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date,
including (i) all Fees accrued under this Agreement immediately prior
to the Effective Date and (ii) to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid
by any Loan Party hereunder or under any other Loan Document.
<PAGE>
(h) The Lenders shall have received a reasonably satisfactory
pro forma consolidated balance sheet of UCAR as of September 30, 1998,
reflecting all pro forma adjustments as if the Transactions had been
consummated on such date, together with a certificate of the Borrower
signed by a Financial Officer of the Borrower to the effect that such
balance sheet fairly presents the pro forma financial position of UCAR
and its subsidiaries in accordance with GAAP, and such pro forma
consolidated balance sheet shall be consistent in all material respects
with the forecasts and other information previously provided to the
Lenders.
(i) All requisite material governmental authorities and all
material third parties shall have been approved or consented to the
Transactions and the other transactions contemplated hereby to the
extent required and all applicable appeal periods shall have expired.
(j) The Senior Subordinated Indenture shall have been amended
so that, after giving effect to such amendment, the Senior Subordinated
Indenture will not prohibit the incurrence of Indebtedness (including
in the form of Guarantees) and the granting of liens under this
Agreement, the Tranche C Facility Credit Agreement and the other Loan
Documents on terms reasonably satisfactory in form and substance to the
Administrative Agent.
(k) This Agreement and the other Loan Documents shall have
been amended, to the satisfaction of the Administrative Agent, in order
to effect the Transactions, including the incurrence of Indebtedness
under (including in the form of Guarantees) and the granting of Liens
in respect of the Tranche C Facility.
(l) The Tranche C Facility Credit Agreement shall have become
effective in accordance with its terms.
(m) As of the Effective Date, immediately prior to giving
effect to the amendment and restatement of this Agreement, no Default
shall have occurred and be continuing under this Agreement.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, this amendment and restatement shall not become effective unless
each of the foregoing conditions is satisfied (or waived pursuant to Section
9.08) at or prior to 3:00 p.m., New York City time, on January 15, 1999.
SECTION 4.02. EACH CREDIT EVENT. On the date of each Borrowing
and on the date of each issuance, renewal or extension of a Letter of Credit
hereunder (other than (a) a Borrowing in which a Revolving Loan is continued or
converted as contemplated by Section 2.10 without any increase in the aggregate
principal amount of Revolving Loans outstanding, (b) a Tranche A Letter of
Credit or
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Tranche A Reimbursement Loan issued, increased or made pursuant to Section
2.11(b) (including for purposes of Section 2.20(a)(v)) and (c) an extension or
renewal of any Letter of Credit made without any increase in the stated amount
of such Letter of Credit), the following conditions must be satisfied (or waived
pursuant to Section 9.08) (each a "CREDIT EVENT"):
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 or, in the case of the
issuance of a Letter of Credit, the Fronting Bank and the
Administrative Agent shall have received a notice requesting the
issuance of such Letter of Credit as required by Section 2.20(a) or
2.20(b), as applicable.
(b) The representations and warranties set forth in Article
III hereof shall be true and correct in all material respects on and as
of the date of such Credit Event with the same effect as though made on
and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Credit Event, no
Event of Default or Default shall have occurred and be continuing.
(d) At the time of and immediately after such Credit Event,
the Administrative Agent shall have received a certificate of the
Borrower signed by a Financial Officer of the Borrower (i) in the case
of a Credit Event with respect to the Revolving Credit Commitments,
certifying that each condition required to be met in connection with
the incurrence of additional Indebtedness under Section 4.03(b),
4.03(c) and/or 4.03(f), as applicable, of the Senior Subordinated
Indenture (or, if applicable, the analogous provision of each
Refinancing Note Indenture) has been satisfied, (ii) certifying that
the Loans to be made or the obligations of the Borrower in respect of
the Letter of Credit to be issued or renewed will constitute "Senior
Indebtedness" for purposes of the Senior Subordinated Indenture and
each applicable Refinancing Note Indenture and (iii) setting forth in
reasonable detail the calculations necessary to certify as to such
compliance.
Each Credit Event (except those specified in the parenthetical contained in the
introductory paragraph of this Article IV) shall be deemed to constitute a
representation and warranty by UCAR and the Borrower on the date of such
Borrowing or issuance, as the case may be, as to the matters specified in
paragraphs (b) and (c) of this Section 4.02. In no event shall the existence of
a Tranche A L/C Disbursement or a default or event of default under any Local
Facility Loan Document in itself cause a failure to meet the lending conditions
set forth above.
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ARTICLE V
AFFIRMATIVE COVENANTS
Each of UCAR and the Borrower covenants and agrees with each
Lender that so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each Loan,
all Fees and all other expenses or amounts payable under any Loan Document shall
have been paid in full and all Letters of Credit have been cancelled or have
expired and all amounts drawn thereunder have been reimbursed in full, unless
the Required Lenders shall otherwise consent in writing, each of UCAR and the
Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence, except as otherwise expressly permitted under
Section 6.05, and except for the liquidation or dissolution of Subsidiaries if
the assets of such corporations to the extent they exceed estimated liabilities
are acquired by the Borrower or a Wholly Owned Subsidiary in such liquidation or
dissolution; PROVIDED that Subsidiaries which are Guarantors may not be
liquidated into Subsidiaries that are not Guarantors and domestic Subsidiaries
may not be liquidated into foreign Subsidiaries.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its business; comply in all material respects
with all applicable laws, rules, regulations (including any Environmental Law)
and orders of any Governmental Authority, whether now in effect or hereafter
enacted; and at all times maintain and preserve all property material to the
conduct of such business and keep such property in good repair, working order
and condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith, if any,
may be properly conducted at all times (in each case except as expressly
permitted by this Agreement).
SECTION 5.02. INSURANCE. (a) Keep its insurable properties
insured at all times by financially sound and reputable insurers in such amounts
as shall be customary for similar businesses and maintain such other insurance
(including, to the extent consistent with past practices, self-insurance), of
such types, to such extent and against such risks, as is customary with
companies in the same or similar businesses.
(b) Cause all such property and casualty insurance policies
with respect to the Mortgaged Properties to be endorsed or otherwise amended to
include a "standard" or "New York" lender's loss payable endorsement, in form
and substance reasonably satisfactory to the Administrative Agent and the
Collateral Agent, which endorsement shall provide that, from and after the
Effective Date, if the insurance carrier shall have received written notice
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87
from the Administrative Agent or the Collateral Agent of the occurrence of an
Event of Default, the insurance carrier shall pay all proceeds otherwise payable
to the Borrower or the Loan Parties under such policies directly to the
Collateral Agent; cause all such policies to provide that neither the applicable
Loan Party, the Administrative Agent, the Collateral Agent nor any other party
shall be a coinsurer thereunder and to contain a "Replacement Cost Endorsement",
without any deduction for depreciation, and such other provisions as the
Administrative Agent or the Collateral Agent may reasonably (in light of a
Default or a material development in respect of the insured Mortgaged Property)
require from time to time to protect their interests; deliver original or
certified copies of all such policies to the Collateral Agent; cause each such
policy to provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium upon not less than 10 days' prior written notice
thereof by the insurer to the Administrative Agent and the Collateral Agent or
(ii) for any other reason upon not less than 30 days' prior written notice
thereof by the insurer to the Administrative Agent and the Collateral Agent;
deliver to the Administrative Agent and the Collateral Agent, prior to the
cancellation, modification or nonrenewal of any such policy of insurance, a copy
of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Administrative Agent and the Collateral Agent), or
insurance certificate with respect thereto, together with evidence reasonably
satisfactory to the Administrative Agent and the Collateral Agent of payment of
the premium therefor.
(c) If at any time the area in which the Premises (as defined
in the Mortgages) are located is designated (i) a "flood hazard area" in any
Flood Insurance Rate Map published by the Federal Emergency Management Agency
(or any successor agency), obtain flood insurance in such reasonable total
amount as the Administrative Agent, the Collateral Agent or the Required Lenders
may from time to time reasonably require, and otherwise comply with the National
Flood Insurance Program as set forth in the Flood Disaster Protection Act of
1973, as it may be amended from time to time, or (ii) a "Zone 1" area (as so
designated in the National Ocean and Earthquake Risk Map), obtain earthquake
insurance in such reasonable total amount as the Administrative Agent, the
Collateral Agent or the Required Lenders may from time to time reasonably
require.
(d) With respect to each Mortgaged Property, carry and
maintain comprehensive general liability insurance and coverage on an occurrence
basis against claims made for personal injury (including bodily injury, death
and property damage) and umbrella liability insurance against any and all
claims, in no event for a combined single limit of less than $1,000,000, naming
the Collateral Agent as an additional insured, on forms reasonably satisfactory
to the Collateral Agent.
(e) Notify the Administrative Agent and the Collateral Agent
promptly whenever any separate insurance concurrent in form or contributing in
the event of loss with that required to be maintained under this Section 5.02 is
taken out by UCAR, the Borrower or any Subsidiary; and promptly deliver to the
Administrative Agent and the Collateral Agent a duplicate original
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copy of such policy or policies, or insurance certificate with
respect thereto.
(f) In connection with the covenants set forth in this Section
5.02, it is understood and agreed that:
(i) none of the Administrative Agent, the Collateral Agent,
the Lenders, the Fronting Banks and their respective agents or
employees shall be liable for any loss or damage insured by the
insurance policies required to be maintained under this Section 5.02,
it being understood that (A) the Borrower and the other Loan Parties
shall look solely to their insurance companies or any other parties
other than the aforesaid parties for the recovery of such loss or
damage and (B) such insurance companies shall have no rights of
subrogation against the Administrative Agent, the Collateral Agent, the
Lenders, the Fronting Banks or their agents or employees. If, however,
the insurance policies do not provide waiver of subrogation rights
against such parties, as required above, then each of UCAR and the
Borrower hereby agree, to the extent permitted by law, to waive, and to
cause each Subsidiary to waive, its right of recovery, if any, against
the Administrative Agent, the Collateral Agent, the Lenders, the
Fronting Banks and their agents and employees; and
(ii) the designation of any form, type or amount of insurance
coverage by the Administrative Agent, the Collateral Agent or the
Required Lenders under this Section 5.02 shall in no event be deemed a
representation, warranty or advice by the Administrative Agent, the
Collateral Agent or the Lenders that such insurance is adequate for the
purposes of the business of UCAR, the Borrower and the Subsidiaries or
the protection of their properties.
SECTION 5.03. TAXES. Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property, before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might give rise to a Lien
upon such properties or any part thereof; PROVIDED, HOWEVER, that such payment
and discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as (a) the validity or amount thereof shall be
contested in good faith by appropriate proceedings and UCAR, the Borrower or the
affected Subsidiary, as applicable, shall have set aside on its books adequate
reserves with respect thereto, (b) such tax, assessment, charge, levy or claim
is in respect of property taxes for property that UCAR, the Borrower or one of
the Subsidiaries has determined to abandon and the sole recourse for such tax,
assessment, charge, levy or claim is to such property or (c) the amount of such
taxes, assessments, charges, levies and claims and interest and penalties
thereon does not exceed $1,000,000 in the aggregate.
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SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. In
the case of the Borrower, furnish to the Administrative Agent and
each Lender:
(a) within 90 days after the end of each fiscal year, a
consolidated balance sheet and related statements of operations, cash
flows and stockholders' equity showing the financial condition of UCAR,
the Borrower and the Subsidiaries as of the close of such fiscal year
and the consolidated results of their operations during such year, all
audited by KPMG Peat Marwick LLC or other independent public
accountants of recognized national standing reasonably acceptable to
the Administrative Agent and accompanied by an opinion of such
accountants (which shall not be qualified in any material respect) to
the effect that such consolidated financial statements fairly present
the financial condition and results of operations of UCAR, the Borrower
and the Subsidiaries on a consolidated basis in accordance with GAAP;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, a consolidated balance sheet and
related statements of operations, cash flows and stockholders' equity
showing the financial condition of UCAR, the Borrower and the
Subsidiaries as of the close of such fiscal quarter and the
consolidated results of their operations during such fiscal quarter and
the then-elapsed portion of the fiscal year, all certified by one of
its Financial Officers on behalf of the Borrower as fairly presenting
the financial condition and results of operations of UCAR, the Borrower
and the Subsidiaries on a consolidated basis in accordance with GAAP
(except for the absence of footnotes), subject to normal year-end audit
adjustments;
(c) concurrently with any delivery of financial statements
under (a) or (b) above, a certificate of the accounting firm or
Financial Officer on behalf of the Borrower opining on or certifying
such statements (which certificate, when furnished by an accounting
firm, may be limited to accounting matters and disclaim responsibility
for legal interpretations) (i) certifying that no Event of Default or
Default has occurred or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto and (ii)
setting forth computations in detail reasonably satisfactory to the
Administrative Agent demonstrating compliance with the covenants
contained in Sections 6.10, 6.11 and 6.12 (it being understood that the
information required by this clause (ii) may be provided in a
certificate of a Financial Officer on behalf of the Borrower instead of
from such accounting firm);
(d) promptly after the same become publicly available, copies
of all periodic and other publicly available reports, proxy statements
and, to the extent requested by the Administrative Agent, other
materials filed by UCAR, the Borrower or any Subsidiary with the
Securities and Exchange Commission, or any governmental authority
succeeding to any of or all the functions of said Commission, or with
any national
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securities exchange, or distributed to its shareholders
generally, as the case may be;
(e) if, as a result of any change in accounting principles and
policies from those as in effect on the date of this Agreement, the
consolidated financial statements of UCAR, the Borrower and the
Subsidiaries delivered pursuant to paragraph (a) or (b) above will
differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such clauses had
no such change in accounting principles and policies been made, then,
together with the first delivery of financial statements pursuant to
paragraph (a) and (b) above following such change, a schedule prepared
by a Financial Officer on behalf of the Borrower reconciling such
changes to what the financial statements would have been without such
changes;
(f) within 90 days after the beginning of each fiscal year, a
copy of an operating and capital expenditure budget for such fiscal
year;
(g) promptly following the creation or acquisition of any
Subsidiary, a certificate of the Borrower signed by a Responsible
Officer of the Borrower, identifying such new Subsidiary and the
ownership interest of the Borrower and the Subsidiaries therein;
(h) simultaneously with the delivery of any financial
statements pursuant to paragraph (a) or (b) above, a balance sheet and
related statements of operations, cash flows and stockholder's equity
for each unconsolidated Subsidiary for the applicable period;
(i) promptly, a copy of all reports submitted in connection
with any material interim or special audit made by independent
accountants of the books of UCAR, the Borrower or any Subsidiary; and
(j) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
UCAR, the Borrower or any Subsidiary, or compliance with the terms of
any Loan Document, or such consolidating financial statements, or such
financial statements showing the results of operations of any
Unrestricted Subsidiary, as in each case the Administrative Agent or
any Lender, acting through the Administrative Agent, may reasonably
request.
SECTION 5.05. LITIGATION AND OTHER NOTICES. Furnish to the
Administrative Agent and each Lender written notice of the following promptly
after any Responsible Officer of the Borrower obtains actual knowledge thereof:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
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(b) the filing or commencement of, or any written threat or
notice of intention of any person to file or commence, any action, suit
or proceeding, whether at law or in equity or by or before any
Governmental Authority, against UCAR, the Borrower or any Subsidiary
thereof in respect of which there is a reasonable possibility of an
adverse determination and which, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect; and
(c) any other development specific to UCAR, the Borrower or
any Subsidiary that is not a matter of general public knowledge and
that has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.
SECTION 5.06. EMPLOYEE BENEFITS. (a) Comply in all material
respects with the applicable provisions of ERISA and the provisions of the Code
relating to ERISA and any applicable similar non-U.S. law and (b) furnish to the
Administrative Agent (i) as soon as possible after, and in any event within 30
days after any Responsible Officer of UCAR, the Borrower or any ERISA Affiliate
knows or has reason to know that, any Reportable Event has occurred, a statement
of a Financial Officer on behalf of the Borrower setting forth details as to
such Reportable Event and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Reportable Event given to
the PBGC, (ii) promptly after any Responsible Officer learns of receipt thereof,
a copy of any notice that the Borrower or any ERISA Affiliate may receive from
the PBGC relating to the intention of the PBGC to terminate any Plan or Plans
(other than a Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Code Section 414) or to
appoint a trustee to administer any such Plan, (iii) within 30 days after the
due date for filing with the PBGC pursuant to Section 412(n) of the Code a
notice of failure to make a required installment or other payment with respect
to a Plan, a statement of a Financial Officer on behalf of the Borrower setting
forth details as to such failure and the action proposed to be taken with
respect thereto, together with a copy of any such notice given to the PBGC and
(iv) promptly after any Responsible Officer learns thereof and in any event
within 30 days after receipt thereof by UCAR, the Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by UCAR, the Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability or (B) a determination that a Multiemployer
Plan is, or is expected to be, terminated or in reorganization, in each case
within the meaning of Title IV of ERISA; PROVIDED that in the case of each of
clauses (i) through (iv) above, notice to the Administrative Agent shall only be
required if such event or condition, together with all other events or
conditions referred to in clauses (i) through (iv) above, could reasonably be
expected to result in liability of UCAR, the Borrower or any Subsidiary in an
aggregate amount exceeding $7,500,000.
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. Maintain all financial records in accordance with GAAP and permit
any persons designated by the Administrative Agent or any Lender to visit and
inspect the financial records and the properties of UCAR, the Borrower or any
Subsidiary at reasonable times, upon reasonable prior notice to UCAR or the
Borrower, and as
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often as reasonably requested and to make extracts from and copies of such
financial records, and permit any persons designated by the Administrative Agent
or any Lender upon reasonable prior notice to UCAR or the Borrower to discuss
the affairs, finances and condition of the Borrower or any Subsidiary with the
officers thereof and independent accountants therefor (subject to reasonable
requirements of confidentiality, including requirements imposed by law or by
contract).
SECTION 5.08. USE OF PROCEEDS. Use the proceeds of the
Loans and request the issuance of Letters of Credit only for the
purposes set forth in the preamble to this Agreement.
SECTION 5.09. COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and
cause all lessees and other persons occupying its Properties to comply, with all
Environmental Laws and Environmental Permits applicable to its operations and
Properties; obtain and renew all Environmental Permits necessary for its
operations and Properties; and conduct any Remedial Action in accordance with
Environmental Laws, except, in each case with respect to this Section 5.09, to
the extent the failure to do so, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
SECTION 5.10. PREPARATION OF ENVIRONMENTAL REPORTS. If a
Default caused by reason of a breach of Section 3.17 or 5.09 shall have occurred
and be continuing, at the request of the Required Lenders through the
Administrative Agent, provide to Lenders within 90 days after such request, at
the expense of the Borrower, an environmental site assessment report for the
Properties which are the subject of such Default prepared by an environmental
consulting firm reasonably acceptable to the Administrative Agent, indicating
the presence or absence of Hazardous Materials and the estimated cost of any
Remedial Action required under any applicable Environmental Law in connection
with such Properties.
SECTION 5.11. FURTHER ASSURANCES. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements) that may be required under applicable law, or which the Collateral
Agent may reasonably request, (a) in order to effectuate the transactions
contemplated by the Loan Documents (other than the Local Facility Loan
Documents), (b) in order to cause the Guarantee Requirement and Collateral
Requirement to be satisfied at all times and (c) in order to grant, preserve,
protect and perfect the validity and first priority (subject to Liens permitted
by Section 6.02 and the Tranche C Facility Credit Agreement) of the security
interests created or intended to be created by the Security Documents. All such
security interests and Liens will be created under the Security Documents and
other instruments and documents in form and substance reasonably satisfactory to
the Collateral Agent, and UCAR, the Borrower and the Subsidiaries shall deliver
or cause to be delivered to the Administrative Agent all such instruments and
documents (including legal opinions and lien searches) as the Required Lenders
shall reasonably request to evidence compliance with this Section 5.11. UCAR and
the Borrower agree to provide, and to cause each Subsidiary to provide, such
evidence as the Collateral Agent shall reasonably
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request as to the perfection and priority status of each such
security interest and Lien.
SECTION 5.12. SIGNIFICANT SUBSIDIARIES. Cause Significant
Subsidiaries at all times to (a) account for 85% or more of the consolidated
assets of the Borrower and (b) have accounted for 85% or more of EBITDA for each
of the two consecutive periods of four fiscal quarters immediately preceding the
date of determination, after giving effect to the designation of any Significant
Subsidiary on such date.
SECTION 5.13. FISCAL YEAR. In the case of each of UCAR,
the Borrower and the Subsidiaries, cause its respective fiscal year
to end on December 31.
SECTION 5.14. DIVIDENDS. In the case of the Borrower, permit
its Subsidiaries to pay dividends and cause such dividends to be paid to the
extent required to pay the monetary Obligations, subject to restrictions
permitted by Section 6.09(d) and under the Tranche C Facility Credit Agreement
and to prohibitions imposed by applicable requirements of law.
SECTION 5.15. INTEREST/EXCHANGE RATE PROTECTION AGREEMENTS.
Maintain in effect one or more Interest/Exchange Rate Protection Agreements with
any of the Lenders or other financial institutions reasonably satisfactory to
the Administrative Agent, the effect of which shall be to limit at all times the
interest payable in connection with 40% of the aggregate principal amount of
Term Borrowings, Tranche A Reimbursement Borrowings and Indebtedness under the
Local Facilities projected to be outstanding at such time, in each case to a
maximum rate and on terms and conditions comparable to those set forth in the
Interest/Exchange Rate Protection Agreements in effect on the Effective Date or
otherwise reasonably acceptable, taking into account current market conditions,
to the Administrative Agent, and deliver evidence of the execution and delivery
thereof to the Administrative Agent.
SECTION 5.16. CORPORATE SEPARATENESS. Cause the management,
business and affairs of each of the Unrestricted Subsidiaries to be conducted in
such a manner so that each Unrestricted Subsidiary will be perceived as a legal
entity separate and distinct from UCAR, the Borrower and the Subsidiaries.
ARTICLE VI
NEGATIVE COVENANTS
Each of UCAR and the Borrower covenants and agrees with each
Lender that, so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each Loan,
all Fees and all other expenses or amounts payable under any Loan Document have
been paid in full and all Letters of Credit have been cancelled or have expired
and all amounts drawn thereunder have been reimbursed in full, unless the
Required Lenders shall otherwise consent in writing, neither UCAR
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nor the Borrower will, and neither will cause or permit any of the
Subsidiaries to:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or
permit to exist any Indebtedness, except:
(a) Indebtedness existing on the Effective Date and set forth
in Schedule 6.01, but not any extensions, renewals or replacements of
such Indebtedness except (i) renewals and extensions expressly provided
for in the agreements evidencing any such Indebtedness as the same are
in effect on the Effective Date and (ii) refinancings and extensions of
any such Indebtedness if the interest rate with respect thereto and
other terms thereof are no less favorable to the obligor thereon or to
the Lenders than the Indebtedness being refinanced or extended and the
average life to maturity thereof is greater than or equal to that of
the Indebtedness being refinanced or extended; PROVIDED that such
Indebtedness permitted under clause (i) or clause (ii) above shall not
be (A) Indebtedness of an obligor that was not an obligor with respect
to the Indebtedness being extended, renewed or refinanced, (B) in a
principal amount which exceeds the Indebtedness being renewed, extended
or refinanced or (C) incurred, created or assumed if any Default or
Event of Default has occurred and is continuing or would result
therefrom;
(b) Indebtedness created hereunder, under the Tranche C
Facility Credit Agreement and under the other Loan Documents; PROVIDED
that no principal amount of Indebtedness under any Local Facility
described in clause (b) of the definition of "Local Facility" may be
incurred unless the Tranche A Exposure shall be simultaneously and
permanently reduced by an aggregate amount not less than such principal
amount; PROVIDED FURTHER that, with respect to Indebtedness under the
Tranche C Facility Credit Agreement, (i) the principal amount of such
Indebtedness shall not exceed $210,000,000, (ii) no Guarantor shall
Guarantee the Obligations under the Tranche C Facility Credit Agreement
unless it shall also Guarantee on a PARI PASSU basis the Obligations
under this Agreement and (iii) if any additional or more restrictive
representation, warranty, covenant, condition, event of default or
other term shall be contained in the Tranche C Facility Credit
Agreement, the Borrower agrees that such additional or more restrictive
representation, warranty, covenant, condition, event of default or
other term shall be incorporated herein (and, to the extent that any
such additional or more restrictive term shall subsequently be amended
to be less restrictive, such amendment shall also be incorporated
herein);
(c) (i) in the case of UCAR, any Senior Subordinated
Guarantee, (ii) in the case of the Borrower, Senior Subordinated Notes
in an aggregate principal amount (the "SUBORDINATED PRINCIPAL") not to
exceed the sum of (A) $200,000,000 and (B) the aggregate principal
amount of Senior Subordinated Notes issued after the Second Closing
Date in payment of interest thereon pursuant to the terms thereof (less
the principal amount of any Senior Subordinated Notes
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that is repaid after the Second Closing Date) and (iii) in the case of
the Borrower, Refinancing Notes in an aggregate principal amount not to
exceed the sum at the time immediately prior to issuance and
refinancing of (A) the Subordinated Principal, (B) any premium payable
and reasonable expenses incurred in connection with such refinancing
and (C) if the Refinancing Notes are issued at a time when there is
accrued but unpaid interest on the Subordinated Principal, the amount
of such accrued but unpaid interest;
(d) Indebtedness of the Borrower and the Subsidiaries pursuant
to Interest/Exchange Rate Protection Agreements entered into in order
to fix the effective rate of interest, or to hedge against currency
fluctuations, on the Loans and other Indebtedness or to hedge against
currency fluctuations with respect to purchases and sales of goods in
the ordinary course, in each case, PROVIDED that such transactions
shall be entered into for business purposes and not for the purpose of
speculation;
(e) Indebtedness owed to (including obligations in respect of
letters of credit for the benefit of) any person providing worker's
compensation, health, disability or other employee benefits or
property, casualty or liability insurance to the Borrower or any
Subsidiary, pursuant to reimbursement or indemnification obligations to
such person;
(f) (i) Indebtedness of the Borrower or any Wholly Owned
Subsidiary that is a Guarantor to any Subsidiary or to the Borrower;
(ii) Indebtedness of the Borrower or any Wholly Owned Subsidiary that
is not a Guarantor to any Subsidiary; (iii) Indebtedness of any
Subsidiary to the Borrower or another Subsidiary incurred pursuant to a
Permitted Foreign Transfer (subject in the case of Specified Permitted
Transactions to the limitations set forth in Section 6.04(k)); and (iv)
so long as at the time of incurrence no Default or Event of Default
shall have occurred and be continuing, Indebtedness of UCAR to the
Borrower incurred for the purpose of making permitted investments in
Unrestricted Subsidiaries (and in an amount limited to the amount of
investments so permitted), in each case subject to compliance with the
provisions of the Pledge Agreements to the extent applicable to such
Indebtedness;
(g) Indebtedness of the Borrower or a Subsidiary which
represents the assumption by the Borrower or such Subsidiary of
Indebtedness of a Subsidiary in connection with the permitted merger of
such Subsidiary with or into the assuming person or the purchase of all
or substantially all the assets of such Subsidiary;
(h) Indebtedness of the Borrower or any Subsidiary in respect
of performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations and trade-related letters of credit, in each case provided
in the ordinary course of business, including those incurred to secure
health, safety and environmental obligations in the ordinary course of
business, and any extension, renewal or refinancing thereof to the
extent not provided to secure the repayment of other Indebtedness and
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to the extent that the amount of refinancing Indebtedness is
not greater than the amount of Indebtedness being refinanced;
(i) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business; PROVIDED
that such Indebtedness is extinguished within two Business Days of its
incurrence;
(j) Indebtedness of a Subsidiary acquired after the date
hereof and Indebtedness of a corporation merged or consolidated with or
into the Borrower or a Subsidiary after the date hereof, which
Indebtedness in each case exists at the time of such acquisition,
merger, consolidation or conversion into a Subsidiary and is not
created in contemplation of such event and where such acquisition,
merger or consolidation is permitted by this Agreement, PROVIDED that
the aggregate principal amount of Indebtedness under this paragraph (j)
shall not exceed $25,000,000 for the Borrower and all Subsidiaries;
(k) Capital Lease Obligations, mortgage financings and
purchase money Indebtedness incurred by the Borrower or any Subsidiary
prior to or within 270 days after a Capital Expenditure permitted under
Section 6.10 in order to finance such Capital Expenditure, and
extensions, renewals and refinancings thereof if the interest rate with
respect thereto and other terms thereof are no less favorable to the
Borrower or such Subsidiary than the Indebtedness being refinanced and
the average life to maturity thereof is greater than or equal to that
of the Indebtedness being refinanced; PROVIDED that such refinancing
Indebtedness shall not be (i) Indebtedness of an obligor that was not
an obligor with respect to the Indebtedness being extended, renewed or
refinanced, (ii) in a principal amount which exceeds the Indebtedness
being renewed, extended or refinanced or (iii) incurred, created or
assumed if any Default or Event of Default has occurred and is
continuing or would result therefrom;
(l) Capital Lease Obligations incurred by the Borrower or any
Subsidiary in respect of any Sale and Leaseback Transaction that is
permitted under Section 6.03;
(m) other Indebtedness of the Borrower and the Subsidiaries in
an aggregate principal amount at any time outstanding not in excess of
$100,000,000, $20,000,000 of which may be incurred on a secured basis;
(n) Indebtedness of UCAR consisting of contingent liabilities
or Indebtedness of the type referred to in the proviso contained in the
definition of "Unrestricted Subsidiary"; and
(o) all premium (if any), interest (including post-petition
interest), fees, expenses, indemnities, charges and additional or
contingent interest on obligations described in clauses (a) through (n)
above.
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Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, no Refinancing Notes shall be issued (and no Indebtedness shall be
incurred under the Refinancing Note Indenture) unless: (a) concurrently with the
issuance of any Refinancing Notes, Senior Subordinated Notes in a principal
amount equal to the principal amount of such Refinancing Notes (less any amount
issued pursuant to clause (iii)(B) or (iii)(C) of paragraph (c) above) shall
have been redeemed or repurchased (or called for redemption, so long as the
redemption price has been indefeasibly deposited with the trustee in respect of
such Senior Subordinated Notes (the "TRUSTEE")) and cancelled upon delivery to
the Trustee, at a price not in excess of 100% of the principal amount thereof
(plus interest accrued to the date of redemption or repurchase and not paid in
cash and plus any premium in respect of such redemption or repurchase (so long
as the premium on repurchase does not exceed 104.5%, or if lower at the time
such repurchase is made, the scheduled premium set forth in the Senior
Subordinated Indenture)), (b) the terms of the Refinancing Notes and the
Refinancing Note Indenture (other than the interest rate, the interest payment
dates and any redemption premiums, which shall be determined at the time of
issuance of the Refinancing Notes) shall be reasonably satisfactory to the
Required Lenders (PROVIDED, HOWEVER, that such terms of the Refinancing Notes
and the Refinancing Note Indenture shall be deemed to be satisfactory to the
Required Lenders if the Refinancing Notes are issued with substantially the same
terms as the Senior Subordinated Notes that are being refinanced (other than any
changes thereto that are not adverse in any respect to the interests of the
Lenders)), (c) the interest rate of the Refinancing Notes shall be a fixed,
non-increasing interest rate per annum not in excess of the rate payable in
respect of the Senior Subordinated Notes, payable on a principal amount of the
Refinancing Notes not in excess of the gross proceeds of the sale thereof and
interest on the Refinancing Notes shall be payable semiannually and (d) the
Refinancing Notes shall mature not earlier than the maturity date of the Senior
Subordinated Notes.
SECTION 6.02. LIENS. Create, incur, assume or permit to exist
any Lien on any property or assets (including stock or other securities of any
person, including any Subsidiary) now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, or sell or transfer
any account receivable or any right in respect thereof, except:
(a) Liens on property or assets of the Borrower and its
Subsidiaries existing on the Effective Date and set forth in Schedule
6.02; PROVIDED that such Liens shall secure only those obligations
which they secure on the Effective Date (and extensions, renewals and
refinancings of such obligations permitted by Section 6.01(a)) and
shall not subsequently apply to any other property or assets of UCAR,
the Borrower or any Subsidiary;
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset of the Borrower
or any Subsidiary prior to the acquisition thereof by the Borrower or
any Subsidiary; PROVIDED that (i) such Lien is not created in
contemplation of or in connection with such
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acquisition and (ii) such Lien does not apply to any other
property or asset of the Borrower or any Subsidiary;
(d) any Lien on any property or asset of a Subsidiary securing
Indebtedness permitted by Section 6.01(j); PROVIDED that such Lien does
not apply to any other property or assets of UCAR, the Borrower or any
Subsidiary not securing such Indebtedness at the date of acquisition of
such property or asset (other than after acquired property subjected to
a Lien securing Indebtedness incurred prior to such date and permitted
hereunder which contains a requirement for the pledging of after
acquired property);
(e) Liens for taxes, assessments or other governmental charges
or levies not yet delinquent, or which are for less than $1,000,000 in
the aggregate, or which are being contested in compliance with Section
5.03 or for property taxes on property that UCAR, the Borrower or one
of the Subsidiaries has determined to abandon if the sole recourse for
such tax, assessment, charge, levy or claim is to such property;
(f) carriers', warehousemen's, mechanic's, materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due and payable or that
are being contested in good faith by appropriate proceedings and in
respect of which, if applicable, UCAR, the Borrower or the relevant
Subsidiary shall have set aside on its books reserves in accordance
with GAAP;
(g) pledges and deposits made in the ordinary course of
business in compliance with the Federal Employers Liability Act or any
other workmen's compensation, unemployment insurance and other social
security laws or regulations and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements in
respect of such obligations;
(h) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business, including those incurred to secure
health, safety and environmental obligations in the ordinary course of
business;
(i) zoning restrictions, easements, trackage rights, leases
(other than Capital Lease Obligations), licenses, special assessments,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and do not materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of UCAR, the Borrower or any of the
Subsidiaries;
(j) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case
of improvements, constructed) by the Borrower or any Subsidiary
(including the interests of vendors and lessors
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under conditional sale and title retention agreements); PROVIDED that
(i) such security interests secure Indebtedness or Sale and Lease-Back
Transactions permitted by Section 6.01, (ii) such security interests
are incurred, and the Indebtedness secured thereby is created, within
270 days after such acquisition (or construction), (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of such
real property, improvements or equipment at the time of such
acquisition (or construction), (iv) such expenditures are permitted by
this Agreement and (v) such security interests do not apply to any
other property or assets of the Borrower or any Subsidiary (other than
to accessions to such real property, improvements or equipment and
provided that individual financings of equipment provided by a single
lender may be cross-collateralized to other financings of equipment
provided solely by such lender);
(k) Liens securing reimbursement obligations in respect of
trade-related letters of credit permitted under Section 6.01 and
covering the goods (or the documents of title in respect of such goods)
financed by such letters of credit;
(l) Liens arising out of capitalized or operating lease
transactions permitted under Section 6.03, so long as such Liens (i)
attach only to the property sold in such transaction and any accessions
thereto and (ii) do not interfere with the business of UCAR, the
Borrower or any Subsidiary in any material respect;
(m) Liens consisting of interests of lessors under capital
leases permitted by Section 6.01;
(n) Liens securing judgments for the payment of money in an
aggregate amount not in excess of $7,500,000 (except to the extent
covered by insurance as to which the insurer has acknowledged in
writing its obligation to cover), unless such judgments shall remain
undischarged for a period of more than 30 consecutive days during which
execution shall not be effectively stayed;
(o) any Lien arising by operation of law pursuant to Section
107(1) of CERCLA or pursuant to analogous state or foreign law, for
costs or damages which are not yet due (by virtue of a written demand
for payment by a Governmental Authority) or which are being contested
in compliance with the standard set forth in Section 5.03(a), or on
property that the Borrower or a Subsidiary has determined to abandon if
the sole recourse for such costs or damages is to such property,
PROVIDED that the liability of the Borrower and the Subsidiaries with
respect to the matter giving rise to all such Liens shall not, in the
reasonable estimate of the Borrower (in light of all attendant
circumstances, including the likelihood of contribution by third
parties), exceed $7,500,000;
(p) any leases or subleases to other persons of properties or
assets owned or leased by the Borrower or a Subsidiary;
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(q) Liens which are contractual rights of set-off (i) relating
to the establishment of depository relations with banks not given in
connection with the issuance of Indebtedness or (ii) pertaining to
pooled deposit and/or sweep accounts of the Borrower and/or any
Subsidiary to permit satisfaction of overdraft or similar obligations
incurred in the ordinary course of business of the Borrower and its
Subsidiaries;
(r) other Liens with respect to property or assets not
constituting collateral for the Obligations with an aggregate fair
market value of not more than $20,000,000 at any time;
(s) any Lien arising as a result of a transaction permitted
under Section 6.05(h) or (i) or under Section 6.13;
(t) the sale of accounts receivable in connection with
collection in the ordinary course of business and Liens which might
arise as a result of the sale or other disposition of accounts
receivable pursuant to Section 6.05(h); and
(u) the replacement, extension or renewal of any Lien
permitted by clause (c), (d) or (j) above; PROVIDED that such
replacement, extension or renewal Lien shall not cover any property
other than the property that was subject to such Lien prior to such
replacement, extension or renewal; and PROVIDED FURTHER that the
Indebtedness and other obligations secured by such replacement,
extension or renewal Lien are permitted by this Agreement.
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred (a "SALE AND LEASE-BACK
TRANSACTION"), other than any Sale and Lease-Back Transaction which involves a
sale by the Borrower or a Subsidiary solely for cash consideration on terms not
less favorable than would prevail in an arm's-length transaction and which (a)
results in a Capital Lease Obligation or an operating lease, in either case
entered into to finance a Capital Expenditure permitted by Section 6.10
consisting of the initial acquisition by the Borrower or such Subsidiary of the
property sold or transferred in such Sale and Lease-Back Transaction, PROVIDED
that such Sale and Lease-Back Transaction occurs within 270 days after such
acquisition or (b) results in a Capital Lease Obligation or an operating lease
entered into for any other purpose; PROVIDED that the proceeds of any such Sale
and Lease-Back Transaction in reliance upon this clause (b) shall be deemed
subject to Section 2.12(e).
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold
or acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
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(a) investments (i) existing on the Effective Date in the
capital stock of the Subsidiaries; (ii) by UCAR in the capital stock of
the Borrower; (iii) by the Borrower or any Subsidiary in any Wholly
Owned Subsidiary that is a Guarantor (so long as such Guarantor shall
remain a Wholly Owned Subsidiary after giving effect to such
investment); (iv) by any Wholly Owned Subsidiary in any Wholly Owned
Subsidiary that is a Guarantor; (v) by any Subsidiary that is not a
Guarantor in any Wholly Owned Subsidiary that is not a Guarantor (so
long as such Subsidiary shall remain a Wholly Owned Subsidiary after
giving effect to such investment); or (vi) that constitute Permitted
Foreign Transfers (subject in the case of Specified Permitted
Transactions to the limitations set forth in paragraph (k) below);
(b) Permitted Investments and investments that were Permitted
Investments when made;
(c) investments arising out of the receipt by the Borrower or
any Subsidiary of noncash consideration for the sale of assets
permitted under Section 6.05 provided that such consideration (if the
stated amount or value thereof is in excess of $1,000,000) is pledged
upon receipt pursuant to the Pledge Agreements to the extent required
thereby;
(d) intercompany loans permitted to be incurred as
Indebtedness under Section 6.01;
(e) (i) loans and advances to employees of UCAR, the Borrower
or the Subsidiaries not to exceed $6,000,000 in the aggregate at any
time outstanding (excluding up to $3,000,000 in loans existing on the
Effective Date to former employees) and (ii) advances of payroll
payments and expenses to employees in the ordinary course of business;
(f) (i) accounts receivable arising and trade credit granted
in the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof from financially troubled
account debtors to the extent reasonably necessary in order to prevent
or limit loss and (ii) prepayments and other credits to suppliers made
in the ordinary course of business consistent with the past practices
of UCAR, the Borrower and the Subsidiaries;
(g) Interest/Exchange Rate Protection Agreements permitted
pursuant to Section 6.01(d);
(h) investments, other than investments listed in paragraphs
(a) through (g) of this Section, existing on the Effective Date and set
forth on Schedule 6.04;
(i) investments resulting from pledges and deposits referred
to in Section 6.02(g) or (h);
(j) investments constituting Permitted Business Acquisitions
made either as Capital Expenditures pursuant to Section 6.10 or, to the
extent not used for other purposes permitted hereunder, made with funds
that if not so spent would
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constitute Net Proceeds under clause (a) of the definition of "Net
Proceeds" (subject to the limitation set forth in the second proviso to
such clause (a));
(k) investments constituting Permitted Other Acquisitions or
Specified Permitted Transactions; PROVIDED that the sum of (i) the
aggregate amount of Specified Permitted Transactions and (ii) the
aggregate amount of consideration (whether cash or property, as valued
at the time each such investment is made) for all Permitted Other
Acquisitions acquired after the Effective Date shall not exceed (net of
any return representing return of capital of (but not return on) any
such investment) at any time (A) the amount set forth on Schedule A for
the Leverage Ratio that is in effect at such time (it being agreed that
any such investment permitted when made shall not cease to be permitted
as a result of the applicable Leverage Ratio subsequently changing)
PLUS, (B) to the extent not used for other purposes permitted
hereunder, the funds that if not so spent would constitute Net Proceeds
under clause (a) of the definition of "Net Proceeds" (subject to the
limitation set forth in the second proviso to such clause (a));
(l) investments in Permitted Business Acquisitions and
Unrestricted Subsidiaries to the extent made with proceeds of the
issuance of Capital Stock of UCAR (to the extent not previously used to
prepay Indebtedness (other than Revolving Loans or Swingline Loans),
make any investment or capital expenditure or otherwise for any purpose
resulting in a deduction to Excess Cash Flow in any fiscal year) issued
after the Original Closing Date (after application of the Net Proceeds
of such issuance to prepay Obligations in accordance with Section
2.12(d) and the Tranche C Facility Credit Agreement); and
(m) investments by the Borrower or any Subsidiary in any
Subsidiary resulting from or in connection with the formation of a
European holding company and any related reorganization or
restructuring of the Subsidiaries that occurs in connection therewith;
PROVIDED that, after giving effect to any such formation,
reorganization or restructuring (COLLECTIVELY, THE "EUROPEAN HOLDING
COMPANY STRATEGY"), the Collateral Requirement and Guarantee
Requirement shall be satisfied in a manner reasonably satisfactory to
the Administrative Agent.
PROVIDED, HOWEVER, that the aggregate amount of the consideration (whether cash
or property, as valued at the time each such investment is made) for all
investments made in Unrestricted Subsidiaries (other than investments made
therein pursuant to paragraph (l) above) after the Effective Date shall not
exceed (net of return of capital of (but not return on) any such investment)
$50,000,000 at any time, PROVIDED FURTHER, HOWEVER, that no more than
$25,000,000 of such amount at any time may be invested in Unrestricted
Subsidiaries not engaged primarily in Related Businesses.
SECTION 6.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS
AND ACQUISITIONS. Merge into or consolidate with any other person,
or permit any other person to merge into or consolidate with it, or
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sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) all or any substantial part of its assets (whether now owned or
hereafter acquired), other than assets of UCAR constituting an Unrestricted
Subsidiary, or any Capital Stock of any Subsidiary, or purchase, lease or
otherwise acquire (in one transaction or a series of transactions) all or any
substantial part of the assets of any other person, except that this Section
shall not prohibit:
(a) the purchase and sale of inventory in the ordinary course
of business by the Borrower or any Subsidiary or the acquisition of any
asset of any person in the ordinary course of business;
(b) if at the time thereof and immediately after giving effect
thereto no Event of Default or Default shall have occurred and be
continuing (i) the merger of any Subsidiary into the Borrower in a
transaction in which the Borrower is the surviving corporation and (ii)
the merger or consolidation of any Subsidiary into or with any other
Wholly Owned Subsidiary in a transaction in which the surviving entity
is a Wholly Owned Subsidiary (which shall be a domestic Subsidiary if
the non-surviving person shall be a domestic Subsidiary) and, in the
case of each of clauses (i) and (ii), no person other than the Borrower
or a Wholly Owned Subsidiary receives any consideration;
(c) Sale and Lease-Back Transactions permitted by
Section 6.03;
(d) investments permitted by Section 6.04;
(e) subject to Section 6.07, sales, leases or transfers (i)
from the Borrower or any Subsidiary to the Borrower or to a domestic
Wholly Owned Subsidiary, (ii) from any foreign Subsidiary to any
foreign Wholly Owned Subsidiary or to the Borrower or (iii)
constituting Permitted Foreign Transfers (subject in the case of
Specified Permitted Transactions to the limitations set forth in
Section 6.04(k));
(f)(i) the lease of all or any part of the Borrower's facility
located in Robinson, Illinois and (ii) sales, leases or other
dispositions of equipment or real property of the Borrower or the
Subsidiaries determined, in the case of this clause (ii), by the Board
of Directors or senior management of the Borrower to be no longer
useful or necessary in the operation of the business of the Borrower or
the Subsidiaries; PROVIDED that in the case of this clause (ii), (x)
the Net Proceeds thereof shall be applied in accordance with Section
2.12(d) and (y) the fair market value of assets sold, leased or
otherwise disposed of in any one year shall not exceed $3,000,000 in
the aggregate;
(g) sales, leases or other dispositions of inventory of the
Borrower and the Subsidiaries determined by the Board of Directors or
senior management of the Borrower to be no longer useful or necessary
in the operation of the business of the
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Borrower and the Subsidiaries; PROVIDED that the Net Proceeds thereof
shall be applied in accordance with Section 2.12(d);
(h) sales or other dispositions of accounts receivable of
foreign Subsidiaries in connection with factoring arrangements so long
as the aggregate face amount at any time outstanding of receivables
subject to such arrangements does not exceed $50,000,000;
(i) sales or other dispositions by the Borrower or any
Subsidiary of assets (other than receivables, except to the extent
disposed of incidentally in connection with an asset disposition
otherwise permitted hereby), including Capital Stock of Subsidiaries,
for consideration in an aggregate amount not exceeding 25% of the book
value of the Total Assets set forth in UCAR's and its subsidiaries'
June 30, 1998 quarterly consolidated financial statements (which book
value equals $1,273,000,000); PROVIDED that (i) each such disposition
shall be for a consideration determined in good faith by the Board of
Directors or senior management of the Borrower to be at least equal to
the fair market value (if any) of the asset sold, (ii) the aggregate
amount of all noncash consideration included in the proceeds of any
such disposition may not exceed 15% of the fair market value of such
proceeds; PROVIDED, HOWEVER, that obligations of the type referred to
in clause (a) or (e) of the definition of "Permitted Investments"
(without regard to the maturity or the credit rating thereof) shall not
be deemed non-cash proceeds if such obligations are promptly sold for
cash and the proceeds of such sale are included in the calculation of
Net Proceeds from such sale, (iii) the aggregate Net Proceeds of all
such dispositions under this paragraph (i) shall be applied in
accordance with Section 2.12(d), except as contemplated by the last
sentence of this paragraph and (iv) no Default or Event of Default
shall have occurred and be continuing immediately prior to or after
such disposition; PROVIDED FURTHER that notwithstanding the first
proviso to clause (a) of the definition of "Net Proceeds", no Mortgaged
Property (other than Mortgaged Properties which are part of UCAR's
Graphite and Carbon Specialties Business) may be sold, transferred,
leased or otherwise disposed of at any time unless the Net Proceeds
thereof shall be applied immediately to the prepayment of Obligations
in accordance with Section 2.12(d) or within 10 Business Days to the
acquisition of property having a value equivalent to or greater than
the value of such Mortgaged Property and such newly acquired property
is thereupon either made a Mortgaged Property subject to a Mortgage on
terms reasonably satisfactory to the Collateral Agent or constitutes an
addition to a Mortgaged Property and is subject to the Mortgage on such
Mortgaged Property; and PROVIDED FURTHER that no sale may be made of
the Capital Stock of (x) any Credit Party, UCAR Carbon Company Inc.,
UCAR Holdings Inc. or UCAR Holdings II Inc. or (y) except in connection
with the sale of all its outstanding Capital Stock that is held by the
Borrower in any Subsidiary, the Capital Stock of any other Subsidiary.
Upon receipt by the Borrower or any Subsidiary of the Net Proceeds of
any transaction contemplated by this paragraph (i), the Borrower shall
promptly deliver a certificate of the Borrower signed by a Responsible
Officer of the Borrower to the
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Administrative Agent setting forth the amount of the Net Proceeds
received in respect thereof and whether it shall apply such Net
Proceeds to prepay Obligations in accordance with Section 2.12(d) and
the Tranche C Facility Credit Agreement or will use such Net Proceeds
to purchase assets useful in the business of the Borrower and the
Subsidiaries within 12 months of such receipt (subject to the second
proviso to clause (a) of the definition of "Net Proceeds");
(j) sale or other disposition of UCAR's, the Borrower's or the
Subsidiaries' facilities owned and existing on the Effective Date in
Berlin, Germany and Welland, Canada; and
(k) intercompany sales, transfers, dispositions, acquisitions,
mergers and consolidations in connection with the implementation of the
European Holding Company Strategy; PROVIDED that (i) any such sale or
transfer is made to, or any such merger into or consolidation with is
effected with, a Subsidiary at least 90% of the outstanding Capital
Stock of which is owned directly by the Borrower or a Wholly Owned
Subsidiary and (ii) after giving effect to any such sale, transfer,
disposition, acquisition, merger or consolidation, the Collateral
Requirement and Guarantee Requirement shall be satisfied in a manner
reasonably satisfactory to the Administrative Agent.
SECTION 6.06. DIVIDENDS AND DISTRIBUTIONS. Declare or pay,
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its Capital Stock (other than
dividends and distributions on the common stock of UCAR payable solely by the
issuance of additional shares of common stock of UCAR or rights, warrants or
options to acquire common stock of UCAR) or directly or indirectly redeem,
purchase, retire or otherwise acquire for value (or permit any Subsidiary to
purchase or acquire) any shares of any class of its Capital Stock or set aside
any amount for any such purpose (collectively, the "RESTRICTED EQUITY
PAYMENTS"); PROVIDED, HOWEVER, that:
(a) any Subsidiary may declare and pay dividends to,
repurchase its Capital Stock from or make other distributions to the
Borrower or to any Wholly Owned Subsidiary (or, in the case of
non-Wholly Owned Subsidiaries, to the Borrower or any Subsidiary and to
each other owner of Capital Stock of such Subsidiary on a pro rata
basis (or more favorable basis from the perspective of the Borrower or
such Subsidiary) based on their relative ownership interests);
(b) the Borrower may declare and pay dividends or make other
distributions to UCAR in respect of overhead, tax liabilities, legal,
accounting and other professional fees and expenses and any fees and
expenses associated with registration statements filed with the
Securities and Exchange Commission and subsequent ongoing public
reporting requirements, in each case to the extent actually incurred by
UCAR in connection with the business of its ownership of the Capital
Stock of the Borrower and the Unrestricted Subsidiaries;
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(c) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, UCAR, the
Borrower and the Subsidiaries may make Restricted Equity Payments so
long as, after giving effect thereto, the aggregate amount of
Restricted Junior Payments made after the Effective Date shall not
exceed the Restricted Junior Payment Amount applicable to the fiscal
year in which any such Restricted Equity Payment is made;
(d) UCAR or the Borrower may purchase or redeem, or the
Borrower may declare and pay dividends or make other distributions to
UCAR the proceeds of which are to be used to purchase or redeem, shares
of Capital Stock (or rights, options or warrants in respect of such
shares) of UCAR (including related stock appreciation rights or similar
securities) held by present or former directors, officers or employees
of UCAR, the Borrower or any Subsidiary or by any Plan upon such
person's death, disability, retirement or termination of employment or
under the terms of any such Plan or any other agreement under which
such shares of stock or related rights were issued; PROVIDED that the
aggregate amount of such purchases or redemptions (or dividends or
distributions to UCAR) under this paragraph (d) shall not exceed
$5,000,000 per calendar year which, if not used in any year may be
carried forward to any subsequent calendar year; PROVIDED, HOWEVER,
that the aggregate amount of such purchases or redemptions (or
dividends or distributions to UCAR) that may be made pursuant to this
paragraph (d) shall not exceed $25,000,000; and
(e) the Borrower may declare and pay dividends or make other
distributions to UCAR in order to fund Litigation Payments; PROVIDED
that the amount of dividends and distributions permitted pursuant to
this clause (e), plus the amount of Restricted Debt Payments permitted
pursuant to the last sentence of Section 6.09(b), shall not exceed
$400,000,000 (calculated in the manner described in Section 3.24). It
being understood that $20,000,000 of such payments and distributions to
UCAR in respect of Litigation Liabilities have been made as of the
Effective Date.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. (a) Sell or
transfer any property or assets to, or purchase or acquire any property or
assets from, or otherwise engage in any other transaction with, any of its
Affiliates or any known direct or indirect holder of 10% or more of any class of
capital stock of UCAR, unless such transaction is (i) otherwise permitted under
this Agreement and (ii) upon terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable
arm's-length transaction with a person which was not an Affiliate, PROVIDED that
the foregoing restriction shall not apply to the indemnification of directors of
UCAR, the Borrower and the Subsidiaries in accordance with customary practice.
(b) The foregoing paragraph (a) shall not prohibit, to the
extent otherwise permitted under this Agreement, (i) any issuance of securities,
or other payments, awards or grants in cash, securities or otherwise pursuant
to, or the funding of, employment arrangements or stock option, ownership or
purchase plans approved
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by the Board of Directors of UCAR, (ii) loans or advances to employees of UCAR,
the Borrower or any Subsidiary in accordance with Section 6.04(e), (iii)
transactions among UCAR, the Borrower and Wholly Owned Subsidiaries and
transactions among Wholly Owned Subsidiaries otherwise permitted by this
Agreement, (iv) Permitted Foreign Transfers (other than Specified Permitted
Transactions), (v) the payment of fees and indemnities to directors, officers
and employees of the Borrower and the Subsidiaries in the ordinary course of
business, (vi) transactions pursuant to permitted agreements in existence on the
Effective Date and set forth on Schedule 6.07, (vii) payments pursuant to the
Tax Sharing Agreement, (viii) any employment agreements entered into by the
Borrower or any of the Subsidiaries in the ordinary course of business, (ix)
dividends and repurchases permitted under Section 6.06, and (x) any purchase by
UCAR of Capital Stock of the Borrower or any contribution by UCAR to the equity
capital of the Borrower.
SECTION 6.08. BUSINESS OF UCAR, THE BORROWER AND THE
SUBSIDIARIES. (a) In the case of the Borrower and the Subsidiaries (taken as a
whole), cease to engage primarily in the business of manufacturing graphite and
carbon electrodes and (b) in the case of UCAR, engage at any time in any
business or business activity other than (i) the ownership of all the
outstanding capital stock of the Borrower together with activities directly
related thereto, (ii) the ownership of Unrestricted Subsidiaries together with
activities directly related thereto, (iii) performance of its obligations under
the Loan Documents, under intercompany Indebtedness and under Indebtedness
incurred in accordance with Section 6.01(n) and (iv) actions required by law to
maintain its status as a corporation and as a public company.
SECTION 6.09. INDEBTEDNESS AND OTHER MATERIAL AGREEMENTS. (a)
Amend or modify, or grant any waiver or release under, any instruments,
agreements or documents evidencing or related to the Senior Subordinated Notes
or the Refinancing Notes in any manner adverse to the Lenders.
(b) (i) Directly or indirectly, make any payment, retirement,
repurchase or redemption on account of the principal of the Senior Subordinated
Notes, the Refinancing Notes or intercompany Indebtedness owed to UCAR or
directly or indirectly prepay or defease any such Indebtedness prior to the
stated maturity date of such Indebtedness (collectively, "RESTRICTED DEBT
PAYMENTS"), except with the proceeds of Capital Stock of UCAR issued by UCAR
after the Original Closing Date (after application of the Net Proceeds of such
issuance to prepay Obligations in accordance with Section 2.12(d) and the
Tranche C Facility Credit Agreement), PROVIDED, that, in addition to the
foregoing, so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, the Borrower may make Restricted Debt
Payments so long as, after giving effect thereto, the aggregate amount of
Restricted Junior Payments made after the Effective Date shall not exceed the
Restricted Junior Payment Amount applicable to the fiscal year in which any such
Restricted Debt Payment is made, (ii) make any payment or prepayment of any such
Indebtedness that would violate the terms of this Agreement or of such
Indebtedness, any agreement or document evidencing, related to or securing the
payment or performance of such Indebtedness or any subordination agreement or
provision
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applicable to such Indebtedness or (iii) pay in cash any amount in respect of
such Indebtedness that may at the Borrower's option be paid in kind thereunder;
PROVIDED, HOWEVER, that the proceeds of the Refinancing Notes may be applied to
repay or prepay Senior Subordinated Notes. Notwithstanding the foregoing, the
Borrower may make Restricted Debt Payments in respect of intercompany
Indebtedness owed to UCAR in order to fund Litigation Payments; PROVIDED that
the amount of Restricted Debt Payments that may be made to UCAR pursuant to this
sentence, plus the amount of dividends or other distributions permitted to be
made to UCAR pursuant to Section 6.06(e), shall not exceed $400,000,000
(calculated in the manner described in Section 3.24) (it being understood that
$20,000,000 of such payments and distributions to UCAR in respect of Litigation
Liabilities have been made as of the Effective Date).
(c) Amend or modify in any manner adverse to the Lenders, or
grant any waiver or release under or terminate in any manner (if such action
shall be adverse to the Lenders), the certificate of incorporation or by-laws of
the Borrower or any Subsidiary.
(d) Permit any Subsidiary to enter into any agreement or
instrument which by its terms restricts the payment of dividends or the making
of cash advances by such Subsidiary to the Borrower or any Subsidiary that is a
direct or indirect parent of such Subsidiary other than those in effect on the
Effective Date and set forth on Schedule 6.09 (or replacements of such
agreements on terms no less favorable to the Lenders), and those arising under
any Loan Document (other than any Loan Document in respect of any Local Facility
described in clause (b) of the definition of "Local Facility").
SECTION 6.10. CAPITAL EXPENDITURES. Permit UCAR to make any
Capital Expenditures, or permit the aggregate amount of Capital Expenditures
made by the Borrower and the Subsidiaries, in any fiscal year to exceed the
aggregate amount set forth below:
YEAR AMOUNT
---- ------
1998 $58,000,000
1999 88,000,000
2000 72,000,000
2001 58,000,000
2002 65,000,000
PROVIDED, HOWEVER, that (a) the Borrower may in any fiscal year, upon written
notice to the Administrative Agent, increase the amount of Capital Expenditures
permitted to be made pursuant to this Section by an amount up to $10,000,000 by
reducing the amount of Capital Expenditures permitted to be made pursuant to
this Section in the next succeeding fiscal year by the amount of such increase;
PROVIDED that not more than $20,000,000 in the aggregate of increases may be
made pursuant to this clause (a) in any three- fiscal-year period, and (b) to
the extent that Capital Expenditures made in any fiscal year were less than the
amount set forth above for such fiscal year less any reduction made for such
fiscal year pursuant to clause (a), such unused amount may be carried forward to
the next succeeding fiscal year; PROVIDED that not more that $20,000,000 may be
carried forwarded from any fiscal year.
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SECTION 6.11. INTEREST COVERAGE RATIO. Permit the ratio (the
"INTEREST COVERAGE RATIO") as of the last day of any fiscal quarter, which last
day occurs in any period set forth below for the four quarter period ended as of
such day of (a) EBITDA MINUS Capital Expenditures of UCAR, the Borrower and the
Subsidiaries to (b) Cash Interest Expense to be less than the ratio set forth
below for such period:
FROM AND INCLUDING: TO AND INCLUDING: RATIO:
July 1, 1998 December 31, 1998 2.00:1.00
January 1, 1999 June 30, 1999 2.00:1.00
July 1, 1999 December 31, 1999 2.00:1.00
January 1, 2000 June 30, 2000 2.00:1.00
July 1, 2000 December 31, 2000 2.50:1.00
January 1, 2001 June 30, 2001 3.00:1.00
July 1, 2001 December 31, 2002 3.00:1.00
SECTION 6.12. LEVERAGE RATIO. Permit the ratio (the "LEVERAGE RATIO") of (a)
Total Debt plus Reserves as of the last day of any fiscal quarter, which last
day occurs in any period set forth below to (b) EBITDA for the four quarter
period ended as of such day to be in excess of the ratio set forth below for
such period:
FROM AND INCLUDING: TO AND INCLUDING: RATIO:
July 1, 1998 December 31, 1998 4.50:1.00
January 1, 1999 September 30, 1999 4.50:1.00
October 1, 1999 December 31, 1999 4.25:1.00
January 1, 2000 June 30, 2000 4.00:1.00
July 1, 2000 December 31, 2000 3.50:1.00
January 1, 2001 June 30, 2001 3.00:1.00
July 1, 2001 December 31, 2002 3.00:1.00
SECTION 6.13. CAPITAL STOCK OF THE SUBSIDIARIES. Sell,
transfer, lease or otherwise dispose of, or make subject to any subscription,
option, warrant, call, right or other agreement or commitment of any nature, the
Capital Stock of any Subsidiary, other than (a) pursuant to the Loan Documents
or pursuant to a transaction permitted pursuant to Section 6.05 and subject to
Section 2.12(d), (b) sales, transfers and other dispositions of the Capital
Stock of Subsidiaries in connection with UCAR's sale of its Graphite and Carbon
Specialties Business, (c) in connection with transactions of the type described
in Section 6.05(k) or 6.07(b)(i) and (d) directors' qualifying shares.
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events
("EVENTS OF DEFAULT"):
(a) any representation or warranty made or deemed made by
UCAR, the Borrower or any Loan Party in any Loan Document
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(other than a Local Facility Loan Document), or any representation,
warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in
connection with or pursuant to any Loan Document (other than a Local
Facility Loan Document), shall prove to have been false or misleading
in any material respect when so made, deemed made or furnished by UCAR,
the Borrower or any other Loan Party;
(b) default shall be made in the payment of any principal of
any Loan, any principal of any Indebtedness under any Local Facility or
the reimbursement with respect to any L/C Disbursement when and as the
same shall become due and payable, whether at the due date thereof or
at a date fixed for prepay ment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any premium or
interest on any Loan or on any L/C Disbursement or in the payment of
any Fee or any other amount (other than an amount referred to in (b)
above) due under any Loan Document (other than a Local Facility Loan
Document), when and as the same shall become due and payable, and such
default shall continue unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance
by UCAR, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a) (with respect to the Borrower),
5.05(a), 5.08 or 5.12 or in Article VI;
(e) default shall be made in the due observance or performance
by UCAR, the Borrower, any Credit Party or any Subsidiary of any
covenant, condition or agreement contained in any Loan Document (other
than a Local Facility Loan Document) (other than those specified in
(b), (c) or (d) above) and such default shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent or
the Required Lenders to the Borrower;
(f) (i) UCAR, the Borrower or any Significant Subsidiary shall
fail to observe or perform any term, covenant, condition or agreement
contained in any agreement or instrument evidencing or governing any
Indebtedness (other than any Indebtedness under any Loan Document)
having an aggregate principal or notional amount in excess of
$7,500,000, if the effect of any such failure is to cause, or to permit
the holder or holders of such Indebtedness or a trustee on its or their
behalf (with or without the giving of notice, the lapse of time or
both) to cause, such Indebtedness to become due prior to its stated
maturity, or UCAR, the Borrower or any Significant Subsidiary shall
fail to pay any principal in respect of any such Indebtedness at the
stated maturity thereof or (ii) an "Event of Default" shall occur under
the Tranche C Facility Credit Agreement;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of UCAR, the
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Borrower or any Subsidiary, or of a substantial part of the property or
assets of UCAR, the Borrower or a Subsidiary, under Title 11 of the
United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for UCAR, the Borrower or
any Subsidiary or for a substantial part of the property or assets of
UCAR, the Borrower or a Subsidiary or (iii) the winding-up or
liquidation of UCAR, the Borrower or any Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(h) UCAR, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended,
or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in (g) above, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for UCAR, the Borrower or
any Subsidiary or for a substantial part of the property or assets of
the Borrower or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $7,500,000 (except to the extent covered
by insurance as to which the insurer has acknowledged in writing its
obligation to cover) shall be rendered against UCAR, the Borrower, any
Significant Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties
of UCAR, the Borrower or any Significant Subsidiary to enforce any such
judgment;
(j) (i) a Reportable Event or Reportable Events, or a failure
to make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code), shall have occurred with respect to any
Plan, (ii) a trustee shall be appointed by a United States district
court to administer any Plan, (iii) the PBGC shall institute
proceedings (including giving notice of intent thereof) to terminate
any Plan, (iv) the Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan and the Borrower or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability or is not contesting such Withdrawal
Liability in a timely and
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appropriate manner, (v) the Borrower or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, (vi) the Borrower or any ERISA
Affiliate shall engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(vii) any other similar event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vii) above,
such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material
Adverse Effect;
(k) (i) any Loan Document (other than a Local Facility Loan
Document) shall for any reason be asserted by UCAR, the Borrower or any
Subsidiary not to be a legal, valid and binding obligation of any party
thereto, (ii) any security interest purported to be created by any
Security Document and to extend to assets which are not immaterial to
UCAR, the Borrower and the Subsidiaries on a consolidated basis shall
cease to be, or shall be asserted by the Borrower or any other Loan
Party not to be, a valid, perfected, first priority (except as
otherwise expressly provided in this Agreement or such Security
Document) security interest in the securities, assets or properties
covered thereby, except to the extent that any such loss of perfection
or priority results from the failure of the Collateral Agent to
maintain possession of certificates representing securities pledged
under the Pledge Agreements or to file Uniform Commercial Code
continuation or other similar statements or (iii) the Obligations of
UCAR and the Borrower and the guarantee by UCAR thereof pursuant to the
Parent Guarantee Agreement shall cease to constitute senior
indebtedness under the subordination provisions of any document or
instrument evidencing any permitted subordinated Indebtedness or such
subordination provisions shall be invalidated or otherwise cease to be
legal, valid and binding obligations of the parties thereto,
enforceable in accordance with their terms;
(l) the Administrative Agent or the Required Lenders shall
have given notice to the Borrower of any event of default under any
Local Facility Credit Agreement; or
(m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders, shall, by notice to the Borrower, take any or all of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments, (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part and (iii) demand cash collateral pursuant to Section
2.20(h), whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest and premiums thereon and any unpaid accrued Fees
and all other liabilities of the Credit Parties accrued hereunder and under any
other Loan Document (other than any Local Facility Loan Document),
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shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and in any event with respect to the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate, the principal of the Loans then outstanding, together with accrued
interest and premiums thereon and any unpaid accrued Fees and all other
liabilities of the Credit Parties accrued hereunder and under any other Loan
Document (other than any Local Facility Loan Document), shall automatically
become due and payable and the Administrative Agent shall be deemed to have made
a demand for cash collateral to the full extent permitted under Section 2.20(h),
without present ment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Credit Parties , anything contained
herein or in any other Loan Document to the contrary notwithstanding. As soon as
practicable following any acceleration hereunder the Administrative Agent shall
advise the Local Facility Lenders thereof.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
In order to expedite the transactions contemplated by this
Agreement, The Chase Manhattan Bank is hereby appointed to act as Administrative
Agent and Collateral Agent on behalf of the Lenders and the Fronting Banks (for
purposes of this Article VIII, the Administrative Agent and the Collateral Agent
are referred to collectively as the "AGENTS"). Each of the Lenders and each
assignee of any such Lender hereby irrevocably authorizes the Agents to take
such actions on behalf of such Lender or assignee or such Fronting Bank and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders and the Fronting Banks,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders and the Fronting Banks all payments of principal of and interest on the
Loans, all payments in respect of L/C Disbursements and all other amounts due to
the Lenders and the Fronting Banks hereunder, and promptly to distribute to each
Lender or Fronting Bank its proper share of each payment so received; (b) to
give notice on behalf of each of the Lenders to the Borrower of any Event of
Default specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by the Borrower pursuant to this Agreement as received by
the Administrative Agent. Without limiting the generality of the foregoing, the
Agents are hereby expressly authorized to execute any and all documents
(including releases) with respect to the Collateral and the rights of the
Secured Parties with respect thereto, as contemplated by and in accordance with
the provisions of this Agreement and the Security Documents. In the event that
any party other than the Lenders and the Agents shall participate in all or any
portion of the Collateral pursuant to the Security Documents,
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all rights and remedies in respect of such Collateral shall be
controlled by the Collateral Agent.
Neither the Agents nor any of their respective directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his own gross negligence or wilful
misconduct, or be responsible for any statement, warranty or representation
herein or the contents of any document delivered in connection herewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by the Borrower or any other Loan Party of any of the terms,
conditions, covenants or agreements contained in any Loan Document. The Agents
shall not be responsible to the Lenders for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement or any other Loan
Documents or other instruments or agreements. The Agents shall in all cases be
fully protected in acting, or refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Agents nor any of
their respective directors, officers, employees or agents shall have any
responsibility to the Borrower or any other Loan Party on account of the failure
of or delay in performance or breach by any Lender or any Fronting Bank of any
of its obligations hereunder or to any Lender or any Fronting Bank on account of
the failure of or delay in performance or breach by any other Lender or Fronting
Bank or the Borrower or any other Loan Party of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith. Each of the Agents may execute any and all duties hereunder by or
through agents or employees and shall be entitled to rely upon the advice of
legal counsel selected by it with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be
under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders. The Lenders further acknowledge and
agree that so long as an Agent shall make any determination to be made by it
hereunder or under any other Loan Document in good faith, such Agent shall have
no liability in respect of such determination to any person.
Subject to the appointment and acceptance of a successor Agent
as provided below, either Agent may resign at any time by notifying the Lenders
and the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor with the consent of the Borrower (not to be
unreasonably withheld). If no successor shall have been so appointed by the
Required Lenders and approved by the Borrower and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders with the
consent of the Borrower (not to be unreasonably
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withheld), appoint a successor Agent which shall be a bank with an office in New
York, New York, having a combined capital and surplus of at least $500,000,000
or an Affiliate of any such bank. Upon the acceptance of any appointment as
Agent hereunder by a successor bank, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After the Agent's resignation hereunder, the provisions of this
Article and Section 9.05 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in
its individual capacity and not as Agent shall have the same rights and powers
as any other Lender and may exercise the same as though it were not an Agent,
and the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in
the amount of its pro rata share (based on its Commit ments hereunder (or if
such Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of its applicable outstanding Loans or
participations in L/C Disbursements, as applicable)) of any reasonable expenses
incurred for the benefit of the Lenders by the Agents, including counsel fees
and compensation of agents and employees paid for services rendered on behalf of
the Lenders, which shall not have been reimbursed by the Borrower and (b) to
indemnify and hold harmless each Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from and
against any and all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against it in
its capacity as Agent or any of them in any way relating to or arising out of
this Agreement or any other Loan Document or any action taken or omitted by it
or any of them under this Agreement or any other Loan Document, to the extent
the same shall not have been reimbursed by the Borrower; PROVIDED that no Lender
shall be liable to an Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or wilful misconduct of such
Agent or any of its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and
without reliance upon the Agents or any other Lender 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 Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
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No Managing Agent shall have any liability hereunder by virtue
of its execution of this Agreement as a Managing Agent.
As soon as practicable after it becomes aware of an Event of
Default that has occurred and is continuing, the Administrative Agent shall
notify each Lender thereof.
In its capacity as Administrative Agent hereunder, the
Administrative Agent will serve as Representative of the Bank Indebtedness under
the Senior Subordinated Indenture and the Senior Subordinated Exchange Indenture
and agrees to notify each Lender of any notice received by it as such
Representative.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:
(a) if to the Borrower, to it at UCAR Global Enterprises Inc.,
39 Old Ridgebury Road, Danbury, CT 06817-0001, Attention of President
(Telecopy No. (203) 207-7785), and if to UCAR, to
it in care of the Borrower;
(b) if to the Administrative Agent, to The Loan and Agency
Services Group, 8th floor, One Chase Manhattan Plaza, New York, New
York 10081 Attention: Janet Belden (Telecopy No. (212) 552-5658) with a
copy to James Ramage, The Chase Manhattan Bank, 270 Park Avenue, New
York, New York 10017 (Telecopy No. (212) 270-4724);
(c) if to a Fronting Bank or to any Credit Party (other than
the Borrower), to it at its address (or telecopy number) set forth in
Schedule 9.01; and
(d) if to a Lender, to it at its address (or telecopy number)
set forth in the Administrative Questionnaire delivered to the
Administrative Agent by such Lender in connection with the execution of
this Agreement or in the Assignment and Acceptance pursuant to which
such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants,
agreements, representations and warranties made by the Borrower, the
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other Credit Parties and the Guarantors herein, in the other Loan Documents and
in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and the Fronting Banks and
shall survive the making by the Lenders of the Loans, the execution and delivery
to the Lenders of the Loan Documents and the issuance of the Letters of Credit,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or L/C Disbursement or any Fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not been terminated. Without prejudice to the survival of any other
agreements contained herein, indemnification and reimbursement obligations
contained herein (including pursuant to Sections 2.13, 2.15, 2.19 and 9.05)
shall survive the payment in full of the principal and interest hereunder, the
expiration of the Letters of Credit and the termination of the Commitments or
this Agreement.
SECTION 9.03. BINDING EFFECT. This Agreement shall become
effective when it shall have been executed by UCAR, the Borrower, and the
Administrative Agent and when the Administrative Agent shall have received
copies hereof which, when taken together, bear the signatures of each of the
other parties hereto, and thereafter shall be binding upon and inure to the
benefit of UCAR, the Borrower, the other Credit Parties, each Fronting Bank, the
Administrative Agent and each Lender and their respective permitted successors
and assigns.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of UCAR, the Borrower, the
other Credit Parties, the Administrative Agent, the Fronting Banks or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations as a Lender under this
Agreement (including all or a portion of its Commitments, the Loans and L/C
Disbursements at the time owing to it and participations in Letters of Credit
and Swingline Loans held by it, it being understood that Lenders shall not be
required to assign pro rata amounts of their Loans, L/C Disbursements, Revolving
Credit Commitments, Term Commitments and Tranche A Reimbursement Commitments,
except that Tranche A Exposures, Tranche A Reimbursement Commitments and Tranche
A Term Loans may only be assigned in pro rata amounts); PROVIDED, HOWEVER, that
(i) except in the case of an assignment to another Lender, an Affiliate of such
Lender or a Related Fund of any Lender, (A) in each case, the Borrower and the
Administrative Agent must each give its prior written consent to such assignment
(which consent shall not in either case be unreasonably withheld or delayed),
PROVIDED that the consent of the Borrower shall not be required if an Event of
Default shall have occurred and be continuing, (B) in the case of participations
in Letters of Credit, Tranche A Reimbursement
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Commitments or Revolving Credit Commitments, each applicable Fronting Bank must
give its prior written consent to such assignment (which consent shall not in
any case be unreasonably withheld or delayed) and (C) in the case of
participations in Swingline Loans or Revolving Credit Commitments, the Swingline
Lender must give its prior consent to such assignment (which consent in any case
shall not be unreasonably withheld), (ii) except in the case of an assignment to
another Lender, an Affiliate of such Lender or a Related Fund of any Lender, the
amount of the Loans, L/C Disbursements, Commitments or participations in Letters
of Credit or Swingline Loans of the assigning Lender subject to such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall be an amount not less
than $5,000,000 and an integral multiple of $1,000,000 or shall be the entire
remaining amount of such Loans, L/C Disbursements, Commitments or participations
in Letters of Credit or Swingline Loans held by such assigning Lender, (iii)
unless the assignor ceases to be a Lender, the aggregate amount of the Loans and
L/C Disbursements owing to and unused Commitments of such Lender after giving
effect to such assignment shall be not less than $5,000,000, (iv) the parties to
each such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500 (except that no such processing and registration fee shall be payable in
the case of an assignee which is already a Lender, an Affiliate of such Lender
or a Related Fund of any Lender), and (v) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this
Section 9.04, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof unless agreed otherwise by the Administrative Agent, (i) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement and (ii) the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.13, 2.15, 2.19 and 9.05, as well as to any Fees accrued for its account and
not yet paid).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Commitments, Tranche A Reimbursement Commitment and Revolving Credit
Commitment, and the outstanding balances of its Loans and L/C Disbursements and
its participations in Letters of Credit and Swingline Loans, in each case
without giving effect to assignments thereof which have not become effective,
are as set forth in such Assignment and Acceptance; (ii) except as set forth in
clause (i) above, such assigning Lender makes no representation or
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warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto, or the financial condition of the
Borrower or any other Loan Party or the performance or observance by the
Borrower or any other Loan Party of any of its obligations under this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such Assignment and Acceptance; (iv) such
assignee confirms that it has received copies of this Agreement and the other
Loan Documents, together with copies of the most recent financial statements
delivered pursuant to this Agreement and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (v) such assignee will independently and
without reliance upon the Administrative Agent, any Fronting Bank, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent and the Collateral
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at its address referred to in subsection
9.01 a copy of each Assignment and Acceptance delivered to it and a register
(the "REGISTER") for the recordation of the names and addresses of the Lenders
and the Commitments of, and principal amount of the Loans and L/C Disbursements
owing to, each Lender from time to time. The Administrative Agent shall also
record the Letter of Credit Exposure of each Lender in the Register. The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the other Credit Parties, the Administrative Agent, the Fronting Banks
and the Lenders shall treat each person whose name is recorded in the Register
as the owner of Commitments and the Loans and Letter of Credit Exposures
recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower, the other Credit Parties, the Fronting
Banks, any Lender and their representatives (including counsel and accountants),
at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above and, if required, the written consent of the Borrower,
the applicable Fronting Banks, the Swingline Lender and the
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Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders.
Notwithstanding anything to the contrary contained herein, no assignment under
Section 9.04(b) of any rights or obligations shall be effective unless and until
the Administrative Agent shall have recorded such assignment in the Register.
The Administrative Agent shall record the name of the transferor, the name of
the transferee, and the amount of the transfer in the Register after receipt of
all documents required pursuant to this Section 9.04 and such other documents as
the Administrative Agent may reasonably request.
(f) Each Lender may without the consent of the Borrower, any
other Credit Party, any Fronting Bank, the Swingline Lender or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments, the Loans owing to it, its
Letter of Credit Exposure and the participations in Letters of Credit and
Swingline Loans held by it); PROVIDED, HOWEVER, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Section
2.13, 2.15, 2.19 and 9.05 to the same extent as if they were Lenders; PROVIDED
that no such participating bank or entity shall be entitled to receive any
greater amount pursuant to such Sections than a Lender would have been entitled
to receive in respect of the amount of the participation sold by such Lender to
such participating bank or entity had no sale occurred, and (iv) the Borrower,
the other Credit Parties, the Administrative Agent, the Fronting Banks, the
Swingline Lender and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower or any other Loan Party, as the case may
be, relating to its Loans, Letter of Credit Exposure and participations in
Letters of Credit and Swingline Loans and Fees and to approve any amendment,
modification or waiver of any provision of this Agreement or any other Loan
Document (other than amendments, modifications or waivers decreasing any Fee
payable hereunder or the amount of principal of or the rate at which interest is
payable on the Loans or L/C Disbursements, extending any final maturity date or
increasing any Commitment, in each case in respect of an Obligation in which the
relevant participating bank or entity is participating, or releasing all or
substantially all of the Collateral or any Guarantor (other than a Subsidiary
which is not a Significant Subsidiary) from its Guarantee Agreement unless all
or substantially all the Capital Stock of such Guarantor is sold in a
transaction permitted by this Agreement or as provided in Section 9.18). Each
Lender will disclose the identity of its participants to the Borrower and
Administrative Agent if requested by the Borrower or the Administrative Agent.
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 9.04, disclose to the
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assignee or participant or proposed assignee or participant any information
relating to the Borrower or any other Loan Party furnished to such Lender by or
on behalf of the Borrower or any Loan Party; PROVIDED that, prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree to be bound by Section 9.17.
(h) Any Lender may at any time assign all or any portion of
its rights under this Agreement to a Federal Reserve Bank, and any Lender that
is a fund that invests in bank loans may, without the consent of the
Administrative Agent or the Borrower, pledge all or any portion of its Loans and
Notes, if any, to any trustee for, or any other representative of, holders of
obligations owed, or securities issued, by such fund, as security for such
obligations or securities; PROVIDED that any foreclosure or similar action by
such trustee shall be subject to the provisions of this Section concerning
assignments; PROVIDED FURTHER that no such assignment shall release a Lender
from any of its obligations hereunder. In order to facilitate such an assignment
to a Federal Reserve Bank or to any trustee or other representative, the
Borrower shall, at the request of the assigning Lender, duly execute and deliver
to the assigning Lender a promissory note or notes evidencing the Loans made to
the Borrower by the assigning Lender hereunder.
(i) In the event that S&P or Moody's shall, after the date
that any Lender becomes a Lender, downgrade the long-term certificate of deposit
ratings or long-term senior unsecured debt ratings of such Lender (or the parent
company thereof), and the resulting ratings shall be BBB+ or Baa1 or lower, then
each applicable Fronting Bank shall have the right, but not the obligation, at
its own expense, upon notice to such Lender and the Administrative Agent, to
replace (or to request the Borrower, at the sole expense of such Fronting Bank,
to use its reasonable efforts to replace) such Lender with respect to such
Lender's Tranche A Reimbursement Commitment or Revolving Credit Commitment, as
applicable, with an assignee (in accordance with and subject to the restrictions
contained in paragraph (b) above), and such Lender hereby agrees to transfer and
assign without recourse (in accordance with and subject to the restrictions
contained in paragraph (b) above) all its interests, rights and obligations in
respect of its Tranche A Reimbursement Commitment or Revolving Credit
Commitment, as applicable, to such assignee; PROVIDED, HOWEVER, that (i) no such
assignment shall conflict with any law, rule and regulation or order of any
Governmental Authority and (ii) such assignee shall pay to such Lender in
immediately available funds on the date of such assignment the principal of and
interest accrued to the date of payment on the Loans and L/C Disbursements of
such Lender hereunder and all other amounts accrued for such Lender's account or
owed to it hereunder.
(j) None of UCAR, the Borrower and the other Credit Parties
shall assign or delegate any of its rights or duties hereunder and any attempted
assignment shall be null and void.
(k) Except as provided in Section 2.13(d), no Fronting Bank
shall assign or delegate any of its interests, rights or obligations as a
Fronting Bank under this Agreement without the
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122
prior written consent of the Borrower, each applicable Credit Party, the
Administrative Agent and the Required Lenders.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to
pay all reasonable out-of-pocket expenses incurred by the Administrative Agent
and the Collateral Agent in connection with the preparation of this Agreement
and the other Loan Documents, or by the Administrative Agent or the Collateral
Agent in connection with the syndication of the Commitments or the
administration of this Agreement (including expenses incurred in connection with
ongoing Collateral examination to the extent incurred with the reasonable prior
approval of the Borrower) or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by the Administrative
Agent, the Collateral Agent or any Lender in connection with the enforcement or
protection of their rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made or the Letters of Credit issued
hereunder, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent and the Collateral Agent,
and, in connection with any such enforcement or protection, the reasonable fees,
charges and disbursements of any other counsel (including the reasonable
allocated costs of internal counsel if a Lender elects to use internal counsel
in lieu of outside counsel) for the Administrative Agent, any Fronting Bank or
any Lender (but no more than one such counsel for any Lender).
(b) The Borrower agrees to indemnify the Administrative Agent,
the Collateral Agent, each Fronting Bank, each Lender and each of their
respective directors, trustees, officers, employees and agents (each such person
being called an "INDEMNITEE") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto and thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated hereby and thereby, (ii) the use of the proceeds of the Loans or
the use of any Letter of Credit or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee (treating, for this purpose only, the
Administrative Agent, any Fronting Bank or any Lender and its directors,
trustees, officers and employees as a single Indemnitee). Subject to and without
limiting the generality of the foregoing sentence, the Borrower agrees to
indemnify each Indemnitee against, and hold each Indemnitee harmless from, any
Environmental Claim, and any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel or consultant fees, charges and
disbursements,
<PAGE>
123
incurred by or asserted against any Indemnitee (and arising out of, or in any
way connected with or as a result of, any of the events described in clause (i),
(ii) or (iii) of the preceding sentence) arising out of, in any way connected
with, or as a result of (A) any Environmental Claim related in any way to UCAR,
the Borrower or any Subsidiary, (B) any violation of any Environmental Law, (C)
any act, omission, event or circumstance (including the actual, proposed or
threatened, Release, removal, presence, disposition, discharge or
transportation, storage, holding, existence, generation, processing, abatement,
handling or presence on, into, from or under any present, past or future
property of UCAR, the Borrower or any Subsidiary of any Hazardous Material);
PROVIDED that such indemnity shall not, as to any Indemnitee, be available to
the extent that such Environmental Claim is, or such losses, claims, damages,
liabilities or related expenses are, determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee or any of its directors,
trustees, officers or employees. The provisions of this Section 9.05 shall
remain operative and in full force and effect regardless of the expiration of
the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent,
any Fronting Bank or any Lender. All amounts due under this Section 9.05 shall
be payable on written demand therefor.
(c) Unless an Event of Default shall have occurred and be
continuing, the Borrower shall be entitled to assume the defense of any action
for which indemnification is sought hereunder with counsel of its choice at its
expense (in which case the Borrower shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by an Indemnitee except as
set forth below); PROVIDED, HOWEVER, that such counsel shall be reasonably
satisfactory to each such Indemnitee. Notwithstanding the Borrower's election to
assume the defense of such action, each Indemnitee shall have the right to
employ separate counsel and to participate in the defense of such action, and
the Borrower shall bear the reasonable fees, costs and expenses of such separate
counsel, if (i) the use of counsel chosen by the Borrower to represent such
Indemnitee would present such counsel with a conflict of interest; (ii) the
actual or potential defendants in, or targets of, any such action include both
the Borrower and such Indemnitee and such Indemnitee shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to the Borrower (in which case the
Borrower shall not have the right to assume the defense or such action on behalf
of such Indemnitee); (iii) the Borrower shall not have employed counsel
reasonably satisfactory to such Indemnitee to represent it within a reasonable
time after notice of the institution of such action; or (iv) the Borrower shall
authorize such Indemnitee to employ separate counsel at the Borrower's expense.
The Borrower will not be liable under this Agreement for any amount paid by an
Indemnitee to settle any claims or actions if the settlement is entered into
without the Borrower's consent, which consent may not be withheld or delayed
unless such settlement is
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124
unreasonable in light of such claims or actions against, and defenses available
to, such Indemnitee.
(d) Notwithstanding anything to the contrary in this Section
9.05, this Section 9.05 shall not apply to taxes, it being understood that the
Borrower's only obligations with respect to taxes shall arise under Sections
2.13 and 2.19.
SECTION 9.06. RIGHT OF SETOFF. If an Event of Default shall
have occurred and be continuing, each Lender and each Fronting Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender or such Fronting Bank to or for the credit or the
account of the Borrower or any other Credit Party against any of and all the
obligations of the Borrower or any Credit Party now or hereafter existing under
this Agreement or any other Loan Document held by such Lender or Fronting Bank,
irrespective of whether or not such Lender or such Fronting Bank shall have made
any demand under this Agreement or such other Loan Document and although such
obligations may be unmatured. The rights of each Lender and Fronting Bank under
this Section 9.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender or such Fronting Bank may have.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER
LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of
the Administrative Agent, any Fronting Bank or any Lender in exercising any
right or power hereunder or under any Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the
Fronting Banks and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by UCAR, the Borrower or any other Loan
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on UCAR, the Borrower or any other Loan Party in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances.
<PAGE>
125
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by UCAR, the Borrower, the other Credit Parties and the Required
Lenders or, in the case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by each party thereto and the Collateral
Agent and consented to by the Required Lenders; PROVIDED, HOWEVER, that no such
agreement shall (i) decrease the principal amount of, or extend the final
maturity of, or decrease the rate of interest on, any Loan or any L/C
Disbursement, without the prior written consent of each Lender directly affected
thereby, (ii) extend any Installment Date (other than any final maturity), or
extend any date on which payment of interest on any Loan or any L/C Disbursement
is due, without the prior written consent of (A) in the case of Term Loans or
the Tranche A Exposure, the Required Lenders and Lenders holding Term Loans or
having Tranche A Exposures representing at least 80% of the aggregate principal
amount of each Tranche affected by such action or (B) in the case of Loans under
the Revolving Credit Commitments and Revolving L/C Disbursements, Lenders with
Revolving Credit Commitments representing at least 80% of the aggregate
Revolving Credit Commitments then in effect, (iii) advance any Installment Date
without the prior written consent of Lenders holding Term Loans or having
Tranche A Exposures representing (A) at least 80% of the aggregate principal
amount of the then outstanding Tranche A Term Loans and the Tranche A Exposure
and (B) at least 80% of the aggregate principal amount of the then outstanding
Tranche B Term Loans, (iv) increase or extend the Commitment of any Lender or
decrease the Commitment Fees or L/C Participation Fees or other fees of any
Lender without the prior written consent of such Lender, (v) effect any waiver,
amendment or modification that by its terms adversely affects the rights in
respect of payments or collateral of Lenders participating in any Tranche
differently from those of Lenders participating in the other Tranche, without
the consent of a majority in interest of the Lenders participating in the
adversely affected Tranche, or change the relative rights in respect of payments
or collateral of the Lenders participating in different Tranches without the
consent of a majority in interest of Lenders participating in each affected
Tranche, (vi) release Collateral, in one transaction or a series of
transactions, representing in the aggregate (based on the book value of such
released Collateral) more than 10% of the book value of Total Assets set forth
in UCAR's most recent consolidated financial statements delivered pursuant to
Section 5.04 but less than all or substantially all the Collateral, without the
prior written consent of the Designated Lenders or (vii) amend or modify the
provisions of Section 2.09(f), Section 2.11(c) or Section 2.16, the provisions
of this Section or the definition of "Required Lenders", or release all or
substantially all the Collateral or release any Guarantor (other than any
Subsidiary which is not a Significant Subsidiary) from its Guarantee Agreement
unless all or substantially all the Capital Stock of such Guarantor is sold in a
transaction permitted by this Agreement or as provided in Section 9.18, without
the prior written consent of each Lender adversely affected thereby; PROVIDED
FURTHER that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Collateral Agent or any
Fronting Bank hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent, the
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126
Collateral Agent or such Fronting Bank acting as such at the effective date of
such agreement, as the case may be. Each Lender shall be bound by any waiver,
amendment or modification authorized by this Section 9.08 and any consent by any
Lender pursuant to this Section 9.08 shall bind any assignee of such Lender.
SECTION 9.09. INTEREST RATE LIMITATION. Notwithstanding
anything herein to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under
applicable law (collectively the "CHARGES"), as provided for herein or in any
other document executed in connection herewith, or otherwise contracted for,
charged, received, taken or reserved by any Lender or Fronting Bank, shall
exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted for,
charged, taken, received or reserved by such Lender in accordance with
applicable law, the rate of interest payable hereunder, together with all
Charges payable to such Lender or such Fronting Bank, shall be limited to the
Maximum Rate; PROVIDED that such excess amount shall be paid to such Lender or
such Fronting Bank on subsequent payment dates to the extent not exceeding the
legal limitation.
SECTION 9.10. ENTIRE AGREEMENT. This Agreement, the other Loan
Documents and the agreements regarding certain Fees referred to herein
constitute the entire contract between the parties relative to the subject
matter hereof. Any previous agreement among or representations from the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12. SEVERABILITY. In the event any one or more of
the provisions contained in this Agreement or in any other Loan Document should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
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127
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.14. HEADINGS. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
Each of UCAR, the Borrower and the other Credit Parties hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Lender or Fronting
Bank may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against UCAR, the Borrower, any other
Credit Party or any Guarantor or their properties in the courts of any
jurisdiction.
(b) Each of UCAR, the Borrower and the other Credit Parties
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or the other Loan Documents in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.16. CONVERSION OF CURRENCIES. (a) If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum due
hereunder or under any other Loan Document in Dollars into another currency, the
parties hereto agree, to the fullest extent that they may legally and
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase Dollars with such other currency in New York, New York, on the
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128
Business Day immediately preceding the day on which final judgment is given.
(b) The obligations of UCAR, the Borrower and the other Credit
Parties in respect of any sum due to the Administrative Agent, any Lender or any
Fronting Bank hereunder or under any other Loan Document in Dollars shall, to
the extent permitted by applicable law, notwithstanding any judgment in a
currency other than Dollars, be discharged only to the extent that on the
Business Day following receipt of any sum adjudged to be so due in the judgment
currency, the Administrative Agent, such Lender or such Fronting Bank may in
accordance with normal banking procedures purchase Dollars in the amount
originally due to the Administrative Agent, such Lender or such Fronting Bank
with the judgment currency. If the amount of Dollars so purchased is less than
the sum originally due to the Administrative Agent, such Lender or such Fronting
Bank, the Borrower agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Administrative Agent, such Lender or such Fronting
Bank against the resulting loss.
SECTION 9.17. CONFIDENTIALITY. Each of the Lenders, the
Fronting Banks and the Administrative Agent agrees that it shall maintain in
confidence any information relating to UCAR, the Borrower and the other Loan
Parties furnished to it by or on behalf of UCAR, the Borrower or the other Loan
Parties (other than information that (a) has become generally available to the
public other than as a result of a disclosure by such party, (b) has been
independently developed by such Lender, such Fronting Bank or the Administrative
Agent without violating this Section 9.17 or (c) was available to such Lender,
such Fronting Bank or the Administrative Agent from a third party having, to
such person's knowledge, no obligations of confidentiality to UCAR, the Borrower
or any other Loan Party) and shall not reveal the same other than (i) to its
directors, trustees, officers, employees and advisors with a need to know (so
long as each such person shall have been instructed to keep the same
confidential in accordance with this Section 9.17) and (ii) as contemplated by
Section 9.04(g), except: (A) to the extent necessary to comply with law or any
legal process or the requirements of any Governmental Authority or of any
securities exchange on which securities of the disclosing party or any Affiliate
of the disclosing party are listed or traded, (B) as part of normal reporting or
review procedures to Governmental Authorities, (C) to its parent companies,
Affiliates or auditors (so long as each such person shall have been instructed
to keep the same confidential in accordance with this Section 9.17) and (D) in
order to enforce its rights under any Loan Document in a legal proceeding.
SECTION 9.18. RELEASE OF LIENS AND GUARANTEES. In the event
that UCAR, the Borrower or any Subsidiary conveys, sells, leases, assigns,
transfers or otherwise disposes of all or any portion of any of the Capital
Stock, assets or property of UCAR, the Borrower or any of the Subsidiaries in a
transaction not prohibited by Section 6.05, the Administrative Agent and the
Collateral Agent shall promptly (and the Lenders hereby authorize the
Administrative Agent and the Collateral Agent to) take such action and execute
any such documents as may be reasonably requested by the Borrower and at the
Borrower's expense to release any Liens created by any Loan Document in respect
of such Capital Stock, assets or property, and,
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129
in the case of a disposition of all or substantially all the Capital Stock or
assets of any Subsidiary Guarantor, terminate such Subsidiary Guarantor's
obligations under any Guarantee Agreements to which it is a party. In addition,
the Administrative Agent and the Collateral Agent agree to take such actions as
are reasonably requested by the Borrower and at the Borrower's expense to
terminate the Liens and security interests created by the Loan Documents when
all the Obligations are paid in full and all Letters of Credit and Commitments
are terminated. Any representation, warranty or covenant contained in any Loan
Document relating to any such Capital Stock, assets, property or Subsidiary
shall no longer be deemed to be made once such Capital Stock, assets or property
is conveyed, sold, leased, assigned, transferred or disposed of.
SECTION 9.19. SUBSIDIARY BORROWERS. On or after the Effective
Date, the Borrower may designate any Wholly Owned Subsidiary as a Subsidiary
Borrower by delivery to the Administrative Agent of a Subsidiary Borrower
Agreement executed by such Subsidiary and the Borrower, and upon (a) such
delivery, (b) approval by the Administrative Agent and (c) if required, approval
by the applicable Fronting Bank, such Subsidiary shall for all purposes of this
Agreement be a Subsidiary Borrower and a party to this Agreement until the
Borrower shall have executed and delivered to the Administrative Agent a
Subsidiary Borrower Termination with respect to such Subsidiary, whereupon such
Subsidiary shall cease to be a Subsidiary Borrower and a party to this
Agreement. The Borrower shall be required to promptly deliver a Subsidiary
Borrower Termination with respect to any Subsidiary that ceases to be a Wholly
Owned Subsidiary. Notwithstanding the foregoing, no Subsidiary Borrower
Termination will become effective as to any Subsidiary Borrower at a time when
any principal of or interest on any Loan to such Subsidiary Borrower shall be
outstanding hereunder or such Subsidiary Borrower shall be an account party
under an outstanding Letter of Credit or there shall be any unreimbursed L/C
Disbursements in respect of any Letter of Credit under which such Subsidiary
Borrower was the account party; PROVIDED that such Subsidiary Borrower
Termination shall be effective to terminate such Subsidiary Borrower's right to
make further Borrowings or request Letters of Credit under this Agreement. As
soon as practicable upon receipt of a Subsidiary Borrower Agreement, the
Administrative Agent shall send a copy thereof to each Lender.
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130
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.
UCAR INTERNATIONAL INC.,
by
/S/ CORRADO F. DEGASPERIS
--------------------------------------
Name:Corrado F. DeGasparis
Title:Controller
UCAR GLOBAL ENTERPRISES INC.,
by
/S/ CORRADO F. DEGASPERIS
---------------------------------------
Name:Corrado F. DeGasperis
Title:Controller
UCAR HOLDINGS S.A.,
by
/S/ CORRADO F. DEGASPERIS
---------------------------------------
Name:Corrado F. DeGasperis
Title:Controller
UCAR S.p.A.,
by
/S/ CORRADO F. DEGASPERIS
---------------------------------------
Name:Corrado F. DeGasperis
Title:Attorney-in-Fact
UCAR ELECTRODOS, S.L.,
by
/S/ CORRADO F. DEGASPERIS
---------------------------------------
Name:Corrado F. DeGasperis
Title:Attorney-in-Fact
UCAR INC.,
by
/S/ CORRADO F. DEGASPERIS
---------------------------------------
Name:Corrado F. DeGasperis
Title:Attorney-in-Fact
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131
UCAR MEXICANA S.A. de C.V.,
by
/S/ CORRADO F. DEGASPERIS
---------------------------------------
Name:Corrado F. DeGasperis
Title:Attorney-in-Fact
THE CHASE MANHATTAN BANK,
individually and as Fronting Bank,
Administrative Agent and
Collateral Agent,
by
/S/ MARIAN N. SCHULMAN
---------------------------------------
Name:Marian N. Schulman
Title:Vice President
ABN AMRO BANK, N.V.,
by
/S/ DAVID A. MANDELL
---------------------------------------
Name:David A. Mandell
Title:Senior Vice President
by
/S/ GEORGE DUGAN
---------------------------------------
Name:George Dugan
Title:Vice President
AMSOUTH BANK OF ALABAMA,
by
/S/ R. MARK GRAF
---------------------------------------
Name:R. Mark Graf
Title:Senior Vice President
by
/S/ KIMBLE L. VARDAMAN
---------------------------------------
Name:Kimble L. Vardaman
Title:Senior Vice President
BANCA COMMERCIALE ITALIANA, NEW
YORK BRANCH,
by
/S/ KAREN PURELIS
---------------------------------------
Name:Karen Purelis
Title:Vice President
by
/S/ CHARLES DOUGHERTY
---------------------------------------
Name:Charles Dougherty
Title:Vice President
<PAGE>
132
BANKBOSTON N.A.,
by
/S/ HARVEY H. THAYER
---------------------------------------
Name:Harvey H. Thayer
Title:Managing Director
BANK OF AMERICA NT&SA,
by
/S/ DONALD J. CHIN
---------------------------------------
Name:Donald J. Chin
Title:Managing Director
THE BANK OF NEW YORK,
by
/S/ KENNETH P. SNEIDER, JR.
---------------------------------------
Name:Kenneth P. Sneider, Jr.
Title:Vice President
THE BANK OF NOVA SCOTIA,
by
/S/ JAMES R. TRIMBLE
---------------------------------------
Name:James R. Trimble
Title:Sr. Relationship Manager
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by
/S/ NICHOLAS CAMPBELL
---------------------------------------
Name:Nicholas Campbell
Title:Vice President
BANQUE NATIONALE DE PARIS,
by
/S/ RICHARD L. STED
---------------------------------------
Name:Richard L. Sted
Title:Senior Vice President
by
/S/ SOPHIE REVILLARD KAUFMAN
---------------------------------------
Name:Sophie Revillard Kaufman
Title:Vice President
<PAGE>
133
BHF-BANK AKTIENGESELLSCHAFT,
by
/S/ ROBERT NOVAK
---------------------------------------
Name:Robert Novak
Title:Assistant Treasurer
by
/S/ GEOFFREY GWIN
---------------------------------------
Name:Geoffrey Gwin
Title:Assistant Treasurer
CERES FINANCE LTD.,
by
/S/ JOHN CULLINANE
---------------------------------------
Name:John Cullinane
Title:Director
CIBC INC.,
by
/S/ IHOR ZALUCKYJ
---------------------------------------
Name:Ihor Zaluckyj
Title:Executive Director
CREDIT AGRICOLE INDOSUEZ,
by
/S/ CRAIG WELCH
---------------------------------------
Name:Craig Welch
Title:First Vice President
by
/S/ SARAH MCCLINTOCK
---------------------------------------
Name:Sarah McClintock
Title:Vice President, TL
CREDIT LYONNAIS NEW YORK BRANCH,
by
/S/ VLADIMIR LABUN
---------------------------------------
Name:Vladimir Labun
Title:First Vice President-
Manager
THE DAI-ICHI KANGYO BANK, LIMITED,
by
/S/ RONALD WOLINSKY
---------------------------------------
Name:Ronald Wolinsky
Title:Vice President &
Group Leader
<PAGE>
134
FIRST AMERICAN NATIONAL BANK,
by
/S/ WARD C. WILSON
---------------------------------------
Name:Ward C. Wilson
Title:Senior Vice President
FIRST UNION NATIONAL BANK,
SUCCESSOR BY MERGER TO CORESTATES
BANK, N.A.,
by
/S/ ROBERT A. BROWN
---------------------------------------
Name:Robert A. Brown
Title:Vice President
FLEET NATIONAL BANK,
by
/S/ ROBERT C. RUBINO
---------------------------------------
Name:Robert C. Rubino
Title:Senior Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION,
by
/S/ JANET K. WILLIAMS
---------------------------------------
Name:Janet K. Williams
Title:Duly Authorized Signatory
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
by
/S/ TAKUYA HONJO
---------------------------------------
Name:Takuya Honjo
Title:Senior Vice President
<PAGE>
135
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.,
by
/S/ WENDELL JONES
---------------------------------------
Name:Wendell Jones
Title:Vice President
by
/S/ ETTORE VIAZZO
---------------------------------------
Name:Ettore Viazzo
Title:Vice President
KBC BANK, N.V.,
by
/S/ ROBERT M. SURDAM, JR.
---------------------------------------
Name:Robert M. Surdam, Jr.
Title:Vice President
by
/S/ ROBERT SNAUFFER
---------------------------------------
Name:Robert Snauffer
Title:First Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
by
/S/ KOJI SASAYAMA
---------------------------------------
Name:Koji Sasayama
Title:Deputy General Manager
MELLON BANK, N.A.,
by
/S/ PETER K. LEE
---------------------------------------
Name:Peter K. Lee
Title:Vice President
MERRILL LYNCH PRIME RATE PORTFOLIO,
BY MERRILL LYNCH ASSET MANAGEMENT,
L.P., AS INVESTMENT ADVISOR,
by
/S/ GILLES MARCHAND
---------------------------------------
Name:Gilles Marchand
Title:CFA, Authorized Signatory
<PAGE>
136
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.,
by
/S/ GILLES MARCHAND
---------------------------------------
Name:Gilles Marchand
Title:CFA, Authorized Signatory
NATEXIS BANQUE BFCE,
by
/S/ CYNTHIA E. SACHS
---------------------------------------
Name:Cynthia E. Sachs
Title:Vice President,
Group Manager
by
/S/ KEVIN MCOWEN
---------------------------------------
Name:Kevin McOwen
Title:Assistant Treasurer
OCTAGON LOAN TRUST
By: Octagan Credit Investors As
Manager,
by
/S/ JOYCE C. DELUCCA
---------------------------------------
Name:Joyce C. DeLucca
Title:Managing Director
PARIBAS,
by
/S/ JOHN J. MCCORMICK, III
---------------------------------------
Name:John J. McCormick, III
Title:Vice President
by
/S/ DOUGLAS R. GOUCHOE
---------------------------------------
Name:Douglas R. Gouchoe
Title:Director
PNC BANK, NATIONAL ASSOCIATION,
by
/S/ MARK W. RUTHERFORD
---------------------------------------
Name:Mark W. Rutherford
Title:Vice President
<PAGE>
137
THE ROYAL BANK OF SCOTLAND PLC,
by
/S/ SCOTT BARTON
---------------------------------------
Name:Scott Barton
Title:Vice President
THE SAKURA BANK, LIMITED,
by
/S/ YOSHIKAZU NAGURA
---------------------------------------
Name:Yoshikazu Nagura
Title:Vice President
THE SANWA BANK, LIMITED,
by
/S/ DOMINIC J. SORRESSO
---------------------------------------
Name:Dominic J. Sorresso
Title:Vice President
SENIOR DEBT PORTFOLIO
By: Boston Management and Research
as Investment Advisor,
by
/S/ PAYSON F. SWAFFIELD
---------------------------------------
Name:Payson F. Swaffield
Title:Vice President
SENIOR HIGH INCOME PORTFOLIO, INC.,
by
/S/ GILLES MARCHAND
---------------------------------------
Name:Gilles Marchand
Title:CFA, Authorized Signatory
SOCIETE GENERALE,
by
/S/ JERRY PARISI
---------------------------------------
Name:Jerry Parisi
Title:Director
THE SUMITOMO BANK, LIMITED,
by
/S/ J. BRUCE MEREDITH
---------------------------------------
Name:J. Bruce Meredith
Title:Senior Vice President
<PAGE>
138
THE TOKAI BANK LIMITED - NEW YORK
BRANCH,
by
/S/ SHINICHI NAKATANI
---------------------------------------
Name:Shinichi Nakatani
Title:Assistant General Manager
THE TRAVELERS INDEMNITY COMPANY,
by
/S/ JOHN W. PETCHLER
---------------------------------------
Name:John W. Petchler
Title:Second Vice President
THE TRAVELERS INSURANCE COMPANY,
by
/S/ JOHN W. PETCHLER
---------------------------------------
Name:John W. Petchler
Title:Second Vice President
THE TRAVELERS LIFE AND ANNUITY
COMPANY,
by
/S/ JOHN W. PETCHLER
---------------------------------------
Name:John W. Petchler
Title:Second Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
by
/S/ JEFFREY W. MAILLET
---------------------------------------
Name:Jeffrey W. Maillet
Title:Senior Vice President &
Director
STRATA FUNDING LTD.,
by
/S/ JOHN CULLINANE
---------------------------------------
Name:John Cullinane
Title:Director
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
LIBOR MARGIN
TRANCHE A
REIMBURSEMENT ABR MARGIN PERMITTED
LOANS AND TRANCHE A OTHER
REVOLVING REMBURSEMENT LIBOR ACQUISITIONS
LOANS/L/C LOANS AND MARGIN ABR MARGIN EXCESS CASH AND SPECIFIED
LEVERAGE PARTICIPATION REVOLVING TRANCHE B TRANCHE B FLOW SWEEP PERMITTED
RATIO FEE LOANS TERM LOANS TERM LOANS PERCENTAGE TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>
greater than 2.75% 1.75% 3.25% 2.25% 75% $75,000,000
or equal to
2.75:1.0
greater than 2.75% 1.75% 3.25% 2.25% 50% $75,000,000
or equal to
2.5:1.0
and less
than
2.75:1.0
greater than 2.50% 1.50% 3.25% 2.25% 50% $100,000,000
or equal to
2.0:1.0
and less
than 2.5:1.0
less than 2.25% 1.25% 3.25% 2.25% 50% $125,000,000
2.0:1.0
</TABLE>
The LIBOR Margin, the ABR Margin, the L/C Participation Fee, the applicable
percentage of Excess Cash Flow referred to in Section 2.12(e) and the aggregate
amount of Permitted Other Acquisitions and Specified Permitted Transactions for
any date shall be determined by reference to the Leverage Ratio as of the last
day of the fiscal quarter most recently ended as of such date and for the period
(the "MEASURED PERIOD") referred to in Section 6.12 for which such last day is
the measuring date (and computed as provided in Section 6.12 with respect to
each such Measured Period), and any change shall become effective upon the
delivery to the Administrative Agent of a certificate of the Borrower signed by
a Responsible Officer of the Borrower (which certificate may be delivered prior
to delivery of the relevant financial statements) with respect to the financial
statements to be delivered pursuant to Section 5.04 for the most recently ended
fiscal quarter (a) setting forth in reasonable detail the calculation of the
Leverage Ratio for such Measured Period and at the end of such fiscal quarter
and (b) stating that the signer has reviewed the terms of this Agreement and
other Loan Documents and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the transactions and condition of
UCAR, the Borrower and the Subsidiaries during the accounting period, and that
the signer does not have knowledge of the existence as at the date of such
officer's certificate of any Event of Default or Default and shall apply (i) in
the case of the applicable LIBOR Margin, to Eurodollar Loans made on and after
such delivery date (including pursuant to any conversion or continuation
pursuant to Section 2.10), (ii) in the case of the applicable ABR Margin, to ABR
Loans made on or after such delivery date (including pursuant to any conversion
or continuation pursuant to Section 2.10) and (iii) in the case of the L/C
Participation Fee, the applicable percentage of Excess Cash Flow referred to in
Section 2.12(e) and Permitted Other Acquisitions and Specified Permitted
Transactions, on and after such delivery date. It is understood that the
foregoing certificate of a Responsible Officer shall be permitted to be
delivered prior to, but in no event later than, the time of the actual delivery
of the financial statements required to be delivered pursuant to Section 5.04.
Notwithstanding the foregoing, at any time during which the Borrower has failed
to deliver the certificate required under Section 5.04(c) with respect to a
fiscal quarter following the date the delivery thereof is due, the Leverage
Ratio shall be deemed, solely for the purposes of this Schedule A, to be greater
than 2.75, until such time as Borrower shall deliver such compliance
certificate.
<PAGE>
Schedule 2.01(a)
LENDERS, COMMITMENTS AND OUTSTANDINGS ON DATE HEREOF
<TABLE>
<CAPTION>
INSTITUTION OUTSTANDING TRANCHE A OUTSTANDING REVOLVING CREDIT
TRANCHE A TERM REIMBURSEMENT TRANCHE B TERM COMMITMENTS AS
LOANS AS OF DATE COMMITMENTS AS LOANS AS OF DATE OF DATE HEREOF
HEREOF OF DATE HEREOF HEREOF
<S> <C> <C> <C> <C>
THE CHASE MANHATTAN BANK $1,023,392.13 $10,976,607.86 $17,853,142.86 $12,499,999.94
ABN AMRO BANK, N.V. 669,141.03 7,177,012.82 0 8,173,076.92
AMSOUTH BANK OF ALABAMA 551,057.32 5,910,481.14 0 6,730,769.24
BANCA COMMERCIALE ITALIANA, NEW
YORK BRANCH 551,057.32 5,910,481.14 0 6,730,769.24
BANKBOSTON, N.A. 393,612.36 4,221,772.24 0 4,807,692.32
BANK OF AMERICA NT&SA 551,057.32 5,910,481.14 0 6,730,769.24
THE BANK OF NEW YORK 669,141.03 7,177,012.82 0 8,173,076.92
THE BANK OF NOVA SCOTIA 669,141.03 7,177,012.82 0 8,173,076.92
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY 669,141.03 7,177,012.82 0 8,173,076.92
BANQUE NATIONALE DE PARIS 551,057.32 5,910,481.14 0 6,730,769.24
BHF-BANK AKTIENGESELLSCHAFT 669,141.03 7,177,012.82 0 8,173,076.92
<PAGE>
CERES FINANCE LTD. 0 0 12,281,142.87 0
CIBC INC. 669,141.03 7,177,012.82 0 8,173,076.92
CORESTATES BANK, N.A. 0 0 0 0
CREDIT AGRICOLE INDOSUEZ 472,334.84 5,066,126.70 0 5,769,230.76
CREDIT LYONNAIS NEW YORK BRANCH 826,585.98 8,865,721.71 0 10,096,153.84
THE DAI-ICHI KANGYO BANK, LIMITED 551,057.32 5,910,481.14 0 6,730,769.24
FIRST AMERICAN NATIONAL BANK 393,612.37 4,221,772.25 0 4,807,692.30
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA 669,141.03 7,177,012.82 0 0
FIRST UNION NATIONAL BANK,
SUCCESSOR BY MERGER TO CORESTATES
BANK, N.A. 551,057.32 5,910,481.14 0 14,903,846.16
FLEET NATIONAL BANK 669,141.03 7,177,012.82 0 8,173,076.92
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION 551,057.32 5,910,481.14 0 6,730,769.24
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH 669,141.03 7,177,012.82 0 8,173,076.92
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A. 393,612.37 4,221,772.25 0 4,807,692.30
KBC BANK, N.V., FORMERLY
KREDIETBANK, N.V., NEW YORK BRANCH 472,334.84 5,066,126.70 0 5,769,230.76
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH 669,141.03 7,177,012.82 0 8,173,076.92
MELLON BANK, N.A. 551,057.32 5,910,481.14 0 6,730,769.24
MERRILL LYNCH PRIME RATE PORTFOLIO,
BY: MERRILL LYNCH ASSET MANAGEMENT,
L.P., AS INVESTMENT ADVISOR 0 0 14,328,000.00 0
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC. 0 0 10,120,571.44 0
<PAGE>
NATEXIS BANQUE BFCE 551,057.32 5,910,481.14 0 6,730,769.24
OCTAGON CREDIT INVESTOR LOAN
PORTFOLIO 0 0 16,914,999.99 0
PARIBAS 669,141.03 7,177,012.82 0 8,173,076.92
PNC BANK, NATIONAL ASSOCIATION 551,057.32 5,910,481.14 0 6,730,769.24
THE ROYAL BANK OF SCOTLAND PLC 551,057.32 5,910,481.14 0 6,730,769.24
THE SAKURA BANK, LIMITED 551,057.32 5,910,481.14 0 6,730,769.24
THE SANWA BANK, LIMITED 551,057.32 5,910,481.14 0 6,730,769.24
SENIOR DEBT PORTFOLIO BY: BOSTON
MANAGEMENT AND RESEARCH AS
INVESTMENT ADVISOR 0 0 7,959,999.99 0
SENIOR HIGH INCOME PORTFOLIO, INC. 0 0 3,411,428.57 0
SOCIETE GENERALE 551,057.32 5,910,481.14 0 6,730,769.24
<PAGE>
STRATA FUNDING LTD. 0 0 1,705,714.29 0
THE SUMITOMO BANK, LIMITED 551,057.32 5,910,481.14 0 6,730,769.24
THE TOKAI BANK,LIMITED - NEW YORK
BRANCH 472,334.84 5,066,126.70 0 5,769,230.76
THE TRAVELERS INDEMNITY COMPANY 78,722.47 844,354.45 1,989,999.99 961,538.46
THE TRAVELERS INSURANCE COMPANY 283,400.90 3,039,676.02 7,959,999.99 3,461,538.46
THE TRAVELERS LIFE AND ANNUITY
COMPANY 31,488.99 337,741.78 0 384,615.38
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST 0 0 24,875,000.01 0
$20,467,843.22 $219,532,156.78 $119,400,000.00 $250,000,000.00
TOTAL:
</TABLE>
<PAGE>
Schedule 2.01(b)
<TABLE>
<CAPTION>
LENDERS, COMMITMENTS AND OUTSTANDINGS ON EFFECTIVE DATE
(GIVING PRO FORMA EFFECT TO PREFUNDING AND PREPAYMENT OF 12/31/98 REQUIRED AMORTIZATION)
INSTITUTION OUTSTANDING TRANCHE A OUTSTANDING REVOLVING CREDIT
TRANCHE A TERM REIMBURSEMENT TRANCHE B TERM COMMITMENTS AS
LOANS AS OF COMMITMENTS AS LOANS AS OF OF DATE HEREOF
EFFECTIVE DATE OF DATE HEREOF EFFECTIVE DATE
<S> <C> <C> <C> <C>
THE CHASE MANHATTAN BANK $23,392.16 $10,976,607.86 $17,793,333.35 $12,499,999.94
ABN AMRO BANK, N.V. 15,294.87 7,177,012.82 0 8,173,076.92
AMSOUTH BANK OF ALABAMA 12,595.78 5,910,481.14 0 6,730,769.24
BANCA COMMERCIALE ITALIANA, NEW
YORK BRANCH 12,595.78 5,910,481.14 0 6,730,769.24
BANKBOSTON, N.A. 8,996.98 4,221,772.24 0 4,807,692.32
BANK OF AMERICA NT&SA 12,595.78 5,910,481.14 0 6,730,769.24
THE BANK OF NEW YORK 15,294.87 7,177,012.82 0 8,173,076.92
THE BANK OF NOVA SCOTIA 15,294.87 7,177,012.82 0 8,173,076.92
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY 15,294.87 7,177,012.82 0 8,173,076.92
BANQUE NATIONALE DE PARIS 12,595.78 5,910,481.14 0 6,730,769.24
BHF-BANK AKTIENGESELLSCHAFT 15,294.87 7,177,012.82 0 8,173,076.92
<PAGE>
CERES FINANCE LTD. 0 0 12,240,000.01 0
CIBC INC. 15,294.87 7,177,012.82 0 8,173,076.92
CORESTATES BANK, N.A. 0 0 0 0
CREDIT AGRICOLE INDOSUEZ 10,796.38 5,066,126.70 0 5,769,230.76
CREDIT LYONNAIS NEW YORK BRANCH 18,893.67 8,865,721.71 0 10,096,153.84
THE DAI-ICHI KANGYO BANK, LIMITED 12,595.78 5,910,481.14 0 6,730,769.24
FIRST AMERICAN NATIONAL BANK 8,996.99 4,221,772.25 0 4,807,692.30
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA 15,294.87 0 0 0
FIRST UNION NATIONAL BANK,
SUCCESSOR BY MERGER TO CORESTATES
BANK, N.A. 12,595.78 13,087,493.96 0 14,903,846.16
FLEET NATIONAL BANK 15,294.87 7,177,012.82 0 8,173,076.92
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION 12,595.78 5,910,481.14 0 6,730,769.24
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH 15,294.87 7,177,012.82 0 8,173,076.92
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A. 8,996.99 4,221,772.25 0 4,807,692.30
KBC BANK, N.V., FORMERLY
KREDIETBANK, N.V., NEW YORK BRANCH 10,796.38 5,066,126.70 0 5,769,230.76
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH 15,294.87 7,177,012.82 0 8,173,076.92
MELLON BANK, N.A. 12,595.78 5,910,481.14 0 6,730,769.24
MERRILL LYNCH PRIME RATE PORTFOLIO,
BY: MERRILL LYNCH ASSET MANAGEMENT,
L.P., AS INVESTMENT ADVISOR 0 0 14,280,000.00 0
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC. 0 0 10,086,666.68 0
<PAGE>
NATEXIS BANQUE BFCE 12,595.78 5,910,481.14 0 6,730,769.24
OCTAGON CREDIT INVESTOR LOAN
PORTFOLIO 0 0 16,858,333.32 0
PARIBAS 15,294.87 7,177,012.82 0 8,173,076.92
PNC BANK, NATIONAL ASSOCIATION 12,595.78 5,910,481.14 0 6,730,769.24
THE ROYAL BANK OF SCOTLAND PLC 12,595.78 5,910,481.14 0 6,730,769.24
THE SAKURA BANK, LIMITED 12,595.78 5,910,481.14 0 6,730,769.24
THE SANWA BANK, LIMITED 12,595.78 5,910,481.14 0 6,730,769.24
SENIOR DEBT PORTFOLIO BY: BOSTON
MANAGEMENT AND RESEARCH AS
INVESTMENT ADVISOR 0 0 7,933,333.32 0
SENIOR HIGH INCOME PORTFOLIO, INC. 0 0 3,400,000.00 0
SOCIETE GENERALE 12,595.78 5,910,481.14 0 6,730,769.24
<PAGE>
STRATA FUNDING LTD. 0 0 1,700,000.00 0
THE SUMITOMO BANK, LIMITED 12,595.78 5,910,481.14 0 6,730,769.24
THE TOKAI BANK, LIMITED - NEW YORK
BRANCH 10,796.38 5,066,126.70 0 5,769,230.76
THE TRAVELERS INDEMNITY COMPANY 1,799.40 844,354.45 1,983,333.32 961,538.46
THE TRAVELERS INSURANCE COMPANY 6,477.83 3,039,676.02 7,933,333.32 3,461,538.46
THE TRAVELERS LIFE AND ANNUITY
COMPANY 719.76 337,741.78 0 384,615.38
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST 0 0 24,791,666.68 0
$467,843.22 $219,532,156.78 $119,000,000.00 $250,000,000.00
TOTAL:
</TABLE>
<PAGE>
SCHEDULE 2.20
LETTERS OF CREDIT
TRANCHE A L/C COMMITMENTS
PERCENTAGE
FRONTING BANKS COMMITMENTS OF FACILITY
The Chase Manhattan Bank $219,532,156.78 100.00%
TRANCHE A LETTERS OF CREDIT
PERCENTAGE
Credit Party STATED AMOUNT OF FACILITY
UCAR Holdings S.A. $134,953,333.33 61.4731506
UCAR S.p.A. 32,240,000.00 14.6857756
UCAR Electrodos S.L. 28,209,090.00 12.8496392
UCAR Inc. 20,563,333.35 9.3668890
Foreign Currency Reserve
Component 3,566,400.10 1.62454565
REVOLVING L/C COMMITMENTS
PERCENTAGE
FRONTING BANKS COMMITMENTS OF FACILITY
The Chase Manhattan Bank $200,000,000 100.00%
<PAGE>
SCHEDULE 3.08
of UCAR International Inc. and
Outstanding Subscriptions, Options and Warrants
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION INTERNATIONAL INC.
- --------------------------------------------------------------------------------
1. UCAR Global Delaware 100%
Enterprises Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR GLOBAL
NAME OF SUBSIDIARY INCORPORATION ENTERPRISES INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. UCAR Carbon Company
Inc. Delaware 100%
3. UCAR Holdings II Inc. Delaware 100%
4. UCAR Carbon S.A. Brazil 95.30%
5. UCAR S.A. Switzerland 99.9%(a)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR CARBON
NAME OF SUBSIDIARY INCORPORATION COMPANY INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. UCAR Holdings Inc. Delaware 100%
7. UCAR Limited United Kingdom 100%(b)
8. EMSA (Pty.) Ltd. South Africa 100%(c)
9. Carbographite Limited South Africa 100%(c)
10. UCAR International
Trading Inc. Delaware 100%
11. UCAR Carbon
Technology Corporation Delaware 100%
12. UCAR Carbon
Foreign Sales Virgin Islands 100%
Corporation
13. UCAR Composites California 100%
Inc.
14. Union Carbide
Grafito, Inc. New York 100%
15. Unicarbon Brazil 100%
Comercial Ltda.
16. UCAR Carbon
(Malaysia) Sdn. Bhd. Malaysia 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS II
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
17. UCAR Holdings III Delaware 100%
Inc.
18. UCAR Holdings S.A. France 100%(d)
19. UCAR Electrodos, Spain 100%(e)
S.L.
20. UCAR Inc. Canada 100%
21. UCAR Elektroden Germany 70%
GmbH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS GMBH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
22. UCAR Grafit OAO Russia 96.27%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
23. UCAR Mexicana,
S.A. de C.V. Mexico 100%(f)
24. UCAR S.p.A. Italy 100%(g)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
25. UCAR S.N.C. France 100%(h)
26. Carbone Savoie France 70%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION MEXICANA, S.A. DE C.V.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
27. UCAR Carbon
Mexicana, S.A. de C.V. Mexico 100%(i)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR CARBON
NAME OF SUBSIDIARY INCORPORATION MEXICANA, S.A. DE C.V.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
28. Servicios
Administratoes Carmex, Mexico 99.9%
S.A. de C.V.
29. Servicios DYC,
S.A. de C.V. Mexico 99.9%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP BY UCAR S.P.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
30. UCAR Energia S.r.l. Italy 100%
31. UCAR Specialties Italy 100%
S.r.l.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR CARBON
NAME OF SUBSIDIARY INCORPORATION S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
32. UCAR Produtos de
Carbono S.A. Brazil 99.9%
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UNICARBON
NAME OF SUBSIDIARY INCORPORATION COMERCIAL LTDA.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
33. UCAR Carbon S.A. Brazil 2.33%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP BY UCAR S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
34. UCAR Holding GmbH Austria 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(a) 99.9% owned by UCAR Global Enterprises Inc. Nominees own three shares of
UCAR S.A.
(b) 99.9% owned by UCAR Carbon Company Inc. A nominee owns one share of UCAR
Limited.
(c) On April 21, 1997, UCAR Carbon Company Inc. (the "Company") purchased the
50% interest in EMSA (Pty.) Ltd. ("EMSA") and Carbographite Limited
("Carbographite") that it did not already own from Samancor Limited, a South
African company. Commencing April 22, 1997, EMSA's and Carbographite's assets,
liabilities and results of operations are included in the Consolidated Financial
Statements.
(d) 99.4% owned by UCAR Holdings II Inc. UCAR International Inc., UCAR Global
Enterprises Inc., UCAR Carbon Company Inc. and three nominees each own one share
of UCAR Holdings S.A.
(e) 99.9% owned by UCAR Holdings II Inc. UCAR Carbon Company Inc. owns 0.1% of
UCAR Electrodos S.L.
(f) 99.9% owned by UCAR Holdings Inc. UCAR Carbon Company Inc. owns one share of
UCAR Mexicana, S.A. de C.V.
(g) 99.9% owned by UCAR Holdings Inc. and UCAR Carbon Company Inc. owns 0.1% of
UCAR S.p.A.
(h) 99.9% owned by UCAR Holdings S.A. UCAR Holdings III Inc. owns one share of
UCAR S.N.C.
(i) 99.9% owned by UCAR Mexicana, S.A. de C.V. UCAR Carbon Company Inc. owns
0.1% of UCAR Carbon Mexicana, S.A. de C.V.
<PAGE>
SCHEDULE 3.09
PENDING LITIGATION OR PROCEEDINGS
ANTITRUST CASES AND PROCEEDINGS
DOFASCO INC. V. UCAR CARBON CANADA INC., ET AL., Court File No. 98-CV-149864,
Ontario Court (General Division), Canada. This case has been settled in
principle. An agreement is being prepared and the case has not yet been
dismissed.
ELLWOOD QUALITY STEELS CO. V. SGL CARBON CORPORATION, ET AL., Civil Action No.
98-1063 (United States District Court for the Western District of Pennsylvania).
This case has been settled in principle. An agreement is being prepared and the
case has not yet been dismissed.
NUCOR CORP. V. THE CARBIDE GRAPHITE GROUP, INC., ET AL., Civil Action No. 98-
1789 (United States District Court for the Eastern District of Pennsylvania).
This case has been settled. An agreement has been signed but the case has not
yet been dismissed.
REPUBLIC ENGINEERED STEELS, INC. V. SHOWA DENKO CARBON, INC., ET AL., Civil
Action No. 98 CV-0902 (United States District Court for the Northern District of
Ohio, Eastern Division (Akron)). This case has been settled in principle. An
agreement is being prepared and the case has not yet been dismissed.
IN RE GRAPHITE ELECTRODES ANTITRUST LITIGATION, Master File No. 97-CV-4182
(United States District Court for the Eastern District of Pennsylvania). This
case has been settled. An agreement has been signed and the class has been
conditionally certified. The opt-out period expires on November 27, 1998. The
settlement has been preliminarily approved by the Court, with final approval
expected in December 1998. The case has not yet been dismissed.
IN RE SIMETCO, INC., Case No. 93-61772 (United States Bankruptcy Court for the
Northern District of Ohio at Canton). Motion by bankruptcy trustee (representing
debtor SiMETCO, Inc.) for a Rule 2004 Examination.
SHAREHOLDER DERIVATIVE CASE
JAROSLAWICZ V. KRASS, ET AL., CV-98-033117 S (Conn. Super. Ct., J.D. of
Stamford-Norwalk);
SECURITIES CLASS ACTION
IN RE UCAR INTERNATIONAL INC. SECURITIES LITIGATION, 98-CV-0600 (JBA)(United
States District Court for the District of Connecticut)
<PAGE>
ANTITRUST INVESTIGATIONS
The Directorate General IV of the European Union, the antitrust
enforcement authorities of the European Union (the "EU authorities"), is
conducting an investigation into whether graphite electrode producers, including
the Borrower's French subsidiary, violated Article 85-1 of the Treaty of Rome,
the antitrust law of the European Union.
The Canadian Competition Bureau (the "Competition Bureau") has commenced a
criminal investigation as to whether there has been any violation of the
Canadian Competition Act (the "Canadian Act") by producers of graphite
electrodes. Under Section 45 of the Canadian Act, the maximum fine is Cdn$10
million. Under Section 46 of the Canadian Act, the amount of the fine is
discretionary and there is no maximum. UCAR and its subsidiaries have been
required by the Competition Bureau to produce documents and witnesses in Canada.
UCAR believes that Japanese antitrust authorities have commenced an
investigation of producers and distributors of graphite electrodes. Neither UCAR
nor its subsidiaries have any facilities or employees in Japan or have sold a
material quantity of graphite electrodes in Japan. The independent distributor
of their products in Japan has been required to produce documents and witnesses
in Japan.
THREATENED LITIGATION
UCAR and its subsidiaries have received oral and written notices or claims
from various domestic and foreign customers concerning recovery for alleged
violations of antitrust laws.
<PAGE>
SCHEDULE 3.14
CREDIT AGREEMENT
TAXES
(a) None.
(b) UCAR has waived or extended the statutes of limitation in the following
jurisdictions:
EXTENSION
JURISDICTION YEAR ENTITY DATE
Federal 1993 UCAR Carbon Company, Inc. and Subsidiaries 3/31/99
Federal 1994 UCAR International Inc. Consolidated Group 3/31/99
California 1994 UCAR International Inc. Unitary Group 3/15/00
New York 1992/93 UCAR Carbon Company Inc. 6/30/99
New York 1994 UCAR Carbon Company Inc. 12/31/99
(c) UCAR INTERNATIONAL INC.
UCAR is currently under federal income tax audit for the years 1993, 1994
and 1995. No adjustment has been proposed by the IRS as of the Effective
Date.
UCAR S.P.A.
UCAR S.p.A. has appeals still outstanding for the years 1972 and 1975.
The results of a tax inspection covering the years 1986 and 1987,
completed on April 20, 1989, are still pending. In addition, UCAR
S.p.A. has appeals outstanding for the year 1989 that are expected to
close without any payment. UCAR S.p.A. has accrued ITL 2,400 million
(approx. $1,456,000) which it believes will adequately cover the
estimated tax liabilities related to all pending tax appeals for UCAR
S.p.A.
(d) None, other than included in paragraph (c).
<PAGE>
SCHEDULE 3.17
CREDIT AGREEMENT
ENVIRONMENTAL MATTERS
Union Carbide Corporation had a license to process radioactive
material at UCAR's current Lawrenceburg, Tennessee site ("UCAR Lawrenceburg")
and did so in the 1960's and 1970's. The process was shut down and the license
was closed in the mid-1970's. The Nuclear Regulatory Commission ("NRC") has been
reviewing closed licenses to determine if additional clean-up is warranted. the
NRC reviewed its records for the UCAR Lawrenceburg site and mandated that
testing be conducted to ascertain whether regulated levels of residual
radiological contamination exist there.
Samples of the soil, water and surfaces at UCAR Lawrenceburg were
collected and analyzed. UCAR hired a radiological remediation contractor,
Nuclear Fuel Services ("NFS"), to review the analytical data and determine
whether contamination is present. NFS has reported to UCAR that, based upon its
review of the data collected, levels of contamination are above current NRC
closure criteria. UCAR commissioned NFS to develop a draft decommissioning plan
which was submitted to the NRC on August 20, 1998. The NRC is currently
reviewing the plan but has not indicated when we may expect their comments. The
plan may need to be modified based on the NRC's comments. Based upon cost
estimates received from NFS, UCAR has accrued a liability in the amount of
$1,300,000 to cover the cost to this clean-up and related fees and expenses.
<PAGE>
Schedule 3.18 to Credit Agreement
CAPITALIZATION
1) UCAR International Inc.
(i) Authorized Capital Stock: 10,000,000 shares of Preferred Stock
100,000,000 shares of Common Stock
(ii) Par Value: $.01 per share
(iii) Authorized Capital Stock Issued
and Outstanding (as of 10/30/98) 44,979,425
2) UCAR Global Enterprises Inc.
(i) Authorized Capital Stock 1,500 shares of Common Stock
(ii) Par Value $.01 per share
(iii) Authorized Capital Stock Issued
and Outstanding 100 shares of Common Stock
<PAGE>
SCHEDULE 3.20
CREDIT AGREEMENT
LABOR MATTERS
None.
<PAGE>
SCHEDULE 3.23(a)
CREDIT AGREEMENT
LOCATION OF REAL PROPERTY
OWNER LOCATION
UCAR S.N.C. Rue des Garennes
F-62100 Calais
France
UCAR Electrodos, S.L. Carretera de Astrain S/N
E-31171 Ororbia
Navarra, (Espana) (Spain)
UCAR Mexicana S.A. de C.V. Carretara Miguel Alemar
Km. 20 #600. Ote.
Apodaca, Nuera Leon
Mexico 66600
Calle Miguel Barragan
No. 702 Pte.
Co. Industrial Entre
La Calle Amado Nerro y
Av. Universidad
C.P. 64440
Municipio Monterrey
Estado Nuevo Leon
Pais Mexico
UCAR Inc. 65 Canal Bank St.
Welland, Ontario
L3B 5R8
UCAR S.p.A. Caserta
Via dell Industria
1-81100 Casseta
Italy
UCAR Specialties S.r.l. Strada Statale Passo del
Vivione, 1
I-25040 Malonno, Brescia
Italy
UCAR Carbon Company Inc. Highway 43 South
Lawrenceburg, TN 38464
<PAGE>
Phillippi Pike
Armoore, WV 26323
Highway 7
Santa Fe Pike
Columbia, TN 38401
Hwt 79N @ Hampton Station Road
Clarksville, TN 37040
3625 Highland Avenue
Niagara Falls, NY 14305
Rural Route 3
Robinson, IL 62454
12900 Snow Road
Parma, OH 44130
11709 Madison Avenue
Lakewood, OH 44107
UNION Carbide Grafito, Inc. Yabucoa, Puerto Rico
EMS (Pty.) Ltd. Kookfontein Farm
Meyerton, 1960 Gauteng
South Africa
UCAR Productos de Carbono S.A. Estrada Salvador-Mataripe
Km. 39-Candeias
Brahia, Brazil 43800-000
UCAR Productos de Carbono S.A. Av. Brigadeiro Faria Lima, 1461
& UCAR S.A. 9(degree) andar-ej. 9I3e94
01451-000 Sao Paulo-SP
Brazil
UCAR Limited Claywheels Lane
Wadsley Bridge
Shiffield, S6 INF
England
<PAGE>
Carbone Savoie 30, rue Louis Jouvei
BP 16
Venissieux Codex
F-69631
France
Carbone Savoie/UCAR S.N.C. Usine de Notre-Dame-de-Braincon
La Lechere
F-73264 Aigueblanche Cedex
France
<PAGE>
SCHEDULE 3.23(b)
CREDIT AGREEMENT
LOCATION OF LEASED PREMISES
OWNER LOCATION
UCAR S.N.C. Usine de Notre-Dame-de-Braincon
La Lechere
F-73264 Aigueblanche Cedex
France
(Lessor is Carbone Savoie)
4 Place des Estas-Unis
SILIC 214
F-94518 RUNGIS, Cedex
France
UCAR S.A. 33 Ave. do Mont Blanc
Case Postale 630
CH-1196 Gland
Switzerland
UCAR Electrodos, S.L. Avda Lendakari
Aguirre, 11-3(degree)
35-D
43014-Bilbao
Spain
UCAR S.p.A. Via Dunini 28
20122, Milano
UCAR Specialties S.r.l. Forno Allione: Portion of
building in North section of
Plan with access and
connections to water and power
UCAR Carbon Company Inc. 39 Old Ridgebury Road J-4
Danbury, CT 06817
UCAR Composites Inc. 5 Burroughs
Irvine, CA 92718
UCAR Elektroden GmbH Herzbergstrasse 128
D-10365 Berlin
Germany
<PAGE>
EMSA (Pty.) Ltd. Barphil Building
15 Loch Street
Meyerton, 1960
South Africa
UCAR GRAFIT OAO 35 Usacheva Street
Moscow Russia 119048
UCAR International Trading Inc. Jianguo Men Wai Ave., Room 3067
Beijing, China
9 Penang Road #10-02
Park Mall
Singapore
Unit B on 13th Floor
The Prudential Assurance Tower
No. 79 Chatham Road South
Tsimshatsui, Kowloon
Hong Kong
<PAGE>
Schedule 4.01
Local Jurisdictions
(1) Montgomery County, Tennessee
(2) Maury County, Tennessee
(3) Lawrence County, Tennessee
(4) Cuyahoga County, Ohio
(5) Crawford County, Illinois
(6) Harrison County, W. Virginia
(7) Niagra County, New York
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 6.01 - INDEBTEDNESS @ 10/30/98* *
BORROWER LENDER TYPE U.S. $ OR EQUIV.
<S> <C> <C> <C>
UCAR CARBON S.A.(BRAZIL) UNIBANCO IMPORT FINANCE $699,611.10 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BFB IMPORT FINANCE $589,244.96 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BFB(1) IMPORT FINANCE $1,955,505.78 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) CCF IMPORT FINANCE $2,245,722.65 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BOSTON(1)(2) IMPORT FINANCE $1,999,342.72 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BFB IMPORT FINANCE $690,946.33 @ OCT 30,1998
@ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) UNIBANCO ACC - IMPORT/EXPORT $620,804.13 @ OCT 30,1998
FINANCING NOTE @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) UNIBANCO DISCOUNTED A/R $813,684.23 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) MERCANTIL DISCOUNTED A/R $838,306.28 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) REAL DISCOUNTED A/R $1,415,912.64 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BOSTON DISCOUNTED A/R $1,309,364.58 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) REAL DISCOUNTED A/R $2,837,988.53 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) SUMITOMO DISCOUNTED A/R $1,192,129.28 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) TOKIO DISCOUNTED A/R $1,559,313.26 @ OCT 30,1998
SUBTOTAL BRAZIL $18,767,876.47
UCAR ELEKTRODEN(Germany) BHF FAC CREDIT AGREEMENT $10,447,400.24 @ OCT 30,1998
UCAR SPA(Italy) BANCA NATIONALE DEL LAVORO BANK GUARANTY $246,558.58 @ OCT 30,1998
UCAR SPA(Italy) BANCA COMMERCIALE ITALIANO(IMI) BANK GUARANTY $734,781.28 @ OCT 30,1998
UCAR SPA(Italy) INSTITUTO MOBLIERE ITALIANO IND DEV FINANCE $1,210,156.01 @ OCT 30,1998
UCAR SPECIALTIES SRI BANCA POPOLARE DI SONDRIO OVERDRAFT LINE $1,524,625.27 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR INTERNATIONAL INTERCO LOAN $116,548,792.47 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR INC.(Canada) INTERCO LOAN $5,000,000.00 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR MEXICANA S.A.(Mexico) INTERCO LOAN $27,000,000.00 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR HOLDINGS ll INTERCO LOAN $37,636,768.13 @ OCT 30,1998
UCAR CARBON COMPANY UCAR ELECTRODOS(Spain) INTERCO LOAN $35,171,508.63 @ OCT 30,1998
UCAR CARBON COMPANY UCAR SNC(France) INTERCO LOAN $43,400,000.00 @ OCT 30,1998
UCAR CARBON COMPANY UCAR LTD(U.K.) INTERCO LOAN $23,792,136.36 @ OCT 30,1998
UCAR CARBON COMPANY UCAR SPA(Italy) INTERCO LOAN $10,172,203.24 @ OCT 30,1998
UCAR CARBON COMPANY UCAR EMSA(So.Africa) INTERCO LOAN $29,746,183.12 @ OCT 30,1998
UCAR HOLDINGS UCAR GLOBAL ENTERPRISES INTERCO LOAN $66,470,056.09 @ OCT 30,1998
UCAR INTERNATIONAL UCAR GLOBAL ENTERPRISES INTERCO LOAN $511,565,445.00 @ OCT 30,1998
UCAR CARBON COMPANY UCAR INTERNATIONAL INTERCO LOAN(NOTE) $172,878,070.94 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR CARBON COMPANY INTERCO LOAN $2,912,141.00 @ OCT 30,1998
UCAR S.A.(Switzerland) UCAR GLOBAL ENTERPRISES INTERCO LOAN $83,403,591.00 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) UCAR PRODUCTS de CARBONO S.A. INTERCO LOAN $12,307,388.08 @ OCT 30,1998
UCAR SNC(FRANCE) CARBONE SAVOIE INTERCO LOAN $15,300,000.00 @ OCT 30,1998
UCAR SNC(FRANCE) UCAR HOLDINGS S.A.(FRANCE) INTERCO LOAN $35,365,000.00 @ OCT 30,1998
</TABLE>
** BALANCES ARE PRESENTED AS OF10/30/98 AND ARE SUBJECT TO CHANGES IN THE
ORDINARY COURSE OF BUSINESS OCCURING BETWEEN 10/30/98 AND THE EFFECTIVE
DATE , WHICH ARE NOT MATERIAL.
<PAGE>
SCHEDULE 6.02
EXISTING LIENS
<TABLE>
<CAPTION>
<S> <C>
BRAZIL
10/16/96 TAX LITIGATION HYSTER , FORKLIFT R $ $45,000.00
STATE OF BAHIA TRUCK US $ $37,957.00
10/16/96 TAX LITIGATION HYSTER , FORKLIFT R $ $95,000.00
STATE OF BAHIA TRUCK US $ $80,132.00
8/22/97 LABOR HYSTER , FORKLIFT R $ $79,000.00
LITIGATION TRUCK US $ $66,636.00
8/22/97 LABOR HYSTER , FORKLIFT R $ $71,000.00
LITIGATION TRUCK US $ $59,888.00
TOTAL R $ $290,000.00
TOTAL US $ $244,613.00
UCAR INC.
(CANADA) SECURED PARTY DESCRIPTION
1 MUNICIPAL SAVINGS & LOAN EQUIPMENT
7100 WOODBINE AVE. SUITE 400 1 KONICA 4145 COPIER
MARKHAM, ONTARIO WI/RADF AND ALL PROCEEDS
OF THE FOREGOING
2 AT & T CAPITAL CANADA INC. EQUIPMENT AND OTHER
900 3650 VICTORIA PARK AVE.
WILLOWDALE, ONTARIO
3 AT & T CAPITAL CANADA INC. EQUIPMENT AND OTHER
600 - 3760 14TH AVE.
MARKHAM, ONTARIO
4 CHASE MANHATTAN BANK OF CANADA INVENTORY, EQUIPMENT, ACCOUNTS & OTHER
SUITE 6900, 100 KING STREET WEST (MOTOR VEHICLES INCLUDED)
TORONTO, ONTARIO
5 MTC LEASING EQUIPMENT
3310 SOUTH SERVICE ROAD PHOTOCOPIER SYSTEM 10379-42705
BURLINGTON, ONTARIO
UCAR CARBON SECURED PARTY DESCRIPTION
CANADA INC.
1 MUNICIPAL FINANCIAL LEASING CORP. EQUIPMENT
7100 WOODBINE AVE. SUITE 400 1 RICOH, MODEL FT6750 COPIER & PROCEEDS
MARKHAM, ONTARIO OF THE FOREGOING
2 TRIATHLON LEASING INC EQUIPMENT AND OTHER
2300 YONGE ST. SUITE 3000 (MOTOR VEHICLES INCLUDED)
TORONTO, ONTARIO
AND
GENERAL ELECTRIC CAPITAL CANADA EQUIPMENT AND OTHER
LEASING
2300 MEADOWVALE BLVD. 2ND FLOOR (MOTOR VEHICLES INCLUDED)
MISSISSAUGA, ONTARIO
UCAR SpA MORTGAGE AND PRIVILIGE AT ITL 2,080,000,000.00
CASERTA, ITALY
PLANT FIXED ASSETS SECURING DEBT US$ 1,200,000.00
TO
INSTITUTO MOBILIARE ITALIANO
UCAR SNC USUAL REGISTRATIONS OF LEASING AGREEMENTS :
PHOTOCOPIER AND SOFTWARE
CARBONE SAVOIE USUAL REGISTRATIONS OF LEASING AGREEMENTS :
COMPUTER EQUIPMENT, PHOTOCOPIERS, STAMPING
EQUIPMENT, COMMERCIAL VEHICLES, TRUCKS
MINORITY SHAREHOLDER HAS A RIGHT OF FIRST REFUSAL
FOR PURCHASE OF UCAR'S SHARES IN CARBONE SAVOIE
UCAR ELEKTRODEN
GMBH MINORITY SHAREHOLDER HAS A RIGHT OF FIRST REFUSAL
FOR PURCHASE OF UCAR'S SHARES IN UCAR ELEKTRODEN GMBH
</TABLE>
<PAGE>
SCHEDULE 6.04
CREDIT AGREEMENT
INVESTMENTS
None.
<PAGE>
SCHEDULE 6.07
CREDIT AGREEMENT
TRANSACTIONS WITH AFFILIATES
UCAR Elektroden GmbH (for purposes of the Schedule, "Elektroden")
has a tolling agreement with UCAR Grafit OAO (for purposes of this Schedule,
"Grafit") whereby Elektroden supplies molded ungraphitized electrodes to Grafit
for graphitization and Grafit returns the graphitized electrodes, scrap and
rejects to Elektroden. Under this agreement, Elektroden is required to supply up
to 13,900 metric tons of ungraphitized electrodes, and, based upon shipment of
13,900 metric tons by Elektroden, Grafit is expected to return approximately
10,000 metric tons of graphitized electrodes. The tolling price paid to Grafit
is 1,960 DM per metric ton for finished product. Prices for burnt scrap and
rejects and graphitized scrap and rejects are 820 DM per metric ton and 1,268 DM
per metric ton, respectively.
The agreement expires on December 31, 1998.
Carbone Savoie is a party to the following agreements involving UCAR
Subsidiaries:
(i) A Sub-Contracting Agreement with UCAR SNC whereby UCAR SNC
manufactures all of Carbone Savoie's products. The price
term of the agreement includes the cost of raw material,
direct labor and variable expense.
(ii) A Lease Agreement for real property whereby Carbone Savoie
leases to UCAR SNC certain real property used in conjunction
with UCAR SNC's obligations under the subcontracting
agreement referred to in (i) above. See also Schedule
3.23(b) for reference to leased property.
(iii) A Technology License Agreement whereby Carbone Savoie
licenses certain technical information and patent rights to
UCAR. Carbon Company Inc. (for purposes of this Schedule,
`UCAR Carbon").
(iv) A Research and Development, License and Services Agreement
among Carbone Savoie, UCAR Carbon and Aluminium Pecheney
whereby (i) the parties agree to cooperate for their mutual
benefits in certain research and development activities,
(ii) UCAR Carbon licenses its technical information and
patent rights for the manufacture, use and sale of certain
products to Carbone Savoie, (iii) Aluminium Pecheney agrees
to cooperate in the marketing and sales of certain products
by Carbone Savoie and (iv) UCAR Carbon agrees to provide
certain training and instruction of personnel of Carbone
Savoie. The consideration for the contributions to this
agreement made by Aluminium Pechiney and UCAR Carbon is a
percentage of the sales of Carbone Savoie during the term of
the agreement.
<PAGE>
SCHEDULE 6.09
CREDIT AGREEMENT
RESTRICTIVE AGREEMENTS
Pursuant to the Articles of Association of UCAR Elektroden GmbH, a
vote of 75% of the votes polled at a duly convened shareholder's meeting is
required to distribute profits. For purposes of such a determination, 75% of the
total share capital must be represented to constitute a quorum.
<PAGE>
Schedule 9.01
Fronting Banks and Credit Parties (other than the Borrower)
CREDIT PARTIES
1. UCAR HOLDINGS S.A.
4 Place des Etates-Unis
SILIC 214
F-94518 Rungis, Cedex France
Attn: Chairman
Telecopy 33-1-46-87-4008
2. UCAR S.p.A.
Via Vittor Pisani, 10
20124 Milano Italy
Attn: Chairman
Telecopy 39-2-775-7237
3. UCAR ELECTRODOS, S.L.
Carretera de Astrain S\N
31171 Ororbia
Navarra, Spain
Telecopy 34-948-322-184
4. UCAR INC.
65 Canal Bank Rd.
Welland, Ontario L3B5R8
Canada
Telecopy 416-732-5144
5. UCAR MEXICANA S.A. de C.V.
Carretera Miguel Aleman
Km.20 #600, OTE.
Apodaca, Neuva Leon 66600
Mexico
Telecopy 5283861303
FRONTING BANK
1. The Chase Manhattan Bank
<PAGE>
January 7, 1999
The undersigned institution, a Lender under the Credit Agreement dated
as of October 19, 1995, as amended and restated as of March 19, 1997, and
November 10, 1998, among UCAR International Inc. ("Holdco"), UCAR Global
Enterprises Inc. (the "Borrower"), the Subsidiary Borrowers party thereto, the
Lenders party thereto, the Fronting Banks party thereto and The Chase Manhattan
Bank, as administrative agent and as collateral agent (the "Restated
Agreement"), and/or the Credit Agreement dated as of November 10, 1998, among
Holdco, the Borrower, UCAR S.A., the Lenders party thereto, The Chase Manhattan
Bank, as administrative agent and as collateral agent, Credit Suisse First
Boston, as syndication agent, and Morgan Guaranty Trust Company of New York, as
syndication agent (the "Tranche C Agreement" and collectively with the Restated
Agreement, the "Credit Agreements"), hereby consents to the existence of an
asserted lien on the assets of Holdco in favor of the United States Department
of Justice (the "DOJ") securing the obligation of Holdco under its settlement
agreement with the DOJ to pay a fine in a remaining amount of $90,000,000,
constituting a portion of the Litigation Liabilities (as defined in the Credit
Agreements).
Consent Under the
Restated Agreement
Lender /s/
----------------------------
by
-------------------------
Name:
Title:
Consent Under the
Tranche C Agreement
Lender /s/
----------------------------
by
-------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.1(a)
CONFORMED COPY
------------------------------------------------------------
CREDIT AGREEMENT
Dated as of November 10, 1998
Among
UCAR INTERNATIONAL INC.,
UCAR GLOBAL ENTERPRISES INC.,
UCAR S.A.,
THE LENDERS PARTY HERETO,
THE CHASE MANHATTAN BANK,
as Administrative Agent
and Collateral Agent,
CREDIT SUISSE FIRST BOSTON,
as Syndication Agent,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Syndication Agent
------------------------------------------------------------
CHASE SECURITIES INC.,
as Lead Arranger
------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms................................................. 2
SECTION 1.02. Terms Generally............................................... 32
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments................................................... 33
SECTION 2.02. Loans......................................................... 33
SECTION 2.03. Borrowing Procedure........................................... 35
SECTION 2.04. Evidence of Debt; Repayment of Loans.......................... 35
SECTION 2.05. Fees.......................................................... 36
SECTION 2.06. Interest on Loans............................................. 36
SECTION 2.07. Default Interest.............................................. 37
SECTION 2.08. Alternate Rate of Interest.................................... 37
SECTION 2.09. Termination and Reduction of Commitments...................... 37
SECTION 2.10. Conversion and Continuation of Borrowings..................... 38
SECTION 2.11. Repayment of Borrowings....................................... 39
SECTION 2.12. Prepayment.................................................... 40
SECTION 2.13. Reserve Requirements; Change in Circumstances................. 42
SECTION 2.14. Change in Legality............................................ 44
SECTION 2.15. Indemnity..................................................... 45
SECTION 2.16. Pro Rata Treatment............................................ 45
SECTION 2.17. Sharing of Setoffs............................................ 46
SECTION 2.18. Payments...................................................... 46
SECTION 2.19. Taxes......................................................... 46
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers.......................................... 50
SECTION 3.02. Authorization................................................. 50
SECTION 3.03. Enforceability................................................ 51
SECTION 3.04. Governmental Approvals........................................ 51
SECTION 3.05. Financial Statements.......................................... 51
SECTION 3.06. No Material Adverse Change.................................... 52
SECTION 3.07. Title to Properties; Possession Under Leases.................. 52
SECTION 3.08. Subsidiaries.................................................. 52
SECTION 3.09. Litigation; Compliance with Laws.............................. 53
SECTION 3.10. Agreements.................................................... 53
SECTION 3.11. Federal Reserve Regulations................................... 53
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.... 54
SECTION 3.13. Use of Proceeds............................................... 54
SECTION 3.14. Tax Returns................................................... 54
SECTION 3.15. No Material Misstatements..................................... 54
SECTION 3.16. Employee Benefit Plans........................................ 55
SECTION 3.17. Environmental Matters......................................... 56
SECTION 3.18. Capitalization of UCAR and the Borrower....................... 57
SECTION 3.19. Security Documents............................................ 57
SECTION 3.20. Labor Matters................................................. 58
SECTION 3.21. No Foreign Assets Control Regulation Violation................ 59
SECTION 3.22. Insurance..................................................... 59
SECTION 3.23. Location of Real Property and Leased Premises................. 59
SECTION 3.24. Litigation Liabilities........................................ 59
SECTION 3.25. Year 2000..................................................... 60
ARTICLE IV
CONDITIONS
SECTION 4.01. Effective Date................................................ 60
SECTION 4.02. Each Borrowing................................................ 63
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Existence; Businesses and Properties.......................... 63
SECTION 5.02. Insurance..................................................... 64
SECTION 5.03. Taxes......................................................... 66
SECTION 5.04. Financial Statements, Reports, etc............................ 66
SECTION 5.05. Litigation and Other Notices.................................. 68
SECTION 5.06. Employee Benefits............................................. 68
SECTION 5.07. Maintaining Records; Access to Properties and Inspections..... 69
SECTION 5.08. Use of Proceeds............................................... 69
SECTION 5.09. Compliance with Environmental Laws............................ 70
SECTION 5.10. Preparation of Environmental Reports.......................... 70
SECTION 5.11. Further Assurances............................................ 70
SECTION 5.12. Significant Subsidiaries...................................... 70
SECTION 5.13. Fiscal Year................................................... 71
SECTION 5.14. Dividends..................................................... 71
SECTION 5.15. Interest/Exchange Rate Protection Agreements.................. 71
SECTION 5.16. Corporate Separateness........................................ 71
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Indebtedness.................................................. 71
SECTION 6.02. Liens......................................................... 75
SECTION 6.03. Sale and Lease-Back Transactions.............................. 78
SECTION 6.04. Investments, Loans and Advances............................... 78
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions..... 80
SECTION 6.06. Dividends and Distributions................................... 83
SECTION 6.07. Transactions with Affiliates.................................. 84
SECTION 6.08. Business of UCAR, the Borrower and the Subsidiaries........... 85
SECTION 6.09. Indebtedness and Other Material Agreements.................... 85
SECTION 6.10. Capital Expenditures.......................................... 86
SECTION 6.11. Interest Coverage Ratio....................................... 87
SECTION 6.12. Leverage Ratio................................................ 87
SECTION 6.13. Capital Stock of the Subsidiaries............................. 87
ARTICLE VII
EVENTS OF DEFAULT............................................. 88
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND
THE COLLATERAL AGENT....................................... 91
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices...................................................... 94
SECTION 9.02. Survival of Agreement........................................ 95
SECTION 9.03. Binding Effect............................................... 95
SECTION 9.04. Successors and Assigns....................................... 95
SECTION 9.05. Expenses; Indemnity.......................................... 99
SECTION 9.06. Right of Setoff..............................................101
SECTION 9.07. Applicable Law...............................................101
SECTION 9.08. Waivers; Amendment...........................................101
SECTION 9.09. Interest Rate Limitation.....................................103
SECTION 9.10. Entire Agreement.............................................103
SECTION 9.11. Waiver of Jury Trial.........................................103
SECTION 9.12. Severability.................................................103
SECTION 9.13. Counterparts.................................................104
SECTION 9.14. Headings.....................................................104
SECTION 9.15. Jurisdiction; Consent to Service of Process..................104
SECTION 9.16. Conversion of Currencies.....................................105
SECTION 9.17. Confidentiality .............................................105
SECTION 9.18. Release of Liens and Guarantees..............................105
EXHIBITS AND SCHEDULES
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit E Form of Parent Guarantee Agreement
Exhibit F Form of Domestic Pledge Agreement
Exhibit G Form of Subsidiary Guarantee Agreement
Exhibit H Form of Domestic Security Agreement
Exhibit I Form of Intellectual Property Security
Agreement
Exhibit J-1 Form of Opinion of Kelley Drye & Warren LLP
Exhibit J-2 Form of Opinion of General Counsel
Exhibit J-3 Forms of Opinion of Local Counsel
Schedule A Adjustments
Schedule 2.01 Lenders and Commitments
Schedule 3.08 Subsidiaries and outstanding subscriptions,
options, warrants, etc.
Schedule 3.09 Litigation
Schedule 3.14 Taxes
Schedule 3.17 Environmental Matters
Schedule 3.18 Capitalization
Schedule 3.20 Labor Matters
Schedule 3.23(a) Location of Real Property and Mortgages
Schedule 3.23(b) Location of Leased Premises
Schedule 4.01 Local Jurisdictions Where Opinion Required
Schedule 6.01 Indebtedness
Schedule 6.02 Liens
Schedule 6.04 Investments
Schedule 6.07 Transactions with Affiliates
Schedule 6.09 Restrictive Agreements
<PAGE>
CREDIT AGREEMENT (this "AGREEMENT") dated as of November
10, 1998, among UCAR INTERNATIONAL INC., a Delaware
corporation ("UCAR"), UCAR GLOBAL ENTERPRISES INC., a Delaware
corporation (the "BORROWER"), UCAR S.A., a Swiss corporation
(the "SWISS BORROWER"), the LENDERS party hereto, THE CHASE
MANHATTAN BANK, as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT") and as collateral agent (in such
capacity, the "COLLATERAL AGENT"), CREDIT SUISSE FIRST BOSTON,
as syndication agent, and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as syndication agent.
Effective on the Effective Date (such term, and each other capitalized term
used and not otherwise defined herein, having the meaning assigned to it in
Article I), the Existing Credit Agreement will be amended in the form of and
replaced with two credit agreements, consisting of (a) the Existing Credit
Agreement, as amended and restated, and (b) this Agreement, under which the
Lenders or the lenders under the Existing Credit Agreement, as applicable, will
maintain existing credit and extend new credit to the Borrower and certain
Subsidiaries in an aggregate original principal amount as of the Effective Date
of $819,400,000. From and after the Effective Date, (a) this Agreement will
govern the Tranche C Term Loans and (b) the Existing Credit Agreement will
govern the commitments, loans and letters of credit referred to therein.
The Credit Parties have requested the Lenders to extend credit hereunder in
the form of (a) U.S. Term Loans to the Borrower on the Effective Date, in an
aggregate principal amount of $125,000,000, and (b) Swiss Term Loans to the
Swiss Borrower on the Effective Date, in an aggregate principal amount of
$85,000,000. The proceeds of the Loans will be used for general corporate
purposes of the Borrower and the Subsidiaries, including (a) the repayment on
the Effective Date of $88,600,000 of outstanding revolving loans under the
Existing Credit Agreement, (b) the prefunding and payment on the Effective Date
of $20,400,000 of fourth quarter 1998 amortization payments to become due under
the Existing Credit Agreement, (c) the financing of Litigation Payments and (d)
the payment of transaction fees and expenses.
The Lenders are willing to extend such credit to the Credit Parties on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate in
effect for such Interest Period and (b) Statutory Reserves.
"ADMINISTRATIVE AGENT FEES" shall have the meaning given such term in
Section 2.05(b).
"ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative Questionnaire
in the form of Exhibit A.
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"AGENT LETTER" shall mean the letter agreement dated October 9, 1998,
between the Borrower and The Chase Manhattan Bank.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate,
including the failure of the Federal Reserve Bank of New York to publish rates
or the inability of the Administrative Agent to obtain quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the preceding sentence until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
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"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent and
the Borrower, in the form of Exhibit B or such other form as shall be approved
by the Administrative Agent.
"BOARD" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"BORROWING" shall mean a group of Loans of a single Class and Type made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect.
"BORROWING REQUEST" shall mean a request by a Credit Party in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C.
"BRAZIL" shall mean UCAR Carbon S.A., a Brazilian corporation and the
direct or indirect owner of virtually all of the business of the Borrower and
the Subsidiaries in Brazil.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day on
which banks in New York City are authorized or required by law to close;
PROVIDED, HOWEVER, that when used in connection with a Eurodollar Loan, the term
"BUSINESS DAY" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, for any person in respect of any period,
the sum of (a) the aggregate of all expenditures by such person during such
period that, in accordance with GAAP, are or should be included in "additions to
property, plant or equipment" or similar items reflected in the statement of
cash flows of such person and (b) to the extent not covered by clause (a) above,
the aggregate of all expenditures by such person to acquire by purchase or
otherwise the business or fixed assets of, or stock or other evidence of
beneficial ownership of, any other person (other than the Borrower or any person
that is a Wholly Owned Subsidiary prior to such acquisition); PROVIDED, HOWEVER,
that Capital Expenditures for the Borrower and the Subsidiaries shall not
include (i) expenditures made to make any acquisition constituting a Specified
Permitted Transaction or Permitted Other Acquisition, (ii) expenditures to the
extent they are made (A) with the proceeds of the issuance of Capital Stock of
UCAR after the Original Closing Date (to the extent not previously used to
prepay Indebtedness (other than revolving loans and swingline loans under the
Existing Credit Agreement), make any investment or capital expenditure or
otherwise for any purpose resulting in a deduction to Excess Cash Flow in any
fiscal year) or (B) with funds that if not so spent would constitute Net
Proceeds under clause (a) of the definition of "NET PROCEEDS" (subject to the
limitation set forth in the second proviso to such clause (a)),
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(iii) expenditures of proceeds of insurance settlements, condemnation awards and
other settlements in respect of lost, destroyed, damaged or condemned assets,
equipment or other property to the extent such expenditures are made to replace
or repair such lost, destroyed, damaged or condemned assets, equipment or other
property or otherwise to acquire assets or properties useful in the business of
the Borrower and the Subsidiaries within 12 months of receipt of such proceeds,
(iv) expenditures that are accounted for as capital expenditures of such person
and that actually are paid for by a third party (excluding UCAR or any
subsidiary thereof) and for which neither UCAR nor any subsidiary thereof has
provided or is required to provide or incur, directly or indirectly, any
consideration or obligation to such third party or any other person (whether
before, during or after such period), (v) the book value of any asset owned by
such person prior to or during such period to the extent that such book value is
included as a capital expenditure during such period as a result of such person
reusing or beginning to reuse such asset during such period without a
corresponding expenditure actually having been made in such period; PROVIDED
that any expenditure necessary in order to permit such asset to be reused shall
be included as a Capital Expenditure during the period that such expenditure
actually is made and such book value shall have been included in Capital
Expenditures when such asset was originally acquired or (vi) expenditures made
in respect of closures of the Welland, Canada and Berlin, Germany facilities in
an aggregate amount not in excess of $11,000,000 (as evidenced by a certificate
of the Borrower signed by a Responsible Officer of the Borrower).
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for purposes hereof, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in accordance with GAAP.
"CAPITAL STOCK" of any person shall mean any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, including any preferred
stock, any limited or general partnership interest and any limited liability
company membership interest, but excluding any debt securities convertible into
such equity.
"CASH INTEREST EXPENSE" shall mean, with respect to UCAR, the Borrower and
the Subsidiaries on a consolidated basis for any period, Interest Expense for
such period less the sum of (a) pay-in-kind Interest Expense, (b) to the extent
included in Interest Expense, the amortization of fees paid by UCAR, the
Borrower or any Subsidiary on or prior to the Original Closing Date in
connection with the transactions consummated on such
<PAGE>
5
date, on or prior to the Second Closing Date in connection with the transactions
consummated on such date or on or prior to the Effective Date in connection with
the Transactions and (c) the amortization of debt discounts, if any, or fees in
respect of Interest/Exchange Rate Protection Agreements.
"CERCLA" shall have the meaning given such term in the definition of
"ENVIRONMENTAL LAW".
A "CHANGE IN CONTROL" shall be deemed to have occurred if (a) UCAR should
fail to own directly, beneficially and of record, free and clear of any and all
Liens (other than Liens in favor of the Collateral Agent pursuant to the
Domestic Pledge Agreement), 100% of the issued and outstanding capital stock of
the Borrower; (b) any person or group (within the meaning of Rule 13d-5 of the
Securities Exchange Act of 1934 as in effect on the Effective Date), other than
members of management of UCAR or the Borrower holding voting stock of UCAR or
options to acquire such stock on the Effective Date (collectively, the
"DESIGNATED PERSONS"), shall own beneficially, directly or indirectly, shares
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of UCAR at a time when Designated
Persons fail to own beneficially, directly or indirectly, shares representing at
least a majority of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of UCAR; (c) a majority of the seats
(excluding vacant seats) on the board of directors of UCAR shall at any time
after the Effective Date be occupied by persons who were neither (i) nominated
by any one or more Designated Persons or by a majority of the board of directors
of UCAR, nor (ii) appointed by directors so nominated; or (d) a change in
control with respect to UCAR or the Borrower (or similar event, however
denominated) shall occur under and as defined in the Senior Subordinated
Indenture or the Refinancing Note Indenture (in each case so long as any
Indebtedness for borrowed money is outstanding thereunder) or in any other
indenture or agreement in respect of Indebtedness in an aggregate outstanding
principal amount in excess of $7,500,000 to which UCAR, the Borrower or any
Subsidiary is party. For purposes of clause (b) of this definition, the term
"DESIGNATED PERSON" shall be deemed to include any other holder or holders of
shares of UCAR having ordinary voting power if UCAR shall have the power to vote
(or cause to be voted at its discretion), pursuant to contract, irrevocable
proxy or otherwise, the shares held by such holder.
"CLASS", when used in reference to any Borrowing, refers to whether the
Loans comprising such Borrowing are U.S. Term Loans or Swiss Term Loans and,
when used in reference to any Commitment, refers to whether such Commitment is a
U.S. Term Loan Commitment or a Swiss Term Loan Commitment.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
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"COLLATERAL" shall mean all the "Collateral" as defined in any Security
Document.
"COLLATERAL REQUIREMENT" shall mean, at any time, that:
(a)(i) the Domestic Pledge Agreement (or a supplement thereto)
shall have been duly executed and delivered by UCAR, the Borrower and each
domestic Subsidiary existing at such time and directly owning any outstanding
Capital Stock or Indebtedness of any other Subsidiary, and there shall have been
duly and validly pledged to the Collateral Agent thereunder, for the ratable
benefit of the Secured Parties, as security for all the Obligations, (A) all the
outstanding Capital Stock of or other equity interests in each domestic
Subsidiary owned directly by UCAR, the Borrower or any domestic Subsidiary and
(B) 65% of the outstanding Capital Stock of or other equity interests in (or, in
each case, such lesser percentages as shall be owned by UCAR, the Borrower and
the domestic Subsidiaries) each foreign Subsidiary owned in whole or in part
directly by UCAR, the Borrower or any domestic Subsidiary and (C) all
Indebtedness in excess of $10,000,000 of UCAR, the Borrower or any Subsidiary
owed to UCAR, the Borrower or any domestic Subsidiary; (ii) one or more other
Pledge Agreements shall have been duly executed and delivered by the Swiss
Borrower, and by each foreign Subsidiary that is required pursuant to the terms
hereof to Guarantee the Obligations of the Swiss Borrower in respect of the
Swiss Term Loans, and there shall have been duly and validly pledged thereunder,
for the ratable benefit of the Secured Parties holding Obligations of the Swiss
Borrower or such foreign Guarantor in respect of such Swiss Term Loans or
Guarantees, as security for all such Obligations of the Swiss Borrower or such
foreign Guarantor (but not as security for the Obligations of the Borrower or
any other Subsidiary) (A) all the outstanding Capital Stock of or other equity
interests in any Subsidiary that is at such time directly owned by the Swiss
Borrower or such foreign Guarantor, (B) all the outstanding Capital Stock of or
other equity interests in the Swiss Borrower or such foreign Guarantor, and of
any Subsidiary directly or indirectly owning any outstanding Capital Stock of or
other equity interests in the Swiss Borrower or such foreign Guarantor that
shall not have been pledged pursuant to the Domestic Pledge Agreement and (C)
all Indebtedness in excess of $10,000,000 of UCAR, the Borrower or any
Subsidiary owed to the Swiss Borrower or such foreign Guarantor; (iii) one or
more other Pledge Agreements shall have been duly executed and delivered by each
domestic Guarantor directly owning any Capital Stock of the Swiss Borrower or a
foreign Guarantor referred to in clause (ii) above, and there shall have been
duly and validly pledged thereunder, for the ratable benefit of the Secured
Parties holding Obligations of the Swiss Borrower or such foreign Guarantor in
respect of such Swiss Term Loans or Guarantees, as security for all such
Obligations of the Swiss Borrower or such foreign Guarantor (but not as security
for the Obligations of the Borrower or any other Subsidiary) all the outstanding
Capital Stock of or other equity interests in the
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Swiss Borrower or such foreign Guarantor that shall not have been pledged
pursuant to the Domestic Pledge Agreement; and (iv) certificates or other
instruments representing the shares or Indebtedness pledged under the Pledge
Agreements, accompanied by stock powers or other instruments of transfer
endorsed in blank, shall be in the actual possession of the Collateral Agent and
all other steps required under applicable law or requested by the Collateral
Agent to ensure that the Pledge Agreements create valid, first priority,
perfected Liens on all the Collateral subject thereto shall have been taken;
(b)(i) the Domestic Security Agreement (or a supplement thereto)
shall have been duly executed and delivered by UCAR, the Borrower and each
domestic Subsidiary existing at such time, and the Domestic Security Agreement
shall create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, as security for all the Obligations, perfected security
interests in (subject only to the Liens permitted by Section 6.02 and by the
Existing Credit Agreement) all the Collateral (as such term is defined in the
Domestic Security Agreement) owned by UCAR, the Borrower and each domestic
Subsidiary; (ii) one or more other Security Agreements shall have been duly
executed and delivered by the Swiss Borrower, and by each foreign Subsidiary
that is required pursuant to the terms hereof to Guarantee the Obligations of
the Swiss Borrower in respect of the Swiss Term Loans, and such Security
Agreements shall create in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties holding Obligations of the Swiss Borrower or such
foreign Guarantor in respect of such Swiss Term Loans or Guarantees, as security
for all such Obligations of the Swiss Borrower or such foreign Guarantor (but
not as security for the Obligations of the Borrower or any other Subsidiary),
perfected security interests in (subject only to Liens permitted by Section 6.02
and by the Existing Credit Agreement) all the Collateral (as such term is
defined in such Security Agreements) owned by the Swiss Borrower or such foreign
Guarantor; and (iii) all steps required under applicable law or requested by the
Collateral Agent to ensure that the Security Agreements create valid, first
priority, perfected Liens (subject only to the Liens permitted by Section 6.02
and by the Existing Credit Agreement) on all the Collateral subject thereto
shall have been taken;
(c)(i) all real properties owned or leased directly by UCAR, the
Borrower or any domestic Subsidiary are Mortgaged Properties, and all steps
required under applicable law or requested by the Collateral Agent to ensure
that the Mortgages on such Mortgaged Properties create in favor of the
Collateral Agent for the benefit of the Secured Parties, as security for all the
Obligations, perfected Liens on and security interests in (subject only to the
Liens permitted by Section 6.02 and by the Existing Credit Agreement) (A) such
Mortgaged Properties and (B) all proceeds thereof shall have been taken; and
(ii) all real properties owned or leased directly by the Swiss Borrower, and by
each foreign Subsidiary that is required to Guarantee the Obligations of the
Swiss Borrower in respect of Swiss Term Loans,
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8
are Mortgaged Properties, and all steps required under applicable law or
requested by the Collateral Agent to ensure that the Mortgages on such Mortgaged
Properties create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties holding Obligations of the Swiss Borrower or such foreign
Guarantor in respect of such Swiss Term Loans or Guarantees, as security for all
such Obligations of the Swiss Borrower or such foreign Guarantor (but not as
security for the Obligations of the Borrower or any other Subsidiary), perfected
Liens on and security interests in (subject only to the Liens permitted by
Section 6.02 and by the Existing Credit Agreement) (A) such Mortgaged Properties
and (B) all proceeds thereof shall have been taken; PROVIDED that,
notwithstanding the foregoing, it is understood that leasehold mortgages will
not be obtained in respect of any real property leased by a Loan Party unless
the Collateral Agent, in its discretion, shall request that a leased property
become a Mortgaged Property (in which case any such Mortgage shall be subject to
such limitations as may be contained in the lease relating to such real
property); and
(d) the Intellectual Property Security Agreement (or a supplement
thereto) shall have been duly executed and delivered by UCAR, the Borrower and
each domestic Subsidiary existing at such time, and that all steps required
under applicable law or requested by the Collateral Agent to ensure that the
Intellectual Property Security Agreement creates in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, as security for all the
Obligations, perfected security interests in (subject only to the Liens
permitted by Section 6.02 and by the Existing Credit Agreement) all the
Collateral (as such term is defined in the Intellectual Property Security
Agreement) owned by UCAR, the Borrower and each domestic Subsidiary shall have
been taken;
PROVIDED that a Collateral Requirement with respect to the Swiss Borrower or a
foreign Subsidiary shall not be required to be satisfied hereunder to the extent
that (i) satisfaction of such Collateral Requirement is not permitted under
applicable law or (ii) the Administrative Agent determines that the expense, tax
consequences or difficulty of satisfying such Collateral Requirement does not
justify satisfying such Collateral Requirement.
"COMMITMENTS" shall mean, with respect to any Lender, such Lender's U.S.
Term Loan Commitment and Swiss Term Loan Commitment.
"COMMITMENT FEE" shall have the meaning given such term in Section 2.05(a).
"CONTROL" shall mean the possession, directly or indirectly, of the power
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,
and "CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto.
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9
"CREDIT PARTIES" shall mean the Borrower and the Swiss Borrower.
"CURRENT ASSETS" shall mean, with respect to UCAR, the Borrower and the
Subsidiaries on a consolidated basis at any date of determination, all assets
(other than cash and Permitted Investments or other cash equivalents) which
would, in accordance with GAAP, be classified on a consolidated balance sheet of
UCAR, the Borrower and the Subsidiaries as current assets at such date of
determination.
"CURRENT LIABILITIES" shall mean, with respect to UCAR, the Borrower and
the Subsidiaries on a consolidated basis at any date of determination, all
liabilities which would, in accordance with GAAP, be classified on a
consolidated balance sheet of UCAR, the Borrower and the Subsidiaries as current
liabilities at such date of determination, other than (a) the current portion of
long term debt, (b) accruals of Interest Expense (excluding Interest Expense
which is due and unpaid), (c) revolving loans or swingline loans under the
Existing Credit Agreement classified as current and (d) accruals prior to the
Effective Date of any costs or expenses related to severance or termination of
employees.
"DEBT SERVICE" shall mean, with respect to UCAR, the Borrower and the
Subsidiaries on a consolidated basis for any period, Interest Expense for such
period PLUS scheduled principal amortization of Total Debt for such period
(whether or not such payments are made).
"DEFAULT" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"DESIGNATED LENDERS" shall mean, at any time, Lenders having Loans and
unused Commitments representing at least 66-2/3% of the sum of all Loans
outstanding and unused Commitments at such time.
"DOLLARS" or "$" shall mean lawful money of the United States of America.
"DOMESTIC PLEDGE AGREEMENT" shall mean the Pledge Agreement dated as of
October 19, 1995, as amended and restated as of November 10, 1998, substantially
in the form of Exhibit F, among UCAR, the Borrower, certain domestic
Subsidiaries and the Collateral Agent for the benefit of the Secured Parties.
"DOMESTIC SECURITY AGREEMENT" shall mean the Security Agreement dated as of
April 22, 1998, as amended and restated as of November 10, 1998, substantially
in the form of Exhibit H, among UCAR, the Borrower and the domestic Subsidiaries
and the Collateral Agent for the benefit of the Secured Parties.
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10
"EBITDA" shall mean, with respect to UCAR, the Borrower and the
Subsidiaries on a consolidated basis for any period, the consolidated net income
of UCAR, the Borrower and the Subsidiaries for such period PLUS, to the extent
deducted in computing such consolidated net income, without duplication, the sum
of (a)(i) income tax expense and (ii) withholding tax expense incurred in
connection with cross border transactions involving non-domestic subsidiaries,
(b) interest expense, (c) depreciation and amortization expense, (d) any special
charges (including, without limitation, any non-cash fees or expenses incurred
in connection with the Recapitalization, the redemption of subordinated notes in
September 1995, the refinancing effected on October 19, 1995, the refinancing
effected on March 19, 1997 or the Transactions) and any extraordinary or
non-recurring losses, (e) other noncash items reducing consolidated net income
and (f) noncash exchange, translation or performance losses relating to any
foreign currency hedging transactions or currency fluctuations, MINUS, to the
extent added in computing such consolidated net income, without duplication, (i)
interest income, (ii) extraordinary or non-recurring gains, (iii) other noncash
items increasing consolidated net income and (iv) noncash exchange, translation
or performance gains relating to any foreign currency hedging transactions or
currency fluctuations.
"EFFECTIVE DATE" shall mean the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.08).
"ENVIRONMENT" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"ENVIRONMENTAL CLAIM" shall mean any written accusation, allegation, notice
of violation, claim, demand, order, directive, cost recovery action or other
cause of action by, or on behalf of, any Governmental Authority or any person
for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon: (a) the threat, the
existence, or the continuation of the existence of a Release (including sudden
or non-sudden, accidental or non-accidental Releases); (b) exposure to any
Hazardous Material; (c) the presence, use, handling, transportation, storage,
treatment or disposal of any Hazardous Material; or (d) the violation or alleged
violation of any Environmental Law or Environmental Permit.
"ENVIRONMENTAL LAW" shall mean any and all applicable present and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any
<PAGE>
11
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to human health or safety,
including the Hazardous Materials Transportation Act, 49 U.S.C. ss.ss. 1801 ET
SEQ., the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
42 U.S.C. ss.ss. 9601 ET SEQ. ("CERCLA"), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous
and Solid Waste Amendments of 1984, 42 U.S.C. ss.ss. 6901, ET SEQ., the Federal
Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33
U.S.C. ss.ss. 1251 ET SEQ., the Clean Air ACt of 1970, as amended 42 U.S.C.
ss.ss. 7401 ET SEQ., the Toxic Substances Control Act of 1976, 15 U.S.C. ss.ss.
2601 ET SEQ., thE Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. ss.ss. 11001 ET SEQ., the National Environmental Policy Act of 1975, 42
U.S.C. ss.ss. 4321 ET SEQ., the Safe Drinking Water Act of 1974, as amended, 42
U.S.C. ss.ss. 300(f) ET SEQ., and any similar or implementing state or foreign
law, and all amendments or regulations promulgated thereunder.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414 of the Code.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR LOAN" shall mean any Loan bearing interest at a rate determined
by reference to the Adjusted LIBO Rate in accordance with the provisions of
Article II.
"EUROPEAN HOLDING COMPANY STRATEGY" shall have the meaning given such term
in Section 6.04(m).
"EVENT OF DEFAULT" shall have the meaning given such term in Article VII.
"EXCESS CASH FLOW" shall mean, with respect to UCAR, the Borrower and the
Subsidiaries on a consolidated basis for any fiscal year, EBITDA of UCAR, the
Borrower and the Subsidiaries on a consolidated basis for such fiscal year,
MINUS, without duplication, (a) Debt Service for such fiscal year, (b) permitted
Capital Expenditures by the Borrower and the Subsidiaries on a consolidated
basis during such fiscal year which are paid in
<PAGE>
12
cash, (c) taxes paid in cash by UCAR, the Borrower and the Subsidiaries on a
consolidated basis during such fiscal year, including income tax expense and
withholding tax expense incurred in connection with cross border transactions
involving non-domestic Subsidiaries, (d) an amount equal to any increase in
Working Capital of UCAR, the Borrower and the Subsidiaries for such fiscal year,
(e) Permitted Other Acquisitions and acquisitions constituting Specified Foreign
Transactions during such fiscal year to the extent paid in cash, (f) cash
expenditures made in respect of Interest/Exchange Rate Protection Agreements
during such fiscal year, to the extent not reflected in the computation of
EBITDA or Interest Expense, (g) permitted dividends or repurchase of its Capital
Stock paid in cash by UCAR or the Borrower during such fiscal year and permitted
dividends paid by any Subsidiary to any person other than the Borrower or any of
its other Subsidiaries during such fiscal year, in each case in accordance with
Section 6.06, (h) amounts paid in cash during such fiscal year on account of
items that were accounted for as noncash reductions of consolidated net income
of UCAR, the Borrower and the Subsidiaries in the current or a prior period, (i)
special charges or any extraordinary or non-recurring loss paid in cash during
such fiscal year, (j) to the extent not deducted in the computation of Net
Proceeds in respect of any asset disposition or condemnation giving rise
thereto, mandatory prepayments of Indebtedness (other than Indebtedness created
hereunder or under any other Loan Document), (k) cash Restricted Debt Payments
made pursuant to the first proviso contained in Section 6.09(b)(i) and (l) to
the extent included in determining EBITDA, all items which did not result from a
cash payment to UCAR, the Borrower and the Subsidiaries on a consolidated basis
during such fiscal year PLUS, without duplication, (i) an amount equal to any
decrease in Working Capital for such fiscal year, (ii) all proceeds received
during such fiscal year of Capital Lease Obligations, purchase money
Indebtedness, Sale and Lease- Back Transactions pursuant to Section 6.03(a) and
any other Indebtedness to the extent used to finance any Permitted Other
Acquisition, acquisition constituting a Specified Permitted Transaction or
Capital Expenditure (other than Indebtedness under this Agreement or the
Existing Credit Agreement to the extent there is no corresponding deduction to
Excess Cash Flow above in respect of the use of such Indebtedness) and all
proceeds received during such fiscal year of Sale and Lease-Back Transactions
pursuant to Section 6.03(b), (iii) all amounts referred to in (b) and (e) above
to the extent funded with the proceeds of the issuance of Capital Stock of UCAR
after the Original Closing Date (to the extent not previously used to prepay
Indebtedness (other than revolving loans or swingline loans under the Existing
Credit Agreement), make any investment or capital expenditure or otherwise for
any purpose resulting in a deduction to Excess Cash Flow in any fiscal year) or
any amount that would have constituted Net Proceeds under clause (a) of the
definition of "NET PROCEEDS" if not so spent, in each case to the extent there
is a corresponding deduction to Excess Cash Flow above, (iv) cash payments
received in respect of Interest/Exchange Rate Protection Agreements during such
fiscal
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13
year to the extent not (A) included in the computation of EBITDA or (B) reducing
Interest Expense, (v) any extraordinary or non-recurring gain realized in cash
during such fiscal year (except to the extent such gain is subject to Section
2.12(d) of this Agreement or the Existing Credit Agreement), (vi) to the extent
deducted in the computation of EBITDA, interest income and (vii) to the extent
subtracted in determining EBITDA, all items which did not result from a cash
payment by UCAR, the Borrower and the Subsidiaries on a consolidated basis
during such fiscal year.
"EXISTING CREDIT AGREEMENT" shall mean the Credit Agreement dated as of
October 19, 1995, as amended and restated as of March 19, 1997 and November 10,
1998, among UCAR, the Borrower, the subsidiary borrowers party thereto, the
lenders party thereto, the fronting banks party thereto and The Chase Manhattan
Bank, as administrative agent and collateral agent.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"FEES" shall mean the Commitment Fees and the Administrative Agent Fees.
"FINANCIAL OFFICER" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer, Assistant Treasurer or
Controller of such corporation.
"GAAP" shall mean generally accepted accounting principles in effect from
time to time in the United States applied on a consistent basis or, when
reference is made to another jurisdiction, generally accepted accounting
principles in effect from time to time in such jurisdiction applied on a
consistent basis.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body or,
in the case of references to "Governmental Authority" in Article II and Section
9.17, the National Association of Insurance Commissioners.
"GUARANTEE" of or by any person shall mean (a) any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness
<PAGE>
14
(whether arising by virtue of partnership arrangements, by agreement to keep
well, to purchase assets, goods, securities or services, to take-or-pay or
otherwise) or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase or lease
property, securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or (iv) entered into for the purpose of assuring in any other
manner the holders of such Indebtedness of the payment thereof or to protect
such holders against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of such person securing any Indebtedness of any other person,
whether or not such Indebtedness is assumed by such person; PROVIDED, HOWEVER,
that the term "GUARANTEE" shall not include endorsements for collection or
deposit, in either case in the ordinary course of business, or customary and
reasonable indemnity obligations in effect on the Effective Date or entered into
in connection with any acquisition or disposition of assets permitted under this
Agreement.
"GUARANTEE AGREEMENTS" shall mean (a) the Parent Guarantee Agreement, (b)
the Subsidiary Guarantee Agreement and (c) any other guarantee agreements or
similar agreements with respect to the Obligations in form and substance
reasonably satisfactory to the Collateral Agent.
"GUARANTEE REQUIREMENT" shall mean, at any time, that (a) the Parent
Guarantee Agreement shall have been duly executed by UCAR and the Borrower,
shall have been delivered to the Collateral Agent and shall be in full force and
effect; (b) the Subsidiary Guarantee Agreement (or a supplement thereto) shall
have been duly executed by each domestic Subsidiary existing at such time, shall
have been delivered to the Collateral Agent and shall be in full force and
effect; (c) in respect of the Swiss Term Loans made to the Swiss Borrower, a
Guarantee Agreement shall have been duly executed (i) by each foreign Subsidiary
existing at such time that is a direct or indirect parent of the Swiss Borrower
and (ii) by each other foreign Subsidiary, shall have been delivered to the
Collateral Agent and shall be in full force and effect; and (d) the Indemnity,
Subrogation and Contribution Agreement (or a supplement thereto) shall have been
executed by UCAR, the Borrower and each Subsidiary party to the Subsidiary
Guarantee Agreement or the Domestic Pledge Agreement, shall have been delivered
to the Collateral Agent and shall be in full force and effect; PROVIDED that a
Guarantee Requirement with respect to the Swiss Borrower or a foreign Subsidiary
shall not be required to be satisfied hereunder to the extent that (i)
satisfaction of such Guarantee Requirement is not permitted under applicable law
or (ii) the Administrative Agent determines that the expense, tax consequences
or difficulty of satisfying such Guarantee Requirement does not justify
satisfying such Guarantee Requirement.
<PAGE>
15
"GUARANTORS" shall mean UCAR, the Borrower and the Subsidiary Guarantors.
"HAZARDOUS MATERIAL" shall mean any material meeting the definition of a
"hazardous substance" in CERCLA 42 U.S.C. ss.9601(14) and all explosive or
radioactive substances or wastes, toxic substances or wastes, pollutants, solid,
liquid or gaseous wastes, including petroleum, petroleum distillates or
fractions or residues, asbestos or asbestos containing materials,
polychlorinated biphenyls ("PCBS") or materials or equipment containing PCBs in
excess of 50 ppm, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law,
or that reasonably could form the basis of an Environmental Claim.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid (other than trade payables
incurred in the ordinary course of business), (d) all obligations of such person
under conditional sale or other title retention agreements relating to property
or assets purchased by such person, (e) all obligations of such person issued or
assumed as the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed, (g) all Guarantees by such person of
Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all payments that such person would have to make in the event of an early
termination, on the date Indebtedness of such person is being determined, in
respect of outstanding interest rate protection agreements, foreign currency
exchange agreements or other interest or exchange rate hedging arrangements and
(j) all obligations of such person as an account party in respect of letters of
credit and bankers' acceptances. The Indebtedness of any person shall include
the Indebtedness of any partnership in which such person is a general partner,
other than to the extent that the instrument or agreement evidencing such
Indebtedness expressly limits the liability of such person in respect thereof;
PROVIDED that, if the sole asset of such person is its general partnership
interest in such partnership, the amount of such Indebtedness shall be deemed
equal to the value of such general partnership interest and the amount of any
Indebtedness in respect of any Guarantee of such partnership Indebtedness shall
be limited to the same extent as such Guarantee may be limited.
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" shall mean the
Indemnity, Subrogation and Contribution Agreement dated as of October 15, 1995,
as amended and restated as of
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16
November 10, 1998, substantially in the form of Exhibit D, among UCAR, the
Borrower, the Subsidiary Guarantors and the Collateral Agent.
"INFORMATION MEMORANDUM" shall have the meaning given such term in Section
3.15.
"INSTALLMENT DATE" shall have the meaning given such term in Section
2.11(a).
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean the Intellectual
Property Security Agreement dated as of April 22, 1998, as amended and restated
as of November 10, 1998, substantially in the form of Exhibit I, among UCAR, the
Borrower, the domestic Subsidiaries and the Collateral Agent for the benefit of
the Secured Parties.
"INTEREST COVERAGE RATIO" shall have the meaning given such term in Section
6.11.
"INTEREST EXPENSE" shall mean, with respect to UCAR, the Borrower and the
Subsidiaries on a consolidated basis for any period, the sum of (a) gross
interest expense of UCAR, the Borrower and the Subsidiaries for such period on a
consolidated basis, including (i) the amortization of debt discounts, (ii) the
amortization of all fees (including fees with respect to interest rate
protection agreements) payable in connection with the incurrence of Indebtedness
to the extent included in interest expense and (iii) the portion of any payments
or accruals with respect to Capital Lease Obligations allocable to interest
expense and (b) capitalized interest of UCAR, the Borrower and the Subsidiaries
on a consolidated basis. For purposes of the foregoing, gross interest expense
shall be determined after giving effect to any net payments made or received by
the Borrower and the Subsidiaries with respect to interest rate protection
agreements.
"INTEREST PAYMENT DATE" shall mean, (a) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months' duration, each day that would have been an
Interest Payment Date had successive Interest Periods of three months' duration
been applicable to such Borrowing, and, in addition, the date of any refinancing
or conversion of such Borrowing with or to a Borrowing of a different Type and
(b) with respect to any ABR Loan, the last day of each calendar quarter.
"INTEREST PERIOD" shall mean as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as the case may be, and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the applicable Credit Party
<PAGE>
17
may elect, and the date any Eurodollar Borrowing is converted to an ABR
Borrowing in accordance with Section 2.10 or repaid or prepaid in accordance
with Section 2.11 or 2.12; PROVIDED, HOWEVER, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day. Interest shall accrue from and including
the first day of an Interest Period to but excluding the last day of such
Interest Period.
"INTEREST/EXCHANGE RATE PROTECTION AGREEMENT" shall mean any interest rate
or currency hedging agreement or arrangement approved by the Administrative
Agent (such approval not to be unreasonably withheld) entered into by the
Borrower or a Subsidiary and designed to protect against fluctuations in
interest rates or currency exchange rates.
"LENDERS" shall mean the persons listed on Schedule 2.01 and any other
person that shall have become a Lender hereunder pursuant to an Assignment and
Acceptance, other than any person that ceases to be a Lender hereunder pursuant
to an Assignment and Acceptance.
"LEVERAGE RATIO" shall have the meaning given such term in Section 6.12.
"LIBO RATE" shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate (rounded upwards, if necessary, to the next 1/16 of
1%) at which dollar deposits approximately equal in principal amount to the
Administrative Agent's portion of such Eurodollar Borrowing and for a maturity
comparable to such Interest Period are offered to the principal London office of
the Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"LITIGATION LIABILITIES" shall mean liabilities and expenses of UCAR, the
Borrower and the Subsidiaries associated with (a) antitrust investigations and
related lawsuits, settlements and claims of the type described in UCAR's Annual
Report on Form 10-K for the year ended December 31, 1997, and UCAR's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998
(together, the "SEC REPORTS"), (b) shareholder derivative lawsuits and claims of
the type
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18
described in the SEC Reports and (c) securities lawsuits and claims of the type
described in the SEC Reports and any investigations that may arise relating to
the subject matter of such securities lawsuits and claims.
"LITIGATION PAYMENTS" shall mean payments, credits, discounts, transfers of
assets and any other transfers of value made in respect of Litigation
Liabilities which are or would be applied against the Reserves in accordance
with GAAP.
"LOAN DOCUMENTS" shall mean this Agreement, the Existing Credit Agreement,
the Notes, if any, the notes, if any, issued under the Existing Credit
Agreement, the Guarantee Agreements, the Security Documents, the Indemnity,
Subrogation and Contribution Agreement, the Local Facility Loan Documents and
the letters of credit issued under the Existing Credit Agreement.
"LOAN PARTIES" shall mean the Borrower, the Swiss Borrower, the Guarantors
and the Pledgors.
"LOANS" shall mean the U.S. Term Loans and the Swiss Term Loans.
"LOCAL FACILITY" shall mean each loan facility permitting borrowings by a
credit party under the Existing Credit Agreement located outside the United
States (a) which are made pursuant to a Local Facility Credit Agreement and
supported by a Tranche A Letter of Credit or (b) which are supported by the
Guarantee of any Guarantor or a pledge of or a security interest in any
Collateral or in any assets of such credit party and the existence and terms of
which (including the existence and terms of any such Guarantee, pledge or
security interest) have been submitted for approval to the administrative agent
under the Existing Credit Agreement by the Borrower and approved in writing by
the administrative agent under the Existing Credit Agreement.
"LOCAL FACILITY CREDIT AGREEMENT" shall mean each credit agreement between
a foreign credit party under the Existing Credit Agreement and one or more
lenders in substantially the form of Exhibit E to the Existing Credit Agreement,
with such changes therefrom as shall in the reasonable judgment of the
administrative agent under the Existing Credit Agreement be necessary or
advisable under applicable law.
"LOCAL FACILITY LENDERS" shall mean each lender under a Local Facility.
"LOCAL FACILITY LOAN DOCUMENTS" shall mean each agreement or instrument
evidencing or securing any obligation of a borrower under, guarantor of, or
grantor of collateral to secure, any Local Facility that does not also evidence,
guarantee or secure any other Obligation.
"MARGIN STOCK" shall have the meaning given such term in Regulation U.
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19
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect on the
assets, business, properties, financial condition or results of operations of
UCAR, the Borrower and the Subsidiaries, taken as a whole, (b) a material
impairment of the ability of UCAR, the Borrower or any Subsidiary to perform any
of its material obligations under any Loan Document (other than the Local
Facility Loan Documents) to which it is or will be a party or (c) an impairment
of the validity or enforceability of, or a material impairment of the material
rights, remedies or benefits available to the Lenders, the Administrative Agent
or the Collateral Agent under any Loan Document (other than Local Facility Loan
Documents).
"MATURITY DATE" shall mean December 31, 2003.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MORTGAGE" shall mean a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property or interest therein to secure all or a portion of the
Obligations. Each Mortgage shall be reasonably satisfactory in form and
substance to the Collateral Agent.
"MORTGAGED PROPERTIES" shall mean, initially, each parcel of real property
and improvements thereto owned by a Loan Party and identified on Schedule
3.23(a), and shall include each other parcel of real property and improvements
thereto with respect to which a Mortgage is granted pursuant to Section 5.11.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code
Section 414) is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"NET PROCEEDS" shall mean (a) 100% of the cash proceeds actually received
by UCAR, the Borrower or any Subsidiary (including any cash payments received by
way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or otherwise and including
casualty insurance settlements and condemnation awards, but only as and when
received), net of (i) attorneys' fees, accountants' fees, investment banking
fees, survey costs, title insurance premiums, and related search and recording
charges, transfer taxes, deed or mortgage recording taxes, required debt
payments (other than pursuant hereto or pursuant to the Existing Credit
Agreement), other customary expenses and brokerage, consultant and other
customary fees actually incurred in connection therewith and (ii) taxes paid or
payable as a result thereof (including withholding taxes incurred in connection
with cross-border transactions, if applicable, and including taxes estimated by
the Borrower to be payable as a result thereof or as a result of such
<PAGE>
20
transactions), from any loss, damage, destruction or condemnation of, or any
sale, transfer or other disposition (including any sale and leaseback of assets
and any lease of real property) to any person of any asset or assets of UCAR,
the Borrower or any Subsidiary (other than those pursuant to Sections 6.03,
6.05(a), 6.05(b), 6.05(e), 6.05(f)and 6.05(h) or any other financing subject to
clause (ii) of the definition of "EXCESS CASH FLOW"); PROVIDED HOWEVER that if
the Borrower shall deliver a certificate of the Borrower signed by a Responsible
Officer of the Borrower to the Administrative Agent promptly following receipt
of any such proceeds setting forth the Borrower's intention to use any portion
of such proceeds to purchase assets useful in the business of the Borrower and
the Subsidiaries (including by way of a purchase of Capital Stock of any person
holding such assets) within 12 months of such receipt, such portion of such
proceeds shall not constitute Net Proceeds except to the extent not so used
within such 12-month period; PROVIDED that the aggregate amount of net proceeds
that may be excluded from Net Proceeds pursuant to the immediately preceding
proviso shall not exceed 25% of the book value of Total Assets set forth in
UCAR's and its subsidiaries' June 30, 1998 quarterly consolidated financial
statements (which book value equals $1,273,000,000); and PROVIDED FURTHER that
(x) no proceeds realized in a single transaction or series of related
transactions shall constitute Net Proceeds unless such proceeds shall exceed
$75,000 and (y) no such proceeds shall constitute Net Proceeds in any fiscal
year until the aggregate amount of all such proceeds in such fiscal year shall
exceed $1,000,000 or the aggregate of all such proceeds received after the
Effective Date shall exceed $3,000,000, (b) 100% of the cash proceeds from the
incurrence, issuance or sale by UCAR, the Borrower or any Subsidiary of any
Indebtedness (other than Indebtedness permitted pursuant to Section 6.01), net
of all taxes (including withholding taxes incurred in connection with
cross-border transactions, if applicable, and including taxes estimated by the
Borrower to be payable as a result thereof or as a result of such transactions)
and fees (including investment banking fees), commissions, costs and other
expenses incurred in connection with such incurrence, issuance or sale and (c)
50% of the cash proceeds from the issuance or the sale by UCAR of any equity
security of UCAR (other than sales of Capital Stock of UCAR to directors,
officers or employees of UCAR, the Borrower or any Subsidiary in connection with
permitted employee compensation and incentive arrangements), net of all taxes
and fees (including investment banking fees), commissions, costs and other
expenses incurred in connection with such issuance or sale. For purposes of
calculating "NET PROCEEDS", fees, commissions and other costs and expenses
payable to UCAR or the Borrower or any Affiliate of either of them shall be
disregarded.
"NOTES" shall mean any promissory note of a Credit Party issued pursuant to
this Agreement.
"OBLIGATIONS" shall mean (a) the unpaid principal of and premium, if any,
and interest (including interest accruing at the then applicable rate provided
in this Agreement after the maturity of the Loans and interest accruing at the
then applicable rate
<PAGE>
21
provided in this Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to any Credit Party whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (b) the unpaid principal of and premium, if any, and interest
(including interest accruing at the then applicable rate provided in the
Existing Credit Agreement after the maturity of the loans thereunder and
interest accruing at the applicable rate provided in the Existing Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any borrower
thereunder whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) on the loans under the Existing Credit Agreement,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (c) each payment required to be made by any
credit party under the Existing Credit Agreement, when and as due, including
payments in respect of reimbursements of L/C disbursements, interest thereon and
obligations to provide cash collateral, (d) each payment required to be made by
any Credit Party under this Agreement, when and as due, and (e) all other
obligations and liabilities of every nature of the Credit Parties and the credit
parties under the Existing Credit Agreement from time to time owed to the
Secured Parties or any of them, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), which may arise under, out of, or in
connection with, this Agreement, the Existing Credit Agreement, any Guarantee
Agreement, any Security Document or any other Loan Document and any obligation
of the Borrower to a Lender or a lender under the Existing Credit Agreement
under an Interest/Exchange Rate Protection Agreement or under any other document
made, delivered or given in connection with any of the foregoing, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including all fees and disbursements
of counsel to the Collateral Agent or to the Secured Parties that are required
to be paid by UCAR, a Credit Party or a credit party under the Existing Credit
Agreement pursuant to the terms of this Agreement, the Existing Credit
Agreement, any Guarantee Agreement, any Security Document, any other Loan
Document or any Interest/Exchange Rate Protection Agreement with a Lender or a
lender under the Existing Credit Agreement).
"ORIGINAL CLOSING DATE" shall mean October 19, 1995.
"PARENT GUARANTEE AGREEMENT" shall mean the Parent Guarantee Agreement
dated as of October 19, 1995, as amended and restated as of November 10, 1998,
substantially in the form of Exhibit E, made by UCAR and the Borrower in favor
of the Collateral Agent for the benefit of the Secured Parties.
<PAGE>
22
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"PERMITTED BUSINESS ACQUISITION" shall mean any acquisition of all or
substantially all the assets of, or shares or other equity interests in, a
person or division or line of business of a person (or any subsequent investment
made in a previously acquired Permitted Business Acquisition) and any investment
in Brazil if immediately after giving effect thereto: (a) no Default or Event of
Default shall have occurred and be continuing or would result therefrom, (b) all
transactions related thereto shall be consummated in accordance with applicable
laws, (c) at least 90% of the outstanding Capital Stock of any acquired or newly
formed corporation, partnership, association or other business entity are owned
directly by the Borrower or a domestic Wholly Owned Subsidiary (unless there is
a material tax or legal or other economic disadvantage in not having a foreign
Subsidiary hold such Capital Stock, in which case such Capital Stock may be held
directly by a foreign Subsidiary) and all actions required to be taken, if any,
with respect to such acquired or newly formed Subsidiary under Section 5.11
shall have been taken, (d) UCAR shall be in compliance, on a PRO FORMA basis
after giving effect to such acquisition or formation, with the covenants
contained in Sections 6.11 and 6.12 recomputed as at the last day of the most
recently ended fiscal quarter of UCAR as if such acquisition had occurred on the
first day of each relevant period for testing such compliance, and the Borrower
shall have delivered to the Administrative Agent a certificate of the Borrower
signed by a Responsible Officer of the Borrower to such effect, together with
all relevant financial information for such subsidiary or assets, (e) the Total
Revolving Credit Commitment shall exceed the Aggregate Revolving Credit Exposure
by at least $75,000,000 following such acquisition and payment of all related
costs and expenses, (f) the Borrower shall have delivered to the Administrative
Agent a certificate of the Borrower signed by a Responsible Officer of the
Borrower representing that in the Borrower's good faith judgment, based on such
analysis as it shall deem appropriate, it will have liquidity it deems adequate
following such acquisition or formation, and (g) any acquired or newly formed
subsidiary shall not be liable for any Indebtedness (except for Indebtedness
permitted by Section 6.01).
"PERMITTED FOREIGN TRANSFER" shall mean (a) any Specified Permitted
Transaction or (b) the transfer by means of Indebtedness, investment or
otherwise (PROVIDED that each transfer of cash (other than a transfer pursuant
to clause (iii) below) shall be made by means of intercompany Indebtedness
(which shall be pledged to the extent required under the Pledge Agreements if no
material tax disadvantage shall result therefrom) unless there is a material tax
or other economic or legal disadvantage in structuring the transfer as
Indebtedness instead of as an equity investment) from the Borrower or any
Subsidiary to any foreign Subsidiary at least 90% of the outstanding Capital
Stock of which is owned by the Borrower or a Wholly Owned Subsidiary of (i)
inventory and equipment in the ordinary course of business consistent with past
<PAGE>
23
practice; (ii) cash to fund (A) working capital needs and capital expenditures,
in each case in accordance with the strategic plan described in the Information
Memorandum or in the ordinary course of business consistent with past practice,
and (B) debt service on Indebtedness permitted under this Agreement paid in the
ordinary course of business, and, in the case of any transaction under clause
(A) or clause (B), solely to the extent internally generated funds of the
applicable transferee are insufficient for such purposes and the Borrower shall
have delivered to the Administrative Agent a certificate of the Borrower signed
by a Responsible Officer of the Borrower to such effect; and (iii) any cash
borrowed in one jurisdiction and transferred to another to repay Indebtedness
under any Local Facility or the Existing Credit Agreement as a direct
consequence of any reallocation made pursuant to Section 2.11(b) of the Existing
Credit Agreement.
"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of the United
States of America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof; (b) time deposit accounts, certificates
of deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt, or whose parent holding company's
long-term debt, is rated A at the time of deposit (or such similar equivalent
rating or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act of 1933, as
amended)); (c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) above entered into
with a bank meeting the qualifications described in clause (b) above; (d)
commercial paper, maturing not more than 180 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Borrower) organized and
in existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time as
of which any investment therein is made of P-1 (or higher) according to Moody's,
or A-1 (or higher) according to S&P; (e) securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least A by S&P
or A2 by Moody's; (f) in the case of any Subsidiary organized in a jurisdiction
outside the United States: (i) direct obligations of the sovereign nation (or
any agency thereof) in which such Subsidiary is organized and is conducting
business or in obligations fully and unconditionally guaranteed by such
sovereign nation (or any agency thereof); PROVIDED that such obligations have a
rating of at least A by S&P or A2 by Moody's (or the equivalent thereof from
comparable foreign rating agencies), (ii) investments of the type and maturity
described in clauses (a) through (e) above of foreign obligors, which
investments or obligors (or the parents
<PAGE>
24
of such obligors) have ratings described in such clauses or equivalent ratings
from comparable foreign rating agencies or (iii) investments of the type and
maturity described in clauses (a) through (e) above of foreign obligors (or the
parents of such obligors), which investments or obligors (or the parents of such
obligors) are not rated as provided in such clauses or in clause (ii) above but
which are, in the reasonable judgment of the Borrower, comparable in investment
quality to such investments and obligors (or the parents of such obligors);
PROVIDED that the aggregate face amount outstanding at any time of such
investments of all foreign Subsidiaries made pursuant to clause (iii) does not
exceed $50,000,000; (g) mutual funds whose investment guidelines restrict such
funds' investments to those satisfying the provisions of clauses (a) through (e)
above; and (h) time deposit accounts, certificates of deposit and money market
deposits in an aggregate face amount not in excess of 1/2 of 1% of Total Assets
as of the end of the Borrower's most recently completed fiscal year.
"PERMITTED OTHER ACQUISITIONS" shall mean acquisitions of any assets of, or
any shares or other equity interests in, a person or division or line of
business of any person if immediately after giving effect thereto: (a) no
Default or Event of Default shall have occurred and be continuing, (b) all
transactions related thereto shall be consummated in accordance with applicable
laws, (c) the Borrower shall on or prior to the making of such acquisition have
delivered to the Administrative Agent a certificate of the Borrower signed by a
Responsible Officer of the Borrower designating such acquisition as a Permitted
Other Acquisition for purposes of this Agreement, (d) either (i) the acquisition
shall constitute a Permitted Business Acquisition, (ii) the acquired asset shall
constitute or be held in an Unrestricted Subsidiary or (iii) solely if at the
time of acquisition thereof the Borrower shall not be entitled to make any
additional Capital Expenditure pursuant to Section 6.11, the acquisition shall
be of real property, improvements thereto or equipment; PROVIDED that if such
acquisition shall be an acquisition of the type described in clause (ii) or
(iii) above, (A) UCAR shall be in compliance, on a PRO FORMA basis after giving
effect to such acquisition, with the covenants contained in Sections 6.11 and
6.12 recomputed as of the last day of the most recently ended fiscal quarter of
UCAR as if such acquisition had occurred on the first day of each relevant
period for testing such compliance, and the Borrower shall have delivered to the
Administrative Agent a certificate of the Borrower signed by a Responsible
Officer of the Borrower to such effect, together with all relevant information
for such acquisition, (B) the Total Revolving Credit Commitment shall exceed the
Aggregate Revolving Credit Exposure by at least $75,000,000 following the
acquisition and the payment of all related costs and expenses, and (C) the
Borrower shall have delivered a certificate of the Borrower signed by a
Responsible Officer of the Borrower representing that in the Borrower's good
faith judgment, based on such analysis as it shall deem adequate, it will have
liquidity it deems adequate following the acquisition.
<PAGE>
25
"PERSON" shall mean any natural person, corporation, limited liability
company, business trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"PLAN" shall mean any employee pension benefit plan, as defined in Section
3(2) of ERISA (other than a Multiemployer Plan), subject to the provisions of
Title IV of ERISA or Section 412 of the Code and in respect of which the
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"PLEDGE AGREEMENTS" shall mean (a) the Domestic Pledge Agreement and (b)
any other pledge agreements or similar agreements securing the Obligations or a
Guarantee thereof in form and substance reasonably satisfactory to the
Collateral Agent.
"PLEDGORS" shall mean UCAR, the Borrower and each Subsidiary that becomes
party to a Pledge Agreement, a Security Agreement, the Intellectual Property
Security Agreement or a Mortgage.
"PRIME RATE" shall mean the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as being effective.
"RECAPITALIZATION" shall mean the recapitalization of UCAR on January 26,
1995, and the related transactions, as defined in the Credit Agreement of UCAR
and the Borrower dated as of January 26, 1995.
"REFINANCING NOTE INDENTURE" shall mean one or more indentures pursuant to
which the Refinancing Notes are issued.
"REFINANCING NOTES" shall mean one or more series of subordinated
debentures or notes issued by the Borrower, the net proceeds of which are used
by the Borrower to redeem or repurchase Senior Subordinated Notes.
"REGISTER" shall have the meaning given such term in Section 9.04(d).
"REGULATION D" shall mean Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
<PAGE>
26
"REGULATION X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"RELATED BUSINESS" shall mean any business or business activity conducted
by UCAR or its subsidiaries on the date hereof and any business or business
activities incidental or related thereto or incidental or related to the
procurement, manufacture or sale of products or services manufactured or
provided by UCAR or any of its subsidiaries on the date hereof.
"RELATED FUND" shall mean, with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised
or managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
"RELEASE" shall have the meaning given such term in CERCLA, 42 U.S.C.
ss.9601(22).
"REMEDIAL ACTION" shall mean (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. ss. 9601(24), and (b) all other actions, including studies
and investigations, required by any Governmental Authority or voluntarily
undertaken to: (i) clean up, remove, treat, abate or in any other way respond to
any Hazardous Material in the environment; or (ii) prevent the Release or threat
of Release, or minimize the further Release, of any Hazardous Material.
"REPORTABLE EVENT" shall mean any reportable event as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than a Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"REQUIRED LENDERS" shall mean, at any time, Lenders having Loans and unused
Commitments representing at least 51% of the sum of all Loans outstanding and
unused Commitments at such time.
"REQUIRED SECURED PARTIES" shall mean, at any time, (a) the Required
Lenders under this Agreement (unless all Commitments under this Agreement shall
have expired or been terminated and the principal of and interest on each Loan,
all Fees and other amounts payable hereunder shall have been paid in full and
(b) the "Required Lenders" under the Existing Credit Agreement (unless all
commitments under the Existing Credit Agreement shall have expired or been
terminated and the principal of and interest on each loan, all fees and other
amounts payable under the Existing Credit Agreement shall have been paid in full
and all letters of credit issued hereunder shall have been cancelled or expired
and all amounts drawn thereunder shall have been reimbursed in full).
"RESERVES" shall mean, with respect to UCAR, the Borrower and its
subsidiaries on a consolidated basis at any date
<PAGE>
27
of determination, all reserves in respect of Litigation Liabilities which are or
would be disclosed on a consolidated balance sheet of UCAR, the Borrower and its
subsidiaries prepared in accordance with GAAP at such date of determination.
"RESPONSIBLE OFFICER" of any corporation shall mean any executive officer
or Financial Officer of such corporation and any other officer or similar
official thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"RESTRICTED DEBT PAYMENTS" shall have the meaning given such term in
Section 6.09(b)(i).
"RESTRICTED EQUITY PAYMENTS" shall have the meaning given such term in
Section 6.06.
"RESTRICTED JUNIOR PAYMENT AMOUNT" shall mean, with respect to any fiscal
year, an amount equal to (a) $15,000,000 for the 1999 fiscal year and (b)
$20,000,000 for each fiscal year thereafter.
"RESTRICTED JUNIOR PAYMENTS" shall mean the collective reference to
Restricted Equity Payments made pursuant to Section 6.06(c) and Restricted Debt
Payments made pursuant to the first proviso contained in Section 6.09(b)(i). The
amount of Restricted Equity Payments made pursuant to Section 6.06(c) shall be
determined without double counting in the case of Restricted Equity Payments
made to UCAR, the Borrower or any Subsidiary to the extent used by such person
to make a Restricted Equity Payment.
"REVOLVING L/C EXPOSURE" shall mean the Revolving L/C Exposure under the
Existing Credit Agreement.
"S&P" shall mean Standard & Poor's Ratings Group.
"SALE AND LEASE-BACK TRANSACTION" shall have the meaning given such term in
Section 6.03.
"SEC REPORTS" shall have the meaning given such term in the definition of
"Litigation Liabilities".
"SECOND CLOSING DATE" shall mean March 19, 1997.
"SECURED PARTIES" shall mean the Lenders, the lenders under the Existing
Credit Agreement, the lenders under the Local Facility Credit Agreements, the
fronting banks under the Existing Credit Agreement, the Administrative Agent,
the administrative agent under the Existing Credit Agreement, the administrative
agent under the Local Facility Credit Agreements and the Collateral Agent.
"SECURITY AGREEMENTS" shall mean (a) the Domestic Security Agreement and
(b) any other security agreements or similar
<PAGE>
28
agreements securing the Obligations or a Guarantee thereof in form and substance
reasonably satisfactory to the Collateral Agent.
"SECURITY DOCUMENTS" shall mean the Security Agreements, the Intellectual
Property Security Agreement, the Pledge Agreements, the Mortgages and each of
the agreements and other instruments and documents executed and delivered
pursuant thereto or pursuant to Section 5.11.
"SENIOR SUBORDINATED GUARANTEE" shall mean the senior subordinated
Guarantee by UCAR in effect on the Original Closing Date, and any subsequent
senior subordinated Guarantee by UCAR on terms no less favorable to the Lenders,
of the Indebtedness of the Borrower under the Senior Subordinated Notes or the
Refinancing Notes.
"SENIOR SUBORDINATED INDENTURE" shall mean the indenture pursuant to which
the Senior Subordinated Notes were issued, dated as of January 15, 1995, among
the Borrower, UCAR, as guarantor, and United States Trust Company of New York,
as Trustee, as amended from time to time in accordance with Section 6.09.
"SENIOR SUBORDINATED NOTES" shall mean up to $200,000,000 aggregate
principal amount of Senior Subordinated Notes of the Borrower issued pursuant to
the Senior Subordinated Indenture.
"SIGNIFICANT SUBSIDIARY" shall mean the Borrower, any other Credit Party
and any other subsidiary of UCAR that at the date of any determination (a)
accounts for 2.5% or more of the consolidated assets of UCAR, (b) has accounted
for 2.5% or more of EBITDA for each of the two consecutive periods of four
fiscal quarters immediately preceding the date of determination or (c) has been
designated by the Borrower in writing to the Administrative Agent as a
Significant Subsidiary and such designation has not subsequently been withdrawn.
"SPECIFIED PERMITTED TRANSACTION" shall mean, if immediately after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing or would result therefrom: (a) any acquisition of Capital Stock of a
person that (i) does not constitute a Permitted Business Acquisition solely
because after giving effect thereto less than 90% of the outstanding Capital
Stock of such person is owned as required under clause (b) of the definition of
"Permitted Business Acquisition" but (ii) after giving effect to which at least
70% of the outstanding Capital Stock of such person is owned directly by the
Borrower or a domestic Wholly Owned Subsidiary (unless there is a material tax
or legal or other economic disadvantage in not having a foreign Subsidiary hold
such Capital Stock, in which case such Capital Stock may be held directly by a
foreign Subsidiary), (b) any acquisition of Capital Stock of a person that (i)
does not constitute a Permitted Business Acquisition solely because after giving
effect thereto less than 90% of the outstanding Capital Stock of such person is
owned as required under clause (b) of the
<PAGE>
29
definition of "Permitted Business Acquisition" but (ii) after giving effect to
which at least 50% of the outstanding Capital Stock of such person is owned
directly by the Borrower or a domestic Wholly Owned Subsidiary (unless there is
a material tax or legal or other economic disadvantage in not having a foreign
Subsidiary hold such Capital Stock, in which case such Capital Stock may be held
directly by a foreign Subsidiary); PROVIDED that the aggregate amount of
consideration (whether cash or property, valued at the time each such investment
is made) for acquisitions made in reliance on this clause (b) shall not exceed
$125,000,000, (c) any acquisition (or redemption or repurchase) of additional
Capital Stock of UCAR Elektroden GmbH, Carbone Savoie, UCAR Grafit OAO or any
other Subsidiary acquired in a Specified Permitted Transaction by the Borrower
or any Subsidiary, unless such transaction shall constitute a Permitted Business
Acquisition, and (d) any advance, loan or capital contribution by the Borrower
or any Subsidiary to UCAR Elektroden GmbH, Carbone Savoie, UCAR Grafit OAO or
any other Subsidiary acquired in a Specified Permitted Transaction at any time
prior to such person becoming a Wholly Owned Subsidiary (other than a Permitted
Foreign Transfer of the type described in clause (b) of the definition thereof);
PROVIDED that after giving effect to any transaction described in clause (a),
(b),(c) or (d) above, (i) UCAR shall be in compliance, on a PRO FORMA BASIS
after giving effect to such transaction, with the covenants contained in
Sections 6.11 and 6.12 recomputed as of the last day of the most recently ended
fiscal quarter of UCAR as if such acquisition had occurred on the first day of
each relevant period for testing such compliance, and the Borrower shall have
delivered to the Administrative Agent a certificate of the Borrower signed by a
Responsible Officer of the Borrower to such effect, together with all relevant
financial information for such transaction, (ii) the Total Revolving Credit
Commitment shall exceed the Aggregate Revolving Credit Exposure by $75,000,000
following such transaction and payment of all related costs and expenses and
(iii) the Borrower shall have delivered to the Administrative Agent a
certificate of the Borrower signed by a Responsible Officer of the Borrower
representing that in the Borrower's good faith judgment, it will have liquidity
it deems adequate following such transaction. For purposes of determining
compliance with Section 6.04(k), the aggregate outstanding amount of Specified
Permitted Transactions at any time shall mean the sum at such time of (i) the
aggregate outstanding principal amount of advances and loans made under clause
(d) of the immediately preceding sentence and (ii) the aggregate amount (net of
return of capital of (but not return on) any such investment) of capital
contributions made under clause (d) of the immediately preceding sentence and
consideration paid in respect of acquisitions (or redemptions or repurchases) of
Capital Stock made under clause (a), (b) or (c) of the immediately preceding
sentence; PROVIDED that the aggregate amount of Specified Permitted Transactions
in respect of any person (A) made under clause (a), (b) and (c) shall be deemed
to be zero after any acquisition in respect of such person that constitutes a
Permitted Business Acquisition (it being understood that the aggregate amount of
all prior such transactions in respect of such person shall thereafter be
treated as Permitted Other
<PAGE>
30
Acquisitions for purposes of Section 6.04(k)) and (B) made under clause (d)
shall be zero at any time that such person is a Wholly Owned Subsidiary.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent is subject with respect to Eurocurrency
Liabilities (as defined in Regulation D of the Board) or other categories of
liabilities or deposits by reference to which the LIBO Rate is determined. Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets which may be available from time to time to any
Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"SUBSIDIARY" shall mean, with respect to any person (herein referred to as
the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, directly or indirectly, owned, controlled or held, or (b) which
is, at the time any determination is made, otherwise Controlled, by the parent
or one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"SUBSIDIARY" shall mean each subsidiary of the Borrower.
"SUBSIDIARY GUARANTEE AGREEMENT" shall mean the Subsidiary Guarantee
Agreement date as of October 15, 1995, as amended and restated as of November
10, 1998, substantially in the form of Exhibit G, made by the domestic
Subsidiary Guarantors in favor of the Collateral Agent for the benefit of the
Secured Parties.
"SUBSIDIARY GUARANTOR" shall mean any Subsidiary that is a party to a
Guarantee Agreement.
"SWISS TERM LOAN" shall mean a Loan made pursuant to clause (b) of Section
2.01 .
"SWISS TERM LOAN COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make a Swiss Term Loan hereunder on the Effective
Date, expressed as an amount representing the maximum principal amount of the
Swiss Term Loan to be made by such Lender hereunder, as such commitment may be
(a)
<PAGE>
31
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Swiss Term Loan Commitment is
set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Swiss Term Loan Commitment, as
applicable. The initial aggregate amount of the Lenders' Swiss Term Loan
Commitments is $85,000,000.
"TAX SHARING AGREEMENT" means (a) that certain agreement dated January 26,
1995, between the Borrower and UCAR, and (b) any other tax allocation agreement
by the Borrower or any of its Subsidiaries and the Borrower or UCAR with respect
to consolidated or combined tax returns including the Borrower or any of its
Subsidiaries but only to the extent that amounts payable from time to time by
the Borrower or any such Subsidiary under any such agreement do not exceed the
corresponding tax payments that the Borrower or such Subsidiary would have been
required to make to any relevant taxing authority had the Borrower or such
Subsidiary not joined in such consolidated or combined return, but instead had
filed returns including only the Borrower or its Subsidiaries (PROVIDED that any
such agreement may provide that, if the Borrower or any such Subsidiary ceases
to be a member of the affiliated group of corporations of which UCAR is the
common parent for purposes of filing a consolidated federal income tax return
(such cessation, a "DECONSOLIDATION EVENT"), then the Borrower or such
Subsidiary will indemnify UCAR with respect to any Federal, state or local
income, franchise or other tax liability (including any related interest,
additions or penalties) imposed on UCAR as the result of an audit or other
adjustment with respect to any period prior to such Deconsolidation Event that
is attributable to the Borrower, such Subsidiary or any predecessor business
thereof (computed as if the Borrower, such Subsidiary or such predecessor
business, as the case may be, were a stand-alone entity that filed separate tax
returns as an independent corporation), but only to the extent that any such tax
liability exceeds any liability for taxes recorded on the books of the Borrower
or such Subsidiary with respect to any such period).
"TOTAL ASSETS" shall mean, with respect to UCAR, the Borrower and the
Subsidiaries on a consolidated basis at any date of determination, all assets
which would, in accordance with GAAP, be classified on a consolidated balance
sheet of UCAR, the Borrower and the Subsidiaries as assets at such date of
determination.
"TOTAL DEBT" shall mean, with respect to UCAR, the Borrower and the
Subsidiaries on a consolidated basis at any time, all Capital Lease Obligations,
Indebtedness for borrowed money and Indebtedness in respect of the deferred
purchase price of property or services of UCAR, the Borrower and the
Subsidiaries at such time.
"TRANCHE A EXPOSURE" shall mean the Tranche A Exposure under the Existing
Credit Agreement.
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32
"TRANCHE A LETTER OF CREDIT" shall mean a Tranche A Letter of Credit issued
under the Existing Credit Agreement.
"TRANCHE A REIMBURSEMENT LOANS" shall mean the Tranche A Reimbursement
Loans made under the Existing Credit Agreement.
"TRANCHE C TERM LOANS" shall mean the U.S. Term Loans and the Swiss Term
Loans.
"TRANSACTIONS" shall have the meaning given such term in Section 3.02.
"TYPE", when used in respect of any Loan or Borrowing, shall refer to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term "RATE" shall include the
Adjusted LIBO Rate and the Alternate Base Rate.
"UNRESTRICTED SUBSIDIARY" shall mean (a) any subsidiary of UCAR (other than
the Borrower) or any other direct or indirect investment by UCAR or any such
subsidiary in the Capital Stock of any other person (other than the Borrower) so
long as (i) none of the Capital Stock or other ownership interests of such
subsidiary or other person is owned by the Borrower or any of the Subsidiaries,
(ii) UCAR shall have notified the Administrative Agent of its acquisition or
creation of such subsidiary or such other investment and its ownership interest
therein concurrently with such acquisition, creation or investment and the
intended purposes of such subsidiary or investment, (iii) any such subsidiary
(unless it is a foreign subsidiary) shall have entered into the Tax Sharing
Agreement existing at the time of such acquisition or creation (or another tax
sharing agreement containing terms which, in the reasonable judgment of the
Administrative Agent, are customary in similar circumstances to provide an
appropriate allocation of tax liabilities and benefits), (iv) except in the case
of UCAR as permitted in the proviso below, none of UCAR, the Borrower and the
Subsidiaries shall have any contingent liability in respect of such subsidiary
or investment and (v) any such subsidiary or investment shall be capitalized
solely from the following sources: (A) any investment by any person other than
UCAR, the Borrower and the Subsidiaries; (B) Indebtedness issued by such
subsidiary or any of its subsidiaries that is nonrecourse to UCAR, the Borrower
and the Subsidiaries (except in the case of UCAR as otherwise permitted by the
proviso below), or proceeds thereof; (C) Capital Stock of such subsidiary or any
other Unrestricted Subsidiary, or proceeds thereof; (D) proceeds of Capital
Stock of UCAR issued by UCAR after the Original Closing Date remaining after
making the prepayment of Obligations required under Section 2.12(d) (to the
extent not previously used to prepay Indebtedness (other than revolving loans or
swingline loans under the Existing Credit Agreement), make any investment or
capital expenditure or otherwise for any purpose resulting in a deduction to
Excess Cash Flow in any fiscal year); and (E) investments permitted to be made
in Unrestricted Subsidiaries pursuant to Section 6.04; PROVIDED that UCAR may
incur
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33
a contingent liability or Indebtedness in a specified and limited amount in
respect of such a subsidiary or investment if it would at the time of such
incurrence be permitted to make an additional investment in such subsidiary or
investment in the amount of such incurrence and the amount so incurred shall
thereafter constitute an investment in such subsidiary or investment in such
amount for purposes of calculating compliance with Section 6.04; and (b) any
subsidiary of an Unrestricted Subsidiary.
"U.S. TERM LOAN" shall mean a Loan made pursuant to clause (a) of Section
2.01.
"U.S. TERM LOAN COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make a U.S. Term Loan hereunder on the Effective
Date, expressed as an amount representing the maximum principal amount of the
U.S. Term Loan to be made by such Lender hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.09 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's U.S. Term Loan
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its U.S. Term Loan Commitment,
as applicable. The initial aggregate amount of the Lenders' U.S. Term Loan
Commitments is $125,000,000.
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary of the Borrower, (a) at least
99% of the Capital Stock of which (other than directors' qualifying shares) is
owned by the Borrower or another Wholly Owned Subsidiary or (b) solely in the
case of any Subsidiary included in Brazil or UCAR Grafit OAO, at least 97% of
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Borrower or another Wholly Owned Subsidiary.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"WORKING CAPITAL" shall mean, with respect to UCAR, the Borrower and the
Subsidiaries on a consolidated basis at any date of determination, Current
Assets at such date of determination MINUS Current Liabilities at such date of
determination.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein,
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34
(a) any reference in this Agreement to any Loan Document shall mean such
document as amended, restated, supplemented or otherwise modified from time to
time and (b) all terms of an accounting or financial nature shall be construed
in accordance with GAAP, as in effect from time to time; PROVIDED, HOWEVER, that
for purposes of determining compliance with the covenants contained in Section
2.12(e) and Article VI all accounting terms herein shall be interpreted and all
accounting determinations hereunder (in each case, unless otherwise provided for
or defined herein) shall be made in accordance with GAAP as in effect on the
Effective Date and applied on a basis consistent with the application used in
the financial statements referred to in Section 3.05; and PROVIDED FURTHER that
if the Borrower notifies the Administrative Agent that the Borrower wishes to
amend any covenant in Section 2.12(e) or Article VI or any related definition to
eliminate the effect of any change in GAAP occurring after the date of this
Agreement on the operation of such covenant (or if the Administrative Agent
notifies the Borrower that the Required Lenders wish to amend Section 2.12(e) or
Article VI or any related definition for such purpose), then (i) the Borrower
and the Administrative Agent shall negotiate in good faith to agree upon an
appropriate amendment to such covenant and (ii) the Borrower's compliance with
such covenant shall be determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective until such covenant is
amended in a manner satisfactory to the Borrower and the Required Lenders. For
the purposes of determining compliance under Sections 6.01, 6.02, 6.04, 6.05 and
6.10 with respect to any amount in a currency other than Dollars, such amount
shall be deemed to equal the Dollar equivalent thereof at the time such amount
was incurred or expended, as the case may be (except that, where measurement of
a financial statement amount is contemplated, such determination shall be based
upon currency translation rules according to GAAP).
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and relying
upon the representations and warranties of UCAR and the Borrower set forth
herein, each Lender agrees, severally and not jointly (a) to make a U.S.
dollar-denominated U.S. Term Loan to the Borrower on the Effective Date, in a
principal amount not exceeding its U.S. Term Loan Commitment and (b) to make a
U.S. dollar-denominated Swiss Term Loan to the Swiss Borrower on the Effective
Date, in a principal amount not exceeding its Swiss Term Loan Commitment.
Amounts paid or prepaid in respect of the Loans may not be reborrowed.
SECTION 2.02. LOANS. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans of the same Class and Type made by the Lenders ratably in
accordance with their Commitments of the applicable Class; PROVIDED, HOWEVER,
that the failure of any Lender to make any Loan shall not relieve any other
Lender of its
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35
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender).
(b) Subject to Sections 2.08 and 2.14, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the applicable Credit Party may
request pursuant to Section 2.03. Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; PROVIDED that any exercise of such option shall not
affect the obligation of the applicable Credit Party to repay such Loan in
accordance with the terms of this Agreement and such Lender shall not be
entitled to any amounts payable under Section 2.13 or Section 2.19 in respect of
increased costs arising as a result of such exercise (and that would not have
arisen but for such exercise). At the commencement of each Interest Period for
any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is
an integral multiple of $1,000,000 and not less than $5,000,000. Borrowings of
more than one Type may be outstanding at the same time; PROVIDED, HOWEVER, that
the Credit Parties shall not be entitled to request any Borrowing which, if
made, would result in more than twenty Eurodollar Borrowings outstanding
hereunder at any time. For purposes of the foregoing, Borrowings having
different Interest Periods, regardless of whether they commence on the same
date, shall be considered separate Borrowings.
(c) Subject to Section 2.10, each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof by wire transfer to such account as
the Administrative Agent may designate in federal funds not later than 11:00
a.m., New York City time, and the Administrative Agent shall by 12:00 (noon),
New York City time, credit the amounts so received to an account designated by
the applicable Credit Party in the applicable Borrowing Request; PROVIDED,
HOWEVER, that if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, the Administrative Agent
shall return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and may, in reliance upon such assumption,
make available to the applicable Credit Party on such date a corresponding
amount. If the Administrative Agent shall have so made funds available then, to
the extent that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the applicable Credit Party severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the applicable Credit Party until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
applicable Credit Party, the interest rate
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36
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, a rate determined by the Administrative Agent to represent
its cost of overnight or short-term funds (which determination shall be
conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
SECTION 2.03. BORROWING PROCEDURE. In order to request a Borrowing, a
Credit Party shall hand deliver or telecopy to the Administrative Agent a duly
completed Borrowing Request substantially in the form of Exhibit C (a) in the
case of a Eurodollar Borrowing, not later than 12:00 (noon), New York City time,
three Business Days before a proposed Borrowing and (b) in the case of an ABR
Borrowing, not later than 12:00 (noon), New York City time, one Business Day
before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall
be signed by or on behalf of the applicable Credit Party and shall specify the
following information: (i) the name of the applicable Credit Party; (ii) whether
the Borrowing then being requested is to be a U.S. Term Borrowing or a Swiss
Term Borrowing, and whether such Borrowing is to be a Eurodollar Borrowing or an
ABR Borrowing; (iii) the date of such Borrowing (which shall be a Business Day),
(iv) the number and location of the account to which funds are to be disbursed
(which account shall be maintained in the United States of America); (v) the
amount of such Borrowing; and (vi) if such Borrowing is to be a Eurodollar
Borrowing, the Interest Period with respect thereto; PROVIDED, HOWEVER, that,
notwithstanding any contrary specification in any Borrowing Request, each
requested Borrowing shall comply with the requirements set forth in Section
2.02. If no election as to the Type of Borrowing is specified in any such
notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest
Period with respect to any Eurodollar Borrowing is specified in any such notice,
then the applicable Credit Party shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall promptly (and in
any event on the same day that the Administrative Agent receives such notice, if
received by 1:00 p.m., New York City time, on such day) advise the Lenders of
any notice given pursuant to this Section 2.03 and of each Lender's portion of
the requested Borrowing.
SECTION 2.04. EVIDENCE OF DEBT; REPAYMENT OF LOANS. The outstanding
principal balance of each Loan shall be payable as provided in Section 2.11.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness to such Lender resulting from
each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.
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37
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from any Credit Party to
each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from any Credit Party and each Lender's share
thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
and (c) of this Section 2.04 shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; PROVIDED, HOWEVER, that the failure
of any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of any Credit Party to
repay the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event any
Lender shall request and receive a Note as provided in Section 9.04(h) or
otherwise the interests represented by that Note shall at all times (including
after any assignment of all or part of such interests pursuant to Section 9.04)
be represented by one or more Notes payable to the payee named therein or its
registered assigns.
SECTION 2.05. FEES. (a) The Borrower agrees to pay to each Lender, through
the Administrative Agent, on the last day of March, June, September and December
in each year, and on the date on which the Commitments of all the Lenders shall
be terminated as provided herein, a commitment fee (a "COMMITMENT FEE") on the
average daily unused amount of the Commitments of such Lender during the
preceding quarter (or other period commencing with the date of this Agreement or
ending with the date on which the last of the Commitments of such Lender shall
be terminated) at the rate of 0.50% per annum. All Commitment Fees shall be
computed on the basis of the actual number of days elapsed in a year of 365 or
366 days, as applicable. The Commitment Fee due to each Lender shall commence to
accrue on the date of this Agreement and shall cease to accrue on the date on
which the last of the Commitments of such Lender shall be terminated as provided
herein.
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, the fees set forth in the Agent Letter at the times specified therein
(the "ADMINISTRATIVE AGENT FEES").
(c) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of Section
2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be,
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38
when determined by reference to the Prime Rate and over a year of 360 days at
all other times) at a rate per annum equal to the Alternate Base Rate PLUS,
2.25%.
(b) Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing PLUS,
3.25%.
(c) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error. The Administrative Agent shall give the Borrower prompt notice of each
such determination.
SECTION 2.07. DEFAULT INTEREST. If any Credit Party shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, such Credit Party shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount for the period beginning on the date of such default up to (but
not including) the date of actual payment (after as well as before judgment) at
a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to (a) in the case of (i) overdue Loans, overdue
interest thereon, overdue Commitment Fees or other overdue amounts owing in
respect of Loans (or the related Commitments), the rate that would otherwise be
applicable to ABR Loans pursuant to Section 2.06 PLUS 2% or (b) in the case of
any other overdue amount, the Alternate Base Rate PLUS 2%.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or telecopy notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an
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39
ABR Borrowing. Each determination by the Administrative Agent hereunder shall be
conclusive absent manifest error.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated, the Commitments shall terminate at 5:00 p.m., New York
City time, on the Effective Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Commitments of any Class; PROVIDED, HOWEVER, that (i) each partial reduction
of any Commitments shall be in an integral multiple of $1,000,000 and in a
minimum principal amount of $5,000,000 (or, if less, the remaining amount of the
Commitments of the applicable Class).
(c) Each reduction in a Class of Commitments hereunder shall be made
ratably among the Lenders in accordance with their respective Commitments for
such Class. The Borrower shall pay to the Administrative Agent for the account
of the Lenders, on the date of each termination or reduction, the Commitment
Fees on the amount of the Commitments so terminated or reduced accrued to but
excluding the date of such termination or reduction.
SECTION 2.10. CONVERSION AND CONTINUATION OF BORROWINGS. A Credit Party
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 10:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 10:00 a.m.,
New York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among the
relevant Lenders in accordance with the respective principal amounts of the
Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting Borrowing
shall satisfy the limitations specified in Section 2.02(b) regarding the
principal amount and maximum number of Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender by recording
for the account of such Lender the new Loan of such Lender resulting from
such conversion and reducing the Loan, (or portion thereof) of such Lender
being converted by an equivalent principal amount; accrued interest on a
Loan (or
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40
portion thereof) being converted shall be paid by the applicable Credit
Party at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other than the
end of the Interest Period applicable thereto, the applicable Credit Party
shall pay, upon demand, any amounts due to the Lenders pursuant to Section
2.15;
(v) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar
Borrowing;
(vi) any portion of a Eurodollar Borrowing which Borrowing cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the end of
the Interest Period in effect for such Borrowing into an ABR Borrowing; and
(vii) no Interest Period may be selected for any Eurodollar Borrowing
that would end later than an Installment Date occurring on or after the
first day of such Interest Period if, after giving effect to such
selection, the aggregate outstanding amount of (A) the Eurodollar
Borrowings made pursuant to the same Commitments with Interest Periods
ending on or prior to such Installment Date and (B) the ABR Borrowings made
pursuant to the same Commitments would not be at least equal to the
principal amount of Borrowings made pursuant to the same Commitments to be
paid on such Installment Date.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the applicable Credit Party requests be converted or continued, (ii)
whether such Borrowing is to be converted to or continued as a Eurodollar
Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the
date of such conversion (which shall be a Business Day) and (iv) if such
Borrowing is to be converted to or continued as a Eurodollar Borrowing, the
Interest Period with respect thereto. If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a Eurodollar
Borrowing, the applicable Credit Party shall be deemed to have selected an
Interest Period of one month's duration. The Administrative Agent shall advise
the other Lenders of any notice given pursuant to this Section 2.10 and of each
Lender's portion of any converted or continued Borrowing. If the applicable
Credit Party shall not have given notice in accordance with this Section 2.10 to
continue any Borrowing into a subsequent Interest Period (and shall not
otherwise have given notice in accordance with this Section 2.10 to convert such
Borrowing), such Borrowing shall, at the end of the Interest Period applicable
thereto (unless repaid pursuant to the terms hereof), automatically be continued
or converted into an ABR Borrowing.
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SECTION 2.11. REPAYMENT OF BORROWINGS. (a) The Borrowings shall be payable
as to principal in the aggregate annual amounts set forth below in consecutive
quarterly installments on each March 31, June 30, September 30 and December 31
(each an "INSTALLMENT DATE"), commencing March 31, 1999, with 40% of each annual
amount being paid or reduced on each June 30 and each December 31 and 10% of
each annual amount being paid or reduced on each March 31 and September 30:
INSTALLMENT DATE AMOUNT
December 31, 1999 1,000,000
December 31, 2000 1,000,000
December 31, 2001 1,000,000
December 31, 2002 1,000,000
December 31, 2003 206,000,000
(b) Each prepayment of principal of the Borrowings pursuant to Section 2.12
shall be applied to (i) the U.S. Term Borrowings and (ii) the Swiss Term
Borrowings ratably in accordance with the respective outstanding amounts thereof
and shall reduce scheduled payments and reductions required under paragraph (a)
above after the date of such prepayment or reduction in the scheduled order of
maturity. Amounts to be repaid under this Section 2.11 on each Installment Date
shall be allocated to the U.S. Term Borrowings and the Swiss Term Borrowings
ratably in accordance with the respective outstanding amounts thereof. To the
extent not previously paid or reduced, all Borrowings shall be due and payable
on the Maturity Date. Each payment of Borrowings pursuant to this Section 2.11
shall be accompanied by accrued interest on the principal amount paid to but
excluding the date of payment.
SECTION 2.12. PREPAYMENT. (a) The Borrower shall have the right at any time
and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days' prior written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) to the Administrative Agent
before 11:00 a.m., New York City time; PROVIDED, HOWEVER, that (i) each partial
prepayment or reduction shall be in an amount which is an integral multiple of
$1,000,000 and not less than $5,000,000 (or, if less, the aggregate outstanding
amount under the applicable Class of Loans), (ii) each prepayment of Borrowings
shall be applied as set forth in paragraph (b) of Section 2.11 and (iii) if the
Borrower shall prepay any Borrowing hereunder prior to January 1, 2000, it shall
pay to the Administrative Agent, for the account of the Lenders, a premium equal
to 1% of the amount so prepaid.
(b) [INTENTIONALLY LEFT BLANK]
(c) [INTENTIONALLY LEFT BLANK]
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42
(d) The Borrower shall apply all Net Proceeds (minus an amount equal to the
lesser of (i) the amount of such Net Proceeds applied to prepay loans and reduce
exposure under the Existing Credit Agreement and (ii) the amount of such Net
Proceeds multiplied by a fraction the numerator of which is the aggregate
principal and stated amount of outstanding term loans (excluding Tranche A
Reimbursement Loans) and Tranche A Exposure under the Existing Credit Agreement
and the denominator of which is the aggregate principal and stated amount of (A)
outstanding term loans (excluding Tranche A Reimbursement Loans) and Tranche A
Exposure under the Existing Credit Agreement and (B) outstanding Loans, promptly
upon receipt thereof by UCAR, the Borrower or any Subsidiary, to prepay
Borrowings.
(e) Not later than 90 days after the end of each fiscal year of the
Borrower, commencing with the fiscal year ending December 31, 1998, the Borrower
shall calculate Excess Cash Flow for such fiscal year and shall apply (i) the
applicable percentage (determined as set forth in Schedule A) of such Excess
Cash Flow (the "EXCESS CASH FLOW PREPAYMENT AMOUNT") less (ii) (A) any voluntary
prepayments of Loans during the period beginning on April 1 of such fiscal year
and ending on March 31 of the immediately succeeding fiscal year (if such
difference is positive) and (B) an amount equal to the lesser of (i) the amount
of such Excess Cash Flow Prepayment Amount applied to prepay loans and reduce
exposure under the Existing Credit Agreement and (ii) such Excess Cash Flow
Prepayment Amount multiplied by a fraction the numerator of which is the
aggregate principal and stated amount of outstanding term loans (excluding
Tranche A Reimbursement Loans) and Tranche A Exposure under the Existing Credit
Agreement and the denominator of which is the aggregate principal and stated
amount of (x) outstanding term loans (excluding Tranche A Reimbursement Loans)
and Tranche A Exposure under the Existing Credit Agreement and (y) outstanding
Loans to prepay Borrowings. Not later than the date on which the Borrower is
required to deliver financial statements with respect to the end of each fiscal
year under Section 5.04(a), the Borrower will deliver to the Administrative
Agent a certificate of the Borrower signed by a Financial Officer of the
Borrower setting forth the amount, if any, of Excess Cash Flow for such fiscal
year and the calculation thereof in reasonable detail.
(f) At the time of any prepayment of the term loans or reduction of Tranche
A Exposure pursuant to Section 2.12 of the Existing Credit Agreement, the
Borrower shall prepay the Loans in an aggregate amount bearing the same
proportion to the aggregate amount of Loans hereunder as the amount of term
loans prepaid and/or Tranche A Exposure reduced pursuant to Section 2.12 of the
Existing Credit Agreement bears to the aggregate amount of term loans (excluding
Tranche A Reimbursement Loans) and Tranche A Exposure under the Existing Credit
Agreement.
(g) Each notice of prepayment pursuant to this Section 2.12 shall specify
the prepayment date and the principal amount of each Borrowing (or portion
thereof) to be prepaid, shall be irrevocable and shall commit the applicable
Credit Party to
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43
prepay such Borrowing and to reduce the Tranche A Exposure by the amount stated
therein on the date stated therein. All prepayments and reductions under this
Section 2.12 shall be subject to Section 2.12(a)(iii) and Section 2.15 but
otherwise shall be made without premium or penalty. All prepayments under this
Section 2.12 shall be accompanied by accrued interest on the principal amount
being prepaid to but excluding the date of payment.
(h) In the event the amount of any prepayment required to be made above
shall exceed the aggregate principal amount of ABR Loans of the applicable Class
outstanding and required to be prepaid (the amount of any such excess being
called the "EXCESS AMOUNT"), the Borrower shall have the right, in lieu of
making such prepayment in full, to prepay all the outstanding applicable ABR
Loans and to deposit an amount equal to the Excess Amount with the Collateral
Agent in a cash collateral account maintained (pursuant to documentation
reasonably satisfactory to the Administrative Agent) by and in the sole dominion
and control of the Collateral Agent. Any amounts so deposited shall be held by
the Collateral Agent as collateral for the Obligations and applied to the
prepayment of the applicable Eurodollar Loans at the end of the current Interest
Periods applicable thereto. On any Business Day on which (i) collected amounts
remain on deposit in or to the credit of such cash collateral account after
giving effect to the payments made on such day pursuant to this Section 2.12(h)
and (ii) the Borrower shall have delivered to the Collateral Agent a written
request or a telephonic request (which shall be promptly confirmed in writing)
that such remaining collected amounts be invested in the Permitted Investments
specified in such request, the Collateral Agent shall use its reasonable efforts
to invest such remaining collected amounts in such Permitted Investments;
PROVIDED, HOWEVER, that the Collateral Agent shall have continuous dominion and
full control over any such investments (and over any interest that accrues
thereon) to the same extent that it has dominion and control over such cash
collateral account and no Permitted Investment shall mature after the end of the
Interest Period for which it is to be applied. The Borrower shall not have the
right to withdraw any amount from such cash collateral account until the
applicable Eurodollar Loans and accrued interest thereon are paid in full or if
a Default or Event of Default then exists or would result.
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender in respect of
the principal of or interest on any Eurodollar Loan made by such Lender or any
Fees or other amounts payable hereunder (other than changes in respect of (i)
taxes imposed on the overall net income of such Lender by the jurisdiction in
which such Lender has its principal office or by any political subdivision or
taxing
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44
authority therein and (ii) any Taxes described in Section 2.19), or shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets or deposits with or for the account of or credit
extended by such Lender (except any such reserve requirement which is reflected
in the Adjusted LIBO Rate) or shall impose on such Lender or the interbank
eurodollar market any other condition affecting this Agreement or any Eurodollar
Loans of such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan or
to reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise) by an amount deemed by such Lender
to be material, then from time to time the Borrower or the applicable Credit
Party will pay to such Lender upon demand such additional amount or amounts as
will compensate such Lender for such additional costs incurred or reduction
suffered.
(b) If any Lender shall have determined that the adoption after the date
hereof of any law, rule, regulation or guideline regarding capital adequacy, or
any change after the date hereof in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any lending office of
such Lender) or any Lender's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) made or
issued after the date hereof by any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or its obligations pursuant hereto to a level
below that which such Lender or such Lender's holding company would have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies and the policies of such Lender's holding company with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time the Borrower or the applicable Credit Party shall pay to
such Lender upon demand such additional amount or amounts as will compensate
such Lender or such Lender's holding company for any such reduction suffered.
(c) A certificate of each Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender or its holding company as specified
in paragraph (a) or (b) above, as the case may be, shall be delivered to the
Borrower through the Administrative Agent and shall be conclusive absent
manifest error. The Borrower or the applicable Credit Party shall pay each
Lender the amount shown as due on any such certificate delivered by it within 10
days after the Borrower's receipt of the same.
(d) In the event any Lender delivers a notice pursuant to paragraph (e)
below, the Borrower or the applicable Credit Party may require, at the
Borrower's or the applicable Credit Party's expense and subject to Section 2.15,
such Lender to assign, at par
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45
plus accrued interest and fees, without recourse (in accordance with Section
9.04) all its interests, rights and obligations hereunder (including all of its
Commitments and the Loans at the time owing to it) to a financial institution
specified by the Borrower; PROVIDED that (i) such assignment shall not conflict
with or violate any law, rule or regulation or order of any court or other
Governmental Authority, (ii) the Borrower or the applicable Credit Party shall
have received the written consent of the Administrative Agent (which consent
shall not be unreasonably withheld) to such assignment and (iii) the Borrower or
the applicable Credit Party shall have paid to the assigning Lender all monies
accrued and owing hereunder to it (including pursuant to this Section 2.13).
(e) Promptly after any Lender has determined, in its sole judgment, that it
will make a request for increased compensation pursuant to this Section 2.13,
such Lender will notify the Borrower thereof. Failure on the part of any Lender
so to notify the Borrower or to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of such Lender's right
to demand compensation with respect to such period or any other period; PROVIDED
that the Borrower or the applicable Credit Party shall not be under any
obligation to compensate any Lender under paragraph (b) above with respect to
increased costs or reductions with respect to any period prior to the date that
is six months prior to such request if such Lender knew or could reasonably have
been expected to be aware of the circumstances giving rise to such increased
costs or reductions and of the fact that such circumstances would in fact result
in a claim for increased compensation by reason of such increased costs or
reductions; PROVIDED FURTHER that the foregoing limitation shall not apply to
any increased costs or reductions arising out of the retroactive application of
any law, regulation, rule, guideline or directive as aforesaid within such six
month period. The protection of this Section 2.13 shall be available to each
Lender regardless of any possible contention as to the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other provision
herein, if the adoption of or any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon any request by a Credit Party for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR
Loan unless such declaration shall be subsequently withdrawn; and
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46
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under subparagraphs (i) and
(ii) above, all payments and prepayments of principal which would otherwise have
been applied to repay the Eurodollar Loans that would have been made by such
Lender or the converted Eurodollar Loans of such Lender shall instead be applied
to repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day
of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.15. INDEMNITY. The Borrower shall indemnify each Lender against
any loss or expense (other than taxes) which such Lender may sustain or incur as
a consequence of (a) any failure by a Credit Party to fulfill on the date of any
Borrowing or proposed Borrowing hereunder the applicable conditions set forth in
Article IV, (b) any failure by a Credit Party to borrow or to refinance, convert
or continue any Loan hereunder after irrevocable notice of such Borrowing,
refinancing, conversion or continuation has been given pursuant to Section 2.03
or 2.10, (c) any payment, prepayment or conversion of a Eurodollar Loan required
by any other provision of this Agreement or otherwise made or deemed made on a
date other than the last day of the Interest Period applicable thereto, (d) any
default in payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, whether by scheduled maturity, acceleration, irrevocable notice of
prepayment or otherwise) or (e) the occurrence of any Event of Default,
including, in each such case, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Loan or any part thereof
as a Eurodollar Loan. Such loss or reasonable expense shall exclude loss of
margin hereunder but shall include an amount equal to the excess, if any, as
reasonably determined by such Lender, of (i) its cost of obtaining the funds for
the Loan being paid, prepaid, converted or not borrowed, converted or continued
(assumed to be the Adjusted LIBO Rate applicable thereto) for the period from
the date of such payment, prepayment, conversion or failure to borrow, convert
or continue to the last day of the Interest Period for such Loan (or, in the
case of a failure to borrow, convert or continue, the Interest Period for such
Loan which would have commenced on the date of such failure) over (ii) the
amount of interest (as reasonably determined by such Lender) that would be
realized by such Lender in reemploying the funds so paid, prepaid, converted or
not borrowed, converted or continued for such period or Interest
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47
Period, as the case may be. A certificate of any Lender setting forth any amount
or amounts which such Lender is entitled to receive pursuant to this Section
2.15 (and the reasons therefor) shall be delivered to the Borrower through the
Administrative Agent and shall be conclusive absent manifest error.
SECTION 2.16. PRO RATA TREATMENT. Except as required under Section 2.14 and
subject to Section 2.11, each Borrowing, each payment or prepayment of principal
of any Borrowing, each payment of interest on the Loans, each payment of the
Commitment Fees, each reduction of the Commitments, and each refinancing of any
Borrowing with, conversion of any Borrowing to or continuation of any Borrowing
as a Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their applicable outstanding Loans). Each Lender agrees
that in computing such Lender's portion of any Borrowing, the Administrative
Agent may, in its discretion, round each Lender's percentage of such Borrowing,
computed in accordance with Section 2.01, to the next higher or lower whole
dollar amount.
SECTION 2.17. SHARING OF SETOFFS. Each Lender agrees to be bound by the
provisions of Section 2.17 of the Existing Credit Agreement as if such
provisions were set forth herein.
SECTION 2.18. PAYMENTS. (a) The Borrower and each other Loan Party shall
make each payment without set off or counterclaim (including principal of or
interest on any Borrowing or any Fees or other amounts) required to be made by
it hereunder and under any other Loan Document (excluding the Local Facility
Loan Documents) not later than 12:00 noon, New York City time, on the date when
due in Dollars to the Administrative Agent at its offices at 270 Park Avenue,
New York, New York, Attention of The Loan and Agency Services Group, in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document (excluding the Local Facility Loan Documents) shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day (except in the case of payment of
principal of a Eurodollar Borrowing if the effect of such extension would be to
extend such payment into the next succeeding month, in which event such payment
shall be due on the immediately preceding Business Day), and such extension of
time shall in such case be included in the computation of interest or Fees, if
applicable.
SECTION 2.19. TAXES. (a) Any and all payments by the Borrower or any other
Loan Party to the Administrative Agent or the Lenders hereunder or under any
other Loan Document (excluding payments by the applicable borrower under a Local
Facility Credit Agreement) shall be made free and clear of and without deduction
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48
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING (i) in the
case of each Lender and the Administrative Agent, taxes that would not be
imposed but for a connection between such Lender or the Administrative Agent (as
the case may be) and the jurisdiction imposing such tax, other than a connection
arising solely by virtue of the activities of such Lender or the Administrative
Agent (as the case may be) pursuant to or in respect of this Agreement or under
any other Loan Document, including entering into, lending money or extending
credit pursuant to, receiving payments under, or enforcing, this Agreement or
any other Loan Document, and (ii) in the case of each Lender and the
Administrative Agent, any United States withholding taxes payable with respect
to any payments made hereunder or under the other Loan Documents under laws
(including any statute, treaty, ruling, determination or regulation) in effect
on the Initial Date (as hereinafter defined) applicable to such Lender or the
Administrative Agent, as the case may be, but not excluding any United States
withholding taxes payable solely as a result of any change in such laws
occurring after the Initial Date (all such non- excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "TAXES"). For purposes of this Section 2.19, the term "INITIAL DATE" shall
mean (i) in the case of the Administrative Agent or any Lender, the date on
which such person became a party to this Agreement and (ii) in the case of any
assignment, including any assignment by a Lender to a new lending office, the
date of such assignment. If any Taxes shall be required by law to be deducted
from or in respect of any sum payable hereunder or under any other Loan Document
(excluding sums payable by the applicable borrower under a Local Facility Credit
Agreement) to any Lender or the Administrative Agent, (i) the sum payable by the
Borrower or any other Loan Party, as the case may be, shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.19) such Lender or
the Administrative Agent, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
or such Loan Party, as the case may be, shall make such deductions and (iii) the
Borrower or such Loan Party, as the case may be, shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law. The Borrower and the other Loan Parties shall not, however,
be required to pay any amounts pursuant to clause (i) of the preceding sentence
to any Lender or the Administrative Agent (in the case of payments to be made by
the Borrower) not organized under the laws of the United States of America or a
state thereof (or, in the case of payments to be made by another Loan Party, not
organized under the laws of such Loan Party's jurisdiction) if such Lender or
the Administrative Agent fails to comply with the requirements of paragraph (f)
or (g), as the case may be, and paragraph (h) of this Section 2.19.
(b) In addition, the Borrower and each other Loan Party agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which
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49
arise from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any other Loan Document (excluding those arising from such
actions by the applicable borrower under a Local Facility Credit Agreement)
(hereinafter referred to as "OTHER TAXES").
(c) The Borrower and each other Loan Party, as applicable, will indemnify
each Lender and the Administrative Agent for the full amount of Taxes and Other
Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.19) paid by such Lender or the Administrative
Agent, as the case may be, and any liability (including penalties, interest and
expenses including reasonable attorney's fees and expenses) arising therefrom or
with respect thereto whether or not such Taxes or Other Taxes were correctly or
legally asserted. A certificate as to the amount of such payment or liability
prepared by a Lender or the Administrative Agent, absent manifest error, shall
be final, conclusive and binding for all purposes; PROVIDED, that if the
Borrower or another Loan Party, as applicable, reasonably believes that such
Taxes were not correctly or legally asserted, such Lender or the Administrative
Agent, as the case may be, shall use reasonable efforts to cooperate with the
Borrower or such other Loan Party, as applicable, to obtain a refund of such
Taxes or Other Taxes. Such indemnification shall be made within 10 days after
the date any Lender or the Administrative Agent, as the case may be, makes
written demand therefor. If a Lender or the Administrative Agent shall become
aware that it is entitled to receive a refund in respect of Taxes or Other
Taxes, it shall promptly notify the Borrower or such other Loan Party, as
applicable, of the availability of such refund and shall, within 30 days after
receipt of a request by the Borrower or such other Loan Party, pursue or timely
claim such refund at the Borrower's or such other Loan Party's expense. If any
Lender or the Administrative Agent receives a refund in respect of any Taxes or
Other Taxes for which such Lender or the Administrative Agent has received
payment from the Borrower or another Loan Party hereunder, it shall promptly
repay such refund (plus any interest received) to the Borrower or such other
Loan Party, as applicable (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.19 with respect to
the Taxes or Other Taxes giving rise to such refund); PROVIDED that the Borrower
or such other Loan Party, upon the request of such Lender or the Administrative
Agent, agrees to return such refund (plus any penalties, interest or other
charges required to be paid) to such Lender or the Administrative Agent in the
event such Lender or the Administrative Agent is required to repay such refund
to the relevant taxing authority.
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by the Borrower or another Loan Party, as the case may be, in respect
of any payment to any Lender or the Administrative Agent, the Borrower or such
Loan Party, as the case may be, will furnish to the Administrative Agent, at its
address referred to in Section 9.01, the original or a certified copy of a
receipt evidencing payment thereof.
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50
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.19 shall
survive the payment in full of principal and interest hereunder and the
termination of the Commitments.
(f) In the case of any Borrowing by the Borrower, this paragraph (f) shall
apply. Each Lender and the Administrative Agent that is not organized under the
laws of the United States of America or a state thereof agrees that at least 10
days prior to the first Interest Payment Date following the Initial Date in
respect of such Lender, it will deliver to the Borrower and the Administrative
Agent (if appropriate) two duly completed copies of either (i) United States
Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, certifying, as applicable, that such Lender or the Administrative
Agent, as the case may be, is entitled to receive payments under this Agreement
and the other Loan Documents payable to it without deduction or withholding of
any United States federal income taxes and backup withholding taxes or is
entitled to receive such payments at a reduced rate pursuant to a treaty
provision or (ii) in the case of a Lender that is not a "bank" within the
meaning of Section 881(c)(3) of the Code, (A) deliver to the Borrower and the
Administrative Agent (I) a statement under penalties of perjury that such Lender
(w) is not a "bank" under Section 881(c)(3)(A) of the Code, is not subject to
regulatory or other legal requirements as a bank in any jurisdiction, and has
not been treated as a bank for purposes of any tax, securities law or other
filing or submission made to any Governmental Authority, any application made to
a rating agency or qualification for any exemption from tax, securities law or
other legal requirements, (x) is not a 10-percent shareholder within the meaning
of Section 881(c)(3)(B) of the Code, (y) is not a controlled foreign corporation
receiving interest from a related person within the meaning of Section
881(c)(3)(c) of the Code and (z) is not a "conduit entity" within the meaning of
U.S. Treasury Regulations Section 1.881-3 and (II) an Internal Revenue Service
Form W-8 or successor applicable form; (B) deliver to the Borrower and the
Administrative Agent a further copy of said Form W-8, or any successor
applicable form or other manner of certification on or before the date that any
such Form W-8 expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by such Lender;
and (C) obtain such extensions of time for filing and completing such forms or
certifications as may be reasonably requested by the Borrower or the
Administrative Agent; unless in any such case an event (including any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders any such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States Federal income taxes or is
entitled to receive such payments at a reduced rate pursuant
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51
to a treaty provision and (ii) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax. Each person
that shall become a participant pursuant to Section 9.04 shall, upon the
effectiveness of the related transfer, be required to provide all the forms and
statements required pursuant to this paragraph (f) to the Lender from which the
related participation shall have been purchased. Unless the Borrower and the
Administrative Agent have received forms, certificates and other documents
required by this Section 2.19(f) indicating that payments hereunder or under any
other Loan Document to or for any Lender not incorporated under the laws of the
United States or a state thereof are not subject to United States withholding
tax or are subject to such tax at a rate reduced by an applicable tax treaty,
the Borrower (or the applicable Domestic Subsidiary Borrower) or the
Administrative Agent shall withhold such taxes from such payments at the
applicable statutory rate.
(g) In the event any Loan Party (other than the Borrower) is required to
pay additional amounts pursuant to this Section 2.19, this paragraph (g) shall
apply. Each Lender and the Administrative Agent that is not incorporated within
or under the laws of the jurisdiction of such Loan Party and that is claiming
such additional amounts agrees that within a reasonable period of time following
the request of such Loan Party it will, to the extent it is legally entitled to
a reduction in the rate of or exemption from withholding taxes in the
jurisdiction of such Loan Party, deliver to such Loan Party and the
Administrative Agent any form or document required under the laws, regulations,
official interpretations or treaties enacted by, made or entered into with such
jurisdiction properly completed and duly executed by such Lender or
Administrative Agent establishing that any payments hereunder are exempt from
withholding tax or subject to a reduced rate of withholding tax in such
jurisdiction as the case may be; PROVIDED that, in the sole determination of
such Lender or the Administrative Agent, such form or document shall not be
otherwise disadvantageous to such Lender or the Administrative Agent.
(h) Any Lender claiming any additional amounts payable pursuant to this
Section 2.19 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document requested in writing by the
Borrower or any affected Credit Party to change the jurisdiction of its
applicable lending office, if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which would be
payable or may thereafter accrue and would not, in the sole determination of
such Lender, be otherwise disadvantageous to such Lender.
(i) Nothing contained in this Section 2.19 shall require any Lender or the
Administrative Agent to make available any of its tax returns (or any other
information that it deems to be confidential or proprietary).
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52
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of UCAR and the Borrower represents and warrants to each of the
Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of UCAR, the Borrower and each of
the Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing (or, if applicable in a foreign jurisdiction, enjoys the
equivalent status under the laws of any jurisdiction of organization outside the
United States) under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to own its property and assets and to carry on
its business as now conducted and as proposed to be conducted, (c) is qualified
to do business in every jurisdiction where such qualification is required,
except where the failure so to qualify could not reasonably be expected to
result in a Material Adverse Effect, and (d) has the corporate power and
authority to execute, deliver and perform its obligations under each of the Loan
Documents and each other agreement or instrument contemplated thereby to which
it is or will be a party and, in the case of the Credit Parties, to borrow
hereunder.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance by
UCAR, the Borrower and each of the Subsidiaries of each of the Loan Documents to
which it is or will be a party and, in the case of the Credit Parties, the
borrowings hereunder, and the other transactions contemplated hereby and thereby
(collectively, the "TRANSACTIONS") (a) have been duly authorized by all
corporate and stockholder action required to be obtained by UCAR, the Borrower
and the Subsidiaries and (b) will not (i) violate (A) any provision of any law,
statute, rule or regulation or of the certificate or articles of incorporation
or other constitutive documents or by-laws of UCAR, the Borrower or any
Subsidiary, (B) any applicable order of any court or any rule, regulation or
order of any Governmental Authority or (C) any provision of any indenture,
certificate of designation for preferred stock, agreement or other instrument to
which UCAR, the Borrower or any Subsidiary is a party or by which any of them or
any of their property is or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, certificate of designation for preferred
stock, agreement or other instrument, where any such conflict, violation, breach
or default referred to in clause (i) or (ii) of this Section 3.02, individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect, or (iii) result in the creation or imposition of any Lien upon or with
respect to any property or assets now owned or hereafter acquired by UCAR, the
Borrower or any Subsidiary, other than the Liens created by the Loan Documents.
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly executed and
delivered by UCAR, the Borrower and each other Credit Party which is party
hereto and constitutes, and each other
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53
Loan Document when executed and delivered by UCAR, the Borrower and each other
Loan Party which is party thereto will constitute, a legal, valid and binding
obligation of UCAR, the Borrower and such Loan Party enforceable against UCAR,
the Borrower and such Loan Party in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally and
except as enforceability may be limited by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
SECTION 3.04. GOVERNMENTAL APPROVALS. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Transactions, except for (a) filings
and recording necessary to satisfy the Collateral Requirement, (b) such as have
been made or obtained and are in full force and effect and (c) such actions,
consents, registrations, filings and approvals the failure to obtain or make
which could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.05. FINANCIAL STATEMENTS. UCAR has heretofore furnished to the
Lenders its consolidated balance sheets and consolidated statements of
operations, cash flows and stockholders' equity as of and for the fiscal year
ended December 31, 1997, audited by and accompanied by the opinion of KPMG Peat
Marwick LLP, independent public accountants. Such financial statements present
fairly the financial condition and results of operations of UCAR and its
consolidated subsidiaries as of such dates and for such periods. Except as
disclosed in the Information Memorandum, none of UCAR, the Borrower and the
Subsidiaries has or shall have as of the Effective Date any material Guarantee,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including any interest rate or foreign currency
hedging transaction, which is not reflected in the foregoing statements or the
notes thereto. Such financial statements were prepared in accordance with GAAP
applied on a consistent basis.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. There has been no material
adverse change in the assets, liabilities (including contingent liabilities),
business, properties, financial condition or results of operations of UCAR and
its subsidiaries, taken as a whole, since December 31, 1997 (other than those
matters specifically disclosed in the Information Memorandum and then only to
the extent reflected in the financial projections contained therein; it being
understood that general references in the Information Memorandum to the
possibility of the development of adverse or worsening circumstances shall not
constitute specific disclosure for purposes of this exception).
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Each of
UCAR, the Borrower and the Subsidiaries has good and marketable title to, or
valid leasehold interests in, or easements or other limited property interests
in, all its material
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54
properties and assets, except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.02.
(b) Each of UCAR, the Borrower and the Subsidiaries has complied with all
obligations under all material leases to which it is a party, except where the
failure to comply would not have a Material Adverse Effect, and all such leases
are in full force and effect, except leases in respect of which the failure to
be in full force and effect could not reasonably be expected to have a Material
Adverse Effect. Each of UCAR, the Borrower and the Subsidiaries enjoys peaceful
and undisturbed possession under all such material leases, other than leases
which, individually or in the aggregate, are not material to the Borrower and
the Subsidiaries, taken as a whole, and in respect of which the failure to enjoy
peaceful and undisturbed possession could not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect.
(c) Each of UCAR, the Borrower and the Subsidiaries owns or has licenses to
use, or could obtain ownership of or licenses to use, on terms not materially
adverse to it, all patents, trademarks, service marks, trade names, copyrights
and rights with respect thereto necessary for the present conduct of its
business, without any known conflict with the rights of others, and free from
any burdensome restrictions, except where such conflicts and restrictions could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.08. SUBSIDIARIES. (a) Schedule 3.08 sets forth as of the
Effective Date the name and jurisdiction of incorporation of each Subsidiary
and, as to each such Subsidiary, the percentage of each class of Capital Stock
owned by the Borrower or by any Subsidiary.
(b) As of the Effective Date, there are no outstanding subscriptions,
options, warrants, calls, rights or other agreements or commitments (other than
those granted to employees, consultants or directors and directors' qualifying
shares) of any nature relating to any Capital Stock of UCAR, the Borrower or any
Subsidiary, except under the Loan Documents or as set forth on Schedule 3.08.
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) Except as set forth in
Schedule 3.09, there are not any material actions, suits or proceedings at law
or in equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting UCAR, the Borrower or
any Subsidiary or any business, property or rights of any such person (i) which
involve any Loan Document or, as of the Effective Date, the Transactions or (ii)
as to which there is a reasonable
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55
possibility of an adverse determination and which, if adversely determined,
could, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
(b) None of UCAR, the Borrower, the Subsidiaries and their respective
material properties or assets is in violation of (nor will the continued
operation of their material properties and assets as currently conducted
violate) any law, rule or regulation (including any Environmental Law), or is in
default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect. It is understood that the
violations that occurred prior to March 13, 1998, and that gave rise to the
Litigation Liabilities shall not be deemed a breach of this Section 3.09(b).
SECTION 3.10. AGREEMENTS. (a) None of UCAR, the Borrower and the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) None of UCAR, the Borrower and the Subsidiaries is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, in either case where such default could reasonably be expected to result
in a Material Adverse Effect. Immediately after giving effect to the
Transactions, no Default or Event of Default shall have occurred and be
continuing.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) None of UCAR, the Borrower
and the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to purchase
or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or X.
SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.
None of UCAR, the Borrower and the Subsidiaries is (a) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
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56
SECTION 3.13. USE OF PROCEEDS. The Credit Parties will use the proceeds of
the Loans only for the purposes specified in the preamble to this Agreement.
SECTION 3.14. TAX RETURNS. Each of UCAR, the Borrower and the Subsidiaries
has timely filed or caused to be timely filed all Federal, and all material
state and local, tax returns required to have been filed by it and has paid or
caused to be paid all taxes shown thereon to be due and payable by it and all
assessments in excess of $2,000,000 in the aggregate received by it, except
taxes or assessments that are being contested in good faith by appropriate
proceedings in accordance with Section 5.03 and for which such person has set
aside on its books adequate reserves and taxes, assessments, charges, levies or
claims in respect of property taxes for property that UCAR, the Borrower or a
Subsidiary has determined to abandon where the sole recourse for such tax,
assessment, charge, levy or claim is to such property. Each of UCAR, the
Borrower and the Subsidiaries has paid in full or made adequate provision (in
accordance with GAAP) for the payment of all taxes due with respect to all
periods ending on or before the Effective Date, which taxes, if not paid or
adequately provided for, could reasonably be expected to have a Material Adverse
Effect. Except as set forth on Schedule 3.14, as of the Effective Date, with
respect to each of UCAR, the Borrower and the Subsidiaries, (a) no material
claims are being asserted in writing with respect to any taxes, (b) no presently
effective waivers or extensions of statutes of limitation with respect to taxes
have been given or requested, (c) no tax returns are being examined by, and no
written notification of intention to examine has been received from, the
Internal Revenue Service or, with respect to any material potential tax
liability, any other taxing authority and (d) no currently pending issues have
been raised in writing by the Internal Revenue Service or, with respect to any
material potential tax liability, any other taxing authority. For purposes
hereof, "TAXES" shall mean any present or future tax, levy, impost, duty,
charge, assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any Governmental Authority.
SECTION 3.15. NO MATERIAL MISSTATEMENTS. (a) The written information,
reports, financial statements, exhibits and schedules furnished by or on behalf
of UCAR, the Borrower or any of the Subsidiaries to the Administrative Agent or
any Lender in connection with the negotiation of any Loan Document or included
therein or delivered pursuant thereto (including the Confidential Information
Memorandum (the "INFORMATION MEMORANDUM") dated October 1998 relating to UCAR
and its subsidiaries), when taken as a whole, did not contain, and as they may
be amended, supplemented or modified from time to time, will not contain, as of
the Effective Date any material misstatement of fact and did not omit, and as
they may be amended, supplemented or modified from time to time, will not omit,
to state as of the Effective Date any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not materially misleading in their presentation of the
refinancing (as
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57
described in the Information Memorandum) or of UCAR, the Borrower, and the
Subsidiaries, taken as a whole.
(b) All financial projections concerning UCAR, the Borrower and the
Subsidiaries that are or have been made available to the Administrative Agent or
any Lender by UCAR, the Borrower or any Subsidiary, including those contained in
the Information Memorandum, unless otherwise disclosed, have been or will be
prepared in good faith based upon assumptions believed by UCAR and the Borrower
to be reasonable.
SECTION 3.16. EMPLOYEE BENEFIT PLANS. Each of UCAR, the Borrower and the
ERISA Affiliates is in compliance with the applicable provisions of ERISA and
the provisions of the Code relating to ERISA and the regulations and published
interpretations thereunder and any similar applicable non-U.S. law except for
such noncompliance which could not reasonably be expected to result in a
Material Adverse Effect. No Reportable Event has occurred as to which UCAR, the
Borrower or any ERISA Affiliate was required to file a report with the PBGC,
other than reports for which the 30 day notice requirement is waived, reports
that have been filed and reports the failure of which to file could not
reasonably be expected to result in a Material Adverse Effect. As of the
Effective Date, the present value of all benefit liabilities under each Plan of
UCAR, the Borrower and the ERISA Affiliates (on a termination basis and based on
the actual assumptions used by such Plan under Section 412 of the Code) did not,
as of the last annual valuation date applicable thereto for which a valuation is
available, exceed by more than $7,500,000 the value of the assets of such Plan,
and the present value of all benefit liabilities of all underfunded Plans (based
on the actual assumptions used by such Plan under Section 412 of the Code) did
not, as of the last annual valuation dates applicable thereto for which
valuations are available, exceed by more than $15,000,000 the value of the
assets of all such underfunded Plans. None of UCAR, the Borrower and the ERISA
Affiliates has incurred or could reasonably be expected to incur any Withdrawal
Liability that could reasonably be expected to result in a Material Adverse
Effect. None of UCAR, the Borrower and the ERISA Affiliates has received any
written notification that any Multiemployer Plan is in reorganization or has
been terminated within the meaning of Title IV of ERISA, and no Multiemployer
Plan is reasonably expected to be in reorganization or to be terminated, where
such reorganization or termination has resulted or could reasonably be expected
to result, through increases in the contributions required to be made to such
Plan or otherwise, in a Material Adverse Effect.
SECTION 3.17. ENVIRONMENTAL MATTERS. Except as set forth in Schedule 3.17:
(a) There has not been a Release or threatened Release of Hazardous
Materials at, on, under or around the properties currently owned or currently or
formerly operated by UCAR, the Borrower and the Subsidiaries (the "PROPERTIES")
in amounts or concentrations which (i) constitute or constituted a violation of
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Environmental Laws, except as could not reasonably be expected to have a
Material Adverse Effect, (ii) would reasonably be expected to give rise to an
Environmental Claim which, in any such case or in the aggregate, is reasonably
likely to result in a Material Adverse Effect or (iii) could reasonably be
expected to impair materially the fair saleable value of any material Property.
(b) The Properties and all operations of UCAR, the Borrower and the
Subsidiaries are in compliance, and in all prior periods have been in
compliance, with all Environmental Laws, and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate, are
not reasonably likely to result in a Material Adverse Effect.
(c) None of UCAR, the Borrower and the Subsidiaries has received any
written notice of an Environmental Claim in connection with the Properties or
the operations of the Borrower or the Subsidiaries or with regard to any person
whose liabilities for environmental matters UCAR, the Borrower or the
Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in either such case or in the aggregate,
is reasonably likely to result in a Material Adverse Effect.
(d) Hazardous Materials have not been transported from the Properties, nor
have Hazardous Materials been generated, treated, stored or disposed of at, on,
under or around any of the Properties in a manner that could reasonably be
expected to give rise to liability of UCAR, the Borrower or any Subsidiary under
any Environmental Law, nor have any of UCAR, the Borrower and the Subsidiaries
retained or assumed any liability, contractually, by operation of law or
otherwise, with respect to the generation, treatment, storage or disposal of
Hazardous Materials, which, in each case, individually or in the aggregate, is
reasonably likely to result in a Material Adverse Effect.
(e) No Lien in favor of any Governmental Authority for (i) any liability
under any Environmental Law or (ii) damages arising from or costs incurred by
such Governmental Authority in response to a Release or threatened Release of
Hazardous Materials into the environment has been recorded with respect to the
Properties except for Liens permitted by Section 6.02 or by the Existing Credit
Agreement.
(f) During the period from the date of the environmental assessment report
prepared by ENVIRON Corporation in connection with the Recapitalization to the
Effective Date, no event has occurred or been discovered, no liability has been
incurred and no Environmental Claim has been asserted that, had it been in
existence at the time such report was issued, would have materially adversely
altered the conclusions contained therein with respect to the properties,
activities and operations covered thereby.
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SECTION 3.18. CAPITALIZATION OF UCAR AND THE BORROWER. The authorized
Capital Stock, the par value thereof and the amount of such authorized Capital
Stock issued and outstanding for each of UCAR and the Borrower as of October 31,
1998 is set forth on Schedule 3.18 (except for changes in the outstanding common
stock of UCAR due to exercises under employee stock option or employee stock
purchase plans in the ordinary course since August 31, 1998). All outstanding
shares of Capital Stock of the Borrower are fully paid and nonassessable, are
owned beneficially and of record by UCAR and are free and clear of all Liens and
encumbrances whatsoever other than the Liens created by the Loan Documents.
SECTION 3.19. SECURITY DOCUMENTS. (a) Each Pledge Agreement is effective to
create in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties secured thereby, a legal, valid and enforceable security interest in the
Collateral described therein and, when certificates or promissory notes
representing the Collateral (as defined in the applicable Pledge Agreement) are
delivered to the Collateral Agent and the other actions specified in such Pledge
Agreement have been taken, each such Pledge Agreement will constitute a duly
perfected first priority Lien on, and security interest in, all right, title and
interest of each Pledgor thereunder in such Collateral, in each case prior and
superior in right to any other person, subject to the agreements listed in
Schedule 3.08.
(b) Each Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties secured
thereby, a legal, valid and enforceable security interest in the Collateral
described therein and, when financing statements in appropriate form are filed
in the offices specified on the schedules to each such Security Agreement and
the other actions specified in such Security Agreement have been taken, each
such Security Agreement will constitute a duly perfected Lien on, and security
interest in, all right, title and interest of the Pledgors thereunder in such
Collateral and, to the extent contemplated therein and subject to ss. 9-306 of
the Uniform Commercial Code, the proceeds thereof, in each case prior and
superior in right to any other person, other than with respect to Liens
expressly permitted by Section 6.02 and by the Existing Credit Agreement.
(c) Each Mortgage is effective to create in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties secured thereby, a legal, valid
and enforceable Lien on all of the Loan Parties' right, title and interest in
and to the Mortgaged Properties thereunder and, to the extent contemplated
therein and subject to ss. 9-306 of the Uniform Commercial Code, the proceeds
thereof, and when each such Mortgage is filed in the offices specified on the
schedules thereto, when financing statements in appropriate form are filed in
the offices specified on the schedules thereto and when the other actions
required by applicable law and specified on the schedules thereto have been
taken, each Mortgage will constitute an enforceable mortgage Lien on, and duly
perfected security interest in, all right, title and
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interest of the Loan Parties in the Mortgaged Property subject thereto and, to
the extent contemplated therein and subject to ss. 9- 306 of the Uniform
Commercial Code, the proceeds thereof, in each case prior and superior in right
to any other person, other than with respect to the rights of persons pursuant
to Liens expressly permitted by Section 6.02 and by the Existing Credit
Agreement.
(d) The Intellectual Property Security Agreement is effective to create in
favor of the Collateral Agent, for the ratable benefit of the Secured Parties
secured thereby, a legal, valid and enforceable security interest in the
Collateral described therein, and when financing statements in appropriate form
are filed in the offices specified in the schedules thereto and the Intellectual
Property Security Agreement is filed in the United States Patent and Trademark
Office and the United States Copyright Office, the Intellectual Property
Security Agreement will constitute a duly perfected Lien on, and security
interest in, all right, title and interest of the Pledgors in such Collateral
and, to the extent contemplated therein and subject to ss. 9-306 of the Uniform
Commercial Code, the proceeds thereof, in each case prior and superior in right
to any other person (it being understood that subsequent recordings in the
United States Patent and Trademark Office and the United States Copyright Office
may be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the Pledgors after the date hereof),
other than with respect to the rights of persons pursuant to Liens expressly
permitted by Section 6.02 and by the Existing Credit Agreement.
SECTION 3.20. LABOR MATTERS. Except as set forth in Schedule 3.20, there
are no strikes pending or threatened against UCAR, the Borrower or any
Subsidiary which, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect. The hours worked and payments made to
employees of UCAR, the Borrower and the Subsidiaries have not been in violation
in any material respect of the Fair Labor Standards Act or any other applicable
law dealing with such matters. All material payments due from UCAR, the Borrower
or any Subsidiary or for which any claim may be made against UCAR, the Borrower
or any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
UCAR, the Borrower or such Subsidiary to the extent required by GAAP. None of
the consummation of the Recapitalization, the consummation of the refinancing
effected in October 1995, the consummation of the refinancing effected in March
1997 and the Transactions has given or will give rise to a right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which UCAR, the Borrower or any Subsidiary (or any
predecessor) is a party or by which UCAR, the Borrower or any Subsidiary (or any
predecessor) is bound, other than collective bargaining agreements which,
individually or in the aggregate, are not material to UCAR, the Borrower and the
Subsidiaries taken as a whole.
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SECTION 3.21. NO FOREIGN ASSETS CONTROL REGULATION VIOLATION. None of the
Transactions will result in a violation of any of the foreign assets control
regulations of the United States Treasury Department, 31 C.F.R., Subtitle B,
Chapter V, as amended (including the Foreign Assets Control Regulations, the
Transaction Control Regulations, the Cuban Assets Control Regulations, the
Foreign Funds Control Regulations, the Iranian Assets Control Regulations, the
Nicaraguan Trade Control Regulations, the South African Transactions
Regulations, the Libyan Sanctions Regulations, the Soviet Gold Coin Regulations,
the Panamanian Transactions Regulations, the Kuwaiti Assets Control Regulations
and the Iraqi Sanctions Regulations contained in said Chapter V), or any ruling
issued thereunder or any enabling legislation or Presidential Executive Order
granting authority therefor, nor will the proceeds of the Loans be used by any
of the Credit Parties in a manner that would violate any thereof.
SECTION 3.22. INSURANCE. Each of UCAR, the Borrower and the Subsidiaries
carries and maintains with respect to its insurable properties insurance
(including, to the extent consistent with past practices, self-insurance) with
financially sound and reputable insurers of the types, to such extent and
against such risks as is customary with companies in the same or similar
businesses.
SECTION 3.23. LOCATION OF REAL PROPERTY AND LEASED PREMISES. (a) Schedule
3.23(a) lists completely and correctly as of the Effective Date all real
property owned by UCAR, the Borrower, each domestic Subsidiary, each Subsidiary
that is a borrower under a Local Facility and each other Subsidiary that is
required to grant a Mortgage pursuant to the Collateral Requirement and the
address thereof. As of the Effective Date, UCAR, the Borrower and the
Subsidiaries own in fee all the real property set forth as being owned by them
on Schedule 3.23(a).
(b) Schedule 3.23(b) lists completely and correctly as of the Effective
Date, all real property leased by UCAR, the Borrower, each domestic Subsidiary,
each Subsidiary that is a borrower under a Local Facility and each other
Subsidiary that is required to grant a leasehold mortgage pursuant to the
Collateral Requirement and the address thereof. As of the Effective Date, UCAR,
the Borrower and the Subsidiaries have valid leases in all the real property set
forth as being leased by them on Schedule 3.23(b).
SECTION 3.24. LITIGATION LIABILITIES. The sum of the aggregate Litigation
Payments plus Reserves in respect of Litigation Liabilities does not, and is not
reasonably expected to, exceed $400,000,000 (including $90,000,000 (calculated
on a present value basis) of payments to the Department of Justice); PROVIDED
that it is understood that all other Litigation Payments and Reserves will be
calculated on a gross dollar basis for purposes of determining the accuracy of
this representation.
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SECTION 3.25. YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) UCAR's, the Borrower's and
each Subsidiaries' computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
their systems interface) and the testing of all such systems and equipment, as
so reprogrammed, will be completed in all material respects by June 30, 1999.
The cost to UCAR, the Borrower and each Subsidiary of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to UCAR, the
Borrower and each Subsidiary (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) could not reasonably be
expected to result in a Default or a Material Adverse Effect. Except for such of
the reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of UCAR, the Borrower and each
Subsidiary are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit UCAR, the
Borrower and each Subsidiary to conduct its businesses without Material Adverse
Effect.
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.08):
(a) The Administrative Agent (or its counsel) shall have received from
UCAR, the Borrower and each Lender either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such party
has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent, the Collateral Agent and
the Lenders and dated the Effective Date) of each of (i) Kelley Drye &
Warren LLP, counsel for UCAR and the Borrower, substantially to the effect
set forth in the form of Exhibit J-1, (ii) the General Counsel of UCAR and
the Borrower, substantially to the effect set forth in the form of Exhibit
J-2, and (iii) local counsel in each jurisdiction listed on Schedule 4.01,
substantially to the effect set forth in the form of Exhibit J-3, and, in
the case of each such opinion required by this paragraph, covering such
other matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Required Lenders shall reasonably request. The Borrower
hereby requests such counsel to deliver such opinions.
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(c) The Administrative Agent shall have received (i) in the case of
each domestic Loan Party, each of the items referred to in clauses (A), (B)
and (C) below and, in the case of each other Loan Party, as requested by
the Administrative Agent, the equivalent documentation in its jurisdiction
of organization: (A) a copy of the certificate or articles of
incorporation, including all amendments thereto, of each Loan Party,
certified as of a recent date by the Secretary of State of the state of its
organization, and a certificate as to the good standing of each Loan Party
as of a recent date from such Secretary of State; (B) a certificate of the
Secretary or Assistant Secretary of each Loan Party dated the Effective
Date and certifying (w) that attached thereto is a true and complete copy
of the by-laws of such Loan Party as in effect on the Effective Date and at
all times since a date immediately prior to the date of the resolutions
described in clause (x) below, (x) that attached thereto is a true and
complete copy of the resolutions duly adopted by the Board of Directors of
such Loan Party authorizing the execution, delivery and performance of the
Loan Documents to which such person is a party and, in the case of the
Credit Parties, the borrowings under this Agreement, and that such
resolutions have not been modified, rescinded or amended and are in full
force and effect, (y) that the certificate or articles of incorporation of
such Loan Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (A) above, and (z) as to the incumbency and specimen signature of
each officer executing any Loan Document or any other document delivered in
connection herewith on behalf of such Loan Party; and (C) a certificate of
another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to (B)
above; and (ii) such other documents as the Lenders, Cravath, Swaine &
Moore, counsel for the Administrative Agent, or, in the case of any Local
Facility or foreign Credit Party, counsel for the Administrative Agent in
the jurisdiction of such Local Facility or foreign Credit Party, may
reasonably request.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (b) and (c) of Section 4.02.
(e) The Collateral Requirement shall have been satisfied.
(f) The Guarantee Requirement shall have been satisfied.
(g) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
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required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.
(h) The Lenders shall have received a reasonably satisfactory pro
forma consolidated balance sheet of UCAR as of September 30, 1998,
reflecting all pro forma adjustments as if the Transactions had been
consummated on such date, together with a certificate of the Borrower
signed by a Financial Officer of the Borrower to the effect that such
balance sheet fairly presents the pro forma financial position of UCAR and
its subsidiaries in accordance with GAAP, and such pro forma consolidated
balance sheet shall be consistent in all material respects with the
forecasts and other information previously provided to the Lenders.
(i) All requisite material governmental authorities and all material
third parties shall have been approved or consented to the Transactions and
the other transactions contemplated hereby to the extent required and all
applicable appeal periods shall have expired.
(j) The Senior Subordinated Indenture shall have been amended so that,
after giving effect to such amendment, the Senior Subordinated Indenture
will not prohibit the incurrence of Indebtedness (including in the form of
Guarantees) and the granting of liens under this Agreement, the Existing
Credit Agreement and the other Loan Documents on terms reasonably
satisfactory in form and substance to the Administrative Agent.
(k) The Existing Credit Agreement and the other Loan Documents shall
have been amended, to the satisfaction of the Administrative Agent, in
order to effect the Transactions, including the incurrence of Indebtedness
under (including in the form of Guarantees) and the granting of Liens in
respect of Loans under this Agreement.
(l) The amendment and restatement of the Existing Credit Agreement
shall have become effective in accordance with its terms.
(m) As of the Effective Date, immediately prior to giving effect to
the amendment and restatement of the Existing Credit Agreement, no Default
shall have occurred and be continuing under the Existing Credit Agreement.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.08) at or prior to 3:00 p.m., New York City time, on
January 15, 1999 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
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65
SECTION 4.02. EACH BORROWING. On the date of each Borrowing, the following
conditions must be satisfied (or waived pursuant to Section 9.08):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03.
(b) The representations and warranties set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of
such Borrowing with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate
to an earlier date.
(c) At the time of and immediately after such Borrowing, no Event of
Default or Default shall have occurred and be continuing.
(d) At the time of and immediately after such Borrowing, the
Administrative Agent shall have received a certificate of the Borrower
signed by a Financial Officer of the Borrower (i) certifying that each
condition required to be met in connection with the incurrence of
additional Indebtedness under Section 4.03(b), 4.03(c) and/or 4.03(f), as
applicable, of the Senior Subordinated Indenture (or, if applicable, the
analogous provision of each Refinancing Note Indenture) has been satisfied,
(ii) certifying that the Loans to be made will constitute "Senior
Indebtedness" for purposes of the Senior Subordinated Indenture and each
applicable Refinancing Note Indenture and (iii) setting forth in reasonable
detail the calculations necessary to certify as to such compliance.
Each Borrowing shall be deemed to constitute a representation and warranty by
UCAR and the Borrower on the date of such Borrowing as to the matters specified
in paragraphs (b) and (c) of this Section 4.02.
ARTICLE V
AFFIRMATIVE COVENANTS
Each of UCAR and the Borrower covenants and agrees with each Lender that so
long as this Agreement shall remain in effect and until the Commitments have
been terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been paid
in full, unless the Required Lenders shall otherwise consent in writing, each of
UCAR and the Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as
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otherwise expressly permitted under Section 6.05, and except for the liquidation
or dissolution of Subsidiaries if the assets of such corporations to the extent
they exceed estimated liabilities are acquired by the Borrower or a Wholly Owned
Subsidiary in such liquidation or dissolution; PROVIDED that Subsidiaries which
are Guarantors may not be liquidated into Subsidiaries that are not Guarantors
and domestic Subsidiaries may not be liquidated into foreign Subsidiaries.
(b) Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; comply in all material respects with
all applicable laws, rules, regulations (including any Environmental Law) and
orders of any Governmental Authority, whether now in effect or hereafter
enacted; and at all times maintain and preserve all property material to the
conduct of such business and keep such property in good repair, working order
and condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith, if any,
may be properly conducted at all times (in each case except as expressly
permitted by this Agreement).
SECTION 5.02. INSURANCE. (a) Keep its insurable properties insured at all
times by financially sound and reputable insurers in such amounts as shall be
customary for similar businesses and maintain such other insurance (including,
to the extent consistent with past practices, self-insurance), of such types, to
such extent and against such risks, as is customary with companies in the same
or similar businesses.
(b) Cause all such property and casualty insurance policies with respect to
the Mortgaged Properties to be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement, in form and
substance reasonably satisfactory to the Administrative Agent and the Collateral
Agent, which endorsement shall provide that, from and after the Effective Date,
if the insurance carrier shall have received written notice from the
Administrative Agent or the Collateral Agent of the occurrence of an Event of
Default, the insurance carrier shall pay all proceeds otherwise payable to the
Borrower or the Loan Parties under such policies directly to the Collateral
Agent; cause all such policies to provide that neither the applicable Loan
Party, the Administrative Agent, the Collateral Agent nor any other party shall
be a coinsurer thereunder and to contain a "Replacement Cost Endorsement",
without any deduction for depreciation, and such other provisions as the
Administrative Agent or the Collateral Agent may reasonably (in light of a
Default or a material development in respect of the insured Mortgaged Property)
require from time to time to protect their interests; deliver original or
certified copies of all such policies to the Collateral Agent; cause each such
policy to provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium upon
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not less than 10 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent or (ii) for any other reason upon
not less than 30 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent; deliver to the Administrative
Agent and the Collateral Agent, prior to the cancellation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Administrative Agent and the Collateral Agent), or insurance certificate with
respect thereto, together with evidence reasonably satisfactory to the
Administrative Agent and the Collateral Agent of payment of the premium
therefor.
(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), obtain flood insurance in such reasonable total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from time
to time reasonably require, and otherwise comply with the National Flood
Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as
it may be amended from time to time, or (ii) a "Zone 1" area (as so designated
in the National Ocean and Earthquake Risk Map), obtain earthquake insurance in
such reasonable total amount as the Administrative Agent, the Collateral Agent
or the Required Lenders may from time to time reasonably require.
(d) With respect to each Mortgaged Property, carry and maintain
comprehensive general liability insurance and coverage on an occurrence basis
against claims made for personal injury (including bodily injury, death and
property damage) and umbrella liability insurance against any and all claims, in
no event for a combined single limit of less than $1,000,000, naming the
Collateral Agent as an additional insured, on forms reasonably satisfactory to
the Collateral Agent.
(e) Notify the Administrative Agent and the Collateral Agent promptly
whenever any separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 5.02 is taken out
by UCAR, the Borrower or any Subsidiary; and promptly deliver to the
Administrative Agent and the Collateral Agent a duplicate original copy of such
policy or policies, or insurance certificate with respect thereto.
(f) In connection with the covenants set forth in this Section 5.02, it is
understood and agreed that:
(i) none of the Administrative Agent, the Collateral Agent, the
Lenders and their respective agents or employees shall be liable for any
loss or damage insured by the insurance policies required to be maintained
under this Section 5.02, it being understood that (A) the Borrower and the
other Loan Parties shall look solely to their insurance
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companies or any other parties other than the aforesaid parties for the
recovery of such loss or damage and (B) such insurance companies shall have
no rights of subrogation against the Administrative Agent, the Collateral
Agent, the Lenders or their agents or employees. If, however, the insurance
policies do not provide waiver of subrogation rights against such parties,
as required above, then each of UCAR and the Borrower hereby agree, to the
extent permitted by law, to waive, and to cause each Subsidiary to waive,
its right of recovery, if any, against the Administrative Agent, the
Collateral Agent, the Lenders and their agents and employees; and
(ii) the designation of any form, type or amount of insurance coverage
by the Administrative Agent, the Collateral Agent or the Required Lenders
under this Section 5.02 shall in no event be deemed a representation,
warranty or advice by the Administrative Agent, the Collateral Agent or the
Lenders that such insurance is adequate for the purposes of the business of
UCAR, the Borrower and the Subsidiaries or the protection of their
properties.
SECTION 5.03. TAXES. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; PROVIDED, HOWEVER, that such payment and
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as (a) the validity or amount thereof shall be
contested in good faith by appropriate proceedings and UCAR, the Borrower or the
affected Subsidiary, as applicable, shall have set aside on its books adequate
reserves with respect thereto, (b) such tax, assessment, charge, levy or claim
is in respect of property taxes for property that UCAR, the Borrower or one of
the Subsidiaries has determined to abandon and the sole recourse for such tax,
assessment, charge, levy or claim is to such property or (c) the amount of such
taxes, assessments, charges, levies and claims and interest and penalties
thereon does not exceed $1,000,000 in the aggregate.
SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, a consolidated
balance sheet and related statements of operations, cash flows and
stockholders' equity showing the financial condition of UCAR, the Borrower
and the Subsidiaries as of the close of such fiscal year and the
consolidated results of their operations during such year, all audited by
KPMG Peat Marwick LLC or other independent public accountants of recognized
national standing reasonably acceptable to the Administrative Agent and
accompanied by an opinion of such
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accountants (which shall not be qualified in any material respect) to the
effect that such consolidated financial statements fairly present the
financial condition and results of operations of UCAR, the Borrower and the
Subsidiaries on a consolidated basis in accordance with GAAP;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, a consolidated balance sheet and related
statements of operations, cash flows and stockholders' equity showing the
financial condition of UCAR, the Borrower and the Subsidiaries as of the
close of such fiscal quarter and the consolidated results of their
operations during such fiscal quarter and the then-elapsed portion of the
fiscal year, all certified by one of its Finan cial Officers on behalf of
the Borrower as fairly presenting the financial condition and results of
operations of UCAR, the Borrower and the Subsidiaries on a consolidated
basis in accordance with GAAP (except for the absence of footnotes),
subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements under (a)
or (b) above, a certificate of the accounting firm or Financial Officer on
behalf of the Borrower opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal interpretations)
(i) certifying that no Event of Default or Default has occurred or, if such
an Event of Default or Default has occurred, specifying the nature and
extent thereof and any corrective action taken or proposed to be taken with
respect thereto and (ii) setting forth computations in detail reasonably
satisfactory to the Administrative Agent demonstrating compliance with the
covenants contained in Sections 6.10, 6.11 and 6.12 (it being understood
that the information required by this clause (ii) may be provided in a
certificate of a Financial Officer on behalf of the Borrower instead of
from such accounting firm);
(d) promptly after the same become publicly available, copies of all
periodic and other publicly available reports, proxy statements and, to the
extent requested by the Administrative Agent, other materials filed by
UCAR, the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any governmental authority succeeding to any of or all the
functions of said Commission, or with any national securities exchange, or
distributed to its shareholders generally, as the case may be;
(e) if, as a result of any change in accounting principles and
policies from those as in effect on the date of this Agreement, the
consolidated financial statements of UCAR, the Borrower and the
Subsidiaries delivered pursuant to paragraph (a) or (b) above will differ
in any material respect from the consolidated financial statements that
would have been delivered pursuant to such clauses had no such change in
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accounting principles and policies been made, then, together with the first
delivery of financial statements pursuant to paragraph (a) and (b) above
following such change, a schedule prepared by a Financial Officer on behalf
of the Borrower reconciling such changes to what the financial statements
would have been without such changes;
(f) within 90 days after the beginning of each fiscal year, a copy of
an operating and capital expenditure budget for such fiscal year;
(g) promptly following the creation or acquisition of any Subsidiary,
a certificate of the Borrower signed by a Responsible Officer of the
Borrower, identifying such new Subsidiary and the ownership interest of the
Borrower and the Subsidiaries therein;
(h) simultaneously with the delivery of any financial statements
pursuant to paragraph (a) or (b) above, a balance sheet and related
statements of operations, cash flows and stockholder's equity for each
unconsolidated Subsidiary for the applicable period;
(i) promptly, a copy of all reports submitted in connection with any
material interim or special audit made by independent accountants of the
books of UCAR, the Borrower or any Subsidiary; and
(j) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of UCAR, the Borrower
or any Subsidiary, or compliance with the terms of any Loan Document, or
such consolidating financial statements, or such financial statements
showing the results of operations of any Unrestricted Subsidiary, as in
each case the Administrative Agent or any Lender, acting through the
Administrative Agent, may reasonably request.
SECTION 5.05. LITIGATION AND OTHER NOTICES. Furnish to the Administrative
Agent and each Lender written notice of the following promptly after any
Responsible Officer of the Borrower obtains actual knowledge thereof:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
(b) the filing or commencement of, or any written threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against UCAR, the Borrower or any Subsidiary thereof in respect
of which there is a reasonable possibility of an adverse determination and
which, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and
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(c) any other development specific to UCAR, the Borrower or any
Subsidiary that is not a matter of general public knowledge and that has
resulted in, or could reasonably be expected to result in, a Material
Adverse Effect.
SECTION 5.06. EMPLOYEE BENEFITS. (a) Comply in all material respects with
the applicable provisions of ERISA and the provisions of the Code relating to
ERISA and any applicable similar non-U.S. law and (b) furnish to the
Administrative Agent (i) as soon as possible after, and in any event within 30
days after any Responsible Officer of UCAR, the Borrower or any ERISA Affiliate
knows or has reason to know that, any Reportable Event has occurred, a statement
of a Financial Officer on behalf of the Borrower setting forth details as to
such Reportable Event and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Reportable Event given to
the PBGC, (ii) promptly after any Responsible Officer learns of receipt thereof,
a copy of any notice that the Borrower or any ERISA Affiliate may receive from
the PBGC relating to the intention of the PBGC to terminate any Plan or Plans
(other than a Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Code Section 414) or to
appoint a trustee to administer any such Plan, (iii) within 30 days after the
due date for filing with the PBGC pursuant to Section 412(n) of the Code a
notice of failure to make a required installment or other payment with respect
to a Plan, a statement of a Financial Officer on behalf of the Borrower setting
forth details as to such failure and the action proposed to be taken with
respect thereto, together with a copy of any such notice given to the PBGC and
(iv) promptly after any Responsible Officer learns thereof and in any event
within 30 days after receipt thereof by UCAR, the Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by UCAR, the Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability or (B) a determination that a Multiemployer
Plan is, or is expected to be, terminated or in reorganization, in each case
within the meaning of Title IV of ERISA; PROVIDED that in the case of each of
clauses (i) through (iv) above, notice to the Administrative Agent shall only be
required if such event or condition, together with all other events or
conditions referred to in clauses (i) through (iv) above, could reasonably be
expected to result in liability of UCAR, the Borrower or any Subsidiary in an
aggregate amount exceeding $7,500,000.
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.
Maintain all financial records in accordance with GAAP and permit any persons
designated by the Administrative Agent or any Lender to visit and inspect the
financial records and the properties of UCAR, the Borrower or any Subsidiary at
reasonable times, upon reasonable prior notice to UCAR or the Borrower, and as
often as reasonably requested and to make extracts from and copies of such
financial records, and permit any persons designated by the Administrative Agent
or any Lender upon reasonable prior notice to UCAR or the Borrower to discuss
the affairs, finances and condition of the Borrower or any Subsidiary with the
officers thereof and
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independent accountants therefor (subject to reasonable requirements of
confidentiality, including requirements imposed by law or by contract).
SECTION 5.08. USE OF PROCEEDS. Use the proceeds of the Loans only for the
purposes set forth in the preamble to this Agreement.
SECTION 5.09. COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause all
lessees and other persons occupying its Properties to comply, with all
Environmental Laws and Environmental Permits applicable to its operations and
Properties; obtain and renew all Environmental Permits necessary for its
operations and Properties; and conduct any Remedial Action in accordance with
Environmental Laws, except, in each case with respect to this Section 5.09, to
the extent the failure to do so, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
SECTION 5.10. PREPARATION OF ENVIRONMENTAL REPORTS. If a Default caused by
reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to Lenders within 90 days after such request, at the expense of
the Borrower, an environmental site assessment report for the Properties which
are the subject of such Default prepared by an environmental consulting firm
reasonably acceptable to the Administrative Agent, indicating the presence or
absence of Hazardous Materials and the estimated cost of any Remedial Action
required under any applicable Environmental Law in connection with such
Properties.
SECTION 5.11. FURTHER ASSURANCES. Execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements) that
may be required under applicable law, or which the Collateral Agent may
reasonably request, (a) in order to effectuate the transactions contemplated by
the Loan Documents (other than the Local Facility Loan Documents), (b) in order
to cause the Guarantee Requirement and Collateral Requirement to be satisfied at
all times and (c) in order to grant, preserve, protect and perfect the validity
and first priority (subject to Liens permitted by Section 6.02 and the Existing
Credit Agreement) of the security interests created or intended to be created by
the Security Documents. All such security interests and Liens will be created
under the Security Documents and other instruments and documents in form and
substance reasonably satisfactory to the Collateral Agent, and UCAR, the
Borrower and the Subsidiaries shall deliver or cause to be delivered to the
Administrative Agent all such instruments and documents (including legal
opinions and lien searches) as the Required Lenders shall reasonably request to
evidence compliance with this Section 5.11. UCAR and the Borrower agree to
provide, and to cause each Subsidiary to provide, such evidence as the
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Collateral Agent shall reasonably request as to the perfection and priority
status of each such security interest and Lien.
SECTION 5.12. SIGNIFICANT SUBSIDIARIES. Cause Significant Subsidiaries at
all times to (a) account for 85% or more of the consolidated assets of the
Borrower and (b) have accounted for 85% or more of EBITDA for each of the two
consecutive periods of four fiscal quarters immediately preceding the date of
determination, after giving effect to the designation of any Significant
Subsidiary on such date.
SECTION 5.13. FISCAL YEAR. In the case of each of UCAR, the Borrower and
the Subsidiaries, cause its respective fiscal year to end on December 31.
SECTION 5.14. DIVIDENDS. In the case of the Borrower, permit its
Subsidiaries to pay dividends and cause such dividends to be paid to the extent
required to pay the monetary Obligations, subject to restrictions permitted by
Section 6.09(d) and under the Existing Credit Agreement and to prohibitions
imposed by applicable requirements of law.
SECTION 5.15. INTEREST/EXCHANGE RATE PROTECTION AGREEMENTS. Maintain in
effect one or more Interest/Exchange Rate Protection Agreements with any of the
Lenders or other financial institutions reasonably satisfactory to the
Administrative Agent, the effect of which shall be to limit at all times the
interest payable in connection with 40% of the aggregate principal amount of
Borrowings projected to be outstanding at such time, in each case to a maximum
rate and on terms and conditions comparable to those set forth in the
Interest/Exchange Rate Protection Agreements in effect on the Effective Date or
otherwise reasonably acceptable, taking into account current market conditions,
to the Administrative Agent, and deliver evidence of the execution and delivery
thereof to the Administrative Agent.
SECTION 5.16. CORPORATE SEPARATENESS. Cause the management, business and
affairs of each of the Unrestricted Subsidiaries to be conducted in such a
manner so that each Unrestricted Subsidiary will be perceived as a legal entity
separate and distinct from UCAR, the Borrower and the Subsidiaries.
ARTICLE VI
NEGATIVE COVENANTS
Each of UCAR and the Borrower covenants and agrees with each Lender that,
so long as this Agreement shall remain in effect and until the Commitments have
been terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full, unless the Required Lenders shall otherwise consent in writing,
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neither UCAR nor the Borrower will, and neither will cause or permit any of the
Subsidiaries to:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness existing on the Effective Date and set forth in
Schedule 6.01, but not any extensions, renewals or replacements of such
Indebtedness except (i) renewals and extensions expressly provided for in
the agreements evidencing any such Indebtedness as the same are in effect
on the Effective Date and (ii) refinancings and extensions of any such
Indebtedness if the interest rate with respect thereto and other terms
thereof are no less favorable to the obligor thereon or to the Lenders than
the Indebtedness being refinanced or extended and the average life to
maturity thereof is greater than or equal to that of the Indebtedness being
refinanced or extended; PROVIDED that such Indebtedness permitted under
clause (i) or clause (ii) above shall not be (A) Indebtedness of an obligor
that was not an obligor with respect to the Indebtedness being extended,
renewed or refinanced, (B) in a principal amount which exceeds the
Indebtedness being renewed, extended or refinanced or (C) incurred, created
or assumed if any Default or Event of Default has occurred and is
continuing or would result therefrom;
(b) Indebtedness created hereunder, under the Existing Credit
Agreement and under the other Loan Documents; PROVIDED that no principal
amount of Indebtedness under any Local Facility described in clause (b) of
the definition of "Local Facility" may be incurred unless the Tranche A
Exposure shall be simultaneously and permanently reduced by an aggregate
amount not less than such principal amount; PROVIDED FURTHER that, with
respect to Indebtedness under the Existing Credit Agreement, (i) no
Guarantor shall Guarantee the Obligations under the Existing Credit
Agreement unless it shall also Guarantee on a PARI PASSU basis the
Obligations under this Agreement and (ii) if any additional or more
restrictive representation, warranty, covenant, condition, event of default
or other term shall be contained in the Tranche C Facility Credit
Agreement, the Borrower agrees that such additional or more restrictive
representation, warranty, covenant, condition, event of default or other
term shall be incorporated herein (and, to the extent that any such
additional or more restrictive term shall subsequently be amended to be
less restrictive, such amendment shall also be incorporated herein);
(c) (i) in the case of UCAR, any Senior Subordinated Guarantee, (ii)
in the case of the Borrower, Senior Subordinated Notes in an aggregate
principal amount (the "SUBORDINATED PRINCIPAL") not to exceed the sum of
(A) $200,000,000 and (B) the aggregate principal amount of Senior
Subordinated Notes issued after the Second Closing Date
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in payment of interest thereon pursuant to the terms thereof (less the
principal amount of any Senior Subordinated Notes that is repaid after the
Second Closing Date) and (iii) in the case of the Borrower, Refinancing
Notes in an aggregate principal amount not to exceed the sum at the time
immediately prior to issuance and refinancing of (A) the Subordinated
Principal, (B) any premium payable and reasonable expenses incurred in
connection with such refinancing and (C) if the Refinancing Notes are
issued at a time when there is accrued but unpaid interest on the
Subordinated Principal, the amount of such accrued but unpaid interest;
(d) Indebtedness of the Borrower and the Subsidiaries pursuant to
Interest/Exchange Rate Protection Agreements entered into in order to fix
the effective rate of interest, or to hedge against currency fluctuations,
on the Loans and other Indebtedness or to hedge against currency
fluctuations with respect to purchases and sales of goods in the ordinary
course, in each case, PROVIDED that such transactions shall be entered into
for business purposes and not for the purpose of speculation;
(e) Indebtedness owed to (including obligations in respect of letters
of credit for the benefit of) any person providing worker's compensation,
health, disability or other employee benefits or property, casualty or
liability insurance to the Borrower or any Subsidiary, pursuant to
reimbursement or indemnification obligations to such person;
(f) (i) Indebtedness of the Borrower or any Wholly Owned Subsidiary
that is a Guarantor to any Subsidiary or to the Borrower; (ii) Indebtedness
of the Borrower or any Wholly Owned Subsidiary that is not a Guarantor to
any Subsidiary; (iii) Indebtedness of any Subsidiary to the Borrower or
another Subsidiary incurred pursuant to a Permitted Foreign Transfer
(subject in the case of Specified Permitted Transactions to the limitations
set forth in Section 6.04(k)); and (iv) so long as at the time of
incurrence no Default or Event of Default shall have occurred and be
continuing, Indebtedness of UCAR to the Borrower incurred for the purpose
of making permitted investments in Unrestricted Subsidiaries (and in an
amount limited to the amount of investments so permitted), in each case
subject to compliance with the provisions of the Pledge Agreements to the
extent applicable to such Indebtedness;
(g) Indebtedness of the Borrower or a Subsidiary which represents the
assumption by the Borrower or such Subsidiary of Indebtedness of a
Subsidiary in connection with the permitted merger of such Subsidiary with
or into the assuming person or the purchase of all or substantially all the
assets of such Subsidiary;
(h) Indebtedness of the Borrower or any Subsidiary in respect of
performance bonds, bid bonds, appeal bonds, surety
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76
bonds and similar obligations and trade-related letters of credit, in each
case provided in the ordinary course of business, including those incurred
to secure health, safety and environmental obligations in the ordinary
course of business, and any extension, renewal or refinancing thereof to
the extent not provided to secure the repayment of other Indebtedness and
to the extent that the amount of refinancing Indebtedness is not greater
than the amount of Indebtedness being refinanced;
(i) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; PROVIDED that such
Indebtedness is extinguished within two Business Days of its incurrence;
(j) Indebtedness of a Subsidiary acquired after the date hereof and
Indebtedness of a corporation merged or consolidated with or into the
Borrower or a Subsidiary after the date hereof, which Indebtedness in each
case exists at the time of such acquisition, merger, consolidation or
conversion into a Subsidiary and is not created in contemplation of such
event and where such acquisition, merger or consolidation is permitted by
this Agreement, PROVIDED that the aggregate principal amount of
Indebtedness under this paragraph (j) shall not exceed $25,000,000 for the
Borrower and all Subsidiaries;
(k) Capital Lease Obligations, mortgage financings and purchase money
Indebtedness incurred by the Borrower or any Subsidiary prior to or within
270 days after a Capital Expenditure permitted under Section 6.10 in order
to finance such Capital Expenditure, and extensions, renewals and
refinancings thereof if the interest rate with respect thereto and other
terms thereof are no less favorable to the Borrower or such Subsidiary than
the Indebtedness being refinanced and the average life to maturity thereof
is greater than or equal to that of the Indebtedness being refinanced;
PROVIDED that such refinancing Indebtedness shall not be (i) Indebtedness
of an obligor that was not an obligor with respect to the Indebtedness
being extended, renewed or refinanced, (ii) in a principal amount which
exceeds the Indebtedness being renewed, extended or refinanced or (iii)
incurred, created or assumed if any Default or Event of Default has
occurred and is continuing or would result therefrom;
(l) Capital Lease Obligations incurred by the Borrower or any
Subsidiary in respect of any Sale and Leaseback Transaction that is
permitted under Section 6.03;
(m) other Indebtedness of the Borrower and the Subsidiaries in an
aggregate principal amount at any time outstanding not in excess of
$100,000,000, $20,000,000 of which may be incurred on a secured basis;
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77
(n) Indebtedness of UCAR consisting of contingent liabilities or
Indebtedness of the type referred to in the proviso contained in the
definition of "Unrestricted Subsidiary"; and
(o) all premium (if any), interest (including post-petition interest),
fees, expenses, indemnities, charges and additional or contingent interest
on obligations described in clauses (a) through (n) above.
Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, no Refinancing Notes shall be issued (and no Indebtedness shall be
incurred under the Refinancing Note Indenture) unless: (a) concurrently with the
issuance of any Refinancing Notes, Senior Subordinated Notes in a principal
amount equal to the principal amount of such Refinancing Notes (less any amount
issued pursuant to clause (iii)(B) or (iii)(C) of paragraph (c) above) shall
have been redeemed or repurchased (or called for redemption, so long as the
redemption price has been indefeasibly deposited with the trustee in respect of
such Senior Subordinated Notes (the "TRUSTEE")) and cancelled upon delivery to
the Trustee, at a price not in excess of 100% of the principal amount thereof
(plus interest accrued to the date of redemption or repurchase and not paid in
cash and plus any premium in respect of such redemption or repurchase (so long
as the premium on repurchase does not exceed 104.5%, or if lower at the time
such repurchase is made, the scheduled premium set forth in the Senior
Subordinated Indenture)), (b) the terms of the Refinancing Notes and the
Refinancing Note Indenture (other than the interest rate, the interest payment
dates and any redemption premiums, which shall be determined at the time of
issuance of the Refinancing Notes) shall be reasonably satisfactory to the
Required Lenders (PROVIDED, HOWEVER, that such terms of the Refinancing Notes
and the Refinancing Note Indenture shall be deemed to be satisfactory to the
Required Lenders if the Refinancing Notes are issued with substantially the same
terms as the Senior Subordinated Notes that are being refinanced (other than any
changes thereto that are not adverse in any respect to the interests of the
Lenders)), (c) the interest rate of the Refinancing Notes shall be a fixed, non-
increasing interest rate per annum not in excess of the rate payable in respect
of the Senior Subordinated Notes, payable on a principal amount of the
Refinancing Notes not in excess of the gross proceeds of the sale thereof and
interest on the Refinancing Notes shall be payable semiannually and (d) the
Refinancing Notes shall mature not earlier than the maturity date of the Senior
Subordinated Notes.
SECTION 6.02. LIENS. Create, incur, assume or permit to exist any Lien on
any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned
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78
or hereafter acquired by it or on any income or revenues or rights in respect of
any thereof, or sell or transfer any account receivable or any right in respect
thereof, except:
(a) Liens on property or assets of the Borrower and its Subsidiaries
existing on the Effective Date and set forth in Schedule 6.02; PROVIDED
that such Liens shall secure only those obligations which they secure on
the Effective Date (and extensions, renewals and refinancings of such
obligations permitted by Section 6.01(a)) and shall not subsequently apply
to any other property or assets of UCAR, the Borrower or any Subsidiary;
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset of the Borrower or any
Subsidiary prior to the acquisition thereof by the Borrower or any
Subsidiary; PROVIDED that (i) such Lien is not created in contemplation of
or in connection with such acquisition and (ii) such Lien does not apply to
any other property or asset of the Borrower or any Subsidiary;
(d) any Lien on any property or asset of a Subsidiary securing
Indebtedness permitted by Section 6.01(j); PROVIDED that such Lien does not
apply to any other property or assets of UCAR, the Borrower or any
Subsidiary not securing such Indebtedness at the date of acquisition of
such property or asset (other than after acquired property subjected to a
Lien securing Indebtedness incurred prior to such date and permitted
hereunder which contains a requirement for the pledging of after acquired
property);
(e) Liens for taxes, assessments or other governmental charges or
levies not yet delinquent, or which are for less than $1,000,000 in the
aggregate, or which are being contested in compliance with Section 5.03 or
for property taxes on property that UCAR, the Borrower or one of the
Subsidiaries has determined to abandon if the sole recourse for such tax,
assessment, charge, levy or claim is to such property;
(f) carriers', warehousemen's, mechanic's, materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or that are being contested in
good faith by appropriate proceedings and in respect of which, if
applicable, UCAR, the Borrower or the relevant Subsidiary shall have set
aside on its books reserves in accordance with GAAP;
(g) pledges and deposits made in the ordinary course of business in
compliance with the Federal Employers Liability Act or any other workmen's
compensation, unemployment insurance and other social security laws or
regulations and deposits securing liability to insurance carriers under
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79
insurance or self-insurance arrangements in respect of such obligations;
(h) deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business,
including those incurred to secure health, safety and environmental
obligations in the ordinary course of business;
(i) zoning restrictions, easements, trackage rights, leases (other
than Capital Lease Obligations), licenses, special assessments,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and do not materially detract from
the value of the property subject thereto or interfere with the ordinary
conduct of the business of UCAR, the Borrower or any of the Subsidiaries;
(j) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by the Borrower or any Subsidiary (including the interests of
vendors and lessors under conditional sale and title retention agreements);
PROVIDED that (i) such security interests secure Indebtedness or Sale and
Lease-Back Transactions permitted by Section 6.01, (ii) such security
interests are incurred, and the Indebted ness secured thereby is created,
within 270 days after such acquisition (or construction), (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of such real
property, improvements or equipment at the time of such acquisition (or
construction), (iv) such expenditures are permitted by this Agreement and
(v) such security interests do not apply to any other property or assets of
the Borrower or any Subsidiary (other than to accessions to such real
property, improvements or equipment and provided that individual financings
of equipment provided by a single lender may be cross-collateralized to
other financings of equipment provided solely by such lender);
(k) Liens securing reimbursement obligations in respect of
trade-related letters of credit permitted under Section 6.01 and covering
the goods (or the documents of title in respect of such goods) financed by
such letters of credit;
(l) Liens arising out of capitalized or operating lease transactions
permitted under Section 6.03, so long as such Liens (i) attach only to the
property sold in such transaction and any accessions thereto and (ii) do
not interfere with the business of UCAR, the Borrower or any Subsidiary in
any material respect;
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(m) Liens consisting of interests of lessors under capital leases
permitted by Section 6.01;
(n) Liens securing judgments for the payment of money in an aggregate
amount not in excess of $7,500,000 (except to the extent covered by
insurance as to which the insurer has acknowledged in writing its
obligation to cover), unless such judgments shall remain undischarged for a
period of more than 30 consecutive days during which execution shall not be
effectively stayed;
(o) any Lien arising by operation of law pursuant to Section 107(1) of
CERCLA or pursuant to analogous state or foreign law, for costs or damages
which are not yet due (by virtue of a written demand for payment by a
Governmental Authority) or which are being contested in compliance with the
standard set forth in Section 5.03(a), or on property that the Borrower or
a Subsidiary has determined to abandon if the sole recourse for such costs
or damages is to such property, PROVIDED that the liability of the Borrower
and the Subsidiaries with respect to the matter giving rise to all such
Liens shall not, in the reasonable estimate of the Borrower (in light of
all attendant circumstances, including the likelihood of contribution by
third parties), exceed $7,500,000;
(p) any leases or subleases to other persons of properties or assets
owned or leased by the Borrower or a Subsidiary;
(q) Liens which are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection
with the issuance of Indebtedness or (ii) pertaining to pooled deposit
and/or sweep accounts of the Borrower and/or any Subsidiary to permit
satisfaction of overdraft or similar obligations incurred in the ordinary
course of business of the Borrower and its Subsidiaries;
(r) other Liens with respect to property or assets not constituting
collateral for the Obligations with an aggregate fair market value of not
more than $20,000,000 at any time;
(s) any Lien arising as a result of a transaction permitted under
Section 6.05(h) or (i) or under Section 6.13;
(t) the sale of accounts receivable in connection with collection in
the ordinary course of business and Liens which might arise as a result of
the sale or other disposition of accounts receivable pursuant to Section
6.05(h); and
(u) the replacement, extension or renewal of any Lien permitted by
clause (c), (d) or (j) above; PROVIDED that such replacement, extension or
renewal Lien shall not cover any property other than the property that was
subject to such Lien
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prior to such replacement, extension or renewal; and PROVIDED FURTHER that
the Indebtedness and other obligations secured by such replacement,
extension or renewal Lien are permitted by this Agreement.
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred (a "SALE AND LEASE-BACK TRANSACTION"), other
than any Sale and Lease-Back Transaction which involves a sale by the Borrower
or a Subsidiary solely for cash consideration on terms not less favorable than
would prevail in an arm's-length transaction and which (a) results in a Capital
Lease Obligation or an operating lease, in either case entered into to finance a
Capital Expenditure permitted by Section 6.10 consisting of the initial
acquisition by the Borrower or such Subsidiary of the property sold or
transferred in such Sale and Lease-Back Transaction, PROVIDED that such Sale and
Lease-Back Transaction occurs within 270 days after such acquisition or (b)
results in a Capital Lease Obligation or an operating lease entered into for any
other purpose; PROVIDED that the proceeds of any such Sale and Lease-Back
Transaction in reliance upon this clause (b) shall be deemed subject to Section
2.12(e).
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or acquire
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments (i) existing on the Effective Date in the capital
stock of the Subsidiaries; (ii) by UCAR in the capital stock of the
Borrower; (iii) by the Borrower or any Subsidiary in any Wholly Owned
Subsidiary that is a Guarantor (so long as such Guarantor shall remain a
Wholly Owned Subsidiary after giving effect to such investment); (iv) by
any Wholly Owned Subsidiary in any Wholly Owned Subsidiary that is a
Guarantor; (v) by any Subsidiary that is not a Guarantor in any Wholly
Owned Subsidiary that is not a Guarantor (so long as such Subsidiary shall
remain a Wholly Owned Subsidiary after giving effect to such investment);
or (vi) that constitute Permitted Foreign Transfers (subject in the case of
Specified Permitted Transactions to the limitations set forth in paragraph
(k) below);
(b) Permitted Investments and investments that were Permitted
Investments when made;
(c) investments arising out of the receipt by the Borrower or any
Subsidiary of noncash consideration for the sale of assets permitted under
Section 6.05 provided that such consideration (if the stated amount or
value thereof is in
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excess of $1,000,000) is pledged upon receipt pursuant to the Pledge
Agreements to the extent required thereby;
(d) intercompany loans permitted to be incurred as Indebtedness under
Section 6.01;
(e) (i) loans and advances to employees of UCAR, the Borrower or the
Subsidiaries not to exceed $6,000,000 in the aggregate at any time
outstanding (excluding up to $3,000,000 in loans existing on the Effective
Date to former employees) and (ii) advances of payroll payments and
expenses to employees in the ordinary course of business;
(f) (i) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to
the extent reasonably necessary in order to prevent or limit loss and (ii)
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of UCAR, the Borrower and the
Subsidiaries;
(g) Interest/Exchange Rate Protection Agreements permitted pursuant to
Section 6.01(d);
(h) investments, other than investments listed in paragraphs (a)
through (g) of this Section, existing on the Effective Date and set forth
on Schedule 6.04;
(i) investments resulting from pledges and deposits referred to in
Section 6.02(g) or (h);
(j) investments constituting Permitted Business Acquisitions made
either as Capital Expenditures pursuant to Section 6.10 or, to the extent
not used for other purposes permitted hereunder, made with funds that if
not so spent would constitute Net Proceeds under clause (a) of the
definition of "Net Proceeds" (subject to the limitation set forth in the
second proviso to such clause (a));
(k) investments constituting Permitted Other Acquisitions or Specified
Permitted Transactions; PROVIDED that the sum of (i) the aggregate amount
of Specified Permitted Transactions and (ii) the aggregate amount of
consideration (whether cash or property, as valued at the time each such
investment is made) for all Permitted Other Acquisitions acquired after the
Effective Date shall not exceed (net of any return representing return of
capital of (but not return on) any such investment) at any time (A) the
amount set forth on Schedule A for the Leverage Ratio that is in effect at
such time (it being agreed that any such investment permitted when made
shall not cease to be permitted as a result of the applicable Leverage
Ratio subsequently changing) PLUS, (B) to the extent not used for other
purposes permitted hereunder, the funds that if not so spent would
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83
constitute Net Proceeds under clause (a) of the definition of "Net
Proceeds" (subject to the limitation set forth in the second proviso to
such clause (a));
(l) investments in Permitted Business Acquisitions and Unrestricted
Subsidiaries to the extent made with proceeds of the issuance of Capital
Stock of UCAR (to the extent not previously used to prepay Indebtedness
(other than Revolving Loans or Swingline Loans), make any investment or
capital expenditure or otherwise for any purpose resulting in a deduction
to Excess Cash Flow in any fiscal year) issued after the Original Closing
Date (after application of the Net Proceeds of such issuance to prepay
Obligations in accordance with Section 2.12(d) and the Existing Credit
Agreement); and
(m) investments by the Borrower or any Subsidiary in any Subsidiary
resulting from or in connection with the formation of a European holding
company and any related reorganization or restructuring of the Subsidiaries
that occurs in connection therewith; PROVIDED that, after giving effect to
any such formation, reorganization or restructuring (COLLECTIVELY, THE
"EUROPEAN HOLDING COMPANY STRATEGY"), the Collateral Requirement and
Guarantee Requirement shall be satisfied in a manner reasonably
satisfactory to the Administrative Agent.
PROVIDED, HOWEVER, that the aggregate amount of the consideration (whether cash
or property, as valued at the time each such investment is made) for all
investments made in Unrestricted Subsidiaries (other than investments made
therein pursuant to paragraph (l) above) after the Effective Date shall not
exceed (net of return of capital of (but not return on) any such investment)
$50,000,000 at any time, PROVIDED FURTHER, HOWEVER, that no more than
$25,000,000 of such amount at any time may be invested in Unrestricted
Subsidiaries not engaged primarily in Related Businesses.
SECTION 6.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND ACQUISITIONS.
Merge into or consolidate with any other person, or permit any other person to
merge into or consolidate with it, or sell, transfer, lease or otherwise dispose
of (in one transaction or in a series of transactions) all or any substantial
part of its assets (whether now owned or hereafter acquired), other than assets
of UCAR constituting an Unrestricted Subsidiary, or any Capital Stock of any
Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
person, except that this Section shall not prohibit:
(a) the purchase and sale of inventory in the ordinary course of
business by the Borrower or any Subsidiary or the acquisition of any asset
of any person in the ordinary course of business;
(b) if at the time thereof and immediately after giving effect thereto
no Event of Default or Default shall have
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occurred and be continuing (i) the merger of any Subsidiary into the
Borrower in a transaction in which the Borrower is the surviving
corporation and (ii) the merger or consolidation of any Subsidiary into or
with any other Wholly Owned Subsidiary in a transaction in which the
surviving entity is a Wholly Owned Subsidiary (which shall be a domestic
Subsidiary if the non-surviving person shall be a domestic Subsidiary) and,
in the case of each of clauses (i) and (ii), no person other than the
Borrower or a Wholly Owned Subsidiary receives any consideration;
(c) Sale and Lease-Back Transactions permitted by Section 6.03;
(d) investments permitted by Section 6.04;
(e) subject to Section 6.07, sales, leases or transfers (i) from the
Borrower or any Subsidiary to the Borrower or to a domestic Wholly Owned
Subsidiary, (ii) from any foreign Subsidiary to any foreign Wholly Owned
Subsidiary or to the Borrower or (iii) constituting Permitted Foreign
Transfers (subject in the case of Specified Permitted Transactions to the
limitations set forth in Section 6.04(k));
(f)(i) the lease of all or any part of the Borrower's facility located
in Robinson, Illinois and (ii) sales, leases or other dispositions of
equipment or real property of the Borrower or the Subsidiaries determined,
in the case of this clause (ii), by the Board of Directors or senior
management of the Borrower to be no longer useful or necessary in the
operation of the business of the Borrower or the Subsidiaries; PROVIDED
that in the case of this clause (ii), (x) the Net Proceeds thereof shall be
applied in accordance with Section 2.12(d) and (y) the fair market value of
assets sold, leased or otherwise disposed of in any one year shall not
exceed $3,000,000 in the aggregate;
(g) sales, leases or other dispositions of inventory of the Borrower
and the Subsidiaries determined by the Board of Directors or senior
management of the Borrower to be no longer useful or necessary in the
operation of the business of the Borrower and the Subsidiaries; PROVIDED
that the Net Proceeds thereof shall be applied in accordance with Section
2.12(d);
(h) sales or other dispositions of accounts receivable of foreign
Subsidiaries in connection with factoring arrangements so long as the
aggregate face amount at any time outstanding of receivables subject to
such arrangements does not exceed $50,000,000;
(i) sales or other dispositions by the Borrower or any Subsidiary of
assets (other than receivables, except to the extent disposed of
incidentally in connection with an asset disposition otherwise permitted
hereby), including Capital Stock of Subsidiaries, for consideration in an
aggregate
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amount not exceeding 25% of the book value of the Total Assets set forth in
UCAR's and its subsidiaries' June 30, 1998 quarterly consolidated financial
statements (which book value equals $1,273,000,000); PROVIDED that (i) each
such disposition shall be for a consideration determined in good faith by
the Board of Directors or senior management of the Borrower to be at least
equal to the fair market value (if any) of the asset sold, (ii) the
aggregate amount of all noncash consideration included in the proceeds of
any such disposition may not exceed 15% of the fair market value of such
proceeds; PROVIDED, HOWEVER, that obligations of the type referred to in
clause (a) or (e) of the definition of "Permitted Investments" (without
regard to the maturity or the credit rating thereof) shall not be deemed
non-cash proceeds if such obligations are promptly sold for cash and the
proceeds of such sale are included in the calculation of Net Proceeds from
such sale, (iii) the aggregate Net Proceeds of all such dispositions under
this paragraph (i) shall be applied in accordance with Section 2.12(d),
except as contemplated by the last sentence of this paragraph and (iv) no
Default or Event of Default shall have occurred and be continuing
immediately prior to or after such disposition; PROVIDED FURTHER that
notwithstanding the first proviso to clause (a) of the definition of "Net
Proceeds", no Mortgaged Property (other than Mortgaged Properties which are
part of UCAR's Graphite and Carbon Specialties Business) may be sold,
transferred, leased or otherwise disposed of at any time unless the Net
Proceeds thereof shall be applied immediately to the prepayment of
Obligations in accordance with Section 2.12(d) or within 10 Business Days
to the acquisition of property having a value equivalent to or greater than
the value of such Mortgaged Property and such newly acquired property is
thereupon either made a Mortgaged Property subject to a Mortgage on terms
reasonably satisfactory to the Collateral Agent or constitutes an addition
to a Mortgaged Property and is subject to the Mortgage on such Mortgaged
Property; and PROVIDED FURTHER that no sale may be made of the Capital
Stock of (x) any Credit Party, UCAR Carbon Company Inc., UCAR Holdings Inc.
or UCAR Holdings II Inc. or (y) except in connection with the sale of all
its outstanding Capital Stock that is held by the Borrower in any
Subsidiary, the Capital Stock of any other Subsidiary. Upon receipt by the
Borrower or any Subsidiary of the Net Proceeds of any transaction
contemplated by this paragraph (i), the Borrower shall promptly deliver a
certificate of the Borrower signed by a Responsible Officer of the Borrower
to the Administrative Agent setting forth the amount of the Net Proceeds
received in respect thereof and whether it shall apply such Net Proceeds to
prepay Obligations in accordance with Section 2.12(d) and the Existing
Credit Agreement or will use such Net Proceeds to purchase assets useful in
the business of the Borrower and the Subsidiaries within 12 months of such
receipt (subject to the second proviso to clause (a) of the definition of
"Net Proceeds");
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(j) sale or other disposition of UCAR's, the Borrower's or the
Subsidiaries' facilities owned and existing on the Effective Date in
Berlin, Germany and Welland, Canada; and
(k) intercompany sales, transfers, dispositions, acquisitions, mergers
and consolidations in connection with the implementation of the European
Holding Company Strategy; PROVIDED that, (i) any such sale or transfer is
made to, or any such merger into or consolidation with is effected with, a
Subsidiary at least 90% of the outstanding Capital Stock of which is owned
directly by the Borrower or a Wholly Owned Subsidiary and (ii) after giving
effect to any such sale, transfer, disposition, acquisition, merger or
consolidation, the Collateral Requirement and Guarantee Requirement shall
be satisfied in a manner reasonably satisfactory to the Administrative
Agent.
SECTION 6.06. DIVIDENDS AND DISTRIBUTIONS. Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
with respect to any shares of its Capital Stock (other than dividends and
distributions on the common stock of UCAR payable solely by the issuance of
additional shares of common stock of UCAR or rights, warrants or options to
acquire common stock of UCAR) or directly or indirectly redeem, purchase, retire
or otherwise acquire for value (or permit any Subsidiary to purchase or acquire)
any shares of any class of its Capital Stock or set aside any amount for any
such purpose (collectively, the "RESTRICTED EQUITY PAYMENTS"); PROVIDED,
HOWEVER, that:
(a) any Subsidiary may declare and pay dividends to, repurchase its
Capital Stock from or make other distributions to the Borrower or to any
Wholly Owned Subsidiary (or, in the case of non-Wholly Owned Subsidiaries,
to the Borrower or any Subsidiary and to each other owner of Capital Stock
of such Subsidiary on a pro rata basis (or more favorable basis from the
perspective of the Borrower or such Subsidiary) based on their relative
ownership interests);
(b) the Borrower may declare and pay dividends or make other
distributions to UCAR in respect of overhead, tax liabilities, legal,
accounting and other professional fees and expenses and any fees and
expenses associated with registration statements filed with the Securities
and Exchange Commission and subsequent ongoing public reporting
requirements, in each case to the extent actually incurred by UCAR in
connection with the business of its ownership of the Capital Stock of the
Borrower and the Unrestricted Subsidiaries;
(c) so long as no Default or Event of Default shall have occurred and
be continuing or would result therefrom, UCAR, the Borrower and the
Subsidiaries may make Restricted Equity Payments so long as, after giving
effect thereto, the
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aggregate amount of Restricted Junior Payments made after the Effective
Date shall not exceed the Restricted Junior Payment Amount applicable to
the fiscal year in which any such Restricted Equity Payment is made;
(d) UCAR or the Borrower may purchase or redeem, or the Borrower may
declare and pay dividends or make other distributions to UCAR the proceeds
of which are to be used to purchase or redeem, shares of Capital Stock (or
rights, options or warrants in respect of such shares) of UCAR (including
related stock appreciation rights or similar securities) held by present or
former directors, officers or employees of UCAR, the Borrower or any
Subsidiary or by any Plan upon such person's death, disability, retirement
or termination of employment or under the terms of any such Plan or any
other agreement under which such shares of stock or related rights were
issued; PROVIDED that the aggregate amount of such purchases or redemptions
(or dividends or distributions to UCAR) under this paragraph (d) shall not
exceed $5,000,000 per calendar year which, if not used in any year may be
carried forward to any subsequent calendar year; PROVIDED, HOWEVER, that
the aggregate amount of such purchases or redemptions (or dividends or
distributions to UCAR) that may be made pursuant to this paragraph (d)
shall not exceed $25,000,000; and
(e) the Borrower may declare and pay dividends or make other
distributions to UCAR in order to fund Litigation Payments; PROVIDED that
the amount of dividends and distributions permitted pursuant to this clause
(e), plus the amount of Restricted Debt Payments permitted pursuant to the
last sentence of Section 6.09(b), shall not exceed $400,000,000 (calculated
in the manner described in Section 3.24). It being understood that
$20,000,000 of such payments and distributions to UCAR in respect of
Litigation Liabilities have been made as of the Effective Date.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. (a) Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transaction with, any of its Affiliates or any
known direct or indirect holder of 10% or more of any class of capital stock of
UCAR, unless such transaction is (i) otherwise permitted under this Agreement
and (ii) upon terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's-length transaction with
a person which was not an Affiliate, PROVIDED that the foregoing restriction
shall not apply to the indemnification of directors of UCAR, the Borrower and
the Subsidiaries in accordance with customary practice.
(b) The foregoing paragraph (a) shall not prohibit, to the extent otherwise
permitted under this Agreement, (i) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements or stock option, ownership or purchase
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plans approved by the Board of Directors of UCAR, (ii) loans or advances to
employees of UCAR, the Borrower or any Subsidiary in accordance with Section
6.04(e), (iii) transactions among UCAR, the Borrower and Wholly Owned
Subsidiaries and transactions among Wholly Owned Subsidiaries otherwise
permitted by this Agreement, (iv) Permitted Foreign Transfers (other than
Specified Permitted Transactions), (v) the payment of fees and indemnities to
directors, officers and employees of the Borrower and the Subsidiaries in the
ordinary course of business, (vi) transactions pursuant to permitted agreements
in existence on the Effective Date and set forth on Schedule 6.07, (vii)
payments pursuant to the Tax Sharing Agreement, (viii) any employment agreements
entered into by the Borrower or any of the Subsidiaries in the ordinary course
of business, (ix) dividends and repurchases permitted under Section 6.06, and
(x) any purchase by UCAR of Capital Stock of the Borrower or any contribution by
UCAR to the equity capital of the Borrower.
SECTION 6.08. BUSINESS OF UCAR, THE BORROWER AND THE SUBSIDIARIES. (a) In
the case of the Borrower and the Subsidiaries (taken as a whole), cease to
engage primarily in the business of manufacturing graphite and carbon electrodes
and (b) in the case of UCAR, engage at any time in any business or business
activity other than (i) the ownership of all the outstanding capital stock of
the Borrower together with activities directly related thereto, (ii) the
ownership of Unrestricted Subsidiaries together with activities directly related
thereto, (iii) performance of its obligations under the Loan Documents, under
intercompany Indebtedness and under Indebtedness incurred in accordance with
Section 6.01(n) and (iv) actions required by law to maintain its status as a
corporation and as a public company.
SECTION 6.09. INDEBTEDNESS AND OTHER MATERIAL AGREEMENTS. (a) Amend or
modify, or grant any waiver or release under, any instruments, agreements or
documents evidencing or related to the Senior Subordinated Notes or the
Refinancing Notes in any manner adverse to the Lenders.
(b) (i) Directly or indirectly, make any payment, retirement, repurchase or
redemption on account of the principal of the Senior Subordinated Notes, the
Refinancing Notes or intercompany Indebtedness owed to UCAR or directly or
indirectly prepay or defease any such Indebtedness prior to the stated maturity
date of such Indebtedness (collectively, "RESTRICTED DEBT PAYMENTS"), except
with the proceeds of Capital Stock of UCAR issued by UCAR after the Original
Closing Date (after application of the Net Proceeds of such issuance to prepay
Obligations in accordance with Section 2.12(d) and the Existing Credit
Agreement), PROVIDED, that, in addition to the foregoing, so long as no Default
or Event of Default shall have occurred and be continuing or would result
therefrom, the Borrower may make Restricted Debt Payments so long as, after
giving effect thereto, the aggregate amount of Restricted Junior Payments made
after the Effective Date shall not exceed the Restricted Junior Payment Amount
applicable to the fiscal year in which any such Restricted Debt Payment is made,
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(ii) make any payment or prepayment of any such Indebtedness that would violate
the terms of this Agreement or of such Indebtedness, any agreement or document
evidencing, related to or securing the payment or performance of such
Indebtedness or any subordination agreement or provision applicable to such
Indebtedness or (iii) pay in cash any amount in respect of such Indebtedness
that may at the Borrower's option be paid in kind thereunder; PROVIDED, HOWEVER,
that the proceeds of the Refinancing Notes may be applied to repay or prepay
Senior Subordinated Notes. Notwithstanding the foregoing, the Borrower may make
Restricted Debt Payments in respect of intercompany Indebtedness owed to UCAR in
order to fund Litigation Payments; PROVIDED that the amount of Restricted Debt
Payments that may be made to UCAR pursuant to this sentence, plus the amount of
dividends or other distributions permitted to be made to UCAR pursuant to
Section 6.06(e), shall not exceed $400,000,000 (calculated in the manner
described in Section 3.24) (it being understood that $20,000,000 of such
payments and distributions to UCAR in respect of Litigation Liabilities have
been made as of the Effective Date).
(c) Amend or modify in any manner adverse to the Lenders, or grant any
waiver or release under or terminate in any manner (if such action shall be
adverse to the Lenders), the certificate of incorporation or by-laws of the
Borrower or any Subsidiary.
(d) Permit any Subsidiary to enter into any agreement or instrument which
by its terms restricts the payment of dividends or the making of cash advances
by such Subsidiary to the Borrower or any Subsidiary that is a direct or
indirect parent of such Subsidiary other than those in effect on the Effective
Date and set forth on Schedule 6.09 (or replacements of such agreements on terms
no less favorable to the Lenders), and those arising under any Loan Document
(other than any Loan Document in respect of any Local Facility described in
clause (b) of the definition of "Local Facility").
SECTION 6.10. CAPITAL EXPENDITURES. Permit UCAR to make any Capital
Expenditures, or permit the aggregate amount of Capital Expenditures made by the
Borrower and the Subsidiaries, in any fiscal year to exceed the aggregate amount
set forth below:
YEAR AMOUNT
1998 $58,000,000
1999 88,000,000
2000 72,000,000
2001 58,000,000
2002 65,000,000
PROVIDED, HOWEVER, that (a) the Borrower may in any fiscal year, upon written
notice to the Administrative Agent, increase the amount of Capital Expenditures
permitted to be made pursuant to this Section by an amount up to $10,000,000 by
reducing the amount of Capital Expenditures permitted to be made pursuant to
this Section in the next succeeding fiscal year by the amount of such
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increase; PROVIDED that not more than $20,000,000 in the aggregate of increases
may be made pursuant to this clause (a) in any three- fiscal-year period, and
(b) to the extent that Capital Expenditures made in any fiscal year were less
than the amount set forth above for such fiscal year less any reduction made for
such fiscal year pursuant to clause (a), such unused amount may be carried
forward to the next succeeding fiscal year; PROVIDED that not more that
$20,000,000 may be carried forwarded from any fiscal year.
SECTION 6.11. INTEREST COVERAGE RATIO. Permit the ratio (the "INTEREST
COVERAGE RATIO") as of the last day of any fiscal quarter, which last day occurs
in any period set forth below for the four quarter period ended as of such day
of (a) EBITDA MINUS Capital Expenditures of UCAR, the Borrower and the
Subsidiaries to (b) Cash Interest Expense to be less than the ratio set forth
below for such period:
FROM AND INCLUDING: TO AND INCLUDING: RATIO:
July 1, 1998 December 31, 1998 2.00:1.00
January 1, 1999 June 30, 1999 2.00:1.00
July 1, 1999 December 31, 1999 2.00:1.00
January 1, 2000 June 30, 2000 2.00:1.00
July 1, 2000 December 31, 2000 2.50:1.00
January 1, 2001 June 30, 2001 3.00:1.00
July 1, 2001 December 31, 2002 3.00:1.00
SECTION 6.12. LEVERAGE RATIO. Permit the ratio (the "LEVERAGE RATIO") of
(a) Total Debt plus Reserves as of the last day of any fiscal quarter, which
last day occurs in any period set forth below to (b) EBITDA for the four quarter
period ended as of such day to be in excess of the ratio set forth below for
such period:
FROM AND INCLUDING: TO AND INCLUDING: RATIO:
July 1, 1998 December 31, 1998 4.50:1.00
January 1, 1999 September 30, 1999 4.50:1.00
October 1, 1999 December 31, 1999 4.25:1.00
January 1, 2000 June 30, 2000 4.00:1.00
July 1, 2000 December 31, 2000 3.50:1.00
January 1, 2001 June 30, 2001 3.00:1.00
July 1, 2001 December 31, 2002 3.00:1.00
SECTION 6.13. CAPITAL STOCK OF THE SUBSIDIARIES. Sell, transfer, lease or
otherwise dispose of, or make subject to any subscription, option, warrant,
call, right or other agreement or commitment of any nature, the Capital Stock of
any Subsidiary, other than (a) pursuant to the Loan Documents or pursuant to a
transaction permitted pursuant to Section 6.05 and subject to Section 2.12(d),
(b) sales, transfers and other dispositions of the Capital Stock of Subsidiaries
in connection with UCAR's sale of its Graphite and Carbon Specialties Business,
(c) in connection with
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transactions of the type described in Section 6.05(k) or 6.07(b)(i) and (d)
directors' qualifying shares.
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) any representation or warranty made or deemed made by UCAR, the
Borrower or any Loan Party in any Loan Document (other than a Local
Facility Loan Document), or any representation, warranty, statement or
information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any Loan
Document (other than a Local Facility Loan Document), shall prove to have
been false or misleading in any material respect when so made, deemed made
or furnished by UCAR, the Borrower or any other Loan Party;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any premium or interest on
any Loan or in the payment of any Fee or any other amount (other than an
amount referred to in (b) above) due under any Loan Document (other than a
Local Facility Loan Document), when and as the same shall become due and
payable, and such default shall continue unremedied for a period of five
Business Days;
(d) default shall be made in the due observance or performance by
UCAR, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a) (with respect to the Borrower),
5.05(a), 5.08 or 5.12 or in Article VI;
(e) default shall be made in the due observance or performance by
UCAR, the Borrower, any Credit Party or any Subsidiary of any covenant,
condition or agreement contained in any Loan Document (other than a Local
Facility Loan Document) (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent or the Required Lenders
to the Borrower;
(f) (i) UCAR, the Borrower or any Significant Subsidiary shall fail to
observe or perform any term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any Indebtedness (other
than any
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Indebtedness under any Loan Document) having an aggregate principal or
notional amount in excess of $7,500,000, if the effect of any such failure
is to cause, or to permit the holder or holders of such Indebtedness or a
trustee on its or their behalf (with or without the giving of notice, the
lapse of time or both) to cause, such Indebtedness to become due prior to
its stated maturity, or UCAR, the Borrower or any Significant Subsidiary
shall fail to pay any principal in respect of any such Indebtedness at the
stated maturity thereof or (ii) an "Event of Default" shall occur under the
Existing Credit Agreement;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of UCAR, the Borrower or any Subsidiary, or of a
substantial part of the property or assets of UCAR, the Borrower or a
Subsidiary, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for UCAR, the Borrower or any Subsidiary or for a substantial part of the
property or assets of UCAR, the Borrower or a Subsidiary or (iii) the
winding-up or liquidation of UCAR, the Borrower or any Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;
(h) UCAR, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any petition
described in (g) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for UCAR, the Borrower or any Subsidiary or for a substantial part of the
property or assets of the Borrower or any Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action for
the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $7,500,000 (except to the extent covered by insurance
as to which the insurer has acknowledged in writing its obligation to
cover) shall be rendered against UCAR, the Borrower, any Significant
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall
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not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of UCAR, the Borrower
or any Significant Subsidiary to enforce any such judgment;
(j) (i) a Reportable Event or Reportable Events, or a failure to make
a required installment or other payment (within the meaning of Section
412(n)(1) of the Code), shall have occurred with respect to any Plan, (ii)
a trustee shall be appointed by a United States district court to
administer any Plan, (iii) the PBGC shall institute proceedings (including
giving notice of intent thereof) to terminate any Plan, (iv) the Borrower
or any ERISA Affiliate shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan and the Borrower or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal Liability or is not
contesting such Withdrawal Liability in a timely and appropriate manner,
(v) the Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, (vi) the Borrower or any ERISA Affiliate shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan, (vii) any other similar event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vii) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect;
(k) (i) any Loan Document (other than a Local Facility Loan Document)
shall for any reason be asserted by UCAR, the Borrower or any Subsidiary
not to be a legal, valid and binding obligation of any party thereto, (ii)
any security interest purported to be created by any Security Document and
to extend to assets which are not immaterial to UCAR, the Borrower and the
Subsidiaries on a consolidated basis shall cease to be, or shall be
asserted by the Borrower or any other Loan Party not to be, a valid,
perfected, first priority (except as otherwise expressly provided in this
Agreement or such Security Document) security interest in the securities,
assets or properties covered thereby, except to the extent that any such
loss of perfection or priority results from the failure of the Collateral
Agent to maintain possession of certificates representing securities
pledged under the Pledge Agreements or to file Uniform Commercial Code
continuation or other similar statements or (iii) the Obligations of UCAR
and the Borrower and the guarantee by UCAR thereof pursuant to the Parent
Guarantee Agreement shall cease to constitute senior indebtedness under the
subordination provisions of any document or instrument evidencing any
permitted subordinated Indebtedness or such subordination provisions shall
be invalidated or otherwise cease to be legal, valid and binding
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obligations of the parties thereto, enforceable in accordance with their
terms;
(l) the Administrative Agent or the Required Lenders shall have given
notice to the Borrower of any event of default under any Local Facility
Credit Agreement; or
(m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to any Credit
Party described in paragraph (g) or (h) above), and at any time thereafter
during the continuance of such event, the Administrative Agent, at the request
of the Required Lenders, shall, by notice to the Borrower, take any or all of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest and premiums
thereon and any unpaid accrued Fees and all other liabilities of the Credit
Parties accrued hereunder and under any other Loan Document (other than any
Local Facility Loan Document), shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Credit Parties, anything contained herein or in
any other Loan Document to the contrary notwithstanding; and in any event with
respect to any Credit Party described in paragraph (g) or (h) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest and premiums thereon and any unpaid
accrued Fees and all other liabilities of the Credit Parties accrued hereunder
and under any other Loan Document (other than any Local Facility Loan Document),
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Credit Parties, anything contained herein or in any other Loan Document to the
contrary notwithstanding. As soon as practicable following any acceleration
hereunder the Administrative Agent shall advise the Local Facility Lenders
thereof.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
In order to expedite the transactions contemplated by this Agreement, The
Chase Manhattan Bank is hereby appointed to act as Administrative Agent and
Collateral Agent on behalf of the Lenders (for purposes of this Article VIII,
the Administrative Agent and the Collateral Agent are referred to collectively
as the "AGENTS"). Each of the Lenders and each assignee of any such Lender
hereby irrevocably authorizes the Agents to take such actions on behalf of such
Lender or assignee and to exercise such powers as are specifically delegated to
the Agents by the terms and provisions hereof and of the other Loan Documents,
together with
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such actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders, without hereby limiting any
implied authority, (a) to receive on behalf of the Lenders all payments of
principal of and interest on the Loans and all other amounts due to the Lenders
hereunder, and promptly to distribute to each Lender its proper share of each
payment so received; (b) to give notice on behalf of each of the Lenders to the
Borrower of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by the Borrower pursuant to this
Agreement as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Agents are hereby expressly authorized to
execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents. In the event that any party other than the Lenders and the
Agents shall participate in all or any portion of the Collateral pursuant to the
Security Documents, all rights and remedies in respect of such Collateral shall
be controlled by the Collateral Agent.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents or other instruments
or agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. Each Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Agents nor any of their respective directors, officers,
employees or agents shall have any responsibility to the Borrower or any other
Loan Party on account of the failure of or delay in performance or breach by any
Lender of any of its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other Lender or the Borrower
or any other Loan Party of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. Each of
the Agents may execute any and all duties here under by or through agents or
employees and shall be entitled to
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rely upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders. The Lenders further acknowledge and agree that so long as
an Agent shall make any determination to be made by it hereunder or under any
other Loan Document in good faith, such Agent shall have no liability in respect
of such determination to any person.
Subject to the appointment and acceptance of a successor Agent as provided
below, either Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor with the consent of the Borrower (not to be unreasonably
withheld). If no successor shall have been so appointed by the Required Lenders
and approved by the Borrower and shall have accepted such appointment within 30
days after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders with the consent of the Borrower (not to be
unreasonably withheld), appoint a successor Agent which shall be a bank with an
office in New York, New York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder. After the Agent's resignation hereunder, the provisions
of this Article and Section 9.05 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the amount of
its pro rata share (based on its Commit ments hereunder (or if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of its applicable outstanding Loans)) of any reasonable
expenses incurred for the benefit of the Lenders by the Agents, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, which shall not have been reimbursed by the Borrower
and (b) to indemnify and hold harmless each Agent and any of its directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from
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and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as Agent or any of them in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other Loan Document, to
the extent the same shall not have been reimbursed by the Borrower; PROVIDED
that no Lender shall be liable to an Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or wilful
misconduct of such Agent or any of its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents or any other Lender 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 Lender also acknowledges that it will, independently
and without reliance upon the Agents or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
No Managing Agent shall have any liability hereunder by virtue of its
execution of this Agreement as a Managing Agent.
As soon as practicable after it becomes aware of an Event of Default that
has occurred and is continuing, the Administrative Agent shall notify each
Lender thereof.
In its capacity as Administrative Agent hereunder, the Administrative Agent
will serve as Representative of the Bank Indebtedness under the Senior
Subordinated Indenture and the Senior Subordinated Exchange Indenture and agrees
to notify each Lender of any notice received by it as such Representative.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at UCAR Global Enterprises Inc., 39 Old
Ridgebury Road, Danbury, CT 06817-0001, Attention of President (Telecopy
No. (203) 207-7785), and if to UCAR, to it in care of the Borrower;
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(b) if to the Swiss Borrower, to it at Avenue de Mont- Blanc 33,
Gland, Canton of Vaud, Switzerland, Attention of Chairman (Telecopy No.
41-22-999-9787), with a copy to the Borrower;
(c) if to the Administrative Agent, to The Loan and Agency Services
Group, 8th floor, One Chase Manhattan Plaza, New York, New York 10081
Attention: Janet Belden (Telecopy No. (212) 552-5658) with a copy to James
Ramage, The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017
(Telecopy No. (212) 270-4724); and
(d) if to a Lender, to it at its address (or telecopy number) set
forth in the Administrative Questionnaire delivered to the Administrative
Agent by such Lender in connection with the execution of this Agreement or
in the Assignment and Acceptance pursuant to which such Lender shall have
become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Loan Parties herein, in the other
Loan Documents and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans, the execution and delivery to
the Lenders of the Loan Documents, regardless of any investigation made by the
Lenders or on their behalf, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid and so long as the Commitments have not been terminated. Without
prejudice to the survival of any other agreements contained herein,
indemnification and reimbursement obligations contained herein (including
pursuant to Sections 2.13, 2.15, 2.19 and 9.05) shall survive the payment in
full of the principal and interest on any Loan hereunder and the termination of
the Commitments or this Agreement.
SECTION 9.03. BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by UCAR, the Borrower, and the Administrative Agent and
when the Administrative Agent shall have received copies hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of UCAR,
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the Borrower, the Swiss Borrower, the Administrative Agent and each Lender and
their respective permitted successors and assigns.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of UCAR, the Borrower, the Swiss Borrower, the
Administrative Agent or the Lenders that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations as a Lender under this Agreement (including
all or a portion of its Commitments and the Loans at the time owing to it);
PROVIDED, HOWEVER, that (i) except in the case of an assignment to another
Lender, an Affiliate of such Lender or a Related Fund of any Lender, in each
case, the Borrower and the Administrative Agent must each give its prior written
consent to such assignment (which consent shall not in either case be
unreasonably withheld or delayed), PROVIDED that the consent of the Borrower
shall not be required if an Event of Default shall have occurred and be
continuing, (ii) except in the case of an assignment to another Lender, an
Affiliate of such Lender or a Related Fund of such Lender, the amount of the
Loans or Commitments of the assigning Lender subject to such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall be an amount not less
than $5,000,000 and an integral multiple of $1,000,000 or shall be the entire
remaining amount of such Loans or Commitments held by such assigning Lender,
(iii) unless the assignor ceases to be a Lender, the aggregate amount of the
Loans owing to and unused Commitments of such Lender after giving effect to such
assignment shall be not less than $5,000,000, (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500 (except
that no such processing and registration fee shall be payable in the case of an
assignee which is already a Lender, an Affiliate of such Lender or a Related
Fund of any Lender), and (v) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire. Upon
acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution thereof
unless agreed otherwise by the Administrative Agent, (i) the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement and (ii) the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall
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cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.13, 2.15, 2.19 and 9.05, as well as to any Fees accrued for its
account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that the
outstanding balance of its Loans and its Commitments, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance; (ii) except as set forth in clause (i)
above, such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto, or the financial condition of the Borrower or any other Loan
Party or the performance or observance by the Borrower or any other Loan Party
of any of its obligations under this Agreement, any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (iii) such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance; (iv) such assignee confirms that it has received
copies of this Agreement and the other Loan Documents, together with copies of
the most recent financial statements delivered pursuant to this Agreement and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(v) such assignee will independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all the obligations
which by the terms of this Agreement are required to be performed by it as a
Lender.
(d) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at its address referred to in subsection 9.01 a copy of
each Assignment and Acceptance delivered to it and a register (the "REGISTER")
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Swiss Borrower,
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the Administrative Agent and the Lenders shall treat each person whose name is
recorded in the Register as the owner of Commitments and the Loans recorded
therein for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Swiss Borrower, any Lender and their
representatives (including counsel and accountants), at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower and the
Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders.
Notwithstanding anything to the contrary contained herein, no assignment under
Section 9.04(b) of any rights or obligations shall be effective unless and until
the Administrative Agent shall have recorded such assignment in the Register.
The Administrative Agent shall record the name of the transferor, the name of
the transferee, and the amount of the transfer in the Register after receipt of
all documents required pursuant to this Section 9.04 and such other documents as
the Administrative Agent may reasonably request.
(f) Each Lender may without the consent of the Borrower, the Swiss Borrower
or the Administrative Agent sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans owing to it);
PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Section 2.13, 2.15, 2.19 and 9.05 to the same extent as
if they were Lenders; PROVIDED that no such participating bank or entity shall
be entitled to receive any greater amount pursuant to such Sections than a
Lender would have been entitled to receive in respect of the amount of the
participation sold by such Lender to such participating bank or entity had no
sale occurred, and (iv) the Borrower, the Swiss Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower or any other Loan Party, as the case may be,
relating to its Loans and Fees and to approve any amendment, modification or
waiver of any provision of this Agreement or any other Loan Document (other than
amendments, modifications or waivers decreasing any Fee payable hereunder or the
amount of principal of or the rate at which interest is payable on the Loans,
extending any final maturity date or increasing any Commitment, in
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each case in respect of an Obligation in which the relevant participating bank
or entity is participating, or releasing all or substantially all of the
Collateral or any Guarantor (other than a Subsidiary which is not a Significant
Subsidiary) from its Guarantee Agreement unless all or substantially all the
Capital Stock of such Guarantor is sold in a transaction permitted by this
Agreement or as provided in Section 9.18). Each Lender will disclose the
identity of its participants to the Borrower and Administrative Agent if
requested by the Borrower or the Administrative Agent.
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower or any other Loan Party
furnished to such Lender by or on behalf of the Borrower or any Loan Party;
PROVIDED that, prior to any such disclosure, each such assignee or participant
or proposed assignee or participant shall execute an agreement whereby such
assignee or participant shall agree to be bound by Section 9.17.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank, and any Lender that is a fund
that invests in bank loans may, without the consent of the Administrative Agent
or the Borrower, pledge all or any portion of its Loans and Notes, if any, to
any trustee for, or any other representative of, holders of obligations owed, or
securities issued, by such fund, as security for such obligations or securities;
PROVIDED that any foreclosure or similar action by such trustee shall be subject
to the provisions of this Section concerning assignments; PROVIDED FURTHER that
no such assignment shall release a Lender from any of its obligations hereunder.
In order to facilitate such an assignment to a Federal Reserve Bank or to any
trustee or other representative, the Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to the Borrower by the assigning Lender
hereunder.
(i) None of UCAR, the Borrower and the other Credit Parties shall assign or
delegate any of its rights or duties hereunder and any attempted assignment
shall be null and void.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent and the
Collateral Agent in connection with the preparation of this Agreement and the
other Loan Documents, or by the Administrative Agent or the Collateral Agent in
connection with the syndication of the Commitments or the administration of this
Agreement (including expenses incurred in connection with ongoing Collateral
examination to the extent incurred with the reasonable prior approval of the
Borrower) or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated
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shall be consummated) or incurred by the Administrative Agent, the Collateral
Agent or any Lender in connection with the enforcement or protection of their
rights in connection with this Agreement and the other Loan Documents or in
connection with the Loans made hereunder, including the reasonable fees, charges
and disbursements of Cravath, Swaine & Moore, counsel for the Administrative
Agent and the Collateral Agent, and, in connection with any such enforcement or
protection, the reasonable fees, charges and disbursements of any other counsel
(including the reasonable allocated costs of internal counsel if a Lender elects
to use internal counsel in lieu of outside counsel) for the Administrative Agent
or any Lender (but no more than one such counsel for any Lender).
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent each Lender and each of their respective directors, trustees,
officers, employees and agents (each such person being called an "INDEMNITEE")
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
and thereto of their respective obligations thereunder or the consummation of
the Transactions and the other transactions contemplated hereby and thereby,
(ii) the use of the proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee (treating, for this purpose
only, the Administrative Agent, or any Lender and its directors, trustees,
officers and employees as a single Indemnitee). Subject to and without limiting
the generality of the foregoing sentence, the Borrower agrees to indemnify each
Indemnitee against, and hold each Indemnitee harmless from, any Environmental
Claim, and any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel or consultant fees, charges and
disbursements, incurred by or asserted against any Indemnitee (and arising out
of, or in any way connected with or as a result of, any of the events described
in clause (i), (ii) or (iii) of the preceding sentence) arising out of, in any
way connected with, or as a result of (A) any Environmental Claim related in any
way to UCAR, the Borrower or any Subsidiary, (B) any violation of any
Environmental Law, (C) any act, omission, event or circumstance (including the
actual, proposed or threatened, Release, removal, presence, disposition,
discharge or transportation, storage, holding, existence, generation,
processing, abatement, handling or presence on, into, from or under any present,
past or future property of UCAR, the Borrower or any Subsidiary of any Hazardous
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Material); PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such Environmental Claim is, or such losses,
claims, damages, liabilities or related expenses are, determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee or any of its
directors, trustees, officers or employees. The provisions of this Section 9.05
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent
or any Lender. All amounts due under this Section 9.05 shall be payable on
written demand therefor.
(c) Unless an Event of Default shall have occurred and be continuing, the
Borrower shall be entitled to assume the defense of any action for which
indemnification is sought hereunder with counsel of its choice at its expense
(in which case the Borrower shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by an Indemnitee except as set forth
below); PROVIDED, HOWEVER, that such counsel shall be reasonably satisfactory to
each such Indemnitee. Notwithstanding the Borrower's election to assume the
defense of such action, each Indemnitee shall have the right to employ separate
counsel and to participate in the defense of such action, and the Borrower shall
bear the reasonable fees, costs and expenses of such separate counsel, if (i)
the use of counsel chosen by the Borrower to represent such Indemnitee would
present such counsel with a conflict of interest; (ii) the actual or potential
defendants in, or targets of, any such action include both the Borrower and such
Indemnitee and such Indemnitee shall have reasonably concluded that there may be
legal defenses available to it that are different from or additional to those
available to the Borrower (in which case the Borrower shall not have the right
to assume the defense or such action on behalf of such Indemnitee); (iii) the
Borrower shall not have employed counsel reasonably satisfactory to such
Indemnitee to represent it within a reasonable time after notice of the
institution of such action; or (iv) the Borrower shall authorize such Indemnitee
to employ separate counsel at the Borrower's expense. The Borrower will not be
liable under this Agreement for any amount paid by an Indemnitee to settle any
claims or actions if the settlement is entered into without the Borrower's
consent, which consent may not be withheld or delayed unless such settlement is
unreasonable in light of such claims or actions against, and defenses available
to, such Indemnitee.
(d) Notwithstanding anything to the contrary in this Section 9.05, this
Section 9.05 shall not apply to taxes, it being understood that the Borrower's
only obligations with respect to taxes shall arise under Sections 2.13 and 2.19.
SECTION 9.06. RIGHT OF SETOFF. If an Event of Default shall have occurred
and be continuing, each Lender is hereby
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authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender to or for the credit or the account of the Borrower or
the Swiss Borrower against any of and all the obligations of the Borrower or the
Swiss Borrower now or hereafter existing under this Agreement or any other Loan
Document held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section 9.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN LETTERS OF CREDIT UNDER THE EXISTING CREDIT AGREEMENT AND AS
EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Administrative Agent, or any Lender in exercising any right or power hereunder
or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by UCAR, the
Borrower or any other Loan Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on UCAR, the Borrower or any other Loan
Party in any case shall entitle the Borrower to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
UCAR, the Borrower, the Swiss Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by each party thereto and the Collateral Agent and consented to by
the Required Lenders; PROVIDED, HOWEVER, that no such agreement shall (i)
decrease the principal amount of, or extend the final maturity of, or decrease
the rate of interest on, any Loan without the prior written consent of each
Lender directly affected thereby, (ii) extend any Installment Date (other than
any final maturity), or extend any date on which payment of interest on any Loan
is due, without the
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prior written consent of Lenders holding Loans representing at least 80% of the
aggregate principal amount of each Tranche affected by such action, (iii)
advance any Installment Date without the prior written consent of Lenders
holding Loans representing at least 80% of the aggregate principal amount of the
then outstanding Loans, (iv) increase or extend the Commitment of any Lender or
decrease the Commitment Fees or other fees of any Lender without the prior
written consent of such Lender, (v) effect any waiver, amendment or modification
that by its terms adversely affects the rights in respect of payments or
collateral of Lenders participating in any Class differently from those of
Lenders participating in the other Class, without the consent of a majority in
interest of the Lenders participating in the adversely affected Class, or change
the relative rights in respect of payments or collateral of the Lenders
participating in different Classes without the consent of a majority in interest
of Lenders participating in each affected Class, (vi) release Collateral, in one
transaction or a series of transactions, representing in the aggregate (based on
the book value of such released Collateral) more than 10% of the book value of
Total Assets set forth in UCAR's most recent consolidated financial statements
delivered pursuant to Section 5.04 but less than all or substantially all the
Collateral, without the prior written consent of the Designated Lenders or (vii)
amend or modify the provisions of Section 2.09(f), Section 2.11(b) or Section
2.16, the provisions of this Section or the definition of "Required Lenders", or
release all or substantially all the Collateral or release any Guarantor (other
than any Subsidiary which is not a Significant Subsidiary) from its Guarantee
Agreement unless all or substantially all the Capital Stock of such Guarantor is
sold in a transaction permitted by this Agreement or as provided in Section
9.18, without the prior written consent of each Lender adversely affected
thereby; PROVIDED FURTHER that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or the
Collateral Agent hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent or the Collateral Agent acting as
such at the effective date of such agreement, as the case may be. Each Lender
shall be bound by any waiver, amendment or modification authorized by this
Section 9.08 and any consent by any Lender pursuant to this Section 9.08 shall
bind any assignee of such Lender.
SECTION 9.09. INTEREST RATE LIMITATION. Notwith standing anything herein to
the contrary, if at any time the applicable interest rate, together with all
fees and charges which are treated as interest under applicable law
(collectively the "CHARGES"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender, shall exceed the maximum lawful rate (the
"MAXIMUM RATE") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, the rate of interest
payable hereunder, together with all Charges payable to such Lender, shall be
limited to the Maximum Rate; PROVIDED that such excess amount
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shall be paid to such Lender on subsequent payment dates to the extent not
exceeding the legal limitation.
SECTION 9.10. ENTIRE AGREEMENT. This Agreement, the other Loan Documents
and the agreements regarding certain Fees referred to herein constitute the
entire contract between the parties relative to the subject matter hereof. Any
previous agreement among or representations from the parties with respect to the
subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 9.03.
SECTION 9.14. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of
UCAR, the Borrower and the Swiss Borrower hereby irrevocably and unconditionally
submits, for itself and its
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property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against UCAR, the Borrower, the Swiss
Borrower or any other Loan Party or their properties in the courts of any
jurisdiction.
(b) Each of UCAR, the Borrower and the Swiss Borrower hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 9.16. CONVERSION OF CURRENCIES. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due hereunder
or under any other Loan Document in Dollars into another currency, the parties
hereto agree, to the fullest extent that they may legally and effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase Dollars with such
other currency in New York, New York, on the Business Day immediately preceding
the day on which final judgment is given.
(b) The obligations of UCAR, the Borrower and the Swiss Borrower in respect
of any sum due to the Administrative Agent or any Lender hereunder or under any
other Loan Document in Dollars shall, to the extent permitted by applicable law,
notwithstanding any judgment in a currency other than Dollars, be discharged
only to the extent that on the Business Day following receipt of any sum
adjudged to be so due in the judgment currency, the Administrative Agent or such
Lender may in accordance with normal banking procedures purchase Dollars in the
amount originally due to the
<PAGE>
109
Administrative Agent or such Lender with the judgment currency. If the amount of
Dollars so purchased is less than the sum originally due to the Administrative
Agent or such Lender, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or such
Lender against the resulting loss.
SECTION 9.17. CONFIDENTIALITY. Each of the Lenders and the Administrative
Agent agrees that it shall maintain in confidence any information relating to
UCAR, the Borrower and the other Loan Parties furnished to it by or on behalf of
UCAR, the Borrower or the other Loan Parties (other than information that (a)
has become generally available to the public other than as a result of a
disclosure by such party, (b) has been independently developed by such Lender or
the Administrative Agent without violating this Section 9.17 or (c) was
available to such Lender or the Administrative Agent from a third party having,
to such person's knowledge, no obligations of confidentiality to UCAR, the
Borrower or any other Loan Party) and shall not reveal the same other than (i)
to its directors, trustees, officers, employees and advisors with a need to know
(so long as each such person shall have been instructed to keep the same
confidential in accordance with this Section 9.17) and (ii) as contemplated by
Section 9.04(g), except: (A) to the extent necessary to comply with law or any
legal process or the requirements of any Governmental Authority or of any
securities exchange on which securities of the disclosing party or any Affiliate
of the disclosing party are listed or traded, (B) as part of normal reporting or
review procedures to Governmental Authorities, (C) to its parent companies,
Affiliates or auditors (so long as each such person shall have been instructed
to keep the same confidential in accordance with this Section 9.17) and (D) in
order to enforce its rights under any Loan Document in a legal proceeding.
SECTION 9.18. RELEASE OF LIENS AND GUARANTEES. In the event that UCAR, the
Borrower or any Subsidiary conveys, sells, leases, assigns, transfers or
otherwise disposes of all or any portion of any of the Capital Stock, assets or
property of UCAR, the Borrower or any of the Subsidiaries in a transaction not
prohibited by Section 6.05, the Administrative Agent and the Collateral Agent
shall promptly (and the Lenders hereby authorize the Administrative Agent and
the Collateral Agent to) take such action and execute any such documents as may
be reasonably requested by the Borrower and at the Borrower's expense to release
any Liens created by any Loan Document in respect of such Capital Stock, assets
or property, and, in the case of a disposition of all or substantially all the
Capital Stock or assets of any Subsidiary Guarantor, terminate such Subsidiary
Guarantor's obligations under any Guarantee Agreements to which it is a party.
In addition, the Administrative Agent and the Collateral Agent agree to take
such actions as are reasonably requested by the Borrower and at the Borrower's
expense to terminate the Liens and security interests created by the Loan
Documents when all the Obligations are paid in full and Commitments are
terminated. Any representation, warranty or covenant contained in any Loan
Document relating to any such
<PAGE>
110
Capital Stock, assets, property or Subsidiary shall no longer be deemed to be
made once such Capital Stock, assets or property is conveyed, sold, leased,
assigned, transferred or disposed of.
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.
UCAR INTERNATIONAL INC.,
by
/S/ CORRADO F. DEGASPERIS
-------------------------------
Name: Corrado F. DeGasperis
Title: Controller
<PAGE>
111
UCAR GLOBAL ENTERPRISES INC.,
by
/S/ CORRADO F. DEGASPERIS
-------------------------------
Name: Corrado F. DeGasperis
Title: Controller
UCAR S.A.,
by
/S/ CORRADO F. DEGASPERIS
-------------------------------
Name: Corrado F. DeGasperis
Title: Attorney-in-Fact
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent and Collateral Agent,
by
/S/ MARIAN N. SCHULMAN
-------------------------------
Name: Marian N. Schulman
Title: Vice President
<PAGE>
112
LENDER ADDENDUM
The undersigned Lender (i) agrees to all the provisions of the Credit
Agreement dated as of November 10, 1998, among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware corporation (the
"BORROWER"), UCAR, S.A., the Lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent and as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent and Morgan Guaranty Trust Company of New York, as Syndication
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), and (ii) becomes a party thereto, as a Lender,
with obligations applicable to such Lender thereunder, including, without
limitation, the obligation to make extensions of credit to the Borrower in an
aggregate principal amount not to exceed the amount of its U.S. Term Loan
Commitment and to UCAR S.A. in an aggregate principal amount not to exceed the
amount of its Swiss Term Loan Commitment, as set forth opposite the undersigned
Lender's name in Schedule 2.01 to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Capitalized terms
defined in the Credit Agreement shall have their respective defined meanings
herein.
CREDIT SUISSE FIRST BOSTON
-------------------------------
(Name of Lender)
By: CHRIS T. HORGAN
---------------------------
Name: Chris T. Horgan
Title: Vice President
By: KRISTIN LEPRI
---------------------------
Name: Kristin Lepri
Title: Associate
Dated as of November 10, 1998
<PAGE>
113
LENDER ADDENDUM
The undersigned Lender (i) agrees to all the provisions of the Credit
Agreement dated as of November 10, 1998, among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware corporation (the
"BORROWER"), UCAR, S.A., the Lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent and as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent and Morgan Guaranty Trust Company of New York, as Syndication
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), and (ii) becomes a party thereto, as a Lender,
with obligations applicable to such Lender thereunder, including, without
limitation, the obligation to make extensions of credit to the Borrower in an
aggregate principal amount not to exceed the amount of its U.S. Term Loan
Commitment and to UCAR S.A. in an aggregate principal amount not to exceed the
amount of its Swiss Term Loan Commitment, as set forth opposite the undersigned
Lender's name in Schedule 2.01 to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Capitalized terms
defined in the Credit Agreement shall have their respective defined meanings
herein.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
------------------------------------
(Name of Lender)
By: C. KUNHARDT
--------------------------------
Name: C. Kunhardt
Title: Vice President
Dated as of November 10, 1998
<PAGE>
114
LENDER ADDENDUM
The undersigned Lender (i) agrees to all the provisions of the Credit
Agreement dated as of November 10, 1998, among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware corporation (the
"BORROWER"), UCAR, S.A., the Lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent and as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent and Morgan Guaranty Trust Company of New York, as Syndication
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), and (ii) becomes a party thereto, as a Lender,
with obligations applicable to such Lender thereunder, including, without
limitation, the obligation to make extensions of credit to the Borrower in an
aggregate principal amount not to exceed the amount of its U.S. Term Loan
Commitment and to UCAR S.A. in an aggregate principal amount not to exceed the
amount of its Swiss Term Loan Commitment, as set forth opposite the undersigned
Lender's name in Schedule 2.01 to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Capitalized terms
defined in the Credit Agreement shall have their respective defined meanings
herein.
BANKBOSTON N.A.
--------------------------
(Name of Lender)
By: HARVEY H. THAYER
----------------------
Name: Harvey H. Thayer
Title: Managing Director
Dated as of November 10, 1998
<PAGE>
115
LENDER ADDENDUM
The undersigned Lender (i) agrees to all the provisions of the Credit
Agreement dated as of November 10, 1998, among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware corporation (the
"BORROWER"), UCAR, S.A., the Lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent and as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent and Morgan Guaranty Trust Company of New York, as Syndication
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), and (ii) becomes a party thereto, as a Lender,
with obligations applicable to such Lender thereunder, including, without
limitation, the obligation to make extensions of credit to the Borrower in an
aggregate principal amount not to exceed the amount of its U.S. Term Loan
Commitment and to UCAR S.A. in an aggregate principal amount not to exceed the
amount of its Swiss Term Loan Commitment, as set forth opposite the undersigned
Lender's name in Schedule 2.01 to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Capitalized terms
defined in the Credit Agreement shall have their respective defined meanings
herein.
THE BANK OF NOVA SCOTIA
---------------------------
(Name of Lender)
By: JAMES R. TRIMBLE
-----------------------
Name: James R. Trimble
Title: Sr. Relationship
Manager
Dated as of November 10, 1998
<PAGE>
116
LENDER ADDENDUM
The undersigned Lender (i) agrees to all the provisions of the Credit
Agreement dated as of November 10, 1998, among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware corporation (the
"BORROWER"), UCAR, S.A., the Lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent and as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent and Morgan Guaranty Trust Company of New York, as Syndication
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), and (ii) becomes a party thereto, as a Lender,
with obligations applicable to such Lender thereunder, including, without
limitation, the obligation to make extensions of credit to the Borrower in an
aggregate principal amount not to exceed the amount of its U.S. Term Loan
Commitment and to UCAR S.A. in an aggregate principal amount not to exceed the
amount of its Swiss Term Loan Commitment, as set forth opposite the undersigned
Lender's name in Schedule 2.01 to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Capitalized terms
defined in the Credit Agreement shall have their respective defined meanings
herein.
Balanced High-Yield Fund II
Ltd.,
By: BHF-BANK AKTIENGESELLSCHAFT,
acting through its New York
Branch, as attorney-in-fact
---------------------------
(Name of Lender)
By: LINDA PACE
---------------------------
Name: Linda Pace
Title: Vice President
By: ANTHONY HEYMAN
---------------------------
Name: Anthony Heyman
Title: Assistant Vice President
Dated as of November 10, 1998
<PAGE>
117
LENDER ADDENDUM
The undersigned Lender (i) agrees to all the provisions of the Credit
Agreement dated as of November 10, 1998, among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware corporation (the
"BORROWER"), UCAR, S.A., the Lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent and as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent and Morgan Guaranty Trust Company of New York, as Syndication
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), and (ii) becomes a party thereto, as a Lender,
with obligations applicable to such Lender thereunder, including, without
limitation, the obligation to make extensions of credit to the Borrower in an
aggregate principal amount not to exceed the amount of its U.S. Term Loan
Commitment and to UCAR S.A. in an aggregate principal amount not to exceed the
amount of its Swiss Term Loan Commitment, as set forth opposite the undersigned
Lender's name in Schedule 2.01 to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Capitalized terms
defined in the Credit Agreement shall have their respective defined meanings
herein.
INTEGRITY LIFE INS
---------------------------
(Name of Lender)
By: EDWARD L. ZEMER
------------------------
Name: Edward L. Zemer
Title: CFO
Dated as of November 10, 1998
<PAGE>
118
LENDER ADDENDUM
The undersigned Lender (i) agrees to all the provisions of the Credit
Agreement dated as of November 10, 1998, among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware corporation (the
"BORROWER"), UCAR, S.A., the Lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent and as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent and Morgan Guaranty Trust Company of New York, as Syndication
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), and (ii) becomes a party thereto, as a Lender,
with obligations applicable to such Lender thereunder, including, without
limitation, the obligation to make extensions of credit to the Borrower in an
aggregate principal amount not to exceed the amount of its U.S. Term Loan
Commitment and to UCAR S.A. in an aggregate principal amount not to exceed the
amount of its Swiss Term Loan Commitment, as set forth opposite the undersigned
Lender's name in Schedule 2.01 to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Capitalized terms
defined in the Credit Agreement shall have their respective defined meanings
herein.
CIBC INC.
---------------------------
(Name of Lender)
By: IHOR ZALUCKYJ
------------------------
Name: Ihor Zaluckyj
Title: Executive Director
CIBC Oppenheimer Corp.,
AS AGENT
Dated as of November 10, 1998
<PAGE>
119
LENDER ADDENDUM
The undersigned Lender (i) agrees to all the provisions of the Credit
Agreement dated as of November 10, 1998, among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware corporation (the
"BORROWER"), UCAR, S.A., the Lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent and as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent and Morgan Guaranty Trust Company of New York, as Syndication
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), and (ii) becomes a party thereto, as a Lender,
with obligations applicable to such Lender thereunder, including, without
limitation, the obligation to make extensions of credit to the Borrower in an
aggregate principal amount not to exceed the amount of its U.S. Term Loan
Commitment and to UCAR S.A. in an aggregate principal amount not to exceed the
amount of its Swiss Term Loan Commitment, as set forth opposite the undersigned
Lender's name in Schedule 2.01 to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Capitalized terms
defined in the Credit Agreement shall have their respective defined meanings
herein.
PNC BANK, NATIONAL ASSOCIATION
---------------------------
(Name of Lender)
By: MARK W. RUTHERFORD
-----------------------
Name: Mark W. Rutherford
Title: Vice President
Dated as of November 10, 1998
<PAGE>
SCHEDULE A
- --------------------------------------------------------------------
PERMITTED OTHER
ACQUISITIONS AND
SPECIFIED
EXCESS CASH FLOW PERMITTED
LEVERAGE RATIO SWEEP PERCENTAGE TRANSACTIONS
- --------------------------------------------------------------------
- --------------------------------------------------------------------
greater than or equal to 75% $75,000,000
2.75:1.0
- --------------------------------------------------------------------
- --------------------------------------------------------------------
greater than or equal
to 2.5:1.0 50% $75,000,000
and less than 2.75:1.0
- --------------------------------------------------------------------
- --------------------------------------------------------------------
greater than or equal
to 2.0:1.0 50% $100,000,000
and less than 2.5:1.0
- --------------------------------------------------------------------
- --------------------------------------------------------------------
less than 2.0:1.0 50% $125,000,000
- --------------------------------------------------------------------
The applicable percentage of Excess Cash Flow referred to in Section 2.12(e) and
the aggregate amount of Permitted Other Acquisitions and Specified Permitted
Transactions for any date shall be determined by reference to the Leverage Ratio
as of the last day of the fiscal quarter most recently ended as of such date and
for the period (the "MEASURED PERIOD") referred to in Section 6.12 for which
such last day is the measuring date (and computed as provided in Section 6.12
with respect to each such Measured Period), and any change shall become
effective upon the delivery to the Administrative Agent of a certificate of the
Borrower signed by a Responsible Officer of the Borrower (which certificate may
be delivered prior to delivery of the relevant financial statements) with
respect to the financial statements to be delivered pursuant to Section 5.04 for
the most recently ended fiscal quarter (a) setting forth in reasonable detail
the calculation of the Leverage Ratio for such Measured Period and at the end of
such fiscal quarter and (b) stating that the signer has reviewed the terms of
this Agreement and other Loan Documents and has made, or caused to be made under
his or her supervision, a review in reasonable detail of the transactions and
condition of UCAR, the Borrower and the Subsidiaries during the accounting
period, and that the signer does not have knowledge of the existence as at the
date of such officer's certificate of any Event of Default or Default and shall
apply on and after such delivery date. It is understood that the foregoing
certificate of a Responsible Officer shall be permitted to be delivered prior
to, but in no event later than, the time of the actual delivery of the financial
statements required to be delivered pursuant to Section 5.04. Notwithstanding
the foregoing, at any time during which the Borrower has failed to deliver the
certificate required under Section 5.04(c) with respect to a fiscal quarter
following the date the delivery thereof is due, the Leverage Ratio shall be
deemed, solely for the purposes of this Schedule A, to be greater than 2.75,
until such time as Borrower shall deliver such compliance certificate.
<PAGE>
Schedule 2.01
<TABLE>
<CAPTION>
LENDERS AND COMMITMENTS
INSTITUTION SWISS TERM LOAN U.S. TERM LOAN TOTAL
COMMITMENTS COMMITMENTS COMMITMENTS
<S> <C> <C> <C>
THE CHASE MANHATTAN BANK $30,694,444.45 $45,138,888.89 $75,833,333.34
CREDIT SUISSE FIRST BOSTON 15,515,873.01 22,817,460.32 38,333,333.33
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK 15,515,873.01 22,817,460.32 38,333,333.33
ARM FINANCIAL 4,047,619.05 5,952,380.95 10,000,000.00
BANKBOSTON, N.A. 4,047,619.05 5,952,380.95 10,000,000.00
THE BANK OF NOVA SCOTIA 6,071,428.57 8,928,571.43 15,000,000.00
BALANCED HIGH-YIELD FUND II LTD.,
BY: BHF-BANK AKTIENGESELLSCHAFT 2,023,809.52 2,976,190.48 5,000,000.00
CIBC INC. 4,047,619.05 5,952,380.95 10,000,000.00
PNC BANK, NATIONAL ASSOCIATION 3,035,714.29 4,464,285.71 7,500,000.00
TOTAL: $85,000,000.00 $125,000,000.00 $210,000,000.00
- ------
</TABLE>
<PAGE>
SCHEDULE 3.08
of UCAR International Inc. and
Outstanding Subscriptions, Options and Warrants
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION INTERNATIONAL INC.
- --------------------------------------------------------------------------------
1. UCAR Global Delaware 100%
Enterprises Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR GLOBAL
NAME OF SUBSIDIARY INCORPORATION ENTERPRISES INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. UCAR Carbon Company
Inc. Delaware 100%
3. UCAR Holdings II Inc. Delaware 100%
4. UCAR Carbon S.A. Brazil 95.30%
5. UCAR S.A. Switzerland 99.9%(a)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR CARBON
NAME OF SUBSIDIARY INCORPORATION COMPANY INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. UCAR Holdings Inc. Delaware 100%
7. UCAR Limited United Kingdom 100%(b)
8. EMSA (Pty.) Ltd. South Africa 100%(c)
9. Carbographite Limited South Africa 100%(c)
10. UCAR International
Trading Inc. Delaware 100%
11. UCAR Carbon
Technology Corporation Delaware 100%
12. UCAR Carbon
Foreign Sales Virgin Islands 100%
Corporation
13. UCAR Composites California 100%
Inc.
14. Union Carbide
Grafito, Inc. New York 100%
15. Unicarbon Brazil 100%
Comercial Ltda.
16. UCAR Carbon
(Malaysia) Sdn. Bhd. Malaysia 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS II
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
17. UCAR Holdings III Delaware 100%
Inc.
18. UCAR Holdings S.A. France 100%(d)
19. UCAR Electrodos, Spain 100%(e)
S.L.
20. UCAR Inc. Canada 100%
21. UCAR Elektroden Germany 70%
GmbH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS GMBH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
22. UCAR Grafit OAO Russia 96.27%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
23. UCAR Mexicana,
S.A. de C.V. Mexico 100%(f)
24. UCAR S.p.A. Italy 100%(g)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
25. UCAR S.N.C. France 100%(h)
26. Carbone Savoie France 70%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION MEXICANA, S.A. DE C.V.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
27. UCAR Carbon
Mexicana, S.A. de C.V. Mexico 100%(i)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR CARBON
NAME OF SUBSIDIARY INCORPORATION MEXICANA, S.A. DE C.V.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
28. Servicios
Administratoes Carmex, Mexico 99.9%
S.A. de C.V.
29. Servicios DYC,
S.A. de C.V. Mexico 99.9%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP BY UCAR S.P.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
30. UCAR Energia S.r.l. Italy 100%
31. UCAR Specialties Italy 100%
S.r.l.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR CARBON
NAME OF SUBSIDIARY INCORPORATION S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
32. UCAR Produtos de
Carbono S.A. Brazil 99.9%
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UNICARBON
NAME OF SUBSIDIARY INCORPORATION COMERCIAL LTDA.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
33. UCAR Carbon S.A. Brazil 2.33%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP BY UCAR S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
34. UCAR Holding GmbH Austria 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(a) 99.9% owned by UCAR Global Enterprises Inc. Nominees own three shares of
UCAR S.A.
(b) 99.9% owned by UCAR Carbon Company Inc. A nominee owns one share of UCAR
Limited.
(c) On April 21, 1997, UCAR Carbon Company Inc. (the "Company") purchased the
50% interest in EMSA (Pty.) Ltd. ("EMSA") and Carbographite Limited
("Carbographite") that it did not already own from Samancor Limited, a South
African company. Commencing April 22, 1997, EMSA's and Carbographite's assets,
liabilities and results of operations are included in the Consolidated Financial
Statements.
(d) 99.4% owned by UCAR Holdings II Inc. UCAR International Inc., UCAR Global
Enterprises Inc., UCAR Carbon Company Inc. and three nominees each own one share
of UCAR Holdings S.A.
(e) 99.9% owned by UCAR Holdings II Inc. UCAR Carbon Company Inc. owns 0.1% of
UCAR Electrodos S.L.
(f) 99.9% owned by UCAR Holdings Inc. UCAR Carbon Company Inc. owns one share of
UCAR Mexicana, S.A. de C.V.
(g) 99.9% owned by UCAR Holdings Inc. and UCAR Carbon Company Inc. owns 0.1% of
UCAR S.p.A.
(h) 99.9% owned by UCAR Holdings S.A. UCAR Holdings III Inc. owns one share of
UCAR S.N.C.
(i) 99.9% owned by UCAR Mexicana, S.A. de C.V. UCAR Carbon Company Inc. owns
0.1% of UCAR Carbon Mexicana, S.A. de C.V.
<PAGE>
SCHEDULE 3.09
PENDING LITIGATION OR PROCEEDINGS
ANTITRUST CASES AND PROCEEDINGS
DOFASCO INC. V. UCAR CARBON CANADA INC., ET AL., Court File No. 98-CV-149864,
Ontario Court (General Division), Canada. This case has been settled in
principle. An agreement is being prepared and the case has not yet been
dismissed.
ELLWOOD QUALITY STEELS CO. V. SGL CARBON CORPORATION, ET AL., Civil Action No.
98-1063 (United States District Court for the Western District of Pennsylvania).
This case has been settled in principle. An agreement is being prepared and the
case has not yet been dismissed.
NUCOR CORP. V. THE CARBIDE GRAPHITE GROUP, INC., ET AL., Civil Action No. 98-
1789 (United States District Court for the Eastern District of Pennsylvania).
This case has been settled. An agreement has been signed but the case has not
yet been dismissed.
REPUBLIC ENGINEERED STEELS, INC. V. SHOWA DENKO CARBON, INC., ET AL., Civil
Action No. 98 CV-0902 (United States District Court for the Northern District of
Ohio, Eastern Division (Akron)). This case has been settled in principle. An
agreement is being prepared and the case has not yet been dismissed.
IN RE GRAPHITE ELECTRODES ANTITRUST LITIGATION, Master File No. 97-CV-4182
(United States District Court for the Eastern District of Pennsylvania). This
case has been settled. An agreement has been signed and the class has been
conditionally certified. The opt-out period expires on November 27, 1998. The
settlement has been preliminarily approved by the Court, with final approval
expected in December 1998. The case has not yet been dismissed.
IN RE SIMETCO, INC., Case No. 93-61772 (United States Bankruptcy Court for the
Northern District of Ohio at Canton). Motion by bankruptcy trustee (representing
debtor SiMETCO, Inc.) for a Rule 2004 Examination.
SHAREHOLDER DERIVATIVE CASE
JAROSLAWICZ V. KRASS, ET AL., CV-98-033117 S (Conn. Super. Ct., J.D. of
Stamford-Norwalk);
SECURITIES CLASS ACTION
IN RE UCAR INTERNATIONAL INC. SECURITIES LITIGATION, 98-CV-0600 (JBA)(United
States District Court for the District of Connecticut)
<PAGE>
ANTITRUST INVESTIGATIONS
The Directorate General IV of the European Union, the antitrust
enforcement authorities of the European Union (the "EU authorities"), is
conducting an investigation into whether graphite electrode producers, including
the Borrower's French subsidiary, violated Article 85-1 of the Treaty of Rome,
the antitrust law of the European Union.
The Canadian Competition Bureau (the "Competition Bureau") has commenced a
criminal investigation as to whether there has been any violation of the
Canadian Competition Act (the "Canadian Act") by producers of graphite
electrodes. Under Section 45 of the Canadian Act, the maximum fine is Cdn$10
million. Under Section 46 of the Canadian Act, the amount of the fine is
discretionary and there is no maximum. UCAR and its subsidiaries have been
required by the Competition Bureau to produce documents and witnesses in Canada.
UCAR believes that Japanese antitrust authorities have commenced an
investigation of producers and distributors of graphite electrodes. Neither UCAR
nor its subsidiaries have any facilities or employees in Japan or have sold a
material quantity of graphite electrodes in Japan. The independent distributor
of their products in Japan has been required to produce documents and witnesses
in Japan.
THREATENED LITIGATION
UCAR and its subsidiaries have received oral and written notices or claims
from various domestic and foreign customers concerning recovery for alleged
violations of antitrust laws.
<PAGE>
SCHEDULE 3.14
CREDIT AGREEMENT
TAXES
(a) None.
(b) UCAR has waived or extended the statutes of limitation in the following
jurisdictions:
EXTENSION
JURISDICTION YEAR ENTITY DATE
Federal 1993 UCAR Carbon Company, Inc. and Subsidiaries 3/31/99
Federal 1994 UCAR International Inc. Consolidated Group 3/31/99
California 1994 UCAR International Inc. Unitary Group 3/15/00
New York 1992/93 UCAR Carbon Company Inc. 6/30/99
New York 1994 UCAR Carbon Company Inc. 12/31/99
(c) UCAR INTERNATIONAL INC.
UCAR is currently under federal income tax audit for the years 1993, 1994
and 1995. No adjustment has been proposed by the IRS as of the Effective
Date.
UCAR S.P.A.
UCAR S.p.A. has appeals still outstanding for the years 1972 and 1975.
The results of a tax inspection covering the years 1986 and 1987,
completed on April 20, 1989, are still pending. In addition, UCAR
S.p.A. has appeals outstanding for the year 1989 that are expected to
close without any payment. UCAR S.p.A. has accrued ITL 2,400 million
(approx. $1,456,000) which it believes will adequately cover the
estimated tax liabilities related to all pending tax appeals for UCAR
S.p.A.
(d) None, other than included in paragraph (c).
<PAGE>
SCHEDULE 3.17
CREDIT AGREEMENT
ENVIRONMENTAL MATTERS
Union Carbide Corporation had a license to process radioactive
material at UCAR's current Lawrenceburg, Tennessee site ("UCAR Lawrenceburg")
and did so in the 1960's and 1970's. The process was shut down and the license
was closed in the mid-1970's. The Nuclear Regulatory Commission ("NRC") has been
reviewing closed licenses to determine if additional clean-up is warranted. the
NRC reviewed its records for the UCAR Lawrenceburg site and mandated that
testing be conducted to ascertain whether regulated levels of residual
radiological contamination exist there.
Samples of the soil, water and surfaces at UCAR Lawrenceburg were
collected and analyzed. UCAR hired a radiological remediation contractor,
Nuclear Fuel Services ("NFS"), to review the analytical data and determine
whether contamination is present. NFS has reported to UCAR that, based upon its
review of the data collected, levels of contamination are above current NRC
closure criteria. UCAR commissioned NFS to develop a draft decommissioning plan
which was submitted to the NRC on August 20, 1998. The NRC is currently
reviewing the plan but has not indicated when we may expect their comments. The
plan may need to be modified based on the NRC's comments. Based upon cost
estimates received from NFS, UCAR has accrued a liability in the amount of
$1,300,000 to cover the cost to this clean-up and related fees and expenses.
<PAGE>
Schedule 3.18 to Credit Agreement
CAPITALIZATION
1) UCAR International Inc.
(i) Authorized Capital Stock: 10,000,000 shares of Preferred Stock
100,000,000 shares of Common Stock
(ii) Par Value: $.01 per share
(iii) Authorized Capital Stock Issued
and Outstanding (as of 10/30/98) 44,979,425
2) UCAR Global Enterprises Inc.
(i) Authorized Capital Stock 1,500 shares of Common Stock
(ii) Par Value $.01 per share
(iii) Authorized Capital Stock Issued
and Outstanding 100 shares of Common Stock
<PAGE>
SCHEDULE 3.20
CREDIT AGREEMENT
LABOR MATTERS
None.
<PAGE>
SCHEDULE 3.23(a)
CREDIT AGREEMENT
LOCATION OF REAL PROPERTY
OWNER LOCATION
UCAR S.N.C. Rue des Garennes
F-62100 Calais
France
UCAR Electrodos, S.L. Carretera de Astrain S/N
E-31171 Ororbia
Navarra, (Espana) (Spain)
UCAR Mexicana S.A. de C.V. Carretara Miguel Alemar
Km. 20 #600. Ote.
Apodaca, Nuera Leon
Mexico 66600
Calle Miguel Barragan
No. 702 Pte.
Co. Industrial Entre
La Calle Amado Nerro y
Av. Universidad
C.P. 64440
Municipio Monterrey
Estado Nuevo Leon
Pais Mexico
UCAR Inc. 65 Canal Bank St.
Welland, Ontario
L3B 5R8
UCAR S.p.A. Caserta
Via dell Industria
1-81100 Casseta
Italy
UCAR Specialties S.r.l. Strada Statale Passo del
Vivione, 1
I-25040 Malonno, Brescia
Italy
UCAR Carbon Company Inc. Highway 43 South
Lawrenceburg, TN 38464
<PAGE>
Phillippi Pike
Armoore, WV 26323
Highway 7
Santa Fe Pike
Columbia, TN 38401
Hwt 79N @ Hampton Station Road
Clarksville, TN 37040
3625 Highland Avenue
Niagara Falls, NY 14305
Rural Route 3
Robinson, IL 62454
12900 Snow Road
Parma, OH 44130
11709 Madison Avenue
Lakewood, OH 44107
UNION Carbide Grafito, Inc. Yabucoa, Puerto Rico
EMS (Pty.) Ltd. Kookfontein Farm
Meyerton, 1960 Gauteng
South Africa
UCAR Productos de Carbono S.A. Estrada Salvador-Mataripe
Km. 39-Candeias
Brahia, Brazil 43800-000
UCAR Productos de Carbono S.A. Av. Brigadeiro Faria Lima, 1461
& UCAR S.A. 9(degree) andar-ej. 9I3e94
01451-000 Sao Paulo-SP
Brazil
UCAR Limited Claywheels Lane
Wadsley Bridge
Shiffield, S6 INF
England
<PAGE>
Carbone Savoie 30, rue Louis Jouvei
BP 16
Venissieux Codex
F-69631
France
Carbone Savoie/UCAR S.N.C. Usine de Notre-Dame-de-Braincon
La Lechere
F-73264 Aigueblanche Cedex
France
<PAGE>
SCHEDULE 3.23(b)
CREDIT AGREEMENT
LOCATION OF LEASED PREMISES
OWNER LOCATION
UCAR S.N.C. Usine de Notre-Dame-de-Braincon
La Lechere
F-73264 Aigueblanche Cedex
France
(Lessor is Carbone Savoie)
4 Place des Estas-Unis
SILIC 214
F-94518 RUNGIS, Cedex
France
UCAR S.A. 33 Ave. do Mont Blanc
Case Postale 630
CH-1196 Gland
Switzerland
UCAR Electrodos, S.L. Avda Lendakari
Aguirre, 11-3(degree)
35-D
43014-Bilbao
Spain
UCAR S.p.A. Via Dunini 28
20122, Milano
UCAR Specialties S.r.l. Forno Allione: Portion of
building in North section of
Plan with access and
connections to water and power
UCAR Carbon Company Inc. 39 Old Ridgebury Road J-4
Danbury, CT 06817
UCAR Composites Inc. 5 Burroughs
Irvine, CA 92718
UCAR Elektroden GmbH Herzbergstrasse 128
D-10365 Berlin
Germany
<PAGE>
EMSA (Pty.) Ltd. Barphil Building
15 Loch Street
Meyerton, 1960
South Africa
UCAR GRAFIT OAO 35 Usacheva Street
Moscow Russia 119048
UCAR International Trading Inc. Jianguo Men Wai Ave., Room 3067
Beijing, China
9 Penang Road #10-02
Park Mall
Singapore
Unit B on 13th Floor
The Prudential Assurance Tower
No. 79 Chatham Road South
Tsimshatsui, Kowloon
Hong Kong
<PAGE>
Schedule 4.01
Local Jurisdictions
(1) Montgomery County, Tennessee
(2) Maury County, Tennessee
(3) Lawrence County, Tennessee
(4) Cuyahoga County, Ohio
(5) Crawford County, Illinois
(6) Harrison County, W. Virginia
(7) Niagra County, New York
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 6.01 - INDEBTEDNESS @ 10/30/98* *
BORROWER LENDER TYPE U.S. $ OR EQUIV.
<S> <C> <C> <C>
UCAR CARBON S.A.(BRAZIL) UNIBANCO IMPORT FINANCE $699,611.10 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BFB IMPORT FINANCE $589,244.96 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BFB(1) IMPORT FINANCE $1,955,505.78 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) CCF IMPORT FINANCE $2,245,722.65 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BOSTON(1)(2) IMPORT FINANCE $1,999,342.72 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BFB IMPORT FINANCE $690,946.33 @ OCT 30,1998
@ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) UNIBANCO ACC - IMPORT/EXPORT $620,804.13 @ OCT 30,1998
FINANCING NOTE @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) UNIBANCO DISCOUNTED A/R $813,684.23 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) MERCANTIL DISCOUNTED A/R $838,306.28 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) REAL DISCOUNTED A/R $1,415,912.64 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) BOSTON DISCOUNTED A/R $1,309,364.58 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) REAL DISCOUNTED A/R $2,837,988.53 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) SUMITOMO DISCOUNTED A/R $1,192,129.28 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) TOKIO DISCOUNTED A/R $1,559,313.26 @ OCT 30,1998
SUBTOTAL BRAZIL $18,767,876.47
UCAR ELEKTRODEN(Germany) BHF FAC CREDIT AGREEMENT $10,447,400.24 @ OCT 30,1998
UCAR SPA(Italy) BANCA NATIONALE DEL LAVORO BANK GUARANTY $246,558.58 @ OCT 30,1998
UCAR SPA(Italy) BANCA COMMERCIALE ITALIANO(IMI) BANK GUARANTY $734,781.28 @ OCT 30,1998
UCAR SPA(Italy) INSTITUTO MOBLIERE ITALIANO IND DEV FINANCE $1,210,156.01 @ OCT 30,1998
UCAR SPECIALTIES SRI BANCA POPOLARE DI SONDRIO OVERDRAFT LINE $1,524,625.27 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR INTERNATIONAL INTERCO LOAN $116,548,792.47 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR INC.(Canada) INTERCO LOAN $5,000,000.00 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR MEXICANA S.A.(Mexico) INTERCO LOAN $27,000,000.00 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR HOLDINGS ll INTERCO LOAN $37,636,768.13 @ OCT 30,1998
UCAR CARBON COMPANY UCAR ELECTRODOS(Spain) INTERCO LOAN $35,171,508.63 @ OCT 30,1998
UCAR CARBON COMPANY UCAR SNC(France) INTERCO LOAN $43,400,000.00 @ OCT 30,1998
UCAR CARBON COMPANY UCAR LTD(U.K.) INTERCO LOAN $23,792,136.36 @ OCT 30,1998
UCAR CARBON COMPANY UCAR SPA(Italy) INTERCO LOAN $10,172,203.24 @ OCT 30,1998
UCAR CARBON COMPANY UCAR EMSA(So.Africa) INTERCO LOAN $29,746,183.12 @ OCT 30,1998
UCAR HOLDINGS UCAR GLOBAL ENTERPRISES INTERCO LOAN $66,470,056.09 @ OCT 30,1998
UCAR INTERNATIONAL UCAR GLOBAL ENTERPRISES INTERCO LOAN $511,565,445.00 @ OCT 30,1998
UCAR CARBON COMPANY UCAR INTERNATIONAL INTERCO LOAN(NOTE) $172,878,070.94 @ OCT 30,1998
UCAR GLOBAL ENTERPRISES UCAR CARBON COMPANY INTERCO LOAN $2,912,141.00 @ OCT 30,1998
UCAR S.A.(Switzerland) UCAR GLOBAL ENTERPRISES INTERCO LOAN $83,403,591.00 @ OCT 30,1998
UCAR CARBON S.A.(BRAZIL) UCAR PRODUCTS de CARBONO S.A. INTERCO LOAN $12,307,388.08 @ OCT 30,1998
UCAR SNC(FRANCE) CARBONE SAVOIE INTERCO LOAN $15,300,000.00 @ OCT 30,1998
UCAR SNC(FRANCE) UCAR HOLDINGS S.A.(FRANCE) INTERCO LOAN $35,365,000.00 @ OCT 30,1998
</TABLE>
** BALANCES ARE PRESENTED AS OF10/30/98 AND ARE SUBJECT TO CHANGES IN THE
ORDINARY COURSE OF BUSINESS OCCURING BETWEEN 10/30/98 AND THE EFFECTIVE
DATE , WHICH ARE NOT MATERIAL.
<PAGE>
SCHEDULE 6.02
EXISTING LIENS
<TABLE>
<CAPTION>
<S> <C>
BRAZIL
10/16/96 TAX LITIGATION HYSTER , FORKLIFT R $ $45,000.00
STATE OF BAHIA TRUCK US $ $37,957.00
10/16/96 TAX LITIGATION HYSTER , FORKLIFT R $ $95,000.00
STATE OF BAHIA TRUCK US $ $80,132.00
8/22/97 LABOR HYSTER , FORKLIFT R $ $79,000.00
LITIGATION TRUCK US $ $66,636.00
8/22/97 LABOR HYSTER , FORKLIFT R $ $71,000.00
LITIGATION TRUCK US $ $59,888.00
TOTAL R $ $290,000.00
TOTAL US $ $244,613.00
UCAR INC.
(CANADA) SECURED PARTY DESCRIPTION
1 MUNICIPAL SAVINGS & LOAN EQUIPMENT
7100 WOODBINE AVE. SUITE 400 1 KONICA 4145 COPIER
MARKHAM, ONTARIO WI/RADF AND ALL PROCEEDS
OF THE FOREGOING
2 AT & T CAPITAL CANADA INC. EQUIPMENT AND OTHER
900 3650 VICTORIA PARK AVE.
WILLOWDALE, ONTARIO
3 AT & T CAPITAL CANADA INC. EQUIPMENT AND OTHER
600 - 3760 14TH AVE.
MARKHAM, ONTARIO
4 CHASE MANHATTAN BANK OF CANADA INVENTORY, EQUIPMENT, ACCOUNTS & OTHER
SUITE 6900, 100 KING STREET WEST (MOTOR VEHICLES INCLUDED)
TORONTO, ONTARIO
5 MTC LEASING EQUIPMENT
3310 SOUTH SERVICE ROAD PHOTOCOPIER SYSTEM 10379-42705
BURLINGTON, ONTARIO
UCAR CARBON SECURED PARTY DESCRIPTION
CANADA INC.
1 MUNICIPAL FINANCIAL LEASING CORP. EQUIPMENT
7100 WOODBINE AVE. SUITE 400 1 RICOH, MODEL FT6750 COPIER & PROCEEDS
MARKHAM, ONTARIO OF THE FOREGOING
2 TRIATHLON LEASING INC EQUIPMENT AND OTHER
2300 YONGE ST. SUITE 3000 (MOTOR VEHICLES INCLUDED)
TORONTO, ONTARIO
AND
GENERAL ELECTRIC CAPITAL CANADA EQUIPMENT AND OTHER
LEASING
2300 MEADOWVALE BLVD. 2ND FLOOR (MOTOR VEHICLES INCLUDED)
MISSISSAUGA, ONTARIO
UCAR SpA MORTGAGE AND PRIVILIGE AT ITL 2,080,000,000.00
CASERTA, ITALY
PLANT FIXED ASSETS SECURING DEBT US$ 1,200,000.00
TO
INSTITUTO MOBILIARE ITALIANO
UCAR SNC USUAL REGISTRATIONS OF LEASING AGREEMENTS :
PHOTOCOPIER AND SOFTWARE
CARBONE SAVOIE USUAL REGISTRATIONS OF LEASING AGREEMENTS :
COMPUTER EQUIPMENT, PHOTOCOPIERS, STAMPING
EQUIPMENT, COMMERCIAL VEHICLES, TRUCKS
MINORITY SHAREHOLDER HAS A RIGHT OF FIRST REFUSAL
FOR PURCHASE OF UCAR'S SHARES IN CARBONE SAVOIE
UCAR ELEKTRODEN
GMBH MINORITY SHAREHOLDER HAS A RIGHT OF FIRST REFUSAL
FOR PURCHASE OF UCAR'S SHARES IN UCAR ELEKTRODEN GMBH
</TABLE>
<PAGE>
SCHEDULE 6.04
CREDIT AGREEMENT
INVESTMENTS
None.
<PAGE>
SCHEDULE 6.07
CREDIT AGREEMENT
TRANSACTIONS WITH AFFILIATES
UCAR Elektroden GmbH (for purposes of the Schedule, "Elektroden")
has a tolling agreement with UCAR Grafit OAO (for purposes of this Schedule,
"Grafit") whereby Elektroden supplies molded ungraphitized electrodes to Grafit
for graphitization and Grafit returns the graphitized electrodes, scrap and
rejects to Elektroden. Under this agreement, Elektroden is required to supply up
to 13,900 metric tons of ungraphitized electrodes, and, based upon shipment of
13,900 metric tons by Elektroden, Grafit is expected to return approximately
10,000 metric tons of graphitized electrodes. The tolling price paid to Grafit
is 1,960 DM per metric ton for finished product. Prices for burnt scrap and
rejects and graphitized scrap and rejects are 820 DM per metric ton and 1,268 DM
per metric ton, respectively.
The agreement expires on December 31, 1998.
Carbone Savoie is a party to the following agreements involving UCAR
Subsidiaries:
(i) A Sub-Contracting Agreement with UCAR SNC whereby UCAR SNC
manufactures all of Carbone Savoie's products. The price
term of the agreement includes the cost of raw material,
direct labor and variable expense.
(ii) A Lease Agreement for real property whereby Carbone Savoie
leases to UCAR SNC certain real property used in conjunction
with UCAR SNC's obligations under the subcontracting
agreement referred to in (i) above. See also Schedule
3.23(b) for reference to leased property.
(iii) A Technology License Agreement whereby Carbone Savoie
licenses certain technical information and patent rights to
UCAR. Carbon Company Inc. (for purposes of this Schedule,
`UCAR Carbon").
(iv) A Research and Development, License and Services Agreement
among Carbone Savoie, UCAR Carbon and Aluminium Pecheney
whereby (i) the parties agree to cooperate for their mutual
benefits in certain research and development activities,
(ii) UCAR Carbon licenses its technical information and
patent rights for the manufacture, use and sale of certain
products to Carbone Savoie, (iii) Aluminium Pecheney agrees
to cooperate in the marketing and sales of certain products
by Carbone Savoie and (iv) UCAR Carbon agrees to provide
certain training and instruction of personnel of Carbone
Savoie. The consideration for the contributions to this
agreement made by Aluminium Pechiney and UCAR Carbon is a
percentage of the sales of Carbone Savoie during the term of
the agreement.
<PAGE>
SCHEDULE 6.09
CREDIT AGREEMENT
RESTRICTIVE AGREEMENTS
Pursuant to the Articles of Association of UCAR Elektroden GmbH, a
vote of 75% of the votes polled at a duly convened shareholder's meeting is
required to distribute profits. For purposes of such a determination, 75% of the
total share capital must be represented to constitute a quorum.
<PAGE>
January 7, 1999
The undersigned institution, a Lender under the Credit Agreement dated
as of October 19, 1995, as amended and restated as of March 19, 1997, and
November 10, 1998, among UCAR International Inc. ("Holdco"), UCAR Global
Enterprises Inc. (the "Borrower"), the Subsidiary Borrowers party thereto, the
Lenders party thereto, the Fronting Banks party thereto and The Chase Manhattan
Bank, as administrative agent and as collateral agent (the "Restated
Agreement"), and/or the Credit Agreement dated as of November 10, 1998, among
Holdco, the Borrower, UCAR S.A., the Lenders party thereto, The Chase Manhattan
Bank, as administrative agent and as collateral agent, Credit Suisse First
Boston, as syndication agent, and Morgan Guaranty Trust Company of New York, as
syndication agent (the "Tranche C Agreement" and collectively with the Restated
Agreement, the "Credit Agreements"), hereby consents to the existence of an
asserted lien on the assets of Holdco in favor of the United States Department
of Justice (the "DOJ") securing the obligation of Holdco under its settlement
agreement with the DOJ to pay a fine in a remaining amount of $90,000,000,
constituting a portion of the Litigation Liabilities (as defined in the Credit
Agreements).
Consent Under the
Restated Agreement
Lender /s/
----------------------------
by
-------------------------
Name:
Title:
Consent Under the
Tranche C Agreement
Lender /s/
----------------------------
by
-------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.2
PARENT GUARANTEE AGREEMENT
PARENT GUARANTEE AGREEMENT, dated as of October 19, 1995, as
amended and restated as of November 10, 1998 (the "PARENT GUARANTEE
AGREEMENT"), made by UCAR INTERNATIONAL INC., a Delaware corporation
("UCAR"), and UCAR GLOBAL ENTERPRISES INC., a Delaware corporation
(the "BORROWER" and, together with UCAR, the "GUARANTORS"), in favor
of THE CHASE MANHATTAN BANK, a New York banking corporation, as
collateral agent for the Secured Parties. Reference is made to (i)
the Credit Agreement dated as of October 19, 1995, as amended and
restated as of March 19, 1997 and November 10, 1998 (as the same may
be amended, supplemented or otherwise modified from time to time,
the "EXISTING CREDIT AGREEMENT"), among UCAR, the Borrower, the
Subsidiary Borrowers party thereto, the Lenders party thereto, the
Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent and (ii) the Credit
Agreement dated as of November 10, 1998, among UCAR, the Borrower,
UCAR S.A., the Lenders party thereto, The Chase Manhattan Bank, as
administrative agent and collateral agent, Credit Suisse First
Boston, as syndication agent, and Morgan Guaranty Trust Company of
New York, as syndication agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "TRANCHE C
FACILITY CREDIT AGREEMENT", and together with the Existing Credit
Agreement, the "CREDIT AGREEMENTS").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreements, the Lenders have severally
agreed to make Loans and the Fronting Banks have agreed to issue Letters of
Credit, upon the terms and subject to the conditions set forth therein;
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make the Loans and the obligation of the Fronting Banks to issue the Letters
of Credit that the Guarantors shall have executed and delivered this Guarantee
to the Collateral Agent for the ratable benefit of the Secured Parties; and
WHEREAS, UCAR is the direct holder of all of the issued and
outstanding capital stock of the Borrower, and it is to the advantage of UCAR
and the Borrower that the Lenders make the Loans and the Fronting Banks issue
the Letters of Credit.
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Credit Agreements and
<PAGE>
2
to induce the Lenders to make their respective Loans and the Fronting Banks to
issue their respective Letters of Credit, each of the Guarantors hereby agrees
with the Collateral Agent, for the ratable benefit of the Secured Parties, as
follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms defined
in the Credit Agreements and used herein shall have the meanings given in the
Credit Agreements.
(b) "GUARANTEE": this Parent Guarantee Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
(c) "OBLIGATIONS": (i) the unpaid principal of and premium, if any,
and interest (including interest accruing at the then applicable rate provided
in the Existing Credit Agreement after the maturity of the Loans thereunder and
interest accruing at the then applicable rate provided in the Existing Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any Credit Party
thereunder whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) on the Loans made under the Existing Credit
Agreement, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) the unpaid principal of and
premium, if any, and interest (including interest accruing at the then
applicable rate provided in the Tranche C Facility Credit Agreement after the
maturity of the Loans thereunder and interest accruing at the applicable rate
provided in the Tranche C Facility Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any Credit Party thereunder whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding) on the
Loans made under the Tranche C Facility Credit Agreement, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (iii) each payment required to be made by any Credit Party under
the Existing Credit Agreement, when and as due, including payments in respect of
reimbursements of L/C Disbursements, interest thereon and obligations to provide
cash collateral, (iv) each payment required to be made by any Credit Party under
the Tranche C Facility Credit Agreement, when and as due, and (v) all other
obligations and liabilities of every nature of the Credit Parties under the
Credit Agreements from time to time owed to the Secured Parties or any of them,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
which may arise under, out of, or in connection with, the Existing Credit
Agreement, the Tranche C Facility Credit Agreement, any Guarantee Agreement, any
Security Document or any other Loan Document and any obligation of the Borrower
or any Credit Party under either of the Credit Agreements to a Lender under
either of the Credit Agreements pursuant to an Interest/Exchange Rate Protection
Agreement or under any other document made, delivered or given in connection
<PAGE>
3
with any of the foregoing, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including all fees and disbursements of counsel to the Collateral
Agent or to the Secured Parties that are required to be paid by the Borrower or
any Credit Party pursuant to the terms of the Existing Credit Agreement, the
Tranche C Facility Credit Agreement, any Guarantee Agreement, any Security
Document, any other Loan Document or any Interest/Exchange Rate Protection
Agreement with a Lender (all of the foregoing obligations collectively, the
"OBLIGATIONS").
(d) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guarantee shall refer to this Guarantee as a whole and
not to any particular provision of this Guarantee, and section and paragraph
references are to this Guarantee unless otherwise specified. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase, "without limitation".
(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. GUARANTEE. (a) The Borrower hereby unconditionally and irrevocably
guarantees, as a primary obligor and not merely as surety, to the Collateral
Agent, for the ratable benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, the due, punctual and complete
payment and performance by the Credit Parties when and as due, whether at the
stated maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, of the Obligations. UCAR hereby unconditionally and irrevocably
guarantees, as a primary obligor and not merely as surety, to the Collateral
Agent, for the ratable benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, the due, punctual and complete
payment and performance by the Borrower when and as due, whether at the stated
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, of the Obligations of the Borrower (including the obligations of the
Borrower as Guarantor under the immediately preceding sentence).
(b) Each Guarantor further agrees to pay any and all reasonable
expenses (including all reasonable fees and disbursements of counsel) which may
be paid or incurred by any Secured Party in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations guaranteed by such Guarantor and/or enforcing any rights with
respect to, or collecting against, such Guarantor under this Guarantee. This
Guarantee shall remain in full force and effect until the Obligations are paid
in full, no Letters of Credit are outstanding and the Commitments are
terminated, notwithstanding that from time to time prior thereto while the
Commitments are in effect any Credit Party may be free from any Obligations.
(c) Each Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to the Collateral
<PAGE>
4
Agent for the benefit of any Secured Party on account of its liability
hereunder, it will notify the Collateral Agent in writing that such payment is
made under this Guarantee for such purpose, provided that the failure of such
Guarantor to provide such notice shall not preclude the application of such
payment to the complete or partial satisfaction of such Guarantor's obligations
hereunder following such Guarantor's notice to the Collateral Agent of such
payment.
3. NO SUBROGATION. Notwithstanding any payment or payments made by a
Guarantor hereunder or any setoff or application of funds of a Guarantor by any
Secured Party, no Guarantor shall be entitled to be subrogated to any of the
rights of any Secured Party against any Credit Party or any collateral security
or guarantee or right of offset held by any Secured Party for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from any Credit Party in respect of payments made
by such Guarantor hereunder, until all amounts owing to the Secured Parties by
any Credit Party on account of the Obligations are paid in full, no Letters of
Credit are outstanding and the Commitments are terminated. If any amount shall
be paid to any Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, Letters of Credit are
outstanding and the Commitments shall not have been terminated, such amount
shall be held by such Guarantor in trust for the Secured Parties, segregated
from other funds of such Guarantor, and shall forthwith upon receipt by such
Guarantor be turned over to the Collateral Agent in the exact form received by
such Guarantor (duly endorsed by such Guarantor to the Collateral Agent, if
required), to be applied against the Obligations, whether matured or unmatured,
at such time and in such order as the Collateral Agent may determine.
4. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF RIGHTS.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against such Guarantor, and without notice to or
further assent by such Guarantor, any demand for payment of any of the
Obligations made by any Secured Party may be rescinded by such Secured Party,
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Secured Party, and the
Credit Agreements, any other Loan Document, any Interest/Exchange Rate
Protection Agreement and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Collateral Agent (or the Required Secured Parties, as
the case may be) or the relevant Secured Party (in the case of any such
Interest/Exchange Rate Protection Agreement) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any Secured Party for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. No Secured Party shall have any obligation to
protect, secure,
<PAGE>
5
perfect or insure any Lien at any time held by it as security for the
Obligations or for this Guarantee or any property subject thereto. When making
any demand hereunder against a Guarantor, any Secured Party may, but shall be
under no obligation to, make a similar demand on any Credit Party or any other
guarantor, and any failure by any Secured Party to make any such demand or to
collect any payments from any Credit Party or any such other guarantor or any
release of any Credit Party or such other guarantor shall not relieve any
Guarantor of its obligations or liabilities hereunder, and shall not impair or
affect the rights and remedies, express or implied, or as a matter of law, of
any Secured Party against any Guarantor.
5. GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Secured Party upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between any Credit Party or any Guarantor, on the one hand, and any of
the Secured Parties, on the other, shall likewise be conclusively presumed to
have been had or consummated in reliance upon this Guarantee. Each Guarantor
waives diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon any Credit Party or any Guarantor with respect to the
Obligations. This Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment, and not of collection, and without regard to
(a) the validity, regularity or enforceability of the Credit Agreements, any
other Loan Document, any Interest/Exchange Rate Protection Agreement, any of the
Obligations or any other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by any Secured
Party, (b) any defense, set-off or counterclaim (other than a defense of payment
or performance) which may at any time be available to or be asserted by any
Credit Party against any Secured Party, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of any Secured Party, any Credit Party
or any Guarantor) which may or might in any manner or to any extent vary the
risk of any Guarantor or otherwise constitutes, or might be construed to
constitute, an equitable or legal discharge of any Credit Party for the
Obligations, or of any Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against any
Guarantor, any Secured Party may, but shall be under no obligation to, pursue
such rights and remedies as it may have against any Credit Party or any other
person or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Secured Party
to pursue such other rights or remedies or to collect any payments from any
Credit Party or any such other person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
any Credit Party or any such other person or of any such collateral security,
guarantee or right of offset, shall not relieve any Guarantor of any liability
hereunder, and shall not
<PAGE>
6
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of any Secured Party against any Guarantor. This Guarantee
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon each Guarantor and its successors and assigns, and
shall inure to the benefit of the Secured Parties, and their respective
permitted successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of each Guarantor under this Guarantee shall
have been satisfied by payment in full, no Letters of Credit shall be
outstanding and the Commitments shall have been terminated, notwithstanding that
from time to time while the Commitments are in effect during the term of the
Credit Agreements any Credit Party may be free from any Obligations.
6. REINSTATEMENT. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
any Secured Party for any reason whatsoever, including, without limitation, upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Credit Party or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, any Credit Party or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
7. PAYMENTS. The Guarantors hereby agree that the Obligations will be
paid to the Collateral Agent without setoff or counterclaim in Dollars at the
office of the Collateral Agent located at 270 Park Avenue, New York, New York
10017.
8. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and
warrants to and with the Secured Parties that all representations and warranties
in the Loan Documents that relate to the Guarantors are true and correct in all
material respects.
9. COVENANTS. Each Guarantor hereby covenants and agrees with the
Secured Parties that, from and after the date of this Guarantee until the
Obligations are paid in full, no Letters of Credit are outstanding and the
Commitments are terminated, unless the Required Secured Parties shall otherwise
consent in writing, it will, and will cause each of the Subsidiaries to, comply
with each covenant set forth in Articles V and VI of the Credit Agreements to
the extent that it relates to such Guarantor.
10. AUTHORITY OF COLLATERAL AGENT. Each Guarantor acknowledges that
the rights and responsibilities of the Collateral Agent under this Guarantee
with respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, right, request, judgment or
other right or remedy provided for herein or resulting or arising out of this
Guarantee shall, as between the Collateral Agent and the other Secured Parties,
be governed by the Credit Agreements and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Guarantors, the Collateral Agent shall be conclusively
<PAGE>
7
presumed to be acting as agent for the other Secured Parties with full and valid
authority so to act or refrain from acting.
11. NOTICES. All notices, requests and demands to or upon any Secured
Party or Guarantor under this Guarantee shall be given in accordance with
Section 9.01 of the Credit Agreements.
12. SEVERABILITY. Any provision of this Guarantee or any other Loan
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The parties shall
endeavor in good-faith negotiations to replace the prohibited or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the prohibited or unenforceable provisions.
13. RIGHT OF SETOFF. If an Event of Default shall have occurred and be
continuing under the Credit Agreements, each Secured Party is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Secured Party to or for the credit or the account of a Guarantor against
any of and all the obligations of such Guarantor now or hereafter existing under
this Guarantee irrespective of whether or not such Secured Party shall have made
any demand under this Guarantee and although such obligations may be unmatured.
The rights of each Secured Party under this Section 13 are in addition to other
rights and remedies (including other rights of setoff) that such Secured Party
may have.
14. INTEGRATION. This Guarantee represents the agreement of the
Guarantors with respect to the subject matter hereof and there are no promises
or representations by any Guarantor or any Secured Party relative to the subject
matter hereof not reflected herein.
15. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES. (a) None of
the terms or provisions of this Guarantee may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by each Guarantor
and the Collateral Agent, PROVIDED that any provision of this Guarantee may be
waived by the Required Secured Parties pursuant to a letter or agreement
executed by the Collateral Agent or by facsimile transmission from the
Collateral Agent.
(b) No Secured Party shall by any act (except by a written instrument
pursuant to Section 15(a) hereof) or delay be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of any Secured Party, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or
<PAGE>
8
privilege hereunder or any course of dealing between the Collateral Agent and
any Guarantor shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by any Secured Party
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which such Secured Party would otherwise have on any
future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
16. SECTION HEADINGS. The section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
17. SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of each
Guarantor and each Secured Party and their permitted successors and assigns
except that no Guarantor shall have the right to assign its rights hereunder or
any interest herein (and any such attempted assignment shall be void) except as
expressly contemplated by this Guarantee or by the other Loan Documents.
18. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
19. COUNTERPARTS. This Guarantee may be executed in counterparts, each
of which shall constitute an original, but all of which, when taken together,
shall constitute but one instrument.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
UCAR INTERNATIONAL INC.
by: /s/ Corrado F. DeGasperis
---------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
UCAR GLOBAL ENTERPRISES INC.
by: /s/ Corrado F. DeGasperis
---------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
<PAGE>
EXHIBIT 10.3
SUBSIDIARY GUARANTEE AGREEMENT
SUBSIDIARY GUARANTEE AGREEMENT, dated as of October 19, 1995,
as amended and restated as of November 10, 1998 made by each U.S.
Subsidiary (collectively referred to as the "GUARANTORS"), in favor
of THE CHASE MANHATTAN BANK, a New York banking corporation as
collateral agent for the Secured Parties (such term and each other
capitalized term used but not defined herein having the meaning
given it in Article I of the Credit Agreements). Reference is made
to (i) the Credit Agreement dated as of October 19, 1995, as amended
and restated as of March 19, 1997 and November 10, 1998 (as the same
may be amended, supplemented or otherwise modified from time to
time, the "EXISTING CREDIT AGREEMENT"), among UCAR, the Borrower,
the Subsidiary Borrowers party thereto, the Lenders party thereto,
the Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent and (ii) the Credit
Agreement dated as of November 10, 1998 among UCAR, the Borrower,
UCAR S.A., the Lenders party thereto, The Chase Manhattan Bank, as
administrative agent and collateral agent, Credit Suisse First
Boston, as syndication agent, and Morgan Guaranty Trust Company of
New York, as syndication agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "TRANCHE C
FACILITY CREDIT AGREEMENT", and together with the Existing Credit
Agreement, the "CREDIT AGREEMENTS").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreements, the Lenders have
severally agreed to make Loans and the Fronting Banks have agreed to issue
Letters of Credit, upon the terms and subject to the conditions set forth
therein;
WHEREAS, the Borrower owns directly or indirectly all of the issued
and outstanding stock of each Guarantor;
WHEREAS, the proceeds of the Loans and the availability of the
Letters of Credit will be used in part to enable the Borrower to make valuable
transfers to some of the Guarantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrower and the Guarantors are engaged in related
businesses, and each Guarantor will derive substantial direct and indirect
benefit from the making of the Loans and the availability of the Letters of
Credit; and
WHEREAS, it is a condition precedent to the obligations of the
Lenders to make the Loans and the Fronting Banks to issue the Letters of Credit
that the Guarantors shall have executed and
<PAGE>
2
delivered this Guarantee to the Collateral Agent for the ratable benefit of the
Secured Parties.
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Credit Agreements and to induce the Lenders to
make their respective Loans and the Fronting Banks and to issue their respective
Letters of Credit, each of the Guarantors hereby agrees with the Collateral
Agent, for the ratable benefit of the Secured Parties, as follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms defined in the
Credit Agreements and used herein shall have the meanings given in the Credit
Agreements.
(b) "GUARANTEE": this Subsidiary Guarantee Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
(c) "OBLIGATIONS": (i) the unpaid principal of and premium, if any,
and interest (including interest accruing at the then applicable rate provided
in the Existing Credit Agreement after the maturity of the Loans thereunder and
interest accruing at the then applicable rate provided in the Existing Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any Credit Party
thereunder whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) on the Loans made under the Existing Credit
Agreement, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) the unpaid principal of and
premium, if any, and interest (including interest accruing at the then
applicable rate provided in the Tranche C Facility Credit Agreement after the
maturity of the Loans thereunder and interest accruing at the applicable rate
provided in the Tranche C Facility Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any Credit Party thereunder whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding) on the
Loans made under the Tranche C Facility Credit Agreement, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (iii) each payment required to be made by any Credit Party under
the Existing Credit Agreement, when and as due, including payments in respect of
reimbursements of L/C Disbursements, interest thereon and obligations to provide
cash collateral, (iv) each payment required to be made by any Credit Party under
the Tranche C Facility Credit Agreement, when and as due, and (v) all other
obligations and liabilities of every nature of the Credit Parties under the
Credit Agreements from time to time owed to the Secured Parties or any of them,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
which may arise under, out of, or in connection with, the Existing Credit
Agreement, the
<PAGE>
3
Tranche C Facility Credit Agreement, any Guarantee Agreement, any Security
Document or any other Loan Document and any obligation of the Borrower or any
Credit Party under either of the Credit Agreements to a Lender under either of
the Credit Agreements pursuant to an Interest/Exchange Rate Protection Agreement
or under any other document made, delivered or given in connection with any of
the foregoing, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including all fees and disbursements of counsel to the Collateral Agent or to
the Secured Parties that are required to be paid by the Borrower or any Credit
Party pursuant to the terms of the Existing Credit Agreement, the Tranche C
Facility Credit Agreement, any Guarantee Agreement, any Security Document, any
other Loan Document or any Interest/Exchange Rate Protection Agreement with a
Lender (all of the foregoing obligations collectively, the "OBLIGATIONS").
(d) "U.S. SUBSIDIARY": any Subsidiary incorporated or otherwise
organized in the United States of America.
(e) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guarantee shall refer to this Guarantee as a whole and
not to any particular provision of this Guarantee, and section references are to
this Guarantee unless otherwise specified. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase, "without limitation".
(f) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. GUARANTEE. (a) Subject to the provisions of Section 2(b), each
Guarantor hereby, jointly and severally, unconditionally and irrevocably, as a
primary obligor and not merely as a surety, guarantees to the Collateral Agent,
for the ratable benefit of the Secured Parties and their respective successors,
endorsees, transferees and assigns, the due, punctual and complete payment and
performance by the Credit Parties when and as due, whether at the stated
maturity, by acceleration, upon one or more dates set for prepayment, or
otherwise of the Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable Federal and state laws relating to the
insolvency of debtors (giving effect to the right of contribution set forth in
Section 3 and in the Indemnity, Subrogation and Contribution Agreement).
(c) Each Guarantor further agrees to pay any and all reasonable
expenses (including all reasonable fees and disbursements of counsel) which may
be paid or incurred by any Secured Party in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations and/or enforcing any rights with respect to, or
<PAGE>
4
collecting against, such Guarantor under this Guarantee. This Guarantee shall
remain in full force and effect until the Obligations are paid in full, no
Letters of Credit are outstanding and the Commitments are terminated,
notwithstanding that from time to time prior thereto while the Commitments are
in effect any Credit Party may be free from any Obligations.
(d) Each Guarantor agrees that the Obligations may at any time and
from time to time exceed the maximum amount of the liability of such Guarantor
hereunder without impairing this Guarantee or affecting the rights and remedies
of the Collateral Agent or any Secured Party hereunder.
(e) Each Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to the Collateral Agent for the benefit of any
Secured Party on account of its liability hereunder, it will notify the
Collateral Agent in writing that such payment is made under this Guarantee for
such purpose, provided that the failure of such Guarantor to provide such notice
shall not preclude the application of such payment to the complete or partial
satisfaction of such Guarantor's obligations hereunder following such
Guarantor's notice to the Collateral Agent of such payment.
3. RIGHT OF CONTRIBUTION. Each Guarantor hereby agrees that to the
extent that any Guarantor shall have paid more than its proportionate share of
any payment made hereunder, such Guarantor shall have the rights with respect to
such amounts set forth in the Indemnity, Subrogation and Contribution Agreement.
Each Guarantor's right of contribution shall be subject to the terms and
conditions of Section 4 hereof. The provisions of this Section shall in no
respect limit the obligations and liabilities of any Guarantor to the Secured
Parties, and each Guarantor shall (subject to Section 2(b)) remain liable to the
Secured Parties for the full amount guaranteed by such Guarantor hereunder.
4. NO SUBROGATION. Notwithstanding any payment or payments made by any
of the Guarantors hereunder or any setoff or application of funds of any of the
Guarantors by any Secured Party, no Guarantor shall be entitled to be subrogated
to any of the rights of any Secured Party against any Credit Party or any other
Guarantor or any collateral security or guarantee or right of offset held by any
Secured Party for the payment of the Obligations, nor shall any Guarantor seek
or be entitled to seek any contribution or reimbursement from any Credit Party
or any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Secured Parties by any Credit Party on account of
the Obligations are paid in full, no Letters of Credit are outstanding and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full, Letters of Credit are outstanding and the
Commitments shall not have been terminated, such amount shall be held by such
Guarantor in trust for the Secured Parties, segregated from other funds of such
Guarantor, and shall forthwith upon receipt by such Guarantor be turned over to
the Collateral Agent in the exact form received by such Guarantor (duly endorsed
by such Guarantor to the Collateral
<PAGE>
5
Agent, if required), to be applied against the Obligations, whether matured or
unmatured, at such time and in such order as the Collateral Agent may determine.
5. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF RIGHTS.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Obligations made
by any Secured Party may be rescinded by such party and any of the Obligations
continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by any Secured Party, and the Credit Agreements, any
other Loan Document, any Interest/Exchange Rate Protection Agreement and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Collateral
Agent (or the Required Secured Parties, as the case may be) or the relevant
Secured Party (in the case of any such Interest/Exchange Rate Protection
Agreement) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by any Secured Party for the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released. No Secured Party shall have any obligation to protect, secure, perfect
or insure any Lien at any time held by it as security for the Obligations or for
this Guarantee or any property subject thereto. When making any demand hereunder
against any of the Guarantors, any Secured Party may, but shall be under no
obligation to, make a similar demand on any Credit Party or any other Guarantor
or guarantor, and any failure by any Secured Party to make any such demand or to
collect any payments from any Credit Party or any such other Guarantor or
guarantor or any release of any Credit Party or such other Guarantor or
guarantor shall not relieve any of the Guarantors in respect of which a demand
or collection is not made or any of the Guarantors not so released of their
several obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of any Secured
Party against any of the Guarantors.
6. SECURITY. Each of the Guarantors authorizes each of the other
Secured Parties, in accordance with the terms and subject to the conditions set
forth in the Security Documents to which such Guarantor is a party, to (a) take
and hold security for the payment of this guarantee or the Obligations and
exchange, enforce, waive and release any such security, (b) apply such security
and direct the order or manner of sale thereof as they in their sole discretion
determine and (c) release or substitute any one or more endorsees, other
guarantors or other obligors.
7. GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Secured Party upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
<PAGE>
6
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between any Credit Party and any of the Guarantors, on the one hand,
and any of the Secured Parties, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon any Credit Party or any
of the Guarantors with respect to the Obligations. Each Guarantor understands
and agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment, and not of collection, and without regard to
(a) the validity, regularity or enforceability of the Credit Agreements, any
other Loan Document, any Interest/Exchange Rate Protection Agreement, any of the
Obligations or any other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by any Secured
Party, (b) any defense, set-off or counterclaim (other than a defense of payment
or performance) which may at any time be available to or be asserted by any
Credit Party against any Secured Party, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of any Secured Party, any Credit Party
or such Guarantor) which may or might in any manner or to any extent vary the
risk of the Guarantor or otherwise constitutes, or might be construed to
constitute, an equitable or legal discharge of any Credit Party for the
Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against any
Guarantor, any Secured Party may, but shall be under no obligation to, pursue
such rights and remedies as it may have against any Credit Party or any other
person (including any other Guarantor) or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto, and
any failure by any Secured Party to pursue such other rights or remedies or to
collect any payments from any Credit Party or any such other person (including
any other Guarantor) or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of any Credit
Party or any such other person (including any other Guarantor) or any such
collateral security, guarantee or right of offset, shall not relieve such
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of any
Secured Party against such Guarantor. This Guarantee shall remain in full force
and effect and be binding in accordance with and to the extent of its terms upon
each Guarantor and the successors and assigns thereof, and shall inure to the
benefit of each Secured Party, and its successors, indorsees, transferees and
assigns, until all the Obligations and the obligations of the Guarantor under
this Guarantee shall have been satisfied by payment in full, no Letters of
Credit shall be outstanding and the Commitments shall have been terminated,
notwithstanding that from time to time while the Commitments are in effect
during the term of the Credit Agreements any Credit Party may be free from any
Obligations.
8. REINSTATEMENT. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is
<PAGE>
7
rescinded or must otherwise be restored or returned by any Secured Party for any
reason whatsoever, including, without limitation, upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Credit Party or
any Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, any Credit
Party or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
9. PAYMENTS. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Collateral Agent without setoff or counterclaim in Dollars
at the office of the Collateral Agent located at 270 Park Avenue, New York, New
York 10017.
10. INFORMATION. Each of the Guarantors assumes all responsibility for
being and keeping itself informed of the Credit Parties' financial condition and
assets and of all other circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that such Guarantor
assumes and incurs hereunder, and agrees that none of the Secured Parties will
have any duty to advise any of the Guarantors of information known to it or any
of them regarding such circumstances or risks.
11. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and
warrants to and with each Secured Party that all representations and warranties
in the Loan Documents that relate to such Guarantor are true and correct in all
material respects.
12. AUTHORITY OF COLLATERAL AGENT. Each Guarantor acknowledges that
the rights and responsibilities of the Collateral Agent under this Guarantee
with respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, right, request, judgment or
other right or remedy provided for herein or resulting or arising out of this
Guarantee shall, as between the Collateral Agent and the other Secured Parties,
be governed by the Credit Agreements and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Collateral Agent and each Guarantor, the Collateral Agent shall be conclusively
presumed to be acting as agent for the other Secured Parties with full and valid
authority so to act or refrain from acting.
13. NOTICES. All notices, requests and demands to or upon any Secured
Party or any Guarantor under this Guarantee shall be given or made in accordance
with Section 9.01 of the Credit Agreements and addressed as follows:
(a) if to any Secured Party, UCAR or any Credit Party, at its
address or transmission number for notices provided in Section 9.01 of the
Credit Agreements; and
(b) if to any Guarantor that is not a Credit Party, at its address
or transmission number for notices set forth under its signature below.
<PAGE>
8
The Collateral Agent, each Secured Party and each Guarantor may change
its address and transmission numbers for notices by notice in the manner
provided in this Section.
14. RELEASE. Each Guarantor shall be released from its guarantee
hereunder in the event that all of the capital stock of such Guarantor shall be
sold, transferred or otherwise disposed of, in accordance with the terms of the
Credit Agreements, by the Borrower or UCAR or any other person that shall own
such stock, to a person that is not UCAR, the Borrower or a Subsidiary.
15. COUNTERPARTS. This Guarantee may be executed by one or more of the
Guarantors in any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the counterparts of this Guarantee signed by all the Guarantors shall be
lodged with the Collateral Agent.
16. SEVERABILITY. Any provision of this Guarantee or any other Loan
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The parties shall
endeavor in good-faith negotiations to replace the prohibited or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the prohibited or unenforceable provisions.
17. RIGHT OF SETOFF. If an Event of Default shall have occurred and be
continuing under the Credit Agreements, each Secured Party is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Secured Party to or for the credit or the account of any Guarantor
against any of and all the obligations of such Guarantor now or hereafter
existing under this Guarantee irrespective of whether or not such Secured Party
shall have made any demand under this Guarantee and although such obligations
may be unmatured. The rights of each Secured Party under this Section 17 are in
addition to other rights and remedies (including other rights of setoff) and
such Secured Party may have.
18. INTEGRATION. This Guarantee represents the agreement of each
Guarantor with respect to the subject matter hereof and there are no promises or
representations by any Guarantor or any Secured Party relative to the subject
matter hereof not reflected herein.
19. AMENDMENTS IN WRITING; NO WAIVER, CUMULATIVE REMEDIES. (a) None of
the terms or provisions of this Guarantee may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by each Guarantor
and the Collateral Agent, PROVIDED that any provision of this Guarantee may be
waived by the Required Secured Parties pursuant to a letter
<PAGE>
9
or agreement executed by the Collateral Agent or by telecopy transmission from
the Collateral Agent.
(b) No Secured Party shall by any act (except by a written instrument
pursuant to Section 19(a) hereof) or delay be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of any Secured Party, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which such
Secured Party would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
20. SECTION HEADINGS. The section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
21. SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of each
Guarantor and each Secured Party and their successors and assigns; PROVIDED that
this Guarantee may not be assigned by any Guarantor without the prior written
consent of the Collateral Agent.
22. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
23. SUBMISSION TO JURISDICTION; WAIVERS. Each Guarantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Guarantee and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
<PAGE>
10
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Guarantor at its address set forth in Section 13 or at such other address
of which the Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
24. ADDITIONAL GUARANTORS. Pursuant to Section 5.11 of the Credit
Agreements, each U.S. Subsidiary that was not in existence or not a U.S.
Subsidiary on the date thereof is required to enter into this Agreement as a
Guarantor upon becoming a U.S. Subsidiary. Upon execution and delivery, after
the date hereof, by the Collateral Agent and such U.S. Subsidiary of an
instrument in the form of Annex 1, such U.S. Subsidiary shall become a Guarantor
hereunder with the same force and effect as if originally named as a Guarantor
hereunder. The execution and delivery of any such instrument shall not require
the consent of any Guarantor hereunder. The rights and obligations of each
Guarantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Guarantor as a party to this Guarantee.
25. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 25.
<PAGE>
11
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
EACH OF THE GUARANTORS LISTED ON
SCHEDULE I HERETO
by: /s/ Corrado F. DeGasperis
---------------------------------------
Name: Corrado F. DeGasperis
Title: Attorney-in-Fact
<PAGE>
SCHEDULE I
TO SUBSIDIARY GUARANTEE AGREEMENT
GUARANTORS
UCAR Carbon Company Inc.
UCAR Carbon Technology Corporation
UCAR Holdings Inc.
UCAR Holdings II Inc.
UCAR Holdings III Inc.
UCAR International Trading Inc.
Union Carbide Grafito, Inc.
UCAR Composites Inc.
1
<PAGE>
EXHIBIT A-1 TO
SUBSIDIARY GUARANTEE
AGREEMENT
SUPPLEMENT NO. dated as of [ ],
to the Subsidiary Guarantee Agreement dated as of October
19, 1995, as amended and restated as of November 10, 1998
(the "SUBSIDIARY GUARANTEE AGREEMENT"), each of the
Guarantors (such term and each other capitalized term used
but not defined having the meaning given it in the
Subsidiary Guarantee Agreement, and if not defined therein,
having the meaning given it in Article I of the Credit
Agreements) party thereto (together with the Borrower, the
"GUARANTORS") and THE CHASE MANHATTAN BANK, a New York
banking corporation, as collateral agent (the "COLLATERAL
AGENT") for the Secured Parties.
A. Reference is made to the Credit Agreement dated as of October 19,
1995, as amended and restated as of March 19, 1997 and November 10, 1998 (as the
same may be amended, supplemented or otherwise modified from time to time, the
"EXISTING CREDIT AGREEMENT"), among UCAR INTERNATIONAL INC., a Delaware
corporation ("UCAR"), the Borrower, the Subsidiary Borrowers party thereto, the
Lenders party thereto, the Fronting Banks party thereto, and The Chase Manhattan
Bank, as administrative agent and as collateral agent and (ii) the Credit
Agreement dated as of November 10, 1998, among UCAR, the Borrower, UCAR S.A.,
the Lenders party thereto, The Chase Manhattan Bank, as administrative agent and
collateral agent, Credit Suisse First Boston, as syndication agent, and Morgan
Guaranty Trust Company of New York, as syndication agent (as the same may be
amended, supplemented or otherwise modified from time to time, the "TRANCHE C
FACILITY CREDIT AGREEMENT", and together with the Existing Credit Agreement, the
"CREDIT AGREEMENTS").
B. The U.S. Subsidiaries have entered into the Subsidiary Guarantee
Agreement in order to induce the Lenders to make Loans and induce the Fronting
Banks to issue Letters of Credit pursuant to, and upon the terms and subject to
the conditions specified in, the Credit Agreements. Pursuant to Section 5.11 of
the Credit Agreements, each U.S. Subsidiary that was not in existence or not a
U.S. Subsidiary on the date thereof is required to enter into the Subsidiary
Guarantee Agreement as a Guarantor upon becoming a U.S. Subsidiary. Section 24
of the Subsidiary Guarantee Agreement provides that additional U.S. Subsidiaries
may become Guarantors under the Subsidiary Guarantee Agreement by execution and
delivery of an instrument in the form of this Supplement. The undersigned (the
"NEW GUARANTOR") is a U.S. Subsidiary and is executing this Supplement in
accordance with the requirements of the Credit Agreements to become a Guarantor
under the Subsidiary Guarantee Agreement in order to induce the Lenders to make
additional Loans and the Fronting Banks to issue additional Letters of Credit
and as consideration for Loans previously made and Letters of Credit previously
issued.
<PAGE>
2
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 24 of the Subsidiary Guarantee
Agreement, the New Guarantor by its signature below becomes a Guarantor under
the Subsidiary Guarantee Agreement with the same force and effect as if
originally named therein as a Guarantor and the New Guarantor hereby agrees to
all the terms and provisions of the Subsidiary Guarantee Agreement applicable to
it as a Guarantor thereunder. Each reference to a "GUARANTOR" in the Subsidiary
Guarantee Agreement shall be deemed to include the New Guarantor. The Subsidiary
Guarantee Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Secured
Parties that this Supplement has been duly authorized, executed and delivered by
it and constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, subject to the effects of applicable
bankruptcy, insolvency or similar laws effecting creditors' rights generally and
equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Supplement shall
become effective when the Collateral Agent shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Guarantor and the Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Subsidiary
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the eco nomic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreements. All communications and
notices hereunder to the New Guarantor shall be given to it at the address set
forth under its signature, with a copy to the Borrower.
<PAGE>
3
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Subsidiary Guarantee Agreement as of the
day and year first above written.
[NAME OF NEW GUARANTOR],
by
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.4
INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT
INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT dated as of
October 19, 1995, as amended and restated as of November 10, 1998, among
UCAR INTERNATIONAL INC., a Delaware corporation ("UCAR"), UCAR GLOBAL
ENTERPRISES INC., a Delaware corporation, as borrower (the "BORROWER"),
each of the U.S. Subsidiaries party hereto (collectively, the "SUBSIDIARY
GUARANTORS"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as collateral agent for the Secured Parties (such term and
each other capitalized term used but not defined herein having the meaning
given it in Article I of the Credit Agreements). Reference is made to (i)
the Credit Agreement dated as of October 19, 1995, as amended and restated
as of March 19, 1997 and November 10, 1998 (as the same may be amended,
supplemented or otherwise modified from time to time, the "EXISTING CREDIT
AGREEMENT"), among UCAR, the Borrower, the Subsidiary Borrowers party
thereto, the Lenders party thereto, the Fronting Banks party thereto and
The Chase Manhattan Bank, as administrative agent and collateral agent and
(ii) the Credit Agreement dated as of November 10, 1998 among UCAR, the
Borrower, UCAR S.A., the Lenders party thereto, The Chase Manhattan Bank,
as administrative agent and collateral agent, Credit Suisse First Boston,
as syndication agent, and Morgan Guaranty Trust Company of New York, as
syndication agent (as the same may be amended, supplemented or otherwise
modified from time to time, the "TRANCHE C FACILITY CREDIT AGREEMENT", and
together with the Existing Credit Agreement, the "CREDIT AGREEMENTS").
The Lenders and the Fronting Banks, respectively, have agreed to
make Loans and to issue Letters of Credit pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreements. Each of the
Subsidiary Guarantors has agreed to guarantee, among other things, all the
obligations of the Borrower and the other Credit Parties under the Credit
Agreements.
The obligations of the Lenders to make the Loans and of the Fronting
Banks to issue the Letters of Credit under the Credit Agreements are conditioned
upon, among other things, the execution and delivery by the Subsidiary
Guarantors of an indemnity, subrogation and contribution agreement in the form
hereof (the "AGREEMENT") to support the due and punctual payment of, with
respect to each Subsidiary Guarantor, its obligations as obligor or guarantor in
respect of (a) the unpaid principal of and premium, if any, and interest
(including interest accruing at the then applicable rate provided in the
Existing Credit Agreement after the maturity of the Loans thereunder and
interest accruing at the then applicable rate provided in the Existing Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any Credit Party
thereunder whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) on the Loans made under the Existing Credit
Agreement,
<PAGE>
2
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (b) the unpaid principal of and premium, if
any, and interest (including interest accruing at the then applicable rate
provided in the Tranche C Facility Credit Agreement after the maturity of the
Loans thereunder and interest accruing at the applicable rate provided in the
Tranche C Facility Credit Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any Credit Party thereunder whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) on the
Loans made under the Tranche C Facility Credit Agreement, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (c) each payment required to be made by any Credit Party under the
Existing Credit Agreement, when and as due, including payments in respect of
reimbursements of L/C Disbursements, interest thereon and obligations to provide
cash collateral, (d) each payment required to be made by any Credit Party under
the Tranche C Facility Credit Agreement, when and as due, and (e) all other
obligations and liabilities of every nature of the Credit Parties under the
Credit Agreements from time to time owed to the Secured Parties or any of them,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
which may arise under, out of, or in connection with, the Existing Credit
Agreement, the Tranche C Facility Credit Agreement, any Guarantee Agreement, any
Security Document or any other Loan Document and any obligation of the Borrower
or any Credit Party under either of the Credit Agreements to a Lender under
either Credit Agreements pursuant to an Interest/Exchange Rate Protection
Agreement or under any other document made, delivered or given in connection
with any of the foregoing, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including all fees and disbursements of counsel to the Collateral
Agent or to the Secured Parties that are required to be paid by the Borrower or
any Credit Party pursuant to the terms of the Existing Credit Agreement, the
Tranche C Facility Credit Agreement, any Guarantee Agreement, any Security
Document, any other Loan Document or any Interest/Exchange Rate Protection
Agreement with a Lender (all of the foregoing obligations collectively, the
"OBLIGATIONS").
Accordingly, UCAR and the Borrower, each Subsidiary Guarantor and
the Collateral Agent agree as follows:
SECTION 1. INDEMNITY AND SUBROGATION. In addition to all such rights
of indemnity and subrogation as the Subsidiary Guarantors may have under
applicable law (but subject to Sec tion 3), UCAR and the Borrower agree that (a)
in the event a pay ment shall be made by any Subsidiary Guarantor under the
Subsidiary Guarantee Agreement, UCAR and the Borrower shall indemnify such
Subsidiary Guarantor for the full amount of such payment and such Subsidiary
Guarantor shall be subrogated to the rights of the person to whom such payment
shall have been made to
<PAGE>
3
the extent of such payment and (b) in the event any assets of any Subsidiary
Guarantor shall be sold pursuant to any applicable security agreement or similar
instrument or agreement to satisfy a claim of any Secured Party, UCAR and the
Borrower shall indemnify such Subsidiary Guarantor in an amount equal to the
greater of the book value or the fair market value of the assets so sold.
SECTION 2. CONTRIBUTION AND SUBROGATION. Each Subsidiary Guarantor
agrees (subject to Section 3) that in the event a payment shall be made by any
Subsidiary Guarantor under the Subsidiary Guarantee Agreement or assets of any
Subsidiary Guarantor shall be sold pursuant to any applicable security agreement
or similar instrument or agreement to satisfy a claim of any Secured Party, and
such Subsidiary Guarantor (the "CLAIMING SUBSIDIARY GUARANTOR") shall not have
been indemnified by UCAR or the Borrower as provided in Section 1, each other
Subsidiary Guarantor (a "CONTRIBUTING SUBSIDIARY GUARANTOR") shall indemnify the
Claiming Subsidiary Guarantor in an amount equal to the amount of such payment
or the greater of the book value or the fair market value of such assets, as the
case may be, multiplied by a fraction of which the numerator shall be the net
worth of the Contributing Subsidiary Guarantor on the date hereof and the
denominator shall be the aggregate net worth of all the Subsidiary Guarantors on
the date hereof (or, in the case of any Subsidiary Guarantor becoming a party
hereto pursuant to Section 16, the date of the Supplement hereto executed and
delivered by such Subsidiary Guarantor). Any Contributing Subsidiary Guarantor
making any payment to a Claiming Subsidiary Guarantor pursuant to this Section 2
shall be subrogated to the rights of such Claiming Subsidiary Guarantor under
Section 1 to the extent of such payment.
SECTION 3. SUBORDINATION. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Subsidiary Guarantors under
Sections 1 and 2 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full of the Obligations. No failure on the part of UCAR,
the Borrower or any Subsidiary Guarantor to make the payments required by
Sections 1 and 2 (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and liabilities of any
other Subsidiary Guarantor with respect to any Guarantee, and each Subsidiary
Guarantor shall remain liable for the full amount of the Obligations that such
Subsidiary Guarantor has otherwise guaranteed.
SECTION 4. TERMINATION. This Agreement shall terminate when all the
Obligations have been indefeasibly paid in full, no Letters of Credit are
outstanding and the Secured Parties have no further Commitments under the Credit
Agreements.
SECTION 5. CONTINUED EFFECTIVENESS. UCAR, the Borrower and each
Subsidiary Guarantor further agree that this Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Obligation is rescinded or must
otherwise be restored by any Secured Party or any Subsidiary Guarantor upon the
<PAGE>
4
bankruptcy or reorganization of UCAR, the Borrower, any Subsidiary Guarantor or
otherwise.
SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent, any Secured Party, or any Guarantor in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power or any abandonment or discontinuance
of steps to enforce such a right or power preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and the remedies
of the Secured Parties under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provisions of this Agreement or consent to any departure by any Subsidiary
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in similar or
other circumstances.
(b) Except for the operation of Section 16 of this Agreement,
neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to a written agreement entered into between the
Subsidiary Guarantors and the Collateral Agent, with the prior written consent
of the Required Secured Parties.
SECTION 8. NOTICES. All communications and notices hereunder shall
be in writing and given as provided in the Credit Agreements, except those to
any Subsidiary Guarantor that is not a Credit Party, which shall be directed to
the address set forth under its signature below.
SECTION 9. BINDING AGREEMENT; ASSIGNMENTS. This Agreement shall
become effective as to each of UCAR, the Borrower or any Subsidiary Guarantor
when a counterpart hereof executed on behalf of UCAR, the Borrower or such
Subsidiary Guarantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon each of UCAR, the Borrower or such
Subsidiary Guarantor and the Collateral Agent and their respective successors
and permitted assigns, and shall inure to the benefit of such Subsidiary
Guarantor and the Secured Parties, and their respective successors and permitted
assigns, except that no Subsidiary Guarantor shall have the right to assign its
rights hereunder or any interest herein (and any such attempted assignment shall
be void), except as expressly contemplated by this Agreement or the other Loan
Documents.
SECTION 10. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any
of the parties hereto is referred to, such reference
<PAGE>
5
shall be deemed to include the successors and permitted assigns of such party,
and all covenants, promises and agreements by or on behalf of each of UCAR, the
Borrower or any Subsidiary Guarantor or the Collateral Agent that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and permitted assigns.
SECTION 11. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All covenants,
agreements, representations and warranties made by each of UCAR, the Borrower
and each Subsidiary Guarantor herein and in any certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied
upon by the Secured Parties and each Subsidiary Guarantor and shall survive the
making by the Lenders of the Loans, the execution and delivery to the Lenders of
the Loan Documents and the issuance by any Fronting Bank of the Letters of
Credit, regardless of any investigation made by the Secured Parties or on their
behalf, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Loan or L/C Disbursement or any Fee or any other
amount payable under, or in respect of, this Agreement or under any of the other
Loan Documents (other than any Local Facility Loan Document that is not
supported in any way by any Loan Document (other than another Local Facility
Loan Document)) is outstanding and unpaid and so long as any Letter of Credit is
outstanding and so long as the Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument.
SECTION 13. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.02 of the Credit Agreements shall be applicable to this
Agreement.
SECTION 14. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of
UCAR, the Borrower and each Subsidiary Guarantor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any
<PAGE>
6
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment related to any such
action or proceeding, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any Loan
Party or any Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement against UCAR, the Borrower or any Subsidiary
Guarantor or any Secured Party or their properties in the courts of any
jurisdiction.
(b) Each of UCAR, the Borrower, each Subsidiary Guarantor and each
Secured Party hereby irrevocably and uncondi tionally waives, to the fullest
extent it may legally and effectively do so, any objection it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any New York State or Federal court.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 15. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.
SECTION 16. ADDITIONAL SUBSIDIARY GUARANTORS. Pursuant to Section
5.11 of the Credit Agreements, each Subsidiary incorporated or otherwise
organized in the United States of America (a "U.S. SUBSIDIARY") that was not in
existence or not a Subsidiary on the date thereof is required to enter into this
Agreement as a Subsidiary Guarantor upon becoming a Subsidiary. Upon execution
and delivery, after the date hereof, by the Collateral Agent and a U.S.
Subsidiary of an instrument in the form of Annex 1, such U.S. Subsidiary shall
become a Subsidiary Guarantor hereunder with the same force and effect as if
originally named as a Subsidiary Guarantor hereunder. The execution and delivery
of any such instrument shall not require
<PAGE>
7
the consent of any Subsidiary Guarantor hereunder. The rights and obligations of
each Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.
SECTION 17. HEADINGS. Article and Section headings used herein are
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpretive,
this Agreement.
<PAGE>
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first appearing
above.
UCAR INTERNATIONAL INC.
by /s/ Corrado F. DeGasperis
---------------------------
Name: Corrado F. DeGasperis
Title: Controller
UCAR GLOBAL ENTERPRISES INC.
by /s/ Corrado F. DeGasperis
---------------------------
Name: Corrado F. DeGasperis
Title: Controller
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO
by /s/ Corrado F. DeGasperis
---------------------------
Name: Corrado F. DeGasperis
Title: Controller
THE CHASE MANHATTAN BANK, as
Collateral Agent
by /s/ Marian Schulman
---------------------------
Name: Marian Schulman
Title: Vice President
<PAGE>
9
SCHEDULE I
TO INDEMNITY SUBROGATION
AND CONTRIBUTION AGREEMENT
SUBSIDIARY GUARANTORS
UCAR Carbon Company Inc.
UCAR Carbon Technology Corporation
UCAR Holdings Inc.
UCAR Holdings II Inc.
UCAR Holdings III Inc.
UCAR International Trading Inc.
Union Carbide Grafito, Inc.
UCAR Composites Inc.
<PAGE>
1
ANNEX I TO
INDEMNITY, SUBROGATION
AND CONTRIBUTION AGREEMENT
SUPPLEMENT NO. dated as of [ ], to the Indemnity,
Subrogation and Contribution Agreement dated as of as of
October 19, 1995, as amended and restated as of November 10,
1998 (the "INDEMNITY, SUBROGATION AND CONTRIBUTION
AGREEMENT"), among UCAR INTERNATIONAL INC., a Delaware
corporation ("UCAR"), UCAR GLOBAL ENTERPRISES INC., a Delaware
corporation (the "BORROWER"), each of Subsidiary Guarantors
(each capitalized term used but not defined having the meaning
given it in the Indemnity, Subrogation and Contribution
Agreement or the Credit Agreements) party thereto and THE
CHASE MANHATTAN BANK, a New York banking corporation, as
Collateral Agent for the Secured Parties.
A. Reference is made to (i) the Credit Agreement dated as of October
19, 1995, as amended and restated as of March 19, 1997 and November 10, 1998 (as
the same may be amended, supplemented or otherwise modified from time to time,
the "EXISTING CREDIT AGREEMENT") among UCAR, the Borrower, the Subsidiary
Borrowers party thereto, the Lenders party thereto, the Fronting Banks party
thereto and The Chase Manhattan Bank, as administrative agent and collateral
agent and (ii) the Credit Agreement dated as of November 10, 1998, among UCAR,
the Borrower, UCAR S.A., the Lenders party thereto, The Chase Manhattan Bank, as
administrative agent and collateral agent, Credit Suisse First Boston, as
syndication agent, and Morgan Guaranty Trust Company of New York, as syndication
agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "TRANCHE C FACILITY CREDIT AGREEMENT", and together with the
Existing Credit Agreement, the "CREDIT AGREEMENTS").
B. Certain Subsidiary Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Fronting Banks to issue Letters of Credit pursuant to, and upon
the terms and subject to the conditions specified in, the Credit Agreements.
Pursuant to Section 5.11 of the Credit Agreements, promptly after its creation
or acquisition, each additional U.S. Subsidiary is required to become a party to
the Indemnity, Subrogation and Contribution Agreement as a Subsidiary Guarantor.
Section 16 of the Indemnity, Subrogation and Contribution Agreement provides
that additional U.S. Subsidiaries may become Subsidiary Guarantors under the
Indemnity, Subrogation and Contribution Agreement by execution and delivery of
an instrument in the form of this Supplement. The undersigned (the "NEW
SUBSIDIARY GUARANTOR") is a U.S. Subsidiary and is executing this Supplement in
accordance with the require ments of the Credit Agreements to become a
Subsidiary Guarantor under the Indemnity, Subrogation and Contribution Agreement
in order to induce the Lenders to make additional Loans and the Fronting Banks
to issue additional Letters of Credit and as consideration for Loans previously
made and Letters of Credit previously issued.
<PAGE>
2
Accordingly, the Collateral Agent and the New Subsidiary Guarantor
agree as follows:
SECTION 1. In accordance with Section 16 of the Indemnity,
Subrogation and Contribution Agreement, the New Subsidiary Guarantor by its
signature below becomes a Subsidiary Guarantor under the Indemnity, Subrogation
and Contribution Agreement with the same force and effect as if originally named
therein as a Subsidiary Guarantor and the New Subsidiary Guarantor hereby agrees
to all the terms and provisions of the Indemnity, Subrogation and Contribution
Agreement applicable to it as a Subsidiary Guarantor thereunder. Each reference
to a "Subsidiary Guarantor" in the Indemnity, Subrogation and Contribution
Agreement shall be deemed to include the New Subsidiary Guarantor. The
Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Subsidiary Guarantor represents and warrants to
the Secured Parties that this Supplement has been duly authorized, executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to the effects of
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Supplement shall
become effective when the Collateral Agent shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Subsidiary Guarantor and the Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. If any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Indemnity, Subrogation and Contribution Agreement shall not in
any way be affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreement. All communications and
notices hereunder to the New Subsidiary
<PAGE>
3
Guarantor shall be given to it at the address set forth under its signature,
with a copy to the Borrower.
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Collateral
Agent have duly executed this Supplement to the Indemnity, Subrogation and
Contribution Agreement as of the day and year first above written.
[NAME OF NEW SUBSIDIARY
GUARANTOR],
by_____________________________
Name: ____________________
Title: ____________________
Address: ____________________
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by_____________________________
Name: ____________________
Title: ____________________
<PAGE>
EXHIBIT 10.5
DOMESTIC PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of October 19, 1995, as amended and
restated as of November 10, 1998 (the "PLEDGE AGREEMENT"), by UCAR
INTERNATIONAL INC., a Delaware corporation ("UCAR"), UCAR GLOBAL
ENTERPRISES INC., a Delaware corporation (the "BORROWER"), and certain
U.S. Subsidiaries that are signatories hereto ("PLEDGOR SUBSIDIARIES" and,
together with UCAR and the Borrower, the "PLEDGORS"), in favor of THE
CHASE MANHATTAN BANK, a New York banking corporation, as collateral agent
for the Secured Parties (such term and each other capitalized term used
but not defined herein having the meaning given it in Article I of the
Credit Agreements). Reference is made to (i) the Credit Agreement dated as
of October 19, 1995, as amended and restated as of March 19, 1997 and
November 10, 1998 (as the same may be amended, supplemented or otherwise
modified from time to time, the "EXISTING CREDIT AGREEMENT"), among UCAR,
the Borrower, the Subsidiary Borrowers party thereto, the Lenders party
thereto, the Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent and (ii) the Credit Agreement
dated as of November 10, 1998, among UCAR, the Borrower, UCAR S.A., the
Lenders party thereto, The Chase Manhattan Bank, as administrative agent
and collateral agent, Credit Suisse First Boston, as syndication agent,
and Morgan Guaranty Trust Company of New York, as syndication agent (as
the same may be amended, supplemented or otherwise modified from time to
time, the "TRANCHE C FACILITY CREDIT AGREEMENT", and together with the
Existing Credit Agreement, the "CREDIT AGREEMENTS").
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreements, the Lenders have severally
agreed to make Loans and the Fronting Banks have agreed to issue Letters of
Credit, upon the terms and subject to the conditions set forth therein;
WHEREAS, the Pledgors are the legal and beneficial owners of the
shares of Pledged Stock issued by the Issuers;
WHEREAS, it is a condition precedent to the obligations of the Lenders
to make the Loans and the Fronting Banks to issue the Letters of Credit that the
U.S. Subsidiaries guarantee payment and performance of the Credit Parties'
obligations under the Credit Agreements and the other Loan Documents, that the
Borrower guarantee payment and performance of the other Credit Parties'
obligations under the Credit Agreements and the other Loan Documents and that
UCAR guarantee payment and performance of the Borrower's obligations, including
its obligations as a guarantor, under the Credit Agreements and the other Loan
Documents;
<PAGE>
2
WHEREAS, in satisfaction of such condition, the Pledgors have entered
into certain Guarantee Agreements for the benefit of the Secured Parties; and
WHEREAS, it is a further condition precedent to the obligations of the
Lenders to make the Loans and the Fronting Banks to issue the Letters of Credit
that the Pledgors shall have executed and delivered this Pledge Agreement to the
Collateral Agent for the ratable benefit of the Secured Parties, to secure
payment and performance of the Pledgors' respective obligations under the Credit
Agreements, the Guarantee Agreements and the other Loan Documents to which they
are party.
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Credit Agreements and to induce the Lenders to
make their respective Loans and the Fronting Banks to issue their respective
Letters of Credit, each of the Pledgors hereby agrees with the Collateral Agent,
for the ratable benefit of the Secured Parties, as follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms defined
in the Credit Agreements and used herein shall have the meanings given in the
Credit Agreements.
(b) The following terms shall have the following meanings:
"ADDITIONAL COLLATERAL": (i) all notes held by any Pledgor
evidencing intercompany debt in an amount greater than $10,000,000
owed by UCAR, the Borrower or any Subsidiary to any Pledgor, and (ii)
any noncash consideration as described in Section 6.04(c) of the
Credit Agreements, including notes, in each case having a stated
amount or value in excess of $1,000,000, received by any Pledgor for a
sale of assets permitted under Section 6.05 of the Credit Agreements.
Notwithstanding anything to the contrary in this Agreement, in no
event shall any Pledgor be required to pledge hereunder any of the
items described in this definition if such pledge would have material
adverse tax or legal consequences.
"AGREEMENT": this Pledge Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"CODE": the Uniform Commercial Code from time to time in
effect in the State of New York.
"COLLATERAL": the Pledged Stock, Additional Collateral and
all Proceeds thereof.
"COLLATERAL ACCOUNT": any account established to hold money
Proceeds, maintained under the sole dominion and control of and on
terms and conditions reasonably satisfactory to the Collateral Agent,
subject to withdrawal by the Collateral Agent for the account of the
Secured
<PAGE>
3
Parties and the Pledgors, as provided in Section 8(a) and Section 15.
"FOREIGN SUBSIDIARY": any Subsidiary incorporated or
otherwise organized outside the United States of America.
"INDEMNITEE": the Secured Parties and their respective
officers, directors, trustees, affiliates and controlling persons.
"ISSUERS": the collective reference to the companies
identified on SCHEDULE I attached hereto as the issuers of the Pledged
Stock and each issuer of any securities included in the Additional
Collateral; each, individually, an "ISSUER."
"OBLIGATIONS": with respect to each Pledgor, the collective
reference to its obligations as obligor or guarantor in respect of (i)
the unpaid principal of and premium, if any, and interest (including
interest accruing at the then applicable rate provided in the Existing
Credit Agreement after the maturity of the Loans thereunder and
interest accruing at the then applicable rate provided in the Existing
Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to any Credit Party thereunder whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
on the Loans made under the Existing Credit Agreement, when and as
due, whether at maturity, by acceleration, upon one or more dates set
for prepayment or otherwise, (ii) the unpaid principal of and premium,
if any, and interest (including interest accruing at the then
applicable rate provided in the Tranche C Facility Credit Agreement
after the maturity of the Loans thereunder and interest accruing at
the applicable rate provided in the Tranche C Facility Credit
Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to any Credit Party thereunder whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
on the Loans made under the Tranche C Facility Credit Agreement, when
and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise, (iii) each payment required to
be made by any Credit Party under the Existing Credit Agreement, when
and as due, including payments in respect of reimbursements of L/C
Disbursements, interest thereon and obligations to provide cash
collateral, (iv) each payment required to be made by any Credit Party
under the Tranche C Facility Credit Agreement, when and as due, and
(v) all other obligations and liabilities of every nature of the
Credit Parties under the Credit Agreements from time to time owed to
the Secured Parties or any of them, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or
hereafter incurred (including monetary obligations incurred during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of
<PAGE>
4
whether allowed or allowable in such proceeding), which may arise
under, out of, or in connection with, the Existing Credit Agreement,
the Tranche C Facility Credit Agreement, any Guarantee Agreement, any
Security Document or any other Loan Document and any obligation of the
Borrower or any Credit Party under either of the Credit Agreements to
a Lender under either Credit Agreement pursuant to an
Interest/Exchange Rate Protection Agreement or under any other
document made, delivered or given in connection with any of the
foregoing, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including all fees and disbursements of counsel to the
Collateral Agent or to the Secured Parties that are required to be
paid by the Borrower or any Credit Party pursuant to the terms of the
Existing Credit Agreement, the Tranche C Facility Credit Agreement,
any Guarantee Agreement, any Security Document, any other Loan
Document or any Interest/Exchange Rate Protection Agreement with a
Lender;
"PLEDGED STOCK": the shares of Capital Stock listed on
SCHEDULE I hereto, together with all the stock certificates, options
or rights of any nature whatsoever that may be issued or granted by
any Issuer to any Pledgor while this Agreement is in effect that are
required to be pledged under Section 5 below.
"PROCEEDS": all "proceeds" (as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the State
of New York on the date hereof) of the Pledged Stock and any
Additional Collateral and, in any event, shall include all dividends
or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
"SECURITIES ACT": the Securities Act of 1933, as amended.
"U.S. SUBSIDIARY": any Subsidiary that is incorporated or
otherwise organized in the United States of America.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section references are to
this Agreement unless otherwise specified. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. PLEDGE; GRANT OF SECURITY INTEREST. Each Pledgor hereby pledges and
delivers to the Collateral Agent, for the ratable benefit of the Secured
Parties, all the Pledged Stock and
<PAGE>
5
Additional Collateral owned by such Pledgor and hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties, a first priority security
interest in all the Collateral owned by such Pledgor from time to time, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration, upon one or more dates of
prepayment or otherwise) of (i) in the case of UCAR, its Obligations and those
of the Borrower, including as a guarantor or Pledgor, and (ii) in the case of
each other Pledgor, the Obligations. Each Pledgor will cause any shares of
capital stock of the Borrower, any Significant Subsidiary or any other
Subsidiary that is or becomes party to the Subsidiary Guarantee Agreement that
it owns or possesses to be evidenced by duly executed certificates that are
pledged and delivered to the Collateral Agent pursuant to the terms thereof.
3. STOCK POWERS. Concurrently with the delivery to the Collateral
Agent of each certificate representing one or more shares of Pledged Stock to
the Collateral Agent, the applicable Pledgor shall deliver an undated stock
power covering such certificate, duly executed in blank by such Pledgor with, if
the Collateral Agent so requests, signature guaranteed.
4. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents and
warrants, as to itself and the Pledged Stock and Collateral pledged by it
hereunder, that:
(a) The shares of Pledged Stock constitute the portion of the issued
and outstanding shares of all classes of the Capital Stock of the
applicable Issuer set forth on Schedule I.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Subject to Section 21(b), each Pledgor is the legal, record and
beneficial owner of the Pledged Stock and of the Additional Collateral,
free of any and all Liens or options in favor of, or claims of, any other
person, except the security interest created by this Agreement.
(d) all capital stock or other ownership interests in the
Subsidiaries will at all times constitute certificated securities for
purposes of Articles 8 and 9 of the Uniform Commercial Code as in effect
in the State of New York or its equivalent in other jurisdictions (the
"UCC").
(e) This Agreement is effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral and, when the Pledged
Stock or Additional Collateral is delivered to the Collateral Agent (or,
as applicable in the case of Capital Stock of foreign Subsidiaries, the
requisite filings or registrations are made), this Agreement will
constitute a duly perfected first priority Lien on, and security interest
in, all right, title and interest of the Pledgors thereunder in such
Pledged Stock
<PAGE>
6
or Additional Collateral, in each case prior and superior in rights to any
other person, subject to the agreements listed in Schedule 3.08.
5. COVENANTS. Each Pledgor, as to itself and the Collateral pledged by
it hereunder, covenants and agrees with the Secured Parties that, from and after
the date of this Agreement until this Agreement is terminated and the security
interest created hereby is released, subject to Section 21(b):
(a) If such Pledgor shall, as a result of its ownership of Pledged
Stock or Additional Collateral, become entitled to receive or shall
receive any stock certificate (including any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any shares of the
Pledged Stock or Additional Collateral, or otherwise in respect thereof,
such Pledgor shall accept the same as the agent of the Secured Parties,
hold the same in trust for the Secured Parties and deliver the same
forthwith to the Collateral Agent in the exact form received, duly
indorsed by such Pledgor to the Collateral Agent, if required, together
with an undated stock power covering such certificate duly executed in
blank by such Pledgor and with, if the Collateral Agent, so requests,
signature guaranteed, to be held by the Collateral Agent, subject to the
terms hereof, as additional collateral security for the Obligations;
PROVIDED that if compliance with this paragraph (a) would result in more
than 65% of the voting power of any class of Capital Stock of any Foreign
Subsidiary being included in the Pledged Stock or Additional Collateral,
the applicable Pledgor shall pledge only such portion of such Capital
Stock as shall result in 65% of the voting power of such class of Capital
Stock being included in the Pledged Stock (or such lesser portion as is
owned by the relevant Pledgor). Without prejudice to the terms and
conditions of the Credit Agreements, any sums paid upon or in respect of
the Pledged Stock or Additional Collateral upon the liquidation or
dissolution (other than any liquidation or dissolution permitted by
Section 5.01(a) of the Credit Agreements) of any Issuer shall be subject
to Section 2.12(d) of the Credit Agreements, or upon and during the
continuance of an Event of Default shall upon the written request of the
Collateral Agent be paid over to the Collateral Agent to be held and
applied by it hereunder as provided in Section 8(a) and Section 15, and in
case any distribution of capital shall be made on or in respect of the
Pledged Stock or Additional Collateral or any property shall be
distributed upon or with respect to the Pledged Stock or Additional
Collateral pursuant to the recapitalization or reclassification of capital
of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall be subject to Section 2.12(d) of the Credit Agreements
or, upon and during continuance of an Event of Default upon the written
request of the Collateral Agent, be delivered to the Collateral Agent
<PAGE>
7
to be held and applied by it hereunder as provided in Section 8(a) and
Section 15. If any sums of money or property so paid or distributed in
respect of the Pledged Stock or Additional Collateral shall be received by
such Pledgor, such Pledgor shall apply such amount in accordance with
Section 2.12(d) of the Credit Agreements, or upon and during the
continuance of an Event of Default, shall, upon the written request of the
Collateral Agent, until such money or property is paid or delivered to the
Collateral Agent, hold such money or property in trust for the Secured
Parties, segregated from other funds of such Pledgor, for application in
accordance with Section 8(a) and Section 15.
(b) Without the prior written consent of the Collateral Agent, such
Pledgor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or
to issue any other securities convertible into or granting the right to
purchase or exchange for any stock or other equity securities of any
nature of any Issuer, except to the extent the same are permitted to be
issued under the Credit Agreements, (ii) sell, assign, transfer, exchange,
or otherwise dispose of, or grant any option with respect to, the
Collateral owned by it, except as not prohibited under the terms of the
Credit Agreements, (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any person with respect to, any of
such Collateral, or any interest therein, except as not prohibited under
the terms of the Credit Agreements and for the security interest created
by this Agreement or (iv) enter into any agreement or undertaking
restricting the right or ability of such Pledgor or the Collateral Agent
to sell, assign or transfer any of such Collateral, except as not
prohibited under the terms of the Credit Agreements.
(c) Such Pledgor shall maintain the security interest created by it
under this Agreement as a first priority, perfected security interest and
shall defend such security interest against claims and demands of all
persons whomsoever. At any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of such Pledgor,
such Pledgor shall promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Collateral
Agent may reasonably request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral owned by such Pledgor shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note, instrument
or chattel paper shall, if so requested by the Collateral Agent, be
immediately delivered to the Collateral Agent duly endorsed in a manner
reasonably satisfactory to the Collateral Agent, to be held as Collateral
pursuant to this Agreement, provided that the use of the Proceeds of such
Collateral shall nonetheless be governed by Sections 6 and 7.
<PAGE>
8
(d) If such Pledgor shall at any time own or acquire any shares of
Capital Stock of a Subsidiary that was not in existence or not a
Subsidiary on the date hereof (a "NEW SUBSIDIARY"), such Pledgor shall (i)
immediately deliver such shares of Capital Stock (or, if such New
Subsidiary is a Foreign Subsidiary, shares of Capital Stock representing
65% (or such lesser percentage as is owned by such Pledgor) of the voting
power of each class of Capital Stock of such New Subsidiary), and all
stock certificates evidencing the same, to the Collateral Agent to be held
as collateral hereunder, (ii) promptly deliver a supplement to this Pledge
Agreement, substantially in the form of Exhibit A-1 to this Agreement
(each, a "PLEDGE AGREEMENT SUPPLEMENT") adding such shares of Capital
Stock to Schedule I hereto and (iii) promptly cause such New Subsidiary to
execute and deliver an Acknowledgment and Consent substantially in the
form appended to Annex I to the Pledge Agreement Supplement. The execution
and delivery of any such instrument shall not require the consent of any
Pledgor hereunder. The rights and obligations of each Pledgor hereunder
shall remain in full force and effect notwithstanding the addition of any
new Pledgor as a party to this Agreement.
(e) If the Borrower or any Subsidiary has incurred or shall incur
indebtedness to UCAR, the Borrower or any U.S. Subsidiary in an amount
greater than $10,000,000, UCAR, the Borrower or such U.S. Subsidiary, as
applicable, shall obtain a promissory note from such obligor in respect of
such Indebtedness and shall pledge such note as Additional Collateral
hereunder. In the event such intercompany indebtedness is owed to a U.S.
Subsidiary that is not a Pledgor hereunder, the Borrower shall cause such
U.S. Subsidiary to execute and deliver a Pledge Agreement Supplement
substantially in the form of Exhibit A-2 to this Agreement, whereby such
U.S. Subsidiary shall become a Pledgor hereunder. The rights and
obligations of each Pledgor shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party to this
Agreement.
(f) If any Pledgor receives any noncash consideration pursuant to
Section 6.04(c) of the Credit Agreements in an aggregate principal amount
in excess of $1,000,000, such noncash consideration shall be pledged as
Additional Collateral hereunder. If such noncash consideration is received
by any U.S. Subsidiary that is not a Pledgor hereunder, the Borrower shall
cause such U.S. Subsidiary to execute and deliver a Pledge Agreement
Supplement in substantially the form of Exhibit A-2 to this Agreement,
whereby such U.S. Subsidiary shall become a Pledgor hereunder. The rights
and obligations of each Pledgor shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party to this
Agreement.
6. CASH DIVIDENDS; VOTING RIGHTS; PROCEEDS. (a) Unless an Event of
Default shall have occurred and be continuing and the Collateral Agent shall
have given notice to the Pledgors of the Collateral Agent's intent to exercise
its
<PAGE>
9
corresponding rights pursuant to Section 7 below, the Pledgors shall be
permitted to receive, retain and use all cash dividends paid in accordance with
the terms and conditions of the Credit Agreements in respect of the Pledged
Stock and, if applicable, Additional Collateral and to exercise all voting and
corporate rights with respect to the Pledged Stock and, if applicable,
Additional Collateral, PROVIDED, HOWEVER, that no vote shall be cast or
corporate right exercised or other action taken (regardless of whether an Event
of Default has occurred and is continuing) which would materially and adversely
affect the rights of the Collateral Agent or the Secured Parties or their
ability to exercise same or result in any violation of any provision of the
Credit Agreements, this Agreement or any other Loan Document.
(b) Unless an Event of Default shall have occurred and be continuing
and the Collateral Agent shall have given notice to the Pledgors of the
Collateral Agent's intent to exercise its corresponding rights pursuant to
Section 7 below, the Pledgors shall be permitted to receive, retain and use all
other Proceeds (in addition to cash dividends as provided under Section 6(a)
above) from the Collateral.
7. RIGHTS OF THE SECURED PARTIES AND THE COLLATERAL AGENT. If an Event
of Default shall occur and be continuing and the Collateral Agent shall give
notice of its intent to exercise such rights to the Pledgors, (i) the Collateral
Agent shall have the right to receive any and all Proceeds paid in respect of
the Pledged Stock or Additional Collateral and any and all Proceeds of Proceeds
and make application thereof to the Obligations in the manner provided in
Section 8(a) and Section 15 and (ii) all shares of the Pledged Stock and, if
applicable, Additional Collateral shall be registered in the name of the
Collateral Agent or its nominee, and the Collateral Agent or its nominee may
thereafter exercise (1) all voting, corporate and other rights pertaining to
such shares of the Pledged Stock and to such Additional Collateral at any
meeting of shareholders of any Issuer or otherwise and (2) any and all rights
of, conversion, exchange, subscription and any other rights, privileges or
options pertaining to such shares of the Pledged Stock and to such Additional
Collateral as if it were the absolute owner thereof (including the right to
exchange at its discretion any and all the Pledged Stock and, if applicable,
Additional Collateral upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by a Pledgor or the Collateral Agent of any right,
privilege or option pertaining to such shares of the Pledged Stock and to such
Additional Collateral, and in connection therewith, the right to deposit and
deliver any and all the Pledged Stock and, if applicable, Additional Collateral
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Collateral Agent may reasonably
determine), all without liability except to account for property actually
received by it, but the Collateral Agent shall have no duty to any Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing. All Proceeds that are received by any
Pledgor contrary to the provisions of this Section 7 shall be received in
<PAGE>
10
trust for the benefit of the Collateral Agent, shall be segregated from other
property or funds of such Pledgor and shall be forthwith delivered to the
Collateral Agent in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or received by
the Collateral Agent pursuant to the provisions of this Section 7 shall be
retained by the Collateral Agent in a Collateral Account to be established by
the Collateral Agent upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 8(a) and Section 15. After
all Events of Default under the Credit Agreements have been cured or waived, the
Collateral Agent shall, within five Business Days after all such Events of
Default have been cured or waived, repay to each Pledgor all cash dividends,
interest or principal that such Pledgor would otherwise be permitted to retain
pursuant to the terms of Section 6 above, but only to the extent such Proceeds
remain in such Collateral Account.
8. REMEDIES. (a) If an Event of Default shall have occurred and be
continuing the Collateral Agent shall apply all or any part of the Proceeds held
in any Collateral Account in accordance with Section 15.
(b) If an Event of Default shall have occurred and be continuing, the
Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to
all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Collateral Agent, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice, required by law referred to below) to or upon the Pledgors
or any other person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at public or private sale or
sales, in the over-the-counter market, at any exchange, broker's board or office
of the Collateral Agent or any Secured Party or elsewhere upon such terms and
conditions as it may reasonably deem advisable and at such prices as it may
reasonably deem best, for cash or on credit or for future delivery without
assumption of any risk. The Collateral Agent or any Secured Party shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of (to the extent permitted by law) any right or equity
of redemption in a Pledgor which right or equity is, to the extent permitted by
law, hereby waived or released. The Collateral Agent shall apply any Proceeds
from time to time held by it and the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses incurred in respect thereof or incidental to the
care or safekeeping of any of the Collateral or
<PAGE>
11
reasonably relating to the Collateral or the any or the rights of the Collateral
Agent and the Secured Parties hereunder, including reasonable attorney's fees
and disbursements of counsel to the Collateral Agent, to the payment in whole or
in part of the Obligations, in the order set forth in Section 15. If any notice
of a proposed sale or other disposition of Collateral shall be required by law,
such notice shall be in writing and deemed reasonable and proper if given at
least 10 days before such sale or other disposition. UCAR and the other Pledgors
shall remain liable for any deficiency if the proceeds of any sale or other
disposition of Collateral are insufficient to pay (i) in the case of each
Pledgor other than UCAR, its Obligations and the reasonable fees and
disbursements of any attorneys employed by the Collateral Agent or any Secured
Party to collect such deficiency in its Obligations and (ii) in the case of
UCAR, its and the Borrower's Obligations and pro rata shares of such fees and
disbursements.
9. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the Collateral Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 8 hereof, and if in the opinion of the Collateral Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the Pledgor who
owns such Pledged Stock will cause the Issuer thereof to (i) execute and
deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts as may be, in the reasonable opinion of the Collateral Agent,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period expiring on the earlier of (A) one year from the
date of the first public offering of the Pledged Stock and (B) such time that
all of the Pledged Stock, or that portion thereof to be sold, is sold and (iii)
to make all amendments thereto and/or to the related prospectus which, in the
reasonable opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. The
Pledgor who owns such Pledged Stock agrees to cause such Issuer to comply with
the provisions of the securities or "Blue Sky" laws of any and all jurisdictions
which the Collateral Agent shall reasonably designate and to make available to
its security holders, as soon as practicable, an earnings statement (which need
not be audited) which will satisfy the provisions of Section 11(a) of the
Securities Act. Each Pledgor jointly and severally agrees to (x) indemnify,
defend and hold harmless Collateral Agent and the other Indemnitees from and
against all losses, liabilities, expenses, costs (including the reasonable fees
and expenses of legal counsel to the Collateral Agent) and claims (including the
costs of investigation) that they may incur insofar as any such loss, liability,
expense, cost or claim arises out of or is based upon any alleged untrue
statement of a material fact contained in any prospectus, offering circular or
similar document (or any amendment or supplement thereto), or arises out
<PAGE>
12
of or is based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements in any writing thereof not
misleading, except insofar as the same may have been caused by any untrue
statement or omission based upon information furnished in writing to any Pledgor
or the Issuer of such Pledged Stock by the Collateral Agent or any other Secured
Party expressly for use therein, and (y) enter into an indemnification agreement
with any underwriter of or placement agent for any Pledged Stock, on its
standard form, to substantially the same effect. The Pledgors will jointly and
severally bear all costs and expenses of carrying out their obligations under
this Section 9.
(b) The Pledgors recognize that the Collateral Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree do so.
(c) Each Pledgor further agrees to use its best efforts to do or cause
to be done all such other acts as may be reasonably necessary to make such sale
or sales of all or any portion of the Pledged Stock or Additional Collateral
owned by it pursuant to this Section valid and binding and in compliance with
any and all other applicable requirements of the laws of any jurisdiction. Each
Pledgor further agrees that a breach of any of the covenants contained in this
Section will cause irreparable injury to the Collateral Agent and the Secured
Parties, that the Collateral Agent and the Secured Parties have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in the Section shall be specifically enforceable
against such Pledgor.
10. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUER. Each Pledgor
hereby authorizes and instructs each Issuer that has issued Pledged Stock
pledged by such Pledgor pursuant to Section 2 hereof to comply with any
instruction received by it from the Collateral Agent in writing that (a) states
that an Event of Default has occurred and (b) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from such
Pledgor, and agrees that each such Issuer shall be fully protected in so
complying.
<PAGE>
13
11. COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN- FACT. (a) Each
Pledgor hereby irrevocably constitutes, and appoints the Collateral Agent and
any officer or agent of the Collateral Agent, with full irrevocable power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in the Collateral Agent's own name, from time to time in the
Collateral Agent's discretion upon and during the continuance of an Event of
Default, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, including without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) Each Pledgor hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
Section 11(a). All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
12. DUTY OF COLLATERAL AGENT. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9- 207 of the Code or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
securities and property for its own account, PROVIDED that investments shall be
made at the option and sole discretion of the Collateral Agent, and PROVIDED
FURTHER that the Collateral Agent shall use reasonable efforts to make such
investments. Neither the Collateral Agent, any Secured Party nor any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgors or any other person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
13. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of
the Code, each Pledgor authorizes the Collateral Agent to file financing
statements with respect to the Collateral owned by it without the signature of
such Pledgor in such form and in such filing offices as the Collateral Agent
reasonably determines appropriate to perfect the security interests of the
Collateral Agent under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
14. AUTHORITY OF COLLATERAL AGENT. Each Pledgor acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting
<PAGE>
14
or arising out this Agreement shall, as between the Collateral Agent and the
Secured Parties, be governed by the Credit Agreements and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and such Pledgor, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting.
15. APPLICATION OF PROCEEDS. The proceeds of any sale of Collateral
pursuant to Section 8(b), as well as any Collateral consisting of cash under
Section 8(a), shall be applied by the Collateral Agent as follows:
FIRST, to the payment of the reasonable costs and expenses
of the Collateral Agent as set forth in Section 8(b);
SECOND, to the payment of all amounts of the Obligations
owed to the Secured Parties in respect of Loans made by them and
outstanding and amounts owing in respect of any L/C Disbursement or
Letter of Credit or under any Interest/Exchange Rate Protection
Agreements with a Lender, pro rata as among the Secured Parties in
accordance with the amount of such Obligations owed them;
THIRD, to the payment and discharge in full of the
Obligations (other than those referred to above), pro rata as among
the Secured Parties in accordance with the amount of such Obligations
owed to them; and
FOURTH, after payment in full of all Obligations, to the
applicable Pledgor, or the successors or assigns thereof, or to
whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, any Collateral then remaining.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
16. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
hereunder, the security interests granted hereunder and all obligations of the
Pledgors hereunder shall be absolute and unconditional.
17. SURVIVAL OF AGREEMENT. All covenants, agreements, representations
and warranties made by any Pledgor herein and in the certificates or other
instruments prepared or delivered in
<PAGE>
15
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Secured Parties and shall survive
the making by the Lenders of the Loans, the execution and delivery to the
Lenders of the Loan Documents and the issuance by the Fronting Banks of the
Letters of Credit, regardless of any investigation made by the Secured Parties,
or on their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or L/C Disbursement, or any Fee
or any other amount payable under or in respect of this Agreement or any other
Loan Document is outstanding and unpaid and so long as the Commitments have not
been terminated.
18. COLLATERAL AGENT'S LIABILITIES AND EXPENSES; INDEMNIFICATION. (a)
Notwithstanding anything to the contrary provided herein, the Collateral Agent
assumes no liabilities with respect to any claims regarding each Pledgor's
ownership (or purported ownership) of, or rights or obligations (or purported
rights or obligations) arising from, the Collateral or any use (or actual or
alleged misuse) whether arising out of any past, current or future event,
circumstance, act or omission or otherwise, or any claim, suit, loss, damage,
expense or liability of any kind or nature arising out of or in connection with
the Collateral. All of such liabilities shall, as between the Collateral Agent
and the Pledgors, be borne exclusively by the Pledgors.
(b) Each Pledgor hereby agrees to pay all reasonable expenses of the
Collateral Agent and to indemnify the Collateral Agent with respect to any and
all losses, claims, damages, liabilities and related expenses in respect of this
Agreement or the Collateral in each case to the extent the Borrower is required
to do so pursuant to Section 9.05 of the Credit Agreements.
(c) Any amounts payable by a Pledgor as provided hereunder shall be
additional Obligations of it secured hereby and by its other Security Documents.
Without prejudice to the survival of any other agreements contained herein, all
indemnification and reimbursement obligations contained herein shall survive the
payment in full of the principal and interest under the Credit Agreements, the
expiration of the Letters of Credit and the termination of the Commitments or
this Agreement.
19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
20. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each Pledgor
hereby irrevocably and unconditionally submits, for
<PAGE>
16
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any Loan Party or any Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Pledgor or any Secured Party or its properties in the courts of any
jurisdiction.
(b) Each Pledgor and each Secured Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 22 hereof. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
21. TERMINATION AND RELEASE. (a) This Agreement and the security
interest created hereunder shall terminate when all the Obligations have been
fully and indefeasibly paid and when the Secured Parties have no further
Commitments and no Letters of Credit are outstanding, at which time the
Collateral Agent shall reassign and deliver to each Pledgor, or to such person
or persons as each Pledgor shall reasonably designate, against receipt, such of
the Collateral owned by such Pledgor as shall have not been sold or otherwise
applied by the Collateral Agent pursuant to the terms hereof and shall still be
held by it hereunder, together with appropriate instructions of reassignment and
release. Any such reassignment shall be without recourse to or any warranty by
the Collateral Agent and at the expense of such Pledgor.
(b) All Collateral sold, transferred or otherwise disposed of, in
accordance with the terms of the Credit Agreements (including pursuant to a
waiver or amendment of the terms thereof), shall be sold, transferred or
otherwise disposed of free and clear of the Lien and the security interest
created hereunder. In connection with the foregoing, (i) the Collateral Agent
shall execute and deliver to each Pledgor with respect to the Collateral owned
by such Pledgor, or to such person or persons as such
<PAGE>
17
Pledgor shall reasonably designate, against receipt, such Collateral sold,
transferred or otherwise disposed together with appropriate instructions of
reassignment and release, (ii) any representation, warranty or covenant
contained herein relating to the Collateral shall no longer be deemed to be made
with respect to such sold, transferred or otherwise disposed Collateral and
(iii) all schedules hereto shall be amended to delete the name of the Issuer.
Any such reassignment shall be without recourse or to any warranty by the
Collateral Agent and at the expense of such Pledgor.
22. NOTICES. All notices, requests and demands to or upon the Secured
Parties or the Pledgors under this Agreement shall be given or made in
accordance with Section 9.01 of the Credit Agreements and addressed as follows:
(a) if to any Secured Party, UCAR, or any Credit Party, at
its address for notices provided in Section 9.01 of the Credit
Agreements;
(b) if to any Subsidiary that is not a Credit Party, at its
address set forth under its signature below.
23. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition of enforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
24. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES. (a) None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the Pledgors
and the Collateral Agent, PROVIDED that any provision of this Agreement may be
waived by the Required Secured Parties pursuant to a letter or agreement
executed by the Collateral Agent or by telecopy transmission from the Collateral
Agent.
(b) Neither the Collateral Agent nor any Secured Party shall by any
act (except by a written instrument pursuant in Section 24(a) hereof) or delay
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of any Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise of any other
right, power or privilege. A waiver by any Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to
<PAGE>
18
any right or remedy which such Secured Party would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
25. SECTION HEADINGS. The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
26. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Pledgors and shall inure to the benefit of the
Pledgors, the Collateral Agent and the Secured Parties and their successors and
assigns, PROVIDED that this Agreement may not be assigned by the Pledgors
without the prior written consent of the Collateral Agent and the Secured
Parties.
27. COUNTERPARTS. This Agreement may be executed in two or more
original counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
28. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE>
19
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
UCAR INTERNATIONAL INC.
by /s/ Corrado F. DeGasperis
------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
UCAR GLOBAL ENTERPRISES INC.
by /s/ Corrado F. DeGasperis
------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
EACH OF THE PLEDGOR SUBSIDIARIES
LISTED ON SCHEDULE II HERETO
by /s/ Corrado F. DeGasperis
------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
Address:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
PLEDGED STOCK
PERCENTAGE
PLEDGOR ISSUER PLEDGED STOCK PLEDGED
<S> <C> <C>
UCAR International Inc. UCAR Global Enterprises Inc. 100 Shares 100%
(Certificate No. U0001)
UCAR Global Enterprise Inc. UCAR Carbon S.A. No Certificates 65%
UCAR Carbon Company Inc. 500 Shares 100%
(Certificate No. 2)
UCAR Holdings II Inc. 100 Shares 100%
(Certificate No. 2)
UCAR S.A. 1,750,000 Shares 65%
(Certificate No. 5)
UCAR Carbon Company Inc. Unicarbon Comercial Ltda. No Certificates 65%
UCAR Limited 9,750,000 Shares 65%
(Certificate No. 8)
UCAR Holdings Inc. 100 Shares 100%
(Certificate No. 1)
Union Carbide Grafito, Inc. 25,000 preferred Shares 100%
(Certificate No. 26)
200 common Shares
(Certificate No. 2)
UCAR Carbon Technology 100 Shares 100%
Corporation (Certificate No. 1)
UCAR Carbon Foreign Sales .65 Share 65%
Corporation (Certificate No. 2)
UCAR Composites Inc. 800 Shares 100%
(Certificate No. A3)
UCAR International Trading 100 Shares 100%
Inc. (Certificate No. 1)
EMSA (Pty.) Ltd. 4,062,500 Shares 65%
(Certificate No. 36)
Carbographite Limited 2,600 Shares 65%
(Certificate No. 42)
UCAR Holdings Inc. UCAR Mexicana S.A. de C.V. 269,827,025 Shares 65%
(Certificate No. __)
UCAR S.p.A. No Certificates 65%
UCAR Holdings II Inc. UCAR Inc. 650 Shares
(Certificate No. 3) 65%
UCAR Electrodos S.L. No Certificates 65%
UCAR Holdings S.A. No Certificates 65%
UCAR Holdings III Inc. 100 Shares 100%
(Certificate No. 2)
UCAR Holdings III Inc. UCAR SNC (1) (1)
No Certificates
====================================================================================================
</TABLE>
(1) UCAR HOLDINGS III Inc. owns one quota of UCAR SNC, which
comprises less than 1% of the outstanding ownership of UCAR SNC.
<PAGE>
SCHEDULE II
PLEDGOR SUBSIDIARIES
UCAR Carbon Company Inc.
UCAR Holdings Inc.
UCAR Holdings II Inc.
UCAR Holdings III Inc.
<PAGE>
EXHIBIT A-1 TO
PLEDGE AGREEMENT
[FORM OF]
PLEDGE AGREEMENT SUPPLEMENT
PLEDGE AGREEMENT SUPPLEMENT, dated as of
[ ] (this "SUPPLEMENT"), made by
, a [ ] corporation (the "PLEDGOR"), in favor of THE
CHASE MANHATTAN BANK, a New York banking corporation, as
collateral agent for the Secured Parties (such term and each
other capitalized term used but not defined having the meaning
given in the Pledge Agreement, and if not defined therein,
having the meaning given in Article I of the Credit
Agreements). Reference is made to (i) the Credit Agreement
dated as of October 19, 1995, as amended and restated as of
March 19, 1997 and November 10, 1998 (as the same may be
amended, supplemented or otherwise modified from time to time,
the "EXISTING CREDIT AGREEMENT"), among UCAR INTERNATIONAL
INC., a Delaware corporation ("UCAR"), UCAR GLOBAL ENTERPRISES
INC., a Delaware corporation (the "BORROWER"), the Subsidiary
Borrowers party thereto, the Lenders party thereto, the
Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent, and (ii) the Credit
Agreement dated as of November 10, 1998, among UCAR, the
Borrower, UCAR S.A., the Lenders party thereto and The Chase
Manhattan Bank, as administrative agent and collateral agent,
Credit Suisse First Boston, as syndication agent, and Morgan
Guaranty Trust Company of New York, as syndication agent (as
the same may be amended, supplemented or otherwise modified
from time to time, the "TRANCHE C FACILITY CREDIT AGREEMENT",
and together with the Existing Credit Agreement, the "CREDIT
AGREEMENTS").
1. Reference is hereby made to that certain Pledge Agreement, dated as
of October 19, 1995, as amended and restated as of November 10, 1998(as amended,
supplemented or otherwise modified as of the date hereof, the "PLEDGE
AGREEMENT"), made by UCAR, the Borrower and certain U.S. Subsidiaries in favor
of the Collateral Agent.
2. The Pledgor hereby confirms and reaffirms the security interest in
the Collateral granted to the Collateral Agent for the benefit of the Secured
Parties under the Pledge Agreement, and, as additional collateral security for
the prompt and complete payment when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations and in order to induce the Secured
Parties to make Loans and extend Letters of Credit under the Credit Agreements
and the other Loan Documents, the Pledgor hereby delivers to the Collateral
Agent, for the benefit of the Secured Parties, all of the issued and outstanding
<PAGE>
2
shares of Capital Stock of [INSERT NAME OF NEW SUBSIDIARY] (the "NEW ISSUER")
listed in SCHEDULE 1 hereto, together with all stock certificates, options, or
rights of any nature whatsoever which may be issued or granted by the New Issuer
in respect of such stock while the Pledge Agreement, as supplemented hereby, is
in force (the "ADDITIONAL PLEDGED STOCK"; as used in the Pledge Agreement as
supplemented by this Supplement, "PLEDGED STOCK" shall be deemed to include the
Additional Pledged Stock) and hereby grants to the Collateral Agent, for the
benefit of the Secured Parties, a first security interest in the Additional
Pledged Stock and all Proceeds thereof.
3. The Pledgor hereby represents and warrants that the representations
and warranties contained in Section 4 of the Pledge Agreement are true and
correct on the date of this Supplement with references therein to the "PLEDGED
STOCK" to include the Additional Pledged Stock, with references therein to the
"ISSUERS" to include the New Issuer, and with references to the "PLEDGE
AGREEMENT" to mean the Pledge Agreement as supplemented by this Supplement.
4. This Supplement is supplemental to the Pledge Agreement, forms a
part thereof and is subject to the terms thereof and the Pledge Agreement is
hereby supplemented as provided herein. Without limiting the foregoing, SCHEDULE
I to the Pledge Agreement shall hereby be deemed to include each item listed on
SCHEDULE I to this Supplement and all references in the Pledge Agreement (other
than in Section 4 therein) to (a) "PLEDGED STOCK" shall be deemed to, and shall,
include the Additional Pledged Stock and (b) "ISSUERS" shall be deemed to, and
shall, include the New Issuer.
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have caused
this Supplement to be duly executed and delivered on the date first set forth
above.
[PLEDGOR]
by
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Collateral Agent
by
------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
TO PLEDGE AGREEMENT SUPPLEMENT
PLEDGED STOCK
OWNERSHIP
PLEDGOR ISSUER PLEDGED STOCK INTEREST
<PAGE>
Annex I TO
PLEDGE AGREEMENT SUPPLEMENT
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
foregoing Supplement and the Pledge Agreement referred to therein (the "PLEDGE
AGREEMENT"). The undersigned agrees for the benefit of the Secured Parties as
follows:
1. The undersigned will be bound by the terms of the Pledge
Agreement and will comply with such terms insofar as such terms are applicable
to the undersigned.
2. The undersigned will notify the Agent promptly in writing of the
occurrence of any of the events described in Section 5(a) of the Pledge
Agreement.
3. The terms of Section 9(c) of the Pledge Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
under or pursuant to or arising out of Section 9 of the Pledge Agreement.
[NAME OF ISSUER]
By
--------------------------------------
Name:
Title:
Address for Notices:
----------------------------------------
----------------------------------------
Telecopy:
-------------------------------
<PAGE>
EXHIBIT A-2 TO THE
PLEDGE AGREEMENT
SUPPLEMENT NO. dated as of
[ ], to the Pledge Agreement dated as
of October 19, 1995, as amended and restated as of November
10, 1998 (the "PLEDGE AGREEMENT"), among UCAR INTERNATIONAL
INC., a Delaware corporation ("UCAR"), UCAR GLOBAL ENTERPRISES
INC., a Delaware corporation, as borrower (the "BORROWER"),
each of the other Pledgors (such term and each other
capitalized term used but not defined having the meaning given
it in the Pledge Agreement, and if not defined therein, having
the meaning given it in Article I of the Credit Agreements),
party thereto (together with the Borrower, the "PLEDGORS") and
THE CHASE MANHATTAN BANK, a New York banking corporation, as
collateral agent (the "COLLATERAL AGENT") for the Secured
Parties.
A. Reference is made to (i) the Credit Agreement dated as of October
19, 1995, as amended and restated as of March 19, 1997 and November 10, 1998 (as
the same may be amended, supplemented or otherwise modified from time to time,
the "EXISTING CREDIT AGREEMENT"), among UCAR, the Borrower, the Subsidiary
Borrowers party thereto, the Lenders party thereto, the Fronting Banks party
thereto and The Chase Manhattan Bank, as administrative agent and collateral
agent and (ii) the Credit Agreement dated as of November 10, 1998, among UCAR,
the Borrower, UCAR S.A., the Lenders party thereto, The Chase Manhattan Bank, as
administrative agent and collateral agent, Credit Suisse First Boston, as
syndication agent, and Morgan Guaranty Trust Company of New York, as syndication
agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "TRANCHE C FACILITY CREDIT AGREEMENT", and together with the
Existing Credit Agreement, the "CREDIT AGREEMENTS").
B. The Pledgors have entered into the Pledge Agreement in order to
induce the Lenders to make Loans and induce the Fronting Banks to issue Letters
of Credit pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreements. Pursuant to Sections 5(e) and 5(f) of the
Pledge Agreement, each U.S. Subsidiary that was not a Pledgor on the date
thereof is required to enter into the Pledge Agreement as a Pledgor upon
acquiring Additional Collateral. Sections 5(e) and 5(f) of the Pledge Agreement
provide that additional U.S. Subsidiaries may become Pledgors under the Pledge
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned (the "NEW PLEDGOR") is a U.S. Subsidiary and is
executing this Supplement in accordance with the requirements of the Pledge
Agreement to become a Pledgor under the Pledge Agreement in order to induce the
Lenders to make additional Loans and the Fronting Banks to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as
follows:
<PAGE>
2
SECTION 1. The New Pledgor by its signature below becomes a Pledgor
under the Pledge Agreement with the same force and effect as if originally named
therein as a Pledgor and the New Pledgor hereby agrees to all the terms and
provisions of the Pledge Agreement applicable to it as a Pledgor thereunder.
Each reference to a "Pledgor" in the Pledge Agreement shall be deemed to include
the New Pledgor. The Pledge Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Pledgor represents and warrants to the Secured
Parties that this Supplement has been duly authorized, executed and delivered by
it and constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, subject to the effects of applicable
bankruptcy, insolvency or similar laws effecting creditors' rights generally and
equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Supplement shall
become effective when the Collateral Agent shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Pledgor and the Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreements. All communications and
notices hereunder to the New Pledgor shall be given to it at the address set
forth under its signature, with a copy to the Borrower.
<PAGE>
3
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.
[NAME OF NEW PLEDGOR],
by
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
------------------------------------
Name:
Title:
<PAGE>
EXHIBIT B TO
PLEDGE AGREEMENT
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned hereby acknowledges receipt of a copy of the
Pledge Agreement dated as of October 19, 1995, as amended and restated as of
November 10, 1998 (the "PLEDGE AGREEMENT"), by UCAR INTERNATIONAL INC., a
Delaware corporation ("UCAR"), UCAR GLOBAL ENTERPRISES INC., a Delaware
corporation (the "BORROWER"), and certain U.S. Subsidiaries that are signatories
hereto ("PLEDGOR SUBSIDIARIES" and, together with UCAR and the Borrower, the
"PLEDGORS"), in favor of THE CHASE MANHATTAN BANK, a New York banking
corporation, as collateral agent for the Secured Parties (such term and each
other capitalized term used but not defined herein having the meaning given it
in Article I of the Credit Agreements). Reference is made to (i) the Credit
Agreement dated as of October 19, 1995, as amended and restated as of March 19,
1997 and November 10, 1998 (as the same may be amended, supplemented or
otherwise modified from time to time, the "EXISTING CREDIT AGREEMENT"), among
UCAR, the Borrower, the Subsidiary Borrowers party thereto, the Lenders party
thereto, the Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent and (ii) the Credit Agreement dated as
of November 10, 1998, among UCAR, the Borrower, UCAR S.A., the Lenders party
thereto and The Chase Manhattan Bank, as administrative agent and collateral
agent, Credit Suisse First Boston, as syndication agent, and Morgan Guaranty
Trust Company, as syndication agent (as the same may be amended, supplemented or
otherwise modified from time to time, the "TRANCHE C FACILITY CREDIT AGREEMENT",
and together with the Existing Credit Agreement, the "CREDIT AGREEMENTS").
1. Each of the undersigned will be bound by the terms of the Pledge
Agreement and will comply with such terms insofar as such terms are applicable
to the undersigned.
2. Each of the undersigned will notify the Collateral Agent promptly
in writing of the occurrence of any of the events described in subsection 5(a)
of the Pledge Agreement.
3. The terms of subsection 9(c) of the Pledge Agreement shall apply
to it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
under or pursuant to or arising out of Section 9 of the Pledge Agreement.
UCAR GLOBAL ENTERPRISES INC.
By
---------------------------------------
Name:
Title:
[NAME OF ISSUER]
By
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.6
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT dated as of
April 22, 1998, as amended and restated as of November 10,
1998, made by UCAR INTERNATIONAL INC., a Delaware corporation
("UCAR"), UCAR GLOBAL ENTERPRISES INC., a Delaware corporation
(the "BORROWER"), and the U.S. Subsidiaries (the "Subsidiary
Grantors", and together with UCAR and the Borrower, the
"GRANTORS") in favor of THE CHASE MANHATTAN BANK, a New York
banking corporation, as collateral agent for the Secured
Parties. Reference is made to (i) the Credit Agreement dated
as of October 19, 1995, as amended and restated as of March
19, 1997 and November 10, 1998 (as the same may be amended,
supplemented or otherwise modified from time to time, the
"EXISTING CREDIT AGREEMENT"), among UCAR, the Borrower, the
Subsidiary Borrowers party thereto, the Lenders party thereto,
the Fronting Banks party thereto and The Chase Manhattan Bank,
as administrative agent and collateral agent and (ii) the
Credit Agreement dated as of November 10, 1998, among UCAR,
the Borrower, UCAR S.A., the Lenders party thereto, The Chase
Manhattan Bank, as administrative agent and collateral agent,
Credit Suisse First Boston, as syndication agent, and Morgan
Guaranty Trust Company of New York, as syndication agent (as
the same may be amended, supplemented or otherwise modified
from time to time, the "TRANCHE C FACILITY CREDIT AGREEMENT",
and together with the Existing Credit Agreement, the "CREDIT
AGREEMENTS").
The Lenders and the Fronting Banks, respectively, have agreed
to make Loans to the Credit Parties and to issue Letters of Credit for the
account of the Credit Parties, pursuant to, and upon the terms and subject to
the conditions specified in, the Credit Agreements.
The obligations of the Lenders to make Loans and of the
Fronting Banks to issue Letters of Credit under the Credit Agreements are
conditioned upon, among other things, the execution and delivery by the Grantors
of an intellectual property security agreement in the form hereof to secure the
due and punctual payment of, with respect to each Grantor, its obligations as
obligor or guarantor in respect of (i) the unpaid principal of and premium, if
any, and interest (including interest accruing at the then applicable rate
provided in the Existing Credit Agreement after the maturity of the Loans
thereunder and interest accruing at the then applicable rate provided in the
Existing Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
any Credit Party thereunder whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) on the Loans made under
the Existing Credit Agreement,
<PAGE>
2
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) the unpaid principal of and premium, if
any, and interest (including interest accruing at the then applicable rate
provided in the Tranche C Facility Credit Agreement after the maturity of the
Loans thereunder and interest accruing at the applicable rate provided in the
Tranche C Facility Credit Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any Credit Party thereunder whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) on the
Loans made under the Tranche C Facility Credit Agreement, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (iii) each payment required to be made by any Credit Party under
the Existing Credit Agreement, when and as due, including payments in respect of
reimbursements of L/C Disbursements, interest thereon and obligations to provide
cash collateral, (iv) each payment required to be made by any Credit Party under
the Tranche C Facility Credit Agreement, when and as due, and (v) all other
obligations and liabilities of every nature of the Credit Parties under the
Credit Agreements from time to time owed to the Secured Parties or any of them,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
which may arise under, out of, or in connection with, the Existing Credit
Agreement, the Tranche C Facility Credit Agreement, any Guarantee Agreement, any
Security Document or any other Loan Document and any obligation of the Borrower
or any Credit Party under either of the Credit Agreements to a Lender under
either Credit Agreement pursuant to an Interest/Exchange Rate Protection
Agreement or under any other document made, delivered or given in connection
with any of the foregoing, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including all fees and disbursements of counsel to the Collateral
Agent or to the Secured Parties that are required to be paid by the Borrower or
any Credit Party pursuant to the terms of the Existing Credit Agreement, the
Tranche C Facility Credit Agreement, any Guarantee Agreement, any Security
Document, any other Loan Document or any Interest/Exchange Rate Protection
Agreement with a Lender (all the foregoing obligations collectively, the
"OBLIGATIONS").
Accordingly, the Grantors and the Collateral Agent, on behalf
of itself and each other Secured Party (and each of their successors and
assigns), hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITION OF TERMS USED HEREIN. All capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Credit Agreements.
<PAGE>
3
SECTION 1.02. DEFINITION OF CERTAIN TERMS USED HEREIN.
As used herein, the following terms shall have the following
meanings:
"AGREEMENT" shall mean this Intellectual Property
Security Agreement.
"COLLATERAL" shall mean, with respect to each Grantor, all of
the following, whether now owned or hereafter acquired by such Grantor: (a)
Patents, including all granted Patents, recordings and pending applications,
including those listed on Schedule I attached hereto, (b) Trademarks, including
all registered Trademarks, registrations, recordings, and pending applications,
including those listed on Schedule II attached hereto, (c) Copyrights, including
all registered Copyrights, registrations, recordings, supplemental registrations
and pending applications, including those listed on Schedule III attached
hereto, (d) Licenses, including those listed on Schedule IV hereto, (e) General
Intangibles, and (f) all products and Proceeds (including insurance proceeds)
of, and additions, improvements and accessions to, and books and records
describing or used in connection with, any and all of the property described
above.
"COPYRIGHTS" shall mean, with respect to each Grantor, all of
the following now or hereafter owned by such Grantor: (i) all copyright rights
in any work subject to the copyright laws of the United States or any other
country, whether as author, assignee, transferee or otherwise, and (ii) all
registrations and applications for registration of any such copyright in the
United States or any other country, including registrations, recordings,
supplemental registrations and pending applications for registration in the
United States Copyright Office.
"COPYRIGHT LICENSE" shall mean, with respect to each Grantor,
any written agreement, now or hereafter in effect, granting any right to any
third party under any Copyright now or hereafter owned by such Grantor or which
such Grantor otherwise has the right to license, or granting any right to such
Grantor under any Copyright now or hereafter owned by any third party, and all
rights of such Grantor under any such agreement.
"GENERAL INTANGIBLES" shall mean, with respect to each
Grantor, all intangible, intellectual or other similar property of such Grantor
of any kind or nature now owned or hereafter acquired by such Grantor, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business information, know-how,
show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations,
franchises, and all other intellectual or other similar property rights not
otherwise described above.
"INDEMNITEE" shall mean the Collateral Agent, the Secured
Parties and their respective officers, directors, trustees, affiliates and
controlling persons.
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4
"LICENSE" shall mean, with respect to each Grantor, any Patent
License, Trademark License, Copyright License or other license or sublicense as
to which such Grantor is a party (other than those license agreements which by
their terms prohibit assignment or a grant of a security interest by such
Grantor as
licensee thereunder).
"PATENT LICENSE" shall mean, with respect to each Grantor, any
written agreement, now or hereafter in effect, granting to any third party any
right to make, use or sell any invention on which a Patent, now or hereafter
owned by such Grantor or which such Grantor otherwise has the right to license,
is in existence, or granting to such Grantor any right to make, use or sell any
invention on which a Patent, now or hereafter owned by any third party, is in
existence, and all rights of such Grantor under any such agreement.
"PATENTS" shall mean, with respect to each Grantor, all the
following now or hereafter owned by such Grantor: (a) all letters patent of the
United States or any other country, including patents, design patents or utility
models, all registrations and recordings thereof, and all applications for
letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, and (b) all
reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.
"PROCEEDS" shall mean, with respect to each Grantor, any
consideration received from the sale, exchange, license, lease or other
disposition of any asset or property that constitutes Collateral owned by such
Grantor, any value received as a consequence of the possession of any such
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft or other involuntary conversion of
whatever nature of any asset or property that constitutes such Collateral, any
claim of such Grantor against third parties for (and the right to sue and
recover for and the rights to damages or profits due or accrued arising out of
or in connection with) (a) past, present or future infringement of any Patent
now or hereafter owned by such Grantor or licensed under a Patent License, (b)
past, present or future infringement or dilu tion of any Trademark now or
hereafter owned by such Grantor or licensed under a Trademark License or injury
to the goodwill associated with or symbolized by any Trademark now or hereafter
owned by such Grantor, (c) past, present or future breach of any License, (d)
past, present or future infringement of any Copyright now or hereafter owned by
such Grantor or licensed under a Copyright License, and (e) any and all other
amounts from time to time paid or payable under or in connection with any of
such Collateral.
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5
"TRADEMARK LICENSE" shall mean, with respect to each Grantor,
any written agreement, now or hereafter in effect, granting to any third party
any right to use any Trademark now or hereafter owned by such Grantor or that
such Grantor otherwise has the right to license, or granting to such Grantor any
right to use any Trademark now or hereafter owned by any third party, and all
rights of such Grantor under any such agreement.
"TRADEMARKS" shall mean, with respect to each Grantor, all of
the following now or hereafter owned by such Grantor: (a) all trademarks,
service marks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, trade dress, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, and all designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office, any State of the United States or any
similar offices in any other country or any political subdivision thereof, and
all extensions or renewals thereof, and (b) all goodwill associated therewith or
symbolized thereby, and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
"U.S. SUBSIDIARIES" shall mean the Subsidiaries (as defined in
the Credit Agreements) incorporated or otherwise organized in the United States
of America.
SECTION 1.03. RULES OF INTERPRETATION. The rules of
interpretation specified in Section 1.02 of the Credit Agreements shall be
applicable to this Agreement.
ARTICLE II
SECURITY INTEREST
SECTION 2.01. SECURITY INTEREST. As security for the payment
or performance, as the case may be, of the Obligations, each Grantor hereby
creates, mortgages, pledges, hypothecates and transfers to the Collateral Agent,
its successors and assigns, for the benefit of the Secured Parties, and hereby
grants to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a continuing first priority security interest in
all such Grantors' right, title and interest in, to and under the Collateral
subject to liens permitted under Section 6.02 of the Credit Agreements (the
"SECURITY INTEREST"). Without limiting the foregoing, the Collateral Agent is
hereby authorized to file one or more financing statements, continuation
statements, filings with the United States Patent and Trademark Office or United
States Copyright Office (or similar office in any other country), or any other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by such Grantor, without the signature
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6
of such Grantor, naming such Grantor as debtor and the Collateral Agent as
secured party.
Notwithstanding any other provision of this Agreement to the
contrary, the Collateral shall not include any License which by its terms or the
terms governing it prohibits assignment thereof or the grant of a security
interest therein; PROVIDED that such term or terms are typical or customary in
connection with the document or instrument to which they relate.
Each Grantor agrees at all times to keep accurate and
complete, in all material respects, accounting records with respect to the
Collateral and, on and after the occurrence and during the continuance of a
Default, a record of all payments and Proceeds received in respect thereof.
SECTION 2.02. FURTHER ASSURANCES. Each Grantor agrees, at its
own cost and expense, to promptly execute, acknowledge, deliver and cause to be
duly filed all such further instruments and documents and take all such actions
as the Collateral Agent may from time to time reasonably request for the better
assuring, preserving and perfecting of the Security Interest and the rights and
remedies created hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting of
the Security Interest created hereby, the filing of any financing statements or
other documents (including filings with the United States Patent and Trademark
Office and the United States Copyright Office or similar offices in any other
country) in connection herewith, and the execution and delivery of any document
required to supplement this Agreement with respect to any Patents, Trademarks
and/or Copyrights applied for, acquired, registered (or for which registration
applications are filed) or issued after the date hereof. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, upon the request of the Collateral
Agent, such note or instrument shall (to the extent not previously pledged and
delivered pursuant to the Pledge Agreements) be immediately pledged and
delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent. Each Grantor agrees promptly to notify the Collateral Agent if
any material portion of the Collateral is canceled or overturned, opposed,
misappropriated, injured, infringed, lost (other than due to expiration of any
issued Patent) or, if applicable, diluted.
SECTION 2.03. INSPECTION AND VERIFICATION. Without limiting
the scope of Section 5.07 of the Credit Agreements, the Collateral Agent and
such representatives as the Collateral Agent may reasonably designate shall have
the right to inspect, at any reasonable times or times, any of the Collateral,
all records related thereto (and to make extracts and copies from such records)
and the premises upon which any of the Collateral is located, to discuss any
Grantor's affairs with the officers of such Grantor and its independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, conditions, and status of or any other matter relating
to such Collateral, including, in the case of Collateral in the
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7
possession of any third party (with, except after an Event of Default shall have
occurred and during the continuance thereof, the consent of such Grantor, which
consent shall not be unreasonably withheld), by contacting such person
possessing such Collateral for the purpose of making such a verification. The
Collateral Agent shall have the absolute right to share any information it gains
from such inspection or verification with any or all of the Secured Parties.
SECTION 2.04. TAXES; ENCUMBRANCES. At its option, the
Collateral Agent may discharge past due taxes, assessments, charges, fees,
liens, security interests or other encumbrances at any time levied or placed on
any of the Collateral and not permitted under this Agreement or other Loan
Documents, and may pay for the maintenance and preservation of any of the
Collateral to the extent any Grantor fails to do so to the extent required by
this Agreement or the other Loan Documents, and such Grantor agrees to reimburse
the Collateral Agent on demand for any payment made or any expense incurred by
the Collateral Agent pursuant to the foregoing authorization; PROVIDED, HOWEVER,
that nothing in this Section 2.04 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or
any other Secured Party to cure or perform, any covenants or other promises of
any Grantor with respect to taxes, assessments, charges, fees, liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.
SECTION 2.05. NO ASSUMPTION OF LIABILITY. The Security
Interest is granted as security only and shall not subject any Secured Party to,
or in any way alter or modify, any obligation or liability of any Grantor with
respect to or arising out of any of the Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants, as to itself and the Collateral in which the Security Interest is
created by it hereunder, that:
SECTION 3.01. VALIDITY OF PATENTS, TRADEMARKS AND COPYRIGHTS.
Each of the Patents, Trademarks and Copyrights is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part, except as could not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.02. TITLE AND AUTHORITY. Each Grantor has rights in
and good title to the Collateral shown on the schedules hereto as being owned by
it and has full corporate power and authority to grant to the Collateral Agent
(for the benefit of the Secured Parties) the Security Interest in the Collateral
pursuant hereto and to execute, deliver and perform its obligations in
accordance with the terms of this Agreement, without the consent or approval of
any other person other than any consent or approval that has been obtained,
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8
except, in each case, as could not reasonably be expected to have a Material
Adverse Effect.
SECTION 3.03. FILINGS. (a) Fully executed financing statements
containing a description of the Collateral shall promptly following the Closing
Date be filed of record in every governmental, municipal or other office in
every jurisdiction located within the United States and its respective
territories and possessions or such other analogous documents in other countries
as are necessary to publish notice of and protect the validity of and to
establish a valid and perfected security interest in favor of the Collateral
Agent (for the benefit of the Secured Parties) in respect of the Collateral in
which a security interest may be perfected by filing a financing statement or
analogous document in the United States and its political subdivisions,
territories and possessions pursuant to the Uniform Commercial Code or other
applicable law in such jurisdictions or pursuant to applicable law in other
countries, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements or other documents of similar effect, except as
contemplated by paragraph (b) below and filings with respect to after-acquired
Collateral, with respect to which all necessary actions will be promptly taken
subsequent to the acquisition of such after-acquired Collateral.
(b) Each Grantor shall ensure and warrants that fully executed
security agreements in the form hereof and containing a description of the
Collateral shall have been received and recorded within three months after the
execution of this Agreement with respect to United States Patents and United
States registered Trademarks (and Trademarks for which United States
registration applications are pending) and within one month after the execution
of this Agreement with respect to United States registered Copyrights by the
United States Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the
regulations thereunder, as applicable, and otherwise as may be required pursuant
to the laws of any other country or any political subdivision thereof, to
protect the validity and first priority of and to perfect a valid first priority
security interest (subject only to Liens permitted by Section 6.02 of the Credit
Agreements) in favor of the Collateral Agent (for the benefit of the Secured
Parties) in respect of the Collateral in which a security interest may be
perfected by filing in the United States and its political subdivisions,
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements (other than such actions as are necessary to perfect
the Collateral Agent's first priority security interest with respect to any
Collateral (or registration or application for registration thereof) acquired or
developed after the date hereof).
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9
SECTION 3.04. VALIDITY OF SECURITY INTERESTS. This Agreement
is effective to create in favor of the Collateral Agent, for the ratable benefit
of the Secured Parties, a legal, valid and enforceable security interest in the
Collateral, and, when financing statements in appropriate form are filed in the
offices specified on Schedule VI hereto and this Agreement is filed in the
United States Patent and Trademark Office and the United States Copyright
Office, this Agreement will constitute a duly perfected Lien on, and security
interest in, all right, title and interest of the Grantors in such Collateral
and, to the extent contemplated therein and subject to ss. 9-306 of the UCC, the
proceeds thereof, in each case prior and superior in right to any other person
(it being understood that subsequent recordings in the United States Patent and
Trademark Office and the United States Copyright Office may be necessary to
perfect a lien on registered trademarks, trademark applications and copyrights
acquired by the Grantors after the date hereof), other than with respect to the
rights of persons pursuant to Liens expressly permitted by Section 6.02 of the
Credit Agreements.
SECTION 3.05. INFORMATION REGARDING NAMES AND LOCATIONS. Each
Grantor has disclosed in writing to the Collateral Agent on Schedule IV any
material trade names used to identify it in its business or in the ownership of
its properties during the past five years.
SECTION 3.06. ABSENCE OF OTHER LIENS. The Collateral is owned
by the Grantors free and clear of any Lien of any nature whatsoever (except for
Liens expressly permitted by Section 6.02 of the Credit Agreements or hereby and
any liens of licenses listed on Schedule V). Other than as contemplated hereby
and by the other Loan Documents, and except as permitted therein, the Grantors
have not filed (a) any financing statement or analogous document under the
Uniform Commercial Code, (b) any assignment in which any Grantor assigns the
Collateral, any security agreement or any similar instrument covering any
Collateral with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office in any other country of political
subdivision thereof and (c) any assignment in which any Grantor assigns the
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office.
ARTICLE IV
COVENANTS
SECTION 4.01. COVENANTS REGARDING PATENT, TRADEMARK AND
COPYRIGHT COLLATERAL. (a) Each Grantor (either itself or through licensees)
will, for each Patent, not do any act, or omit to do any act, whereby any Patent
that is material to the conduct of the Grantors' businesses, taken as a whole,
may become invalidated or dedicated to the public, and shall continue to mark,
to the extent consistent with past practices and good business judgment, any
products covered by a material Patent with the relevant patent number as
necessary and sufficient to establish and preserve such Grantor's matrial
rights under applicable laws.
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10
(b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct of the
Grantors' businesses, taken as a whole, to the extent consistent with past
practices and good business judgment, (i) maintain such Trademark in full force
free from any material claim of abandonment or invalidity for nonuse, (ii)
maintain the quality of products and services offered under such Trademark to
the extent that the failure to do so would result in a Material Adverse Effect,
(iii) display such Trademark with notice of federal or foreign registration to
the extent necessary and sufficient to establish and preserve such Grantor's
material rights under applicable law and (iv) not knowingly use or knowingly
permit the use of such Trademark in violation of any material third-party
rights.
(c) Each Grantor (either itself or through licensees) will,
for each work covered by a material Copyright, to the extent consistent with
past practices and good business judgment, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve such Grantor's material
rights under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately
if it knows or has reason to know that any Patent, Trademark or Copyright
material to the conduct of the Grantors' businesses, taken as a whole, may
become abandoned, lost or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, United States Copyright Office or any court or similar office
of any country) regarding such Grantor's ownership of any such Patent, Trademark
or Copyright, its right to register the same, or to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United States
or in any other country or any political subdivision thereof, unless it promptly
informs the Collateral Agent, and, upon request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may reasonably request to evidence (and, in the case of
applications for Trademarks with the United States Patent and Trademark Office,
perfect) the Collateral Agent's security interest in such Patent, Trademark or
Copyright of such Grantor and the good will and general intangibles of such
Grantor relating thereto or represented thereby, and such Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable until the Obligations are paid in full.
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11
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
(and to obtain the relevant grant or registration) relating to the Pat ents,
Trademarks and/or Copyrights which are material to the Grantors' businesses,
taken as a whole, to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of the Grantors'
businesses, taken as a whole, including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third parties.
(g) In the event that any Collateral consisting of a Patent,
Trademark or Copyright material to the conduct of the Grantors' businesses,
taken as a whole, is believed by the Grantor that has created the Security
Interest in such Collateral pursuant hereto to have been infringed,
misappropriated or diluted by a third party in any material respect, such
Grantor shall notify the Collateral Agent promptly after it learns thereof and
shall, if consistent with good business judgment, promptly sue for infringement,
misappropriation, or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as are
appropriate under the circumstances to protect such Collateral.
SECTION 4.02. PROTECTION OF SECURITY. Each Grantor shall, at
its own cost and expense, take any and all reasonable actions necessary to
defend title to the Collateral against all persons, to properly maintain,
protect and preserve the Collateral and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
permitted under the Credit Agreements in each case, except as otherwise
permitted by the Credit Agreements or this Agreement.
SECTION 4.03. CONTINUING OBLIGATIONS OF THE GRANTORS. Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each License, contract,
agreement, interest or obligation relating to the Collateral, all in accordance
with the terms and conditions thereof, to the extent consistent with good
business practice. Without limiting the foregoing, the Collateral Agent shall
have no obligation or liability under any License by reason of or arising out of
this Agreement or the granting or the assignment to the Collateral Agent of the
Security Interest or the receipt by the Collateral Agent of any payment related
to any License pursuant hereto, nor shall the Collateral Agent be required or
obligated in any manner to perform or fulfill any of the obligations of any
Grantor under or pursuant to any License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any License, or to present or
file any claim, or to take any action to collect or enforce any performance of
the payment of any amounts that may have been assigned to it or to which it may
be entitled at any time or times.
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12
SECTION 4.04. USE AND DISPOSITION OF COLLATERAL. A Grantor
shall not (i) make or permit to be made an assignment, pledge or hypothecation
of the Collateral, and shall grant no other security interest in the Collateral
(other than pursuant hereto or except for any Permitted Liens) or (ii) make or
permit to be made any transfer of the Collateral, and shall remain at all times
in possession thereof other than transfers to the Collateral Agent pursuant to
the provisions hereof; notwithstanding the foregoing, a Grantor may use and
dispose of the Collateral in any lawful manner permitted by the provisions of
this Agreement, the Credit Agreements or any other Loan Document, unless the
Collateral Agent shall, after an Event of Default shall have occurred and during
the continuance thereof, notify the Borrower not to sell, convey, lease, assign,
transfer or otherwise dispose of any Collateral except with respect to any
transfer between the Borrower or a Wholly Owned Subsidiary that is a Grantor and
the Borrower or a Wholly Owned Subsidiary that is a Grantor.
SECTION 4.05. LOCATIONS OF COLLATERAL; PLACE OF BUSINESS. (a)
Each Grantor agrees, at such time or times as the Collateral Agent may
reasonably request, promptly to prepare and deliver to the Collateral Agent a
duly certified schedule or schedules in form reasonably satisfactory to the
Collateral Agent, showing the identity, amount and location (to the extent
practicable) of any and all Collateral.
(b) Each Grantor agrees not to change, or permit to be
changed, the location of its chief executive office or chief place of business
or the name or names used to identify it in its business or in the ownership of
its properties unless all filings under the Uniform Commercial Code or under
other applicable laws that are required to be made with respect to the
Collateral have been made and the Collateral Agent has a valid, legal and
perfected first priority security interest in the Collateral, subject to no
liens, other than Liens permitted by Section 6.02 of the Credit Agreements and
any liens or licenses listed on Schedule V, and prior notice thereof has been
given to the Collateral Agent along with copies of all such filings to be made.
SECTION 4.06. FUTURE RIGHTS. (a) If, before the time that all
Obligations shall have been paid in full, no Letters of Credit are outstanding
and the Secured Parties no longer have Commitments under the Credit Agreements,
any Grantor shall obtain rights to any material asset or item that may be
considered Collateral, the provisions of Section 2.01 shall automatically apply
thereto and each Grantor shall give to the Collateral Agent prompt notice
thereof in writing.
(b) With respect to any such material asset or item that may
be considered Collateral as set forth in paragraph (a) above, each Grantor shall
follow the procedures set forth in Section 3.03, as applicable, to ensure that
the Collateral Agent's valid first priority security interest therein is
perfected (subject only to Liens permitted by Section 6.02 the Credit
Agreements).
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13
SECTION 4.07 ASSIGNMENT OF LICENSES. Upon and during the
continuance of an Event of Default and at the reasonable request of the
Collateral Agent, each Grantor shall use its reasonable efforts to obtain all
requisite consents or approvals by the licensor of each Copyright License,
Patent License or Trademark License to effect the assignment of all of the
Grantors' rights, title and interest thereunder to the Collateral Agent or its
designee.
SECTION 4.08. COLLATERAL AGENT'S LIABILITIES AND EXPENSES;
INDEMNIFICATION. (a) Notwithstanding anything to the contrary provided herein,
the Collateral Agent assumes no liabilities with respect to any claims regarding
each Grantor's ownership (or purported ownership) of, or rights or obligations
(or purported rights or obligations) arising from, the Collateral or any use (or
actual or alleged misuse), license or sublicense thereof by any Grantor or any
licensee of such Grantor, whether arising out of any past, current or future
event, circumstance, act or omission or otherwise, or any claim, suit, loss,
damage, expense or liability of any kind or nature arising out of or in
connection with the Collateral or the production, marketing, delivery, sale or
provision of goods or services under or in connection with any of the
Collateral. As between the Secured Parties and the Grantors, all of such
liabilities shall be borne exclusively by the Grantors.
(b) Each Grantor hereby agrees to pay all expenses of the
Collateral Agent and to indemnify the Collateral Agent with respect to any and
all losses, claims, damages, liabilities and related expenses in respect of this
Agreement or the Collateral in each case to the extent the Borrower is required
to do so pursuant to Section 9.05 of the Credit Agreements.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents.
Without prejudice to the survival of any other agreements contained herein, all
indemnification and reimbursement obligations contained herein shall survive the
payment in full of the principal and interest under the Credit Agreements, the
expiration of the Letters of Credit and the termination of the Commitments or
this Agreement.
ARTICLE V
REMEDIES
SECTION 5.01. POWER OF ATTORNEY. Upon the occurrence and
during the continuance of any Event of Default, subject to prior written notice
to the Borrower, the Collateral Agent shall have the right, as the true and
lawful attorney-in-fact of the
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14
Grantors, with power of substitution for the Grantors and in the Grantors'
names, the Collateral Agent's name or otherwise, for the use and benefit of the
Secured Parties (a) upon prior notice from the Collateral Agent, to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof; (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (c) to sign the
name of any Grantor on any invoice relating to any of the Collateral; (d) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral; (e) to settle, compromise, compound, adjust or defend any actions,
suits or proceedings relating to or pertaining to all or any of the Collateral;
(f) to license or, to the extent permitted by any applicable law, sublicense,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any of the Collateral throughout the world for such term or
terms, on such conditions, and in such manner, as the Collateral Agent shall
determine (other than in violation of any then existing licensing arrangements
to the extent that waivers or other adequate provision cannot be secured
therefor); and (g) generally to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; PROVIDED, HOWEVER, that
except as provided for by law or the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions, nothing herein
contained shall be construed as requiring or obligating the Collateral Agent to
make any commitment or to make any inquiry as to the nature or sufficiency of
any payment received by the Collateral Agent, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken by the Collateral Agent or omitted to be taken with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of any Grantor or to any claim or action against
the Collateral Agent. It is understood and agreed that the appointment of the
Collateral Agent as the attorney-in-fact of the Grantors for the purposes set
forth above in this Section 5.01 is coupled with an interest and is irrevocable.
The provisions of this Section 5.01 shall in no event relieve the Grantors of
any of their obligations hereunder or under the Credit Agreements or any other
Loan Document with respect to the Collateral or any part thereof or impose any
obligation on the Collateral Agent or the Secured Parties to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Secured Party of any other
or further right that it may have on the date of this Agreement or hereafter,
whether hereunder or by law or by the Security Agreement, or otherwise.
<PAGE>
15
SECTION 5.02. OTHER REMEDIES UPON DEFAULT. Upon the occurrence
and during the continuance of an Event of Default, each Grantor expressly agrees
that, subject to prior written notice to the Borrower, the Collateral Agent on
demand shall have the right to take any or all of the following actions at the
same or different times: with or without legal process and with or without
previous notice or demand for performance, to take possession of all tangible
manifestations or embodiments of the Collateral and documentation relating
thereto and all business records, documents, files, prints and labels with
respect to the Collateral, and without liability for trespass to enter any
premises where such tangible manifestations or embodiments, business records,
documents, files, prints and labels with respect to the Collateral may be
located for the purpose of taking possession of or removing such tangible
manifestations or embodiments, business records, documents, files, prints and
labels with respect to the Collateral, and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other
law applicable to any part of the Collateral. Subject to and without limiting
the generality of the foregoing, each Grantor agrees that the Collateral Agent
shall have the right, subject to the mandatory requirements of applicable law,
to sell or otherwise dispose of all or any part of the Collateral, at public or
private sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery as the Collateral Agent shall deem
appropriate. The Collateral Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof where the failure to obtain such a representation and agreement
could result in a violation of any applicable securities laws, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal that such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.
The Collateral Agent shall give the Grantors at least 10 days'
written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of Collateral. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case of a
sale at a broker's board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral, or
<PAGE>
16
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice to the Grantors. At any public sale made
pursuant to this Section 5.02, the Collateral Agent or any Secured Party may bid
for or purchase, free from any right of redemption, stay, valuation or appraisal
on the part of any Grantor (all said rights being also hereby waived and
released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to the Collateral Agent or any Secured Party from any Grantor as
a credit against the purchase price, and the Collateral Agent or any Secured
Party may, upon compliance with the terms of sale, hold, retain and dispose of
such property without further accountability to such Grantor therefor. As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
SECTION 5.03. APPLICATION OF PROCEEDS OF SALE. The proceeds of
any sale of Collateral, as well as any Collateral consisting of cash, shall be
applied by the Collateral Agent as follows:
FIRST, to the payment of the reasonable costs and expenses of
the Collateral Agent as set forth in Sections 5.01 and 5.02 and in the
Credit Agreements;
SECOND, to the payment of all amounts of the Obligations owed
to the Secured Parties in respect of Loans made by them and outstanding
and amounts owing in respect of any L/C Disbursement or Letter of
Credit or under any Interest/Exchange Rate Protection Agreement, pro
rata as among the Secured Parties in accordance with the amount of such
Obligations owed them;
THIRD, to the payment and discharge in full of the Obligations
(other than those referred to above), pro rata as among the Secured
<PAGE>
17
Parties in accordance with the amount of such Obligations owed to them;
and
FOURTH, after payment in full of all Obligations, to the
applicable Grantor, or its successor or assign thereof, or to
whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, any Collateral then remaining.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 5.04. GRANT OF LICENSE TO USE PATENT, TRADEMARK AND
COPYRIGHT COLLATERAL. For the purpose of enabling the Collateral Agent to
exercise rights and remedies under Article V hereof at such time as the
Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Collateral Agent an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sublicense any of the
Collateral now owned or hereafter acquired by such Grantor, and wherever the
same may be located, and including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored. The use of
such license by the Collateral Agent shall be exercised, at the option of the
Collateral Agent for any purpose appropriate in connection with the exercise of
remedies hereunder, only upon the occurrence and during the continuance of an
Event of Default; PROVIDED that any license, sublicense or other transaction
entered into by the Collateral Agent in accordance herewith shall be binding
upon such Grantor notwithstanding any subsequent cure of an Event of Default.
The Collateral Agent agrees to apply the net proceeds received from any license
as provided in Section 5.03 hereof.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. THE COLLATERAL AGENT APPOINTED ATTORNEY-
IN-FACT. Except as otherwise provided herein, each Grantor hereby appoints the
Collateral Agent the attorney-in-fact of such Grantor, effective upon the
occurrence and during the continuance of an Event of Default, for the purposes
of carrying out the provisions of this Agreement, taking any action and
executing any instrument that the Collateral Agent may reasonably deem necessary
or advisable to accomplish the purposes hereof, and doing all other acts that
such Grantor is obligated to do hereunder. Such appointment is in each case
<PAGE>
18
irrevocable and coupled with an interest. Each Grantor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof in
accordance with this Agreement.
SECTION 6.02. NOTICES. Notices and other communications
provided for herein shall be in writing and given (i) in the case of
communications and notices to any Credit Party or any Secured Party, as provided
in the Credit Agreements and (ii) in the case of communications and notices to
any Grantor that is not a Credit Party, as provided in the Subsidiary Guarantee
Agreement.
SECTION 6.03. SUCCESSORS AND ASSIGNS. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party, and the
terms "Lender", "Fronting Bank" and "Secured Party" shall include each permitted
successor and assignee of any Lender, Fronting Bank or Secured Party permitted
under Section 9.04 of the Credit Agreements and all covenants, promises and
agreements by or on behalf of the Grantors or the Collateral Agent or that are
contained in this Agreement shall bind and inure to the benefit of their
respective permitted successors and permitted assigns referred to above.
(b) No Grantor shall assign or delegate any of its rights and
duties hereunder.
(c) The covenants, promises and agreements by the Grantors
shall inure to the benefit of each Secured Party and each assignee of any
Secured Party permitted under Section 9.04 of the Credit Agreements.
SECTION 6.04. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT
TO THE EXTENT THAT FEDERAL LAW OR LAWS OF ANOTHER STATE OR FOREIGN JURISDICTION
MAY APPLY TO PATENTS, TRADEMARKS, COPYRIGHTS, OTHER COLLATERAL OR REMEDIES.
SECTION 6.05. WAIVERS; AMENDMENT. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other right or power. The rights and remedies of the
Collateral Agent hereunder and of other Secured Parties under the Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or any other Loan
Document or consent to any departure by any Grantor therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on any Grantor in any case
shall entitle such Grantor to any other or further notice or demand in similar
or other circumstances.
<PAGE>
19
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into between any Grantor and the Collateral Agent, with the
prior written consent of the Required Secured Parties; PROVIDED, HOWEVER, that
except as provided herein or in the other Loan Documents, no such agreement
shall amend, modify, waive or otherwise affect the rights or duties of the
Collateral Agent hereunder without the prior written consent of the Collateral
Agent.
SECTION 6.06. SECURITY INTEREST ABSOLUTE. All rights of the
Collateral Agent hereunder, the security interests granted hereunder and all
obligations of the Grantors hereunder shall be absolute and unconditional.
SECTION 6.07. SURVIVAL OF AGREEMENT. All covenants,
agreements, representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Secured Parties and shall survive the making by the
Lenders of the Loans, the execution and delivery to the Lenders of the Loan
Documents and the issuance by the Fronting Banks of the Letters of Credit
regardless of any investigation made by the Secured Parties or on their behalf
and shall continue in full force and effect so long as the principal of or any
accrued interest on any Loan or L/C Disbursement or any Fee or any other amount
payable under or in respect of this Agreement or any other Loan Document is
outstanding and unpaid and so long as the Commitments have not been terminated.
SECTION 6.08. BINDING EFFECT; ASSIGNMENTS. This Agreement
shall become effective as to any Grantor when a counterpart hereof executed on
behalf of such Grantor shall have been delivered to the Collateral Agent, and
thereafter shall be binding upon such Grantor and its respective successors and
assigns, and shall inure to the benefit of such Grantor and the Secured Parties
and their respective successors and assigns, except that no Grantor shall have
the right to assign its rights hereunder or any interest herein (and any such
attempted assignment shall be void) except as expressly contemplated by this
Agreement or the other Loan Documents.
SECTION 6.09. TERMINATION; RELEASE. (a) This Agreement and the
security interests granted hereby shall terminate when all the Obligations have
been indefeasibly paid in full, the Commitments have been terminated and no
Letters of Credit are outstanding.
(b) Upon any sale by any Grantor of any Collateral that is
permitted under the Credit Agreements or upon the effectiveness of any written
consent to the release of the Security Interest in any Collateral pursuant to
Section 9.08 of the Credit Agreements, the Security Interest in such Collateral
shall be automatically released.
<PAGE>
20
(c) In connection with any termination or release pursuant to
paragraphs (a) and (b), the Collateral Agent shall execute and deliver to each
Grantor, at such Grantor's expense, all Uniform Commercial Code termination
statements, documents in order to terminate any United States Patent and
Trademark Office filings and similar documents that such Grantor shall
reasonably request to evidence such termination or release. Any execution and
delivery of termination statements or documents pursuant to this Section 6.09
shall be without recourse to or warranty by the Collateral Agent.
SECTION 6.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 6.10.
SECTION 6.11. SEVERABILITY. In the event any one or more of
the provisions contained in this Agreement or in any other Loan Document should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 6.12. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
Each Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any Loan
Party or Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Grantor or
any Secured Party or its properties in the courts of any jurisdiction.
<PAGE>
21
(b) Each Grantor and each Secured Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 6.02. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 6.13. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together shall constitute but one instrument, and shall become
effective as provided in Section 6.08.
SECTION 6.14. HEADINGS. Article and Section headings used
herein are for convenience of reference only, are not part of this Agreement and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 6.15. ADDITIONAL GRANTORS. Pursuant to Section 5.11 of
the Credit Agreements, each U.S. Subsidiary that was not in existence or not a
U.S. Subsidiary on the date thereof is required to enter into this Agreement as
a Grantor upon becoming a U.S. Subsidiary. Upon execution and delivery, after
the date hereof, by the Collateral Agent and such U.S. Subsidiary of an
instrument in the form of Annex 1, such U.S. Subsidiary shall become a Grantor
hereunder with the same force and effect as if originally named as a Grantor
hereunder. The execution and delivery of any such instrument shall not require
the consent of any Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Grantor as a party to this Agreement.
<PAGE>
22
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
UCAR INTERNATIONAL INC.
by /s/ Michelle F. Rider
---------------------------------------
Name: Michelle F. Rider
Title: Attorney-in-Fact
UCAR GLOBAL ENTERPRISES INC.
by /s/ Michelle F. Rider
---------------------------------------
Name: Michelle F. Rider
Title: Attorney-in-Fact
EACH OF THE SUBSIDIARY GRANTORS
LIATED ON SCHEDULE VII HERETO
by /s/ Michelle F. Rider
---------------------------------------
Name: Michelle F. Rider
Title: Attorney-in-Fact
THE CHASE MANHATTAN BANK, as
Collateral Agent
by /s/ Marian Schulman
---------------------------------------
Name: Marian Schulman
Title: Vice President
<PAGE>
SCHEDULE I
TO INTELLECTUAL
PROPERTY SECURITY AGREEMENT
PATENTS AND PATENT APPLICATIONS
SERIAL NO. OR ISSUE OR
PATENT NO. INVENTOR COUNTRY FILE DATE TITLE
See Attached
<PAGE>
SCHEDULE II
TO INTELLECTUAL
PROPERTY SECURITY AGREEMENT
TRADEMARKS, TRADEMARK REGISTRATIONS AND
TRADEMARK REGISTRATION APPLICATIONS
SERIAL NO. OR ISSUE OR
REGISTRATION NO. COUNTRY FILE DATE MARK
See attached
<PAGE>
SCHEDULE III
TO INTELLECTUAL
PROPERTY SECURITY AGREEMENT
COPYRIGHT REGISTRATIONS AND COPYRIGHT
REGISTRATION APPLICATIONS
REGISTRATION NO. COUNTRY ISSUE OR
FILE DATE TITLE
None
<PAGE>
SCHEDULE IV
TO INTELLECTUAL
PROPERTY SECURITY AGREEMENT
TRADE NAMES
None
<PAGE>
SCHEDULE V
TO INTELLECTUAL
PROPERTY SECURITY AGREEMENT
LIENS ON
None
<PAGE>
SCHEDULE VI
TO INTELLECTUAL
PROPERTY SECURITY AGREEMENT
Offices where financing statements need to be filed
[See Security Agreement]
<PAGE>
SCHEDULE VII
TO INTELLECTUAL PROPERTY
SECURITY AGREEEMENT
SUBSIDIARY GRANTORS
UCAR International Inc.
UCAR Global Enterprises Inc.
UCAR Carbon Company Inc.
UCAR Carbon Technology Corporation
UCAR Holdings Inc.
UCAR Holdings II Inc.
UCAR Holdings III Inc.
UCAR International Trading Inc.
Union Carbide Grafito, Inc.
UCAR Composites Inc.
<PAGE>
EXHIBIT A-1 TO
INTELLECTUAL PROPERTY
SECURITY AGREEMENT
SUPPLEMENT NO. dated as of [ Security
Agreement dated as of April 22,1998, as amended and
restated as of November 10, 1998 (the "INTELLECTUAL
PROPERTY SECURITY AGREEMENT"), among UCAR
INTERNATIONAL INC., a Delaware corporation ("UCAR"),
UCAR GLOBAL ENTERPRISES INC., a Delaware corporation
(the "BORROWER"), each of the U.S. Subsidiaries (such
term and each other capitalized term used but not
defined having the meaning given it in the
Intellectual Property Security Agreement, and if not
defined therein, having the meaning given it in
Article I of the Credit Agreements), party thereto
(together with the Borrower, the "GRANTORS") and THE
CHASE MANHATTAN BANK, a New York banking corporation,
as collateral agent (the "COLLATERAL AGENT") for the
Secured Parties.
A. Reference is made to (i) the Credit Agreement dated as of
October 19, 1995, as amended and restated as of March 19, 1997 and November 10,
1998 (as the same may be amended, supplemented or otherwise modified from time
to time, the "EXISTING CREDIT AGREEMENT"), among UCAR, the Borrower, the
Subsidiary Borrowers party thereto, the Lenders party thereto, the Fronting
Banks party thereto and The Chase Manhattan Bank, as administrative agent and
collateral agent and (ii) the Credit Agreement dated as of November 10, 1998,
among UCAR, the Borrower, UCAR S.A., the Lenders party thereto, The Chase
Manhattan Bank, as administrative agent and collateral agent, Credit Suisse
First Boston, as syndication agent, and Morgan Guaranty Trust Company of New
York, as syndication agent (as the same may be amended, supplemented or
otherwise modified from time to time, the "TRANCHE C FACILITY CREDIT AGREEMENT",
and together with the Existing Credit Agreement, the "CREDIT AGREEMENTS").
B. The Borrower and the U.S. Subsidiaries have entered into
the Intellectual Property Security Agreement in order to induce the Lenders to
make Loans and the Fronting Banks to issue Letters of Credit pursuant to, and
upon the terms and subject to the conditions specified in, the Credit
Agreements. Pursuant to Section 5.11 of the Credit Agreements, each U.S.
Subsidiary that was not in existence or not a U.S. Subsidiary on the date
thereof is required to enter into the Intellectual Property Security Agreement
as a Grantor upon becoming a U.S. Subsidiary. Section 6.15 of the Intellectual
Property Security Agreement provides that additional U.S. Subsidiaries may
become Grantors under the Intellectual Property Security Agreement by execution
and delivery of an instrument in the form of this Supplement. The undersigned
(the "NEW GRANTOR") is a U.S. Subsidiary and is executing this Supplement in
accordance with the requirements of the Credit Agreements to become a Grantor
under the Intellectual Property Security Agreement in order to induce the
Lenders to make additional Loans and the Fronting Banks to issue additional
<PAGE>
2
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as
follows:
SECTION 1. In accordance with Section 6.15 of the Intellectual
Property Security Agreement, the New Grantor by its signature below becomes a
Grantor under the Intellectual Property Security Agreement with the same force
and effect as if originally named therein as a Grantor and the New Grantor
hereby agrees to all the terms and provisions of the Intellectual Property
Security Agreement applicable to it as a Grantor thereunder. Each reference to a
"GRANTOR" in the Intellectual Property Security Agreement shall be deemed to
include the New Grantor. The Intellectual Property Security Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the
Secured Parties that this Supplement has been duly authorized, executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to the effects of
applicable bankruptcy, insolvency or similar laws effecting creditors' rights
generally and equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Supplement shall
become effective when the Collateral Agent shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Grantor and the Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the
Intellectual Property Security Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Intellectual Property Security Agreement shall not
in any way be affected or impaired. The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provi sions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in the Credit Agreements. All communications
and notices hereunder to the New Grantor shall be given to it at the address set
forth under its signature, with a copy to the Borrower.
<PAGE>
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent
have duly executed this Supplement to the Intellectual Property Security
Agreement as of the day and year first above written.
[NAME OF NEW GRANTOR],
by
-----------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
-----------------------------------
Name:
Title:
Address:
<PAGE>
EXHIBIT 10.7
DOMESTIC SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 22, 1998, as amended and
restated as of November 10, 1998, made by UCAR INTERNATIONAL INC., a
Delaware corporation ("UCAR"), UCAR GLOBAL ENTERPRISES INC., a
Delaware corporation (the "BORROWER"), and the U.S. Subsidiaries
(together with UCAR and the Borrower, the "GRANTORS") in favor of
THE CHASE MANHATTAN BANK, a New York banking corporation, as
collateral agent for the Secured Parties (such term and each other
capitalized term used but not defined herein having the meaning
given it in Article I of the Credit Agreements). Reference is made
to (i) the Credit Agreement dated as of October 19, 1995, as amended
and restated as of March 19, 1997 and November 10, 1998 (as the same
may be amended, supplemented or otherwise modified from time to
time, the "EXISTING CREDIT AGREEMENT"), among UCAR, the Borrower,
the Subsidiary Borrowers party thereto, the Lenders party thereto,
the Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent and (ii) the Credit
Agreement dated as of November 10, 1998, among UCAR, the Borrower,
UCAR S.A., the Lenders party thereto, The Chase Manhattan Bank, as
administrative agent and collateral agent, Credit Suisse First
Boston, as syndication agent, and Morgan Guaranty Trust Company of
New York, as syndication agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "TRANCHE C
FACILITY CREDIT AGREEMENT", and together with the Existing Credit
Agreement, the "CREDIT AGREEMENTS").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreements, the Lenders have
severally agreed to make Loans and the Fronting Banks have agreed to issue
Letters of Credit, upon the terms and subject to the conditions set forth
therein; and
WHEREAS, it is a condition precedent to the obligations of the
Lenders to make the Loans and the Fronting Banks to issue the Letters of Credit
that the Grantors, other than UCAR and the Borrower, guarantee payment and
performance of the Credit Parties' obligations under the Credit Agreements and
the other Loan Documents, that UCAR guarantee payment and performance of the
Borrower's obligations, including its obligations as a guarantor, under the
Credit Agreements and the other Loan Documents and that the Borrower guarantee
payment and performance of the other Credit Parties' obligations under the
Credit Agreements and the other Loan Documents;
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2
WHEREAS, in satisfaction of such condition, the Grantors have
entered into certain Guarantee Agreements for the benefit of the Secured
Parties;
WHEREAS, it is a further condition precedent to the obligations of
the Lenders to make the Loans and the Fronting Banks to issue the Letters of
Credit that the Grantors shall have executed and delivered this Security
Agreement; and
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Credit Agreements and to induce the Lenders to
make their respective Loans and the Fronting Banks to issue their respective
Letters of Credit, each of the Grantors hereby agree with the Collateral Agent,
for the ratable benefit of the Secured Parties, as follows:
1. DEFINED TERMS.
1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined
in the Credit Agreements and used herein shall have the meanings given in the
Credit Agreements, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Chattel Paper, Farm Products, Instruments and Vehicles.
(b) The following terms shall have the following meanings:
"ACCOUNTS": with respect to each Grantor, any and all right, title
and interest of such Grantor to payment for goods and services sold or
leased, including any such right evidenced by chattel paper, whether due
or to become due, whether or not it has been earned or performed, and
whether now or hereafter acquired or arising in the future, including,
without limitation, accounts receivable from Affiliates of such person,
except to the extent that the grant of a security interest in Accounts
owed by Affiliates not incorporated or otherwise organized in the United
States of America would result in material adverse tax or legal
consequences to such Grantor.
"ACCOUNTS RECEIVABLE": with respect to each Grantor, all right,
title and interest of such Grantor to Accounts and all of its right, title
and interest in any returned goods, together with all rights, titles,
securities and guaranties with respect thereto, including any rights to
stoppage in transit, replevin, reclamation and resales, and all related
security interests, liens and pledges, whether voluntary or involuntary in
each case whether due or become due, whether now or hereafter arising in
the future.
"AGREEMENT": this Security Agreement, as the same may be amended,
modified or otherwise supplemented from time to time.
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3
"CODE": the Uniform Commercial Code as from time to time in effect
in the State of New York.
"COLLATERAL": as defined in Section 2 of this Agreement.
"COLLATERAL ACCOUNT": any collateral account established by the
Collateral Agent as provided in Section 5.3 or Section 7.2.
"CONTRACTS": with respect to each Grantor, all rights of such
Grantor under contracts and agreements to which such Grantor is a party or
under which such Grantor has any right, title or interest or to which such
Grantor or any property of such Grantor is subject, as the same may from
time to time be amended, supplemented or otherwise modified, including,
without limitation, (a) all rights of such Grantor to receive moneys due
and to become due to it thereunder or in connection therewith, (b) all
rights of such Grantor to damages arising out of, or for, breach or
default in respect thereof and (c) all rights of such Grantor to exercise
all remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its rights
under such contract or agreement is not prohibited without the consent of
any other person, or is permitted with consent if all necessary consents
to such grant of a security interest have been obtained from all such
other persons (it being understood that the foregoing shall not be deemed
to obligate such Grantor to obtain such consents); PROVIDED, that the
foregoing limitation shall not affect, limit, restrict or impair the grant
by such Grantor of a security interest pursuant to this Agreement in any
Account or any money or other amounts due or to become due under any such
contract or agreement to the extent provided in Section 9-318 of the Code
as in effect on the date hereof.
"DOCUMENTS": with respect to each Grantor, all Instruments, files,
records, ledger sheets, and documents covering or relating to any of the
Accounts, Equipment, General Intangibles, Inventory and Proceeds.
"EQUIPMENT": with respect to each Grantor, all equipment, furniture
and furnishings, tools, accessories, parts and supplies of every kind and
description, wherever located, now or hereafter existing, and all
improvements, accessions or appurtenances thereto, including Fixtures, and
all other tangible personal property whether or not similar to any of the
foregoing items which are now or hereafter acquired by such Grantor (it
being understood that "Equipment" does not include Vehicles).
"FIXTURES": with respect to each Grantor, all items that would
otherwise constitute items of Collateral, whether now owned or hereafter
acquired, that become so related to particular real estate that an
interest in them arises under any real estate law applicable thereto.
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4
"GENERAL INTANGIBLES": with respect to each Grantor, as defined in
the Uniform Commercial Code in effect in the State of New York on the date
hereof to the extent, in the case of any General Intangibles arising under
any contract or agreement, that the grant by such Grantor of a security
interest pursuant to this Agreement in its rights under such contract or
agreement is not prohibited without the consent of any other person, or is
permitted with consent if all necessary consents to such grant of a
security interest have been obtained from all such other persons (it being
understood that the foregoing shall not be deemed to obligate such Grantor
to obtain such consents), PROVIDED, that the foregoing limitation shall
not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any Account or General
Intangible or any money or other amounts due or to become due under any
such contract or agreement to the extent provided in Section 9-318 of the
Code as in effect on the date hereof, and PROVIDED, FURTHER, that "General
Intangibles" shall not include any of the items within Section 2(h)
herein, except to the extent that the grant of a security interest in
General Intangibles owed by Affiliates not incorporated or otherwise
organized in the United States of America would result in material adverse
tax or legal consequences to such Grantor.
"INDEMNITEE": the Secured Parties and their respective officers,
directors, trustees, affiliates and controlling persons.
"INVENTORY": with respect to each Grantor, all right, title and
interest of such Grantor in and to goods intended for sale or lease by
such person, or consumed in such person's business (including, without
limitation, all operating parts and supplies), together with all raw
materials and finished goods, whether now owned or hereafter acquired or
arising.
"OBLIGATIONS": with respect to each Grantor, the collective
reference to its obligations as obligor or guarantor in respect of (i) the
unpaid principal of and premium, if any, and interest (including interest
accruing at the then applicable rate provided in the Existing Credit
Agreement after the maturity of the Loans thereunder and interest accruing
at the then applicable rate provided in the Existing Credit Agreement
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to any Credit
Party thereunder whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) on the Loans made under the
Existing Credit Agreement, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii)
the unpaid principal of and premium, if any, and interest (including
interest accruing at the then applicable rate provided in the Tranche C
Facility Credit Agreement after the maturity of the Loans thereunder and
interest accruing at the applicable rate provided in the Tranche C
Facility Credit Agreement after the
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5
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to any Credit
Party thereunder whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) on the Loans made under the
Tranche C Facility Credit Agreement, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise,
(iii) each payment required to be made by any Credit Party under the
Existing Credit Agreement, when and as due, including payments in respect
of reimbursements of L/C Disbursements, interest thereon and obligations
to provide cash collateral, (iv) each payment required to be made by any
Credit Party under the Tranche C Facility Credit Agreement, when and as
due, and (v) all other obligations and liabilities of every nature of the
Credit Parties under the Credit Agreements from time to time owed to the
Secured Parties or any of them, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred
(including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), which may
arise under, out of, or in connection with, the Existing Credit Agreement,
the Tranche C Facility Credit Agreement, any Guarantee Agreement, any
Security Document or any other Loan Document and any obligation of the
Borrower or any Credit Party under either of the Credit Agreements to a
Lender under either Credit Agreement pursuant to an Interest/Exchange Rate
Protection Agreement or under any other document made, delivered or given
in connection with any of the foregoing, in each case whether on account
of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including all fees and disbursements of
counsel to the Collateral Agent or to the Secured Parties that are
required to be paid by the Borrower or any Credit Party pursuant to the
terms of the Existing Credit Agreement, the Tranche C Facility Credit
Agreement, any Guarantee Agreement, any Security Document, any other Loan
Document or any Interest/Exchange Rate Protection Agreement with a Lender.
"PROCEEDS": with respect to each Grantor, any consideration received
from the sale, exchange or other disposition of any asset or property
which constitutes Collateral owned by it, any value received as a
consequence of the possession of any such Collateral and any payment
received from any insurer or other person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of
whatever nature of any asset or property which constitutes such
Collateral, and shall include, without limitation, (a) all cash and
negotiable instruments received or held on behalf of the Collateral Agent
pursuant to Section 5.3 and (b) any claim of such Grantor against a third
party for (and the right to sue and recover for and the rights to damages
or profits due or accrued arising out of or in connection with) any and
all amounts from time to time paid or payable under or in connection with
any of the Collateral.
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6
"U.S. SUBSIDIARY": a Subsidiary incorporated o rotherwise organized
in the United States of America.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section references are to this Agreement unless otherwise
specified. The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation".
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt
and complete payment and performance when due, whether at the stated maturity,
by acceleration, upon one or more dates set for prepayment or otherwise of the
Obligations, each Grantor hereby grants to the Collateral Agent, for the ratable
benefit of the Secured Parties, a first priority security interest in all of the
following property now owned or at any time hereafter acquired by such Grantor,
subject to Permitted Liens (as defined below) (collectively, with respect to
each Grantor, the "COLLATERAL"):
(a) all Accounts Receivable;
(b) all Contracts;
(c) all Documents;
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Inventory;
(h) all books and records pertaining to the Collateral; and
(i) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing.
Notwithstanding anything contained in this Agreement or any Loan Document to the
contrary, "Collateral" shall not include any property of the type specified in
Sections 2(b), (d) (to the extent such Equipment constitutes Fixtures), (e), (f)
and (g) if the granting of a Lien by such Grantor hereunder would violate the
terms of, or otherwise constitute a default under, any document or instrument to
which any Loan Party is a party (other than those documents or instruments
between or among the Loan Parties and/or their Affiliates only) relating to the
ownership of, or pertaining to any rights or interests held in such property,
provided that the terms to be violated or default that would result in the event
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7
of the granting of the Lien hereunder are typical or customary in connection
with the document or instrument to which they relate.
Such security interests are granted as security only and shall not
subject any Secured Party to, or in anyway alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.
3. REPRESENTATIONS AND WARRANTIES. Each Grantor hereby represents
and warrants, as to itself and the Collateral in which the security interest is
created by it hereunder, that:
3.1 TITLE; NO OTHER LIENS. Except for the security interest granted
to the Collateral Agent for the ratable benefit of the Secured Parties pursuant
to this Agreement and the other Liens permitted to exist pursuant to the Credit
Agreements (the "PERMITTED LIENS"), such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No security
agreement, financing statement or other public notice with respect to all or any
part of such Collateral is on file or of record in any public office, except
such as have been filed, pursuant to this Agreement, in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, or in respect of
Permitted Liens.
3.2 AUTHORITY. Such Grantor has full power and authority to grant to
the Collateral Agent the security interest in such Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other person other
than any consent or approval that has been obtained.
3.3 ENFORCEABLE OBLIGATION; PERFECTED, FIRST PRIORITY SECURITY
INTERESTS. This Agreement constitutes a legal, valid and binding obligation of
such Grantor, enforceable against such Grantor in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally and
except as enforceability may be limited by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and the security interests granted pursuant to this Agreement
(a) upon completion of the filings and other actions specified in SCHEDULE I
attached hereto shall constitute perfected security interests in such Collateral
in favor of the Collateral Agent for the ratable benefit of the Secured Parties,
and (b) are prior to all other Liens (other than Permitted Liens) on such
Collateral in existence on the date hereof.
3.4 INVENTORY AND EQUIPMENT. The Inventory and the Equipment owned
by such Grantor are kept at the locations listed in SCHEDULE II hereto, which
shall be updated from time to time in accordance with Section 4.5 of this
Agreement, or at such other locations as shall be permitted by Section 4.4,
provided that in the case of any Equipment that in the ordinary course of a
Grantor's business is moved to a Vehicle, such Equipment may also be kept on or
near such Vehicle as is usual in the ordinary course of business.
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8
3.5 CHIEF EXECUTIVE OFFICE. As of the date hereof, such Grantor's
chief executive office and chief place of business is located at the location
listed in Section 9.01 of the Credit Agreements or under its signature set forth
below.
3.6 FARM PRODUCTS. None of such Collateral constitutes, or is the
Proceeds of, Farm Products.
4. COVENANTS. Each Grantor covenants and agrees with the Secured
Parties that, from and after the date of this Agreement until this Agreement is
terminated and the security interests created hereby are released:
4.1 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER. If an Event of
Default shall have occurred and be continuing and if any amount payable under or
in connection with any of the Collateral owned by such Grantor shall be or
become evidenced by any promissory note, other instrument or chattel paper, upon
the request of the Collateral Agent, such promissory note, instrument or Chattel
Paper shall be immediately delivered to the Collateral Agent, duly indorsed in a
manner reasonably satisfactory to the Collateral Agent, to be held as Collateral
pursuant to this Agreement.
4.2 MAINTENANCE OF INSURANCE. Such Grantor shall maintain insurance
policies in accordance with the requirements of Section 5.02 of the Credit
Agreements.
4.3 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION. (a) Such Grantor shall cause all filings and other actions listed
in SCHEDULE I to be taken. Such Grantor shall maintain the security interests
created by this Agreement as first, perfected security interests subject only to
Permitted Liens and shall defend such security interests against all claims and
demands of all persons whomsoever (other than those pursuant to Permitted
Liens).
(b) At any time and from time to time, upon the written request of
the Collateral Agent, and at the sole expense of such Grantor, such Grantor
shall promptly and duly execute and deliver such further instruments and
documents and take such further action as the Collateral Agent may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any jurisdiction with respect to the
security interests created hereby.
4.4 CHANGES IN LOCATIONS, NAME, ETC. Such Grantor shall not, except
(x) upon prior written notice to the Collateral Agent and delivery to the
Collateral Agent of a written supplement to SCHEDULE II showing the additional
location or locations at which Inventory or Equipment shall be kept, and (y) if
filings under the UCC or otherwise have been made which maintain in favor of the
Collateral Agent a valid, legal and perfected security interest in such
Collateral subject to no liens, other than Permitted Liens,
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9
(a) permit any of the Inventory or Equipment owned by it to be kept
at a location other than those listed in SCHEDULE II hereto or Vehicles as
described in Section 3.4, except for Inventory and Equipment in transit
between locations described in this paragraph (a) or transferred to a
foreign Subsidiary in a transaction permitted by the Credit Agreements;
(b) change the location of its chief executive office and chief
place of business from that specified in Section 3.5; or
(c) change its (i) corporate name or any trade name used to identify
it in its conduct of business or in the ownership of its properties, (ii)
identity or (iii) corporate structure to such an extent that any financing
statement filed in favor of the Collateral Agent in connection with this
Agreement would become seriously misleading.
4.5 FURTHER IDENTIFICATION OF COLLATERAL. Such Grantor shall furnish
to the Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral owned by it and such other reports in
connection with such Collateral as the Collateral Agent may reasonably request,
all in reasonable detail.
4.6 NOTICES. Such Grantor shall advise the Collateral Agent
promptly, in reasonable detail, at its address set forth in Section 9.01 of the
Credit Agreements of:
(a) any Lien (other than security interests created hereby or
Permitted Liens) on, any material portion of the Collateral; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the security interests
created hereby or on the aggregate value of (i) the Collateral owned by it
and (ii) all other Collateral (as such term is defined in the other
Security Documents) of the Borrower and its U.S. Subsidiaries taken as a
whole.
4.8 COLLATERAL AGENT'S LIABILITIES AND EXPENSES; INDEMNIFICATION.
(a) Notwithstanding anything to the contrary provided herein, the Collateral
Agent assumes no liabilities with respect to any claims regarding each Grantor's
ownership (or purported ownership) of, or rights or obligations (or purported
rights or obligations) arising from, the Collateral or any use (or actual or
alleged misuse) whether arising out of any past, current or future event,
circumstance, act or omission or otherwise, or any claim, suit, loss, damage,
expense or liability of any kind or nature arising out of or in connection with
the Collateral or the production, marketing, delivery, sale or provision of
goods or services under or in connection with any of the Collateral. All of such
liabilities shall, as between the Collateral Agent and the Grantors, be borne
exclusively by the Grantors.
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10
(b) Each Grantor hereby agrees to pay all expenses of the Collateral
Agent and to indemnify the Collateral Agent with respect to any and all losses,
claims, damages, liabilities and related expenses in respect of this Agreement
or the Collateral in each case to the extent the Borrower is required to do so
pursuant to Section 9.05 of the Credit Agreements.
(c) Any amounts payable by a Grantor as provided hereunder shall be
additional Obligations of it secured hereby and by the other Security Documents.
Without prejudice to the survival of any other agreements contained herein, all
indemnification and reimbursement obligations contained herein shall survive the
payment in full of the principal and interest under the Credit Agreements, the
expiration of the Letters of Credit and the termination of the Commitments or
this Agreement.
4.9 USE AND DISPOSITION OF COLLATERAL. A Grantor shall not (i) make
or permit to be made an assignment, pledge or hypothecation of the Collateral
owned by it, and shall grant no other security interest in such Collateral
(other than pursuant hereto or except for any Permitted Liens) or (ii) make or
permit to be made any transfer of such Collateral, and shall remain at all times
in possession thereof other than transfers to the Collateral Agent pursuant to
the provisions hereof; notwithstanding the foregoing, such Grantor may use and
dispose of such Collateral in any lawful manner not in violation of the
provisions of this Agreement, the Credit Agreements or any other Loan Document
to which it is a party, unless the Collateral Agent shall, after an Event of
Default shall have occurred and during the continuance thereof, notify such
Grantor not to sell, convey, lease, assign, transfer or otherwise dispose of any
such Collateral other than Inventory in the ordinary course of business,
Permitted Foreign Transfers and other than any other transfers between the
Borrower or a Wholly Owned Subsidiary that is a Grantor and a Borrower or a
Wholly Owned Subsidiary that is a Grantor.
5. PROVISIONS RELATING TO ACCOUNTS.
5.1 GRANTORS REMAIN LIABLE UNDER ACCOUNTS. Anything herein to the
contrary notwithstanding, a Grantor shall remain liable under each of the
Accounts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. No Secured Party shall have any
obligation or liability under any Account (or any agreement giving rise thereto)
by reason of or arising out of this Agreement or the receipt by the Collateral
Agent or any Secured Party of any payment relating to such Account pursuant
hereto, nor shall any Secured Party be obligated in any manner to perform any of
the obligations of a Grantor under or pursuant to any Account (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may
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11
have been assigned to it or to which it may be entitled at any time or times.
5.2 ANALYSIS OF ACCOUNTS. The Collateral Agent shall have the right
upon the occurrence and during the continuance of an Event of Default to make
test verifications of the Accounts in any manner and through any medium that it
considers reasonably advisable, and each Grantor shall furnish all such
assistance and information as the Collateral Agent may reasonably require in
connection with such test verifications. At any time and from time to time upon
the occurrence and during the continuance of an Event of Default, upon the
Collateral Agent's reasonable request and at the expense of each Grantor, each
Grantor shall cause independent public accountants or others reasonably
satisfactory to the Collateral Agent to furnish to the Collateral Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Accounts. Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them to the
Collateral Agent's reasonable satisfaction the existence, amount and terms of
any Accounts.
5.3 COLLECTIONS ON ACCOUNTS. (a) The Collateral Agent hereby
authorizes each Grantor to collect the Accounts, and the Collateral Agent may
curtail or terminate said authority at any time after the occurrence and during
the continuance of an Event of Default. If required by the Collateral Agent at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Accounts, when collected by a Grantor during the continuance of
such an Event of Default, (i) shall be forthwith (and, in any event, within two
Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Collateral Agent if required, in a Collateral
Account maintained under the sole dominion and control of and on terms and
conditions reasonably satisfactory to the Collateral Agent, subject to
withdrawal by the Collateral Agent as provided in Section 7.3, and (ii) until so
turned over, shall be held by such Grantor in trust for the Secured Parties,
segregated from other funds of such Grantor.
(b) At the Collateral Agent's reasonable request after the
occurrence and during the continuance of an Event of Default, each Grantor shall
deliver to the Collateral Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the Accounts,
including, without limitation, all original orders, invoices and shipping
receipts.
5.4 REPRESENTATIONS AND WARRANTIES. (a) As of the date hereof,
the place where each Grantor keeps its records concerning the Accounts is at
the location listed in SCHEDULE III hereto.
(b) As of the date hereof, the amounts owing with respect to
Accounts of obligors which are Governmental Authorities do not constitute more
than 15% of the average aggregate amount owing on the Accounts owing to UCAR,
the Borrower, and any
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12
Subsidiaries, taken as a whole, during the most recently ended period of twelve
consecutive calendar months.
5.5 COVENANTS. (a) The amount represented by each Grantor to the
Secured Parties from time to time as owing by each account debtor or by all
account debtors in respect of the Accounts shall at such time be in all material
respects the correct amount actually owing by such account debtor or debtors
thereunder.
(b) Upon the occurrence and during the continuance of an Event of
Default, a Grantor shall not grant any extension of the time of payment of any
of the Accounts Receivable, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partly, any person liable for
the payment thereof, or allow any credit or discount whatsoever thereon other
than extensions, credits, discounts, compromises or settlements granted or made
in the ordinary course of business if the Collateral Agent shall have instructed
the Grantors not to grant or make any such extension, credit, discount,
compromise, or settlement under any circumstances during the continuance of such
Event of Default.
(c) Unless a Grantor shall deliver prior written notice, identifying
the change of location for its books and records, such Grantor shall not remove
its books and records from the location specified in Section 5.4(a).
6. PROVISIONS RELATING TO CONTRACTS.
6.1 GRANTORS REMAIN LIABLE UNDER CONTRACTS. Anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each Contract
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with and pursuant to the terms and
provisions of such Contract. No Secured Party shall have any obligation or
liability under any Contract by reason of or arising out of this Agreement or
the receipt by any such Secured Party of any payment relating to such Contract
pursuant hereto, nor shall any Secured Party be obligated in any manner to
perform any of the obligations of a Grantor under or pursuant to any Contract,
to make any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance by any
party under any Contract, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.
6.2 COMMUNICATION WITH CONTRACTING PARTIES. Upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent in its own
name or in the name of others may communicate with parties to the Contracts to
verify with them to the Collateral Agent's satisfaction the existence, amount
and terms of any Contracts.
7. REMEDIES.
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7.1 NOTICE TO ACCOUNT DEBTORS AND CONTRACT PARTIES. Upon the request
of the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default, a Grantor shall notify account debtors on
the Accounts and parties to the Contracts that the Accounts and the Contracts
have been assigned to the Collateral Agent for the ratable benefit of the
Secured Parties and that payments in respect thereof during the continuance of
such an Event of Default shall be made directly to the Collateral Agent.
7.2 PROCEEDS TO BE TURNED OVER TO COLLATERAL AGENT. In addition to
the rights of the Collateral Agent and the Secured Parties specified in Section
5.3 with respect to payments of Accounts, if an Event of Default shall occur and
be continuing, all Proceeds received by a Grantor consisting of cash, checks and
other near-cash items shall upon the Collateral Agent's request be held by such
Grantor in trust for the Secured Parties, segregated from other funds of such
Grantor, and shall, upon the Collateral Agent's request (it being understood
that the exercise of remedies by the Secured Parties in connection with an Event
of Default under Sections VII(g) and VII(h) of the Credit Agreements shall be
deemed to constitute a request by the Collateral Agent for the purposes of this
sentence) forthwith upon receipt by such Grantor, be turned over to the
Collateral Agent in the exact form received by such Grantor (duly indorsed by
such Grantor to the Collateral Agent, if required) and held by the Collateral
Agent in a Collateral Account maintained under the sole dominion and control of
the Collateral Agent and on terms and conditions reasonably satisfactory to the
Collateral Agent. All Proceeds while held by the Collateral Agent in a
Collateral Account (or by such Grantor in trust for the Collateral Agent and the
Secured Parties) shall subject to Section 7.3 continue to be held as collateral
security for all the Obligations and shall not constitute payment thereof until
applied as provided in Section 7.3.
7.3 APPLICATION OF PROCEEDS. If an Event of Default shall have
occurred and be continuing, and the Collateral Agent shall have requested a
Grantor to take any action set forth in Section 5.3(a) or 7.2 or the Collateral
Agent shall have taken any action pursuant to Section 7.4, the Collateral Agent
shall apply the proceeds as follows:
FIRST, to the payment of the reasonable costs and expenses of the
Collateral Agent as set forth in Sections 7.4 and 15;
SECOND, to the payment of all amounts of the Obligations owed to the
Secured Parties in respect of Loans made by them and outstanding and
amounts owing in respect of any L/C Disbursement or Letter of Credit or
under any Interest/Exchange Rate Protection Agreement, pro rata as among
the Secured Parties in accordance with the amount of such Obligations owed
to them;
THIRD, to the payment and discharge in full of the Obligations
(other than those referred to above), pro rata as among the Secured
Parties in accordance with the amount of such Obligations owed to them;
and
<PAGE>
14
FOURTH, after payment in full of all Obligations, to the applicable
Grantor, or its successors or assigns, or to whomsoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may
direct, any Collateral then remaining.
7.4 CODE REMEDIES. If an Event of Default shall have occurred and be
continuing, the Collateral Agent, on behalf of the Secured Parties may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, the Collateral Agent, without demand
of performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon a
Grantor or any other person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
any Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. Any Secured Party shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of (to the extent permitted by law) any right or
equity of redemption in a Grantor, which right or equity is hereby, to the
extent permitted by law, waived or released. Each Grantor further agrees, at the
Collateral Agent's request, to assemble the Collateral and make it available to
the Collateral Agent at places which the Collateral Agent shall reasonably
select, whether at such Grantor's premises or elsewhere. The Collateral Agent
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses incurred therein or incidental to the care or safekeeping of any of
such Collateral or reasonably relating to such Collateral or the rights of the
Collateral Agent and the Secured Parties hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in accordance with Section 7.3, and only
after such application and after the payment by the Collateral Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Collateral Agent account for the
surplus, if any, to such Grantor. If any notice of a proposed sale or other
disposition of such Collateral shall be required by law, such notice shall be in
writing and deemed reasonable and proper if given at least 10 days before such
sale or other disposition.
The Collateral Agent shall have absolute discretion as to the time
of application of any such proceeds, moneys or
<PAGE>
15
balances in accordance with this Agreement. Upon any sale of the Collateral by
the Collateral Agent (including pursuant to a power of sale granted by statute
or under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
7.5 WAIVER; DEFICIENCY. Each Grantor waives and agrees not to assert
any rights or privileges it may acquire under Section 9-112 of the Code. Each
Grantor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay (i) in the case of
UCAR, its Obligations or those of the Borrower (including as guarantor) and (ii)
in the case of each other Grantor, the Obligations and the reasonable fees and
disbursements of any attorneys employed by any Secured Party to collect such
deficiency.
8. COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT; COLLATERAL
AGENT'S PERFORMANCE OF GRANTORS' OBLIGATIONS.
8.1 POWERS. Each Grantor hereby irrevocably constitutes and appoints
the Collateral Agent and any officer or agent thereof, with full power of
substitution, during the continuance of an Event of Default, as its true and
lawful attorney-in-fact, with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name
from time to time in the Collateral Agent's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, such Grantor hereby gives the Collateral Agent
the power and right, on behalf of such Grantor, without notice to or assent by
such Grantor, to do the following upon the occurrence and during the continuance
of an Event of Default:
(a) in the name of such Grantor or its own name, or otherwise, to
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate
by the Collateral Agent for the purpose of collecting any and all such
moneys due under any Account, Instrument, General Intangible or Contract
or with respect to any other Collateral whenever payable;
(b) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral (other than Permitted Liens), to effect
any repairs or any insurance called for by the terms of this Agreement and
to pay all or any part of the premiums therefor and the costs thereof,
<PAGE>
16
(c) to execute, in connection with any sale provided for in Section
7.4 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(d)(i) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent
shall direct; (ii) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (iii) to
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (iv) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in
respect of any Collateral; (v) to defend any suit, action or proceeding
brought against any Grantor with respect to any Collateral; (vi) to
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, to give such discharges or releases as the
Collateral Agent may deem appropriate; and (vii) generally, to use, sell,
transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the
Collateral Agent were the absolute owner thereof for all purposes, and to
do, at the Collateral Agent's option and at the expense of such Grantor,
at any time, or from time to time, all acts and things which the
Collateral Agent reasonably deems necessary to protect, preserve or
realize upon such Collateral and the Collateral Agent's and the Secured
Parties' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
8.2 PERFORMANCE BY COLLATERAL AGENT OF GRANTOR'S OBLIGATIONS. If any
Grantor fails to perform or comply with any of its agreements contained herein,
the Collateral Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.
8.3 GRANTOR'S REIMBURSEMENT OBLIGATION. The expenses of the
Collateral Agent reasonably incurred in connection with actions undertaken as
provided in this Section 8, together with interest thereon at a rate per annum
equal to the default rate of interest set forth in Section 2.07 of the Credit
Agreements, from the date payment is demanded by the Collateral Agent to the
date reimbursed by a Grantor, shall be payable by the Borrower to the Collateral
Agent on demand.
8.4 RATIFICATION; POWER COUPLED WITH AN INTEREST. Each Grantor
hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
<PAGE>
17
is terminated and the security interests created hereby are released.
9. DUTY OF COLLATERAL AGENT. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. No Secured Party nor any of its respective
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of a Grantor or any other person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Secured Parties hereunder are solely to protect the Secured
Parties' interests in the Collateral and shall not impose any duty upon any
Secured Party to exercise any such powers. The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
10. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of
the Code, each Grantor authorizes the Collateral Agent to file financing
statements with respect to the Collateral without the signature of such Grantor
in such form and in such filing offices as the Collateral Agent reasonably
determines appropriate to perfect the security interests of the Collateral Agent
under this Agreement. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
11. AUTHORITY OF COLLATERAL AGENT. Each Grantor acknowledges that
the rights and responsibilities of the Collateral Agent under this Agreement
with respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the other
Secured Parties, be governed by the Credit Agreements and by such other
agreements with respect thereto as may exist from time to time among them but,
as between the Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the other Secured Parties with
full and valid authority so to act or refrain from acting.
12. NOTICES. All notices, requests and demands to or upon the
Secured Parties or the Grantors under this Agreement shall be given or made in
accordance with Section 9.01 of the Credit Agreements and addressed as follows:
(a) if to any Secured Party or any Credit Party, in accordance with
Section 9.01 of the Credit Agreements;
<PAGE>
18
(b) if to any Grantor that is not a Credit Party, at its address
set forth under its signature below.
13. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
hereunder, the security interest and all obligations of the Grantors hereunder
shall be absolute and unconditional.
14. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Secured Parties and shall survive the making by the
Lenders of the Loans, the execution and delivery to the Lenders of the Loan
Documents and the issuance of any Letters of Credit, regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or L/C Disbursement, or any Fee or any other amount payable under or in
respect of this Agreement or any other Loan Document is outstanding and unpaid
and so long as any Letter of Credit is outstanding and so long as the
Commitments have not been terminated.
15. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.
16. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each Grantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Loan Party or any
Secured Party may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against any Grantor or any Secured
Party or its properties in the courts of any jurisdiction.
<PAGE>
19
(b) Each Grantor and each Secured Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 12. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
17. RELEASE. (a) This Agreement and the security interest created
hereunder shall terminate when all Obligations have been fully and indefeasibly
paid and when the Secured Parties have no further Commitments under the Credit
Agreements and no Letters of Credit are outstanding, at which time the
Collateral Agent shall execute and deliver to each Grantor, or to such person or
persons as such Grantor shall reasonably designate, all Uniform Commercial Code
termination statements and similar documents prepared by such Grantor at its
expense which such Grantor shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 17(a) shall be without recourse to or warranty by the
Collateral Agent.
(b) All Collateral used, sold, transferred or otherwise disposed of,
in accordance with the terms of the Credit Agreements (including pursuant to a
waiver or amendment of the terms thereof) shall be used, sold, transferred or
otherwise disposed of free and clear of the Lien and the security interest
created hereunder. In connection with the foregoing, (i) the Collateral Agent
shall execute and deliver to each Grantor, or to such person or persons as such
Grantor shall reasonably designate, all Uniform Commercial Code termination
statements and similar documents prepared by such Grantor at its expense which
such Grantor shall reasonably request to evidence the release of the Lien and
security interest created hereunder with respect to such Collateral and (ii) any
representation, warranty or covenant contained herein relating to such
Collateral shall no longer be deemed to be made with respect to such used, sold,
transferred or otherwise disposed Collateral.
18. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties hereunder
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
<PAGE>
20
19. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES.
19.1 AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Grantors and the Collateral Agent, PROVIDED
that any provision of this Agreement may be waived by the Required Secured
Parties pursuant to a letter or agreement executed by the Collateral Agent or by
telecopy transmission from the Collateral Agent.
19.2 NO WAIVER BY COURSE OF CONDUCT. No Secured Party shall by any
act (except by a written instrument pursuant to Section 19.1 hereof) or delay be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Secured Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party would otherwise have on any future
occasion.
20. REMEDIES CUMULATIVE. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
21. SECTION HEADINGS. The section and Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
22. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of each
Grantor and the Secured Parties and their successors and assigns, PROVIDED that
this Agreement may not be assigned by any Grantor without the prior written
consent of the Collateral Agent.
<PAGE>
21
23. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
24. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract.
25. ADDITIONAL GRANTORS. Pursuant to Section 5.11 of the Credit
Agreements, each U.S. Subsidiary that was not in existence or not a U.S.
Subsidiary on the date thereof is required to enter into this Agreement as a
Grantor upon becoming a U.S. Subsidiary. Upon execution and delivery, after the
date hereof, by the Collateral Agent and such U.S. Subsidiary of an instrument
in the form of Exhibit A-1, such U.S. Subsidiary shall become a Grantor
hereunder with the same force and effect as if originally named as a Grantor
hereunder. The execution and delivery of any such instrument shall not require
the consent of any Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Grantor as a party to this Agreement.
<PAGE>
22
IN WITNESS WHEREOF, the undersigned has caused this Security
Agreement to be duly executed and delivered as of the date first above written.
UCAR INTERNATIONAL INC.
by /s/ Corrado F. DeGasperis
----------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
UCAR GLOBAL ENTERPRISES INC.
by /s/ Corrado F. DeGasperis
----------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
EACH OF THE SUBSIDIARY GRANTORS
LISTED ON SCHEDULE IV HERETO
by /s/ Corrado F. DeGasperis
----------------------------------------
Name: Corrado F. DeGasperis
Title: Attorney-in-Fact
THE CHASE MANHATTAN BANK,
as Collateral Agent,
by /s/ Marian Schulman
----------------------------------------
Name: Marian Schulman
Title: Vice President
<PAGE>
23
SCHEDULES:
Schedule I Filings and Other Actions Required to Perfect
Security Interests
Schedule II Inventory and Equipment
Schedule III Records of Accounts
Schedule IV Subsidiary Grantors
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Filings
I. Filing Offices for: UCAR Carbon Company Inc.
UCAR Carbon Technology Corporation
a. California:
(i) Orange County Clerk and Recorder
Santa Ana, CA 92701
(ii) Secretary of State, California
b. Connecticut:
(i) Town Clerk Danbury
(ii) Secretary of State, Connecticut
c. Illinois:
(i) Crawford County Recorder
Robinson, IL 62454
(ii) Secretary of State, Illinois
d. New York:
(i) Niagara County Clerk
Lockport, NY 14094
(ii) Secretary of State, New York
e. Ohio:
(i) Cuyahoga County Recorder
Cleveland, OH 44113
(ii) Secretary of State, Ohio
<PAGE>
f. Tennessee: (UCAR Carbon Company Inc. Only)
(i) Lawrence County Register of Deeds
Lawrenceburg, TN 38464
(ii) Maury County Register of Deeds
Columbia, TN 38401
(iii) Montgomery County Register
Clarksville, TN 37040
(iv) Secretary of State, Tennessee
g. West Virginia:
(i) Harrison County Clerk
Clarksburg, WV 26301
(ii) Secretary of State, West Virginia
II. Filing Offices for: UCAR Holdings Inc.
UCAR Holdings II, Inc.
UCAR Holdings III, Inc.
UCAR Carbon Foreign Sales Corporation
UCAR Composites Inc.
UCAR International Trading Inc.
a. Connecticut:
(i) Town Clerk Danbury
(ii) Secretary of State, Connecticut
b. Ohio:
(i) Cuyahoga County Recorder
Cleveland, OH 44113
(ii) Secretary of State, Ohio
c. California (UCAR International Trading Inc.
Only):
(i) Orange County Clerk and Recorder
Santa Ana, CA 92701
(ii) Secretary of State, California
<PAGE>
III. Filing Offices for UCAR International Inc. and UCAR
Global Enterprises Inc.:
a. Connecticut
(i) Town Clerk Danbury
(ii) Secretary of State, Connecticut
b. New York:
(i) County Clerk, New York County
(ii) Secretary of State, New York
c. Ohio:
(i) Cuyahoga County Recorder
Cleveland, OH 44113
(ii) Secretary of State, Ohio
IV. Filing Offices for Mortgages of UCAR Carbon Company
Inc.:
a. Ohio:
(i) Cuyahoga County Recorder
Cleveland, OH 44113
(ii) Secretary of State, Ohio
b. Tennessee:
(i) Lawrence County Register of Deeds
Lawrenceburg, TN 38464
(ii) Maury County Register of Deeds
Columbia, TN 38401
(iii) Montgomery County Register
Clarksville, TN 37040
(iv) Secretary of State, Tennessee
<PAGE>
c. West Virginia:
(i) Harrison County Clerk
Clarksburg, WV 26301
(ii) Secretary of State, West Virginia
d. New York:
(i) Niagara County Clerk
Lockport, NY 14094
(ii) Secretary of State, New York
e. Illinois:
(i) Crawford County Clerk
Robinson, IL 62454
(ii) Secretary of State, Illinois
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
INVENTORY AND EQUIPMENT LOCATIONS
Highway 43 South
Lawrenceburg, TN 38464
Philippi Pike
Anmoore, WV 26323
Highway 7,
Santa Fe Pike
Columbia, TN 38401
Hwy 79N @
Hampton Station Rd.
Clarksville, TN 37040
12900 Snow Road
Parma, OH 44130
3625 Highland Avenue
Niagara Falls, NY 14305
39 Old Ridgebury Road
Danbury, CT 06817
Rural Route 3
Robinson, IL 62454
5 Burroughs
Irvine, CA 92718
11709 Madison Avenue
Lakewood, OH 4107
<PAGE>
SCHEDULE III
TO SECURITY AGREEMENT
RECORDS OF ACCOUNTS
Description
All records concerning the accounts of UCAR International Inc., UCAR
International Acquisitions Inc., UCAR Global Enterprises Inc. and the U.S.
Subsidiaries are located at:
12900 Snow Road
Parma, OH 44130
<PAGE>
SCHEDULE IV
TO THE SECURITY AGREEMENT
SUBSIDIARY GRANTORS
UCAR Carbon Company Inc.
UCAR Carbon Technology Corporation
UCAR Holdings Inc.
UCAR Holdings II Inc.
UCAR Holdings III Inc.
UCAR International Trading Inc.
Union Carbide Grafito, Inc.
UCAR Composites Inc.
<PAGE>
1
EXHIBIT A-1 TO
SECURITY AGREEMENT
SUPPLEMENT NO. dated as of [ ], to the Security
Agreement dated as of April 22, 1998, as amended and
restated as of November 10, 1998 (the "SECURITY AGREEMENT"),
among UCAR INTERNATIONAL INC., a Delaware corporation
("UCAR"), UCAR GLOBAL ENTERPRISES INC., a Delaware
corporation as borrower (the "BORROWER"), each of the U.S.
Subsidiaries (such term and each other capitalized term used
but not defined having the meaning given it in the Security
Agreement, and if not defined therein, having the meaning
given it in Article I of the Credit Agreements), party
thereto (together with the Borrower, the "GRANTORS") and THE
CHASE MANHATTAN BANK, a New York banking corporation, as
collateral agent (the "COLLATERAL AGENT") for the Secured
Parties.
A. Reference is made to (i) the Credit Agreement dated as of October
19, 1995, as amended and restated as of March 19, 1997 and November 10, 1998 (as
the same may be amended, supplemented or otherwise modified from time to time,
the "EXISTING CREDIT AGREEMENT"), among UCAR, the Borrower, the Subsidiary
Borrowers party thereto, the Lenders party thereto, the Fronting Banks party
thereto and The Chase Manhattan Bank, as administrative agent and collateral
agent and (ii) the Credit Agreement dated as of November 10, 1998, among UCAR,
the Borrower, UCAR S.A., the Lenders party thereto, The Chase Manhattan Bank, as
administrative agent and collateral agent, Credit Suisse First Boston, as
syndication agent, and Morgan Guaranty Trust Company of New York, as syndication
agent (as the same may be amended, supplemented or otherwise modified from time
to time, the "TRANCHE C FACILITY CREDIT AGREEMENT", and together with the
Existing Credit Agreement, the "CREDIT AGREEMENTS").
B. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Fronting Banks to issue Letters of
Credit pursuant to, and upon the terms and subject to the conditions specified
in, the Credit Agreements. Pursuant to Section 5.11 of the Credit Agreements,
each U.S. Subsidiary that was not in existence or not a U.S. Subsidiary on the
date thereof is required to enter into the Security Agreement as a Grantor upon
becoming a U.S. Subsidiary. Section 25 of the Security Agreement provides that
additional U.S. Subsidiaries may become Grantors under the Security Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned (the "NEW GRANTOR") is a U.S. Subsidiary and is executing this
Supplement in accordance with the requirements of the Credit Agreements to
become a Grantor under the Security Agreement in order to induce the Lenders to
make additional Loans and the Fronting Banks to issue additional
<PAGE>
2
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as
follows:
SECTION 1. In accordance with Section 25 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby agrees to all the terms and provisions of the
Security Agreement applicable to it as a Grantor thereunder. Each reference to a
"Grantor" in the Security Agreement shall be deemed to include the New Grantor.
The Security Agreement is hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the Secured
Parties that this Supplement has been duly authorized, executed and delivered by
it and constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, subject to the effects of applicable
bankruptcy, insolvency or similar laws effecting creditors' rights generally and
equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Supplement shall
become effective when the Collateral Agent shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Grantor and the Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreements. All communications and
notices hereunder to the New Grantor shall be given to it at the address set
forth under its signature, with a copy to the Borrower.
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3
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have
duly executed this Supplement to the Security Agreement as of the day and year
first above written.
[NAME OF NEW GRANTOR],
by
------------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
-----------------------------------
Name:
Title:
EXHIBIT 10.8
EXECUTION COPY
35% PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of November 10, 1998 (the "PLEDGE
AGREEMENT"), by UCAR GLOBAL ENTERPRISES INC., a Delaware corporation (the
"BORROWER"), UCAR CARBON COMPANY INC., a Delaware corporation, UCAR
HOLDINGS INC., a Delaware, corporation and UCAR HOLDINGS II INC., a
Delaware corporation UCAR Holdings III Inc., a Delaware corporation, UCAR
International Inc., a Delaware corporation (each a "PLEDGOR" and,
collectively, the "PLEDGORS"), in favor of THE CHASE MANHATTAN BANK, a New
York banking corporation, as collateral agent for the Secured Parties.
Reference is made to (i) the Credit Agreement dated as of October 19,
1995, as amended and restated as of March 19, 1997 and November 10, 1998
(as the same may be amended, supplemented or otherwise modified from time
to time, the "EXISTING CREDIT AGREEMENT"), among UCAR International Inc.,
a Delaware corporation ("UCAR"), the Borrower, the Subsidiary Borrowers
party thereto, the Lenders party thereto, the Fronting Banks party thereto
and The Chase Manhattan Bank, as administrative agent and collateral
agent, (ii) the Credit Agreement dated as of November 10, 1998, among
UCAR, the Borrower, UCAR S.A., the Lenders party thereto, The Chase
Manhattan Bank, as administrative agent and collateral agent, Credit
Suisse First Boston, as syndication agent, and Morgan Guaranty Trust
Company of New York, as syndication agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "TRANCHE C
FACILITY CREDIT AGREEMENT" and together with the Existing Credit
Agreement, the "US CREDIT AGREEMENTS") and (iii) the Local Credit Facility
Agreements (the Local Credit Facility Agreements and US Credit Agreements,
the "CREDIT AGREEMENTS"). Capitalized terms used herein but not otherwise
defined have the meaning assigned to them in Article I of the Credit
Agreements.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreements, the Lenders have
severally agreed to make Loans and the Fronting Banks have agreed to issue
Letters of Credit, upon the terms and subject to the conditions set forth
therein;
WHEREAS, the Pledgors are the legal and beneficial owners of the
shares of Pledged Stock issued by the Issuers;
WHEREAS, it is a condition precedent to the obligations of the
Lenders to make the Loans and the Fronting Banks to issue the Letters of Credit
that the U.S. Subsidiaries guarantee payment and performance of the Credit
Parties' obligations under the Credit Agreements and the other Loan Documents,
that the Borrower guarantee payment and performance of the other Credit Parties'
obligations under the Credit Agreements and the other Loan Documents and that
UCAR guarantee payment and performance of the
<PAGE>
2
Borrower's obligations, including its obligations as a guarantor, under the
Credit Agreements and the other Loan Documents;
WHEREAS, in satisfaction of such condition, the Pledgors have
entered into certain Guarantee Agreements for the benefit of the Secured
Parties; and
WHEREAS, it is a further condition precedent to the obligations of
the Lenders to make the Loans and the Fronting Banks to issue the Letters of
Credit that the Pledgors shall have executed and delivered this Pledge Agreement
to the Collateral Agent for the ratable benefit of the Secured Parties, to
secure payment and performance of the Foreign Subsidiaries' respective
obligations under the Credit Agreements, the Guarantee Agreements and the other
Loan Documents to which they are party.
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Credit Agreements and to induce the Lenders to
make their respective Loans and the Fronting Banks to issue their respective
Letters of Credit, each of the Pledgors hereby agrees with the Collateral Agent,
for the ratable benefit of the Secured Parties, as follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms defined
in the Credit Agreements and used herein shall have the meanings given in the
U.S. Credit Agreements.
(b) The following terms shall have the following meanings:
"AGREEMENT": this Pledge Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"CODE": the Uniform Commercial Code from time to time in
effect in the State of New York.
"COLLATERAL": the Pledged Stock, and all Proceeds
thereof.
"COLLATERAL ACCOUNT": any account established to hold
money Proceeds, maintained under the sole dominion and control of
and on terms and conditions reasonably satisfactory to the
Collateral Agent, subject to withdrawal by the Collateral Agent for
the account of the Secured Parties and the Pledgors, as provided in
Section 8(a) and Section 15.
"FOREIGN SUBSIDIARY": any Subsidiary incorporated or
otherwise organized outside the United States of America.
"INDEMNITEE": the Secured Parties and their respective
officers, directors, trustees, affiliates and controlling persons.
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3
"ISSUERS": the collective reference to the companies
identified on SCHEDULE I attached hereto as the issuers of the
Pledged Stock; each, individually, an "ISSUER."
"OBLIGATIONS": with respect to each Foreign Subsidiary,
the collective reference to its obligations as obligor or guarantor
in respect of (i) the unpaid principal of and premium, if any, and
interest (including interest accruing at the then applicable rate
provided in the Existing Credit Agreement after the maturity of the
Loans thereunder and interest accruing at the then applicable rate
provided in the Existing Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Credit Party
thereunder whether or not a claim for post- filing or post-petition
interest is allowed in such proceeding) on the Loans made under the
Existing Credit Agreement, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or
otherwise, (ii) the unpaid principal of and premium, if any, and
interest (including interest accruing at the then applicable rate
provided in the Tranche C Facility Credit Agreement after the
maturity of the Loans thereunder and interest accruing at the
applicable rate provided in the Tranche C Facility Credit Agreement
after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding, relating to
any Credit Party thereunder whether or not a claim for post- filing
or post-petition interest is allowed in such proceeding) on the
Loans made under the Tranche C Facility Credit Agreement, when and
as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (iii) each payment required to be
made by any Credit Party under the Existing Credit Agreement, when
and as due, including payments in respect of reimbursements of L/C
Disbursements, interest thereon and obligations to provide cash
collateral, (iv) each payment required to be made by any Credit
Party under the Tranche C Facility Credit Agreement, when and as
due, and (v) all other obligations and liabilities of every nature
of the Credit Parties under the Credit Agreements from time to time
owed to the Secured Parties or any of them, whether direct or
indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including monetary obligations
incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), which may arise under, out
of, or in connection with, the Existing Credit Agreement, the
Tranche C Facility Credit Agreement, any Guarantee Agreement, any
Security Document or any other Loan Document (including a Local
Facility Loan Document) and any obligation of the Borrower or any
Credit Party under the Credit Agreements to any Lender under the
Credit Agreement pursuant to an Interest/Exchange Rate Protection
Agreement or under any other document made, delivered or given in
connection with any of the foregoing, in each case whether on
<PAGE>
4
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including all fees and
disbursements of counsel to the Collateral Agent or to the Secured
Parties that are required to be paid by the Borrower or any Credit
Party pursuant to the terms of the Existing Credit Agreement, the
Tranche C Facility Credit Agreement, any Guarantee Agreement, any
Security Document, any other Loan Document or any Interest/Exchange
Rate Protection Agreement with a Lender. For the avoidance of doubt,
Obligations as used in this Agreement shall never include an
obligation of UCAR, the Borrower or a U.S. Subsidiary.
"PLEDGED STOCK": the shares of Capital Stock listed on
SCHEDULE I hereto, together with all the stock certificates, options
or rights of any nature whatsoever that may be issued or granted by
any Issuer to any Pledgor while this Agreement is in effect that are
required to be pledged under Section 5 below.
"PROCEEDS": all "proceeds" (as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the
State of New York on the date hereof) of the Pledged Stock and, in
any event, shall include all dividends or other income from the
Pledged Stock, collections thereon or distributions with respect
thereto.
"SECURED PARTIES": (a) the lenders under the Local
Facility Credit Agreements, (b) the Lenders of Swiss Term Loans
under the Tranche C Facility Credit Agreement, (c) the Lenders
holding obligations of the foreign Credit Parties under the Existing
Credit Agreement (including, in the form of Revolving Loans or
Letter of Credit Exposure), (d) the Fronting Banks that have issued
Letters of Credit for the account of a foreign Credit Party under
the Existing Credit Agreement, (e) the respective Administrative
Agent under each Credit Agreement and (f) the Collateral Agent.
"SECURITIES ACT": the Securities Act of 1933, as
amended.
"US SUBSIDIARY": any Subsidiary that is incorporated or
otherwise organized in the United States of America.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section
references are to this Agreement unless otherwise specified. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation".
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
<PAGE>
5
2. PLEDGE; GRANT OF SECURITY INTEREST. Each Pledgor hereby pledges
and delivers to the Collateral Agent, for the ratable benefit of the Secured
Parties, all the Pledged Stock owned by such Pledgor and hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a first
priority security interest in all the Collateral owned by such Pledgor from time
to time, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration, upon one
or more dates of prepayment or otherwise) of the Obligations. Each Pledgor will
cause any shares of Capital Stock of any Subsidiary required to be pledged
hereunder to be evidenced by duly executed certificates that are pledged and
delivered to the Collateral Agent pursuant to the terms hereof.
3. STOCK POWERS. Concurrently with the delivery to the Collateral
Agent of each certificate representing one or more shares of Pledged Stock to
the Collateral Agent, the applicable Pledgor shall deliver an undated stock
power covering such certificate, duly executed in blank by such Pledgor with, if
the Collateral Agent so requests, signature guaranteed.
4. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents and
warrants, as to itself and the Pledged Stock and Collateral pledged by it
hereunder, that:
(a) The shares of Pledged Stock constitute the portion of the issued
and outstanding shares of all classes of the Capital Stock of the
applicable Issuer set forth on Schedule I.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Subject to Section 21(b), each Pledgor is the legal, record and
beneficial owner of the Pledged Stock, free of any and all Liens or
options in favor of, or claims of, any other person, except the security
interest created by this Agreement.
(d) All Capital Stock or other ownership interests in the
Subsidiaries will at all times constitute certificated securities for
purposes of Articles 8 and 9 of the Uniform Commercial Code as in effect
in the State of New York or its equivalent in other jurisdictions.
(e) This Agreement is effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral and, when the Pledged
Stock is delivered to the Collateral Agent (or, as applicable in the case
of Capital Stock of foreign Subsidiaries, the requisite filings or
registrations are made), this Agreement will constitute a duly perfected
first priority Lien on, and security interest in, all right, title and
interest of the Pledgors thereunder in such Pledged Stock, in each case
prior and superior in
<PAGE>
6
rights to any other person, subject to the agreements listed in
Schedule 3.08.
5. COVENANTS. Each Pledgor, as to itself and the Collateral pledged
by it hereunder, covenants and agrees with the Secured Parties that, from and
after the date of this Agreement until this Agreement is terminated and the
security interest created hereby is released, subject to Section 21(b):
(a) If such Pledgor shall, as a result of its ownership of Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including any certificate representing a stock dividend or a distribution
in connection with any reclassification, increase or reduction of capital
or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of,
or in exchange for any shares of the Pledged Stock, or otherwise in
respect thereof, such Pledgor shall accept the same as the agent of the
Secured Parties, hold the same in trust for the Secured Parties and
deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by such Pledgor to the Collateral Agent, if
required, together with an undated stock power covering such certificate
duly executed in blank by such Pledgor and with, if the Collateral Agent,
so requests, signature guaranteed, to be held by the Collateral Agent,
subject to the terms hereof, as additional collateral security for the
Obligations; PROVIDED that the applicable Pledgor shall pledge only such
portion of such Capital Stock that it is not required to pledge pursuant
to the Domestic Pledge Agreement. Without prejudice to the terms and
conditions of the Credit Agreements, any sums paid upon or in respect of
the Pledged Stock upon the liquidation or dissolution (other than any
liquidation or dissolution permitted by Section 5.01(a) of the US Credit
Agreements) of any Issuer shall be subject to Section 2.12(d) of the US
Credit Agreements, or upon and during the continuance of an Event of
Default shall upon the written request of the Collateral Agent be paid
over to the Collateral Agent to be held and applied by it hereunder as
provided in Section 8(a) and Section 15, and in case any distribution of
capital shall be made on or in respect of the Pledged Stock or any
property shall be distributed upon or with respect to the Pledged Stock
pursuant to the recapitalization or reclassification of capital of any
Issuer or pursuant to the reorganization thereof, the property so
distributed shall be subject to Section 2.12(d) of the US Credit
Agreements or, upon and during continuance of an Event of Default upon the
written request of the Collateral Agent, be delivered to the Collateral
Agent to be held and applied by it hereunder as provided in Section 8(a)
and Section 15. If any sums of money or property so paid or distributed in
respect of the Pledged Stock shall be received by such Pledgor, such
Pledgor shall apply such amount in accordance with Section 2.12(d) of the
US Credit Agreements, or upon and during the continuance of an Event of
Default, shall, upon the written request of the Collateral Agent, until
such money or property is paid or
<PAGE>
7
delivered to the Collateral Agent, hold such money or property in trust
for the Secured Parties, segregated from other funds of such Pledgor, for
application in accordance with Section 8(a) and Section 15.
(b) Without the prior written consent of the Collateral Agent, such
Pledgor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or
to issue any other securities convertible into or granting the right to
purchase or exchange for any stock or other equity securities of any
nature of any Issuer, except to the extent the same are permitted to be
issued under the US Credit Agreements, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to,
the Collateral owned by it, except as not prohibited under the terms of
the Credit Agreements, (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any person with respect to, any of
such Collateral, or any interest therein, except as not prohibited under
the terms of the Credit Agreements and for the security interest created
by this Agreement or (iv) enter into any agreement or undertaking
restricting the right or ability of such Pledgor or the Collateral Agent
to sell, assign or transfer any of such Collateral, except as not
prohibited under the terms of the Credit Agreements.
(c) Such Pledgor shall maintain the security interest created by it
under this Agreement as a first priority, perfected security interest and
shall defend such security interest against claims and demands of all
persons whomsoever. At any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of such Pledgor,
such Pledgor shall promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Collateral
Agent may reasonably request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral owned by such Pledgor shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note, instrument
or chattel paper shall, if so requested by the Collateral Agent, be
immediately delivered to the Collateral Agent duly endorsed in a manner
reasonably satisfactory to the Collateral Agent, to be held as Collateral
pursuant to this Agreement, provided that the use of the Proceeds of such
Collateral shall nonetheless be governed by Sections 6 and 7.
(d) If such Pledgor shall at any time own or acquire any shares of
Capital Stock of a Subsidiary that was not in existence or not a
Subsidiary on the date hereof (a "NEW SUBSIDIARY") and such Capital Stock
is not required to be pledged pursuant to the Domestic Pledge Agreement,
such Pledgor shall (i) immediately deliver such shares of Capital Stock,
and all stock certificates evidencing the same, to the Collateral Agent to
be held as collateral hereunder,
<PAGE>
8
(ii) promptly deliver a supplement to this Pledge Agreement, substantially
in the form of Exhibit A-1 to this Agreement (each, a "PLEDGE AGREEMENT
SUPPLEMENT") adding such shares of Capital Stock to Schedule I hereto and
(iii) promptly cause such New Subsidiary to execute and deliver an
Acknowledgment and Consent substantially in the form appended to Annex I
to the Pledge Agreement Supplement. The execution and delivery of any such
instrument shall not require the consent of any Pledgor hereunder. The
rights and obligations of each Pledgor hereunder shall remain in full
force and effect notwithstanding the addition of any new Pledgor as a
party to this Agreement.
6. CASH DIVIDENDS; VOTING RIGHTS; PROCEEDS. (a) Unless an Event of
Default shall have occurred and be continuing and the Collateral Agent shall
have given notice to the Pledgors of the Collateral Agent's intent to exercise
its corresponding rights pursuant to Section 7 below, the Pledgors shall be
permitted to receive, retain and use all cash dividends paid in accordance with
the terms and conditions of the US Credit Agreements in respect of the Pledged
Stock and to exercise all voting and corporate rights with respect to the
Pledged Stock, PROVIDED, HOWEVER, that no vote shall be cast or corporate right
exercised or other action taken (regardless of whether an Event of Default has
occurred and is continuing) which would materially and adversely affect the
rights of the Collateral Agent or the Secured Parties or their ability to
exercise same or result in any violation of any provision of the Credit
Agreements, this Agreement or any other Loan Document.
(b) Unless an Event of Default shall have occurred and be continuing
and the Collateral Agent shall have given notice to the Pledgors of the
Collateral Agent's intent to exercise its corresponding rights pursuant to
Section 7 below, the Pledgors shall be permitted to receive, retain and use all
other Proceeds (in addition to cash dividends as provided under Section 6(a)
above) from the Collateral.
7. RIGHTS OF THE SECURED PARTIES AND THE COLLATERAL AGENT. If an
Event of Default shall occur and be continuing and the Collateral Agent shall
give notice of its intent to exercise such rights to the Pledgors, (i) the
Collateral Agent shall have the right to receive any and all Proceeds paid in
respect of the Pledged Stock and any and all Proceeds of Proceeds and make
application thereof to the Obligations in the manner provided in Section 8(a)
and Section 15 and (ii) all shares of the Pledged Stock shall be registered in
the name of the Collateral Agent or its nominee, and the Collateral Agent or its
nominee may thereafter exercise (1) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of shareholders of
any Issuer or otherwise and (2) any and all rights of, conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
shares of the Pledged Stock as if it were the absolute owner thereof (including
the right to exchange at its discretion any and all the Pledged Stock upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any
<PAGE>
9
Issuer, or upon the exercise by a Pledgor or the Collateral Agent of any right,
privilege or option pertaining to such shares of the Pledged Stock and in
connection therewith, the right to deposit and deliver any and all the Pledged
Stock with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Collateral Agent may
reasonably determine), all without liability except to account for property
actually received by it, but the Collateral Agent shall have no duty to any
Pledgor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing. All Proceeds that are
received by any Pledgor contrary to the provisions of this Section 7 shall be
received in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of such Pledgor and shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or received by
the Collateral Agent pursuant to the provisions of this Section 7 shall be
retained by the Collateral Agent in a Collateral Account to be established by
the Collateral Agent upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 8(a) and Section 15. After
all Events of Default under the Credit Agreements have been cured or waived, the
Collateral Agent shall, within five Business Days after all such Events of
Default have been cured or waived, repay to each Pledgor all cash dividends,
interest or principal that such Pledgor would otherwise be permitted to retain
pursuant to the terms of Section 6 above, but only to the extent such Proceeds
remain in such Collateral Account.
8. REMEDIES. (a) If an Event of Default shall have occurred and be
continuing the Collateral Agent shall apply all or any part of the Proceeds held
in any Collateral Account in accordance with Section 15.
(b) If an Event of Default shall have occurred and be continuing,
the Collateral Agent, on behalf of the Secured Parties, may exercise, in
addition to all other rights and remedies granted in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, the Collateral Agent, without demand
of performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice, required by law referred to below) to or upon the
Pledgors or any other person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange, broker's
board or office of the Collateral Agent or any Secured Party or elsewhere upon
such terms and conditions as it may reasonably deem advisable and at such prices
as it may reasonably deem best, for cash or on credit or for future delivery
<PAGE>
10
without assumption of any risk. The Collateral Agent or any Secured Party shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of (to the extent permitted by law) any right or
equity of redemption in a Pledgor which right or equity is, to the extent
permitted by law, hereby waived or released. The Collateral Agent shall apply
any Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses incurred in respect thereof or
incidental to the care or safekeeping of any of the Collateral or reasonably
relating to the Collateral or the any or the rights of the Collateral Agent and
the Secured Parties hereunder, including reasonable attorney's fees and
disbursements of counsel to the Collateral Agent, to the payment in whole or in
part of the Obligations, in the order set forth in Section 15. If any notice of
a proposed sale or other disposition of Collateral shall be required by law,
such notice shall be in writing and deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Pledgors shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay in the case of each Pledgor, its Obligations
and the reasonable fees and disbursements of any attorneys employed by the
Collateral Agent or any Secured Party to collect such deficiency in its
Obligations.
9. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the Collateral Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 8 hereof, and if in the opinion of the Collateral Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the Pledgor who
owns such Pledged Stock will cause the Issuer thereof to (i) execute and
deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts as may be, in the reasonable opinion of the Collateral Agent,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period expiring on the earlier of (A) one year from the
date of the first public offering of the Pledged Stock and (B) such time that
all of the Pledged Stock, or that portion thereof to be sold, is sold and (iii)
to make all amendments thereto and/or to the related prospectus which, in the
reasonable opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. The
Pledgor who owns such Pledged Stock agrees to cause such Issuer to comply with
the provisions of the securities or "Blue Sky" laws of any and all jurisdictions
which the Collateral Agent shall reasonably designate and to make available to
its security holders, as soon as practicable, an earnings statement (which need
not be audited) which will satisfy the provisions of Section 11(a) of the
Securities Act. Each Pledgor jointly and
<PAGE>
11
severally agrees to (x) indemnify, defend and hold harmless Collateral Agent and
the other Indemnitees from and against all losses, liabilities, expenses, costs
(including the reasonable fees and expenses of legal counsel to the Collateral
Agent) and claims (including the costs of investigation) that they may incur
insofar as any such loss, liability, expense, cost or claim arises out of or is
based upon any alleged untrue statement of a material fact contained in any
prospectus, offering circular or similar document (or any amendment or
supplement thereto), or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any writing thereof not misleading, except insofar as the same may
have been caused by any untrue statement or omission based upon information
furnished in writing to any Pledgor or the Issuer of such Pledged Stock by the
Collateral Agent or any other Secured Party expressly for use therein, and (y)
enter into an indemnification agreement with any underwriter of or placement
agent for any Pledged Stock, on its standard form, to substantially the same
effect. The Pledgors will jointly and severally bear all costs and expenses of
carrying out their obligations under this Section 9.
(b) The Pledgors recognize that the Collateral Agent may be unable
to effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree do so.
(c) Each Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be reasonably necessary to make such
sale or sales of all or any portion of the Pledged Stock owned by it pursuant to
this Section valid and binding and in compliance with any and all other
applicable requirements of the laws of any jurisdiction. Each Pledgor further
agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to the Collateral Agent and the Secured Parties, that
the Collateral Agent and the Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in the Section shall be specifically enforceable against such Pledgor.
<PAGE>
12
10. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUER. Each
Pledgor hereby authorizes and instructs each Issuer that has issued Pledged
Stock pledged by such Pledgor pursuant to Section 2 hereof to comply with any
instruction received by it from the Collateral Agent in writing that (a) states
that an Event of Default has occurred and (b) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from such
Pledgor, and agrees that each such Issuer shall be fully protected in so
complying.
11. COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN- FACT. (a) Each
Pledgor hereby irrevocably constitutes, and appoints the Collateral Agent and
any officer or agent of the Collateral Agent, with full irrevocable power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in the Collateral Agent's own name, from time to time in the
Collateral Agent's discretion upon and during the continuance of an Event of
Default, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, including without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) Each Pledgor hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
Section 11(a). All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
12. DUTY OF COLLATERAL AGENT. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9- 207 of the Code or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
securities and property for its own account, PROVIDED that investments shall be
made at the option and sole discretion of the Collateral Agent, and PROVIDED
FURTHER that the Collateral Agent shall use reasonable efforts to make such
investments. Neither the Collateral Agent, any Secured Party nor any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgors or any other person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
13. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of
the Code, each Pledgor authorizes the Collateral Agent to file financing
statements with respect to the Collateral owned by it without the signature of
such Pledgor in such form and in such filing offices as the Collateral Agent
reasonably determines appropriate to perfect the security interests of the
<PAGE>
13
Collateral Agent under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
14. AUTHORITY OF COLLATERAL AGENT. Each Pledgor acknowledges that
the rights and responsibilities of the Collateral Agent under this Agreement
with respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out this Agreement shall, as between the Collateral Agent and the Secured
Parties, be governed by the Credit Agreements and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Collateral Agent and such Pledgor, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting.
15. APPLICATION OF PROCEEDS. The proceeds of any sale of Collateral
pursuant to Section 8(b), as well as any Collateral consisting of cash under
Section 8(a), shall be applied by the Collateral Agent as follows:
FIRST, to the payment of the reasonable costs and expenses of the
Collateral Agent as set forth in Section 8(b);
SECOND, to the payment of all amounts of the Obligations owed to the
Secured Parties, pro rata as among the Secured Parties in accordance with
the amount of such Obligations owed them; and
THIRD, after payment in full of all Obligations, to the applicable
Pledgor, or the successors or assigns thereof, or to whomsoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, any Collateral then remaining.
The Collateral Agent shall have absolute discretion as to the time
of application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
16. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
hereunder, the security interests granted hereunder and all obligations of the
Pledgors hereunder shall be absolute and unconditional.
<PAGE>
14
17. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Pledgor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Secured Parties and shall survive the making by the
Lenders of the Loans, the execution and delivery to the Lenders of the Loan
Documents and the issuance by the Fronting Banks of the Letters of Credit,
regardless of any investigation made by the Secured Parties, or on their behalf,
and shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or L/C Disbursement, or any Fee or any other amount
payable under or in respect of this Agreement or any other Loan Document is
outstanding and unpaid and so long as the Commitments have not been terminated.
18. COLLATERAL AGENT'S LIABILITIES AND EXPENSES; INDEMNIFICATION.
(a) Notwithstanding anything to the contrary provided herein, the Collateral
Agent assumes no liabilities with respect to any claims regarding each Pledgor's
ownership (or purported ownership) of, or rights or obligations (or purported
rights or obligations) arising from, the Collateral or any use (or actual or
alleged misuse) whether arising out of any past, current or future event,
circumstance, act or omission or otherwise, or any claim, suit, loss, damage,
expense or liability of any kind or nature arising out of or in connection with
the Collateral. All of such liabilities shall, as between the Collateral Agent
and the Pledgors, be borne exclusively by the Pledgors.
(b) Each Pledgor hereby agrees to pay all reasonable expenses of the
Collateral Agent and to indemnify the Collateral Agent with respect to any and
all losses, claims, damages, liabilities and related expenses in respect of this
Agreement or the Collateral in each case to the extent the Borrower is required
to do so pursuant to Section 9.05 of the US Credit Agreements.
(c) Any amounts payable by a Pledgor as provided hereunder shall be
additional Obligations of it secured hereby and by its other Security Documents.
Without prejudice to the survival of any other agreements contained herein, all
indemnification and reimbursement obligations contained herein shall survive the
payment in full of the principal and interest under the Credit Agreements, the
expiration of the Letters of Credit and the termination of the Commitments or
this Agreement.
19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
<PAGE>
15
20. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each Pledgor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Loan Party or any
Secured Party may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against any Pledgor or any Secured
Party or its properties in the courts of any jurisdiction.
(b) Each Pledgor and each Secured Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 22 hereof. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
21. TERMINATION AND RELEASE. (a) This Agreement and the security
interest created hereunder shall terminate when all the Obligations have been
fully and indefeasibly paid and when the Secured Parties have no further
Commitments and no Letters of Credit are outstanding, at which time the
Collateral Agent shall reassign and deliver to each Pledgor, or to such person
or persons as each Pledgor shall reasonably designate, against receipt, such of
the Collateral owned by such Pledgor as shall have not been sold or otherwise
applied by the Collateral Agent pursuant to the terms hereof and shall still be
held by it hereunder, together with appropriate instructions of reassignment and
release. Any such reassignment shall be without recourse to or any warranty by
the Collateral Agent and at the expense of such Pledgor.
(b) All Collateral sold, transferred or otherwise disposed of, in
accordance with the terms of the Credit Agreements (including pursuant to a
waiver or amendment of the terms thereof), shall be sold, transferred or
otherwise disposed of free and clear of the Lien and the security interest
created hereunder. In connection with the foregoing, (i) the Collateral Agent
shall
<PAGE>
16
execute and deliver to each Pledgor with respect to the Collateral owned by such
Pledgor, or to such person or persons as such Pledgor shall reasonably
designate, against receipt, such Collateral sold, transferred or otherwise
disposed together with appropriate instructions of reassignment and release,
(ii) any representation, warranty or covenant contained herein relating to the
Collateral shall no longer be deemed to be made with respect to such sold,
transferred or otherwise disposed Collateral and (iii) all schedules hereto
shall be amended to delete the name of the Issuer. Any such reassignment shall
be without recourse or to any warranty by the Collateral Agent and at the
expense of such Pledgor.
22. NOTICES. All notices, requests and demands to or upon the
Secured Parties or the Pledgors under this Agreement shall be given or made in
accordance with Section 9.01 of the US Credit Agreements and addressed as
follows:
(a) if to any Secured Party, UCAR, or any Credit Party,
at its address for notices provided in Section 9.01 of US the Credit
Agreements;
(b) if to any Subsidiary that is not a Credit Party, at
its address set forth under its signature below.
23. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition of enforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
24. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES. (a) None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgors and the Collateral Agent, PROVIDED that any provision of this
Agreement may be waived by the Required Secured Parties pursuant to a letter or
agreement executed by the Collateral Agent or by telecopy transmission from the
Collateral Agent.
(b) Neither the Collateral Agent nor any Secured Party shall by any
act (except by a written instrument pursuant in Section 24(a) hereof) or delay
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of any Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise of any other
right, power or privilege. A waiver by any Secured Party of any right or remedy
<PAGE>
17
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which such Secured Party would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
25. SECTION HEADINGS. The section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
26. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Pledgors and shall inure to the benefit of the
Pledgors, the Collateral Agent and the Secured Parties and their successors and
assigns, PROVIDED that this Agreement may not be assigned by the Pledgors
without the prior written consent of the Collateral Agent and the Secured
Parties.
27. COUNTERPARTS. This Agreement may be executed in two or more
original counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
28. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE>
18
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
UCAR GLOBAL ENTERPRISES INC.
by /s/ Corrado F. DeGasperis
------------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
UCAR CARBON COMPANY INC.
by /s/ Corrado F. DeGasperis
------------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
UCAR HOLDINGS INC.
by /s/ Corrado F. DeGasperis
------------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
UCAR HOLDINGS II INC.
by /s/ Corrado F. DeGasperis
------------------------------------------
Name: Corrado F. DeGasperis
Title: Controller
<PAGE>
19
UCAR HOLDINGS III INC.
by /s/ Peter B. Mancino
------------------------------------------
Name: Peter B. Mancino
Title: Vice President
UCAR INTERNATIONAL INC.
by /s/ Peter B. Mancino
------------------------------------------
Name: Peter B. Mancino
Title: Vice President
<PAGE>
SCHEDULE I
PLEDGED STOCK
PERCENTAGE
PLEDGOR ISSUER PLEDGED STOCK PLEDGED
UCAR Global UCAR Carbon S.A. No Certificates 30.26%
Enterprises Inc.
UCAR S.A. 61,247 Shares, 34.9%
Certificate No. 4
UCAR Holdings S.A. No Certificates .1%
UCAR Carbon Unicarbon Comercial No Certificates 34.9%
Company Inc. Ltda.
UCAR Limited 5,249,999 shares 34.9%
Certificate No.9
UCAR Foreign Sales 35 shares 35%
Corporation
EMSA (Pty.) Ltd. 2,187,500 shares 35%
Certificate No. 37
Carbographite Limited 1,394 shares 34.8%
Certificate No. 43
UCAR Holdings S.A. No Certificates *
UCAR Electrodos S.L. No Certificates .1%
UCAR S.p.A. No Certificates .1%
UCAR Mexicana S.A. de 1 Share .1%
C.V. Certificate No. 02
UCAR Holdings Inc. UCAR Mexicana S.A. de 145,291,474 Shares 34.9%
C.V. Certificates No.
03, 04, 07, and 08
UCAR S.p.A. No Certificates 34.9%
UCAR Holdings II UCAR Inc. 350 shares 35%
Inc. Certificate No. 4
UCAR Electrodos S.L. No Certificates 34.9%
UCAR Holdings S.A. No Certificates 34.9%
UCAR Holdings III UCAR Holdings S.A. No Certificates *
Inc.
UCAR International UCAR Holdings S.A. No Certificates *
Inc.
===================== ========================= ==================== ===========
* less than .1%
<PAGE>
EXHIBIT A-1 TO
PLEDGE AGREEMENT
[FORM OF]
PLEDGE AGREEMENT SUPPLEMENT
PLEDGE AGREEMENT SUPPLEMENT, dated as of [ ] (this
"SUPPLEMENT"), made by , a [ ] corporation (the "PLEDGOR"), in
favor of THE CHASE MANHATTAN BANK, a New York banking
corporation, as collateral agent for the Secured Parties.
Reference is made to (i) the Credit Agreement dated as of
October 19, 1995, as amended and restated as of March 19, 1997
and November 10, 1998 (as the same may be amended,
supplemented or otherwise modified from time to time, the
"EXISTING CREDIT AGREEMENT"), among UCAR International Inc., a
Delaware corporation ("UCAR"), UCAR Global Enterprises Inc., a
Delaware corporation (the "BORROWER"), the Subsidiary
Borrowers party thereto, the Lenders party thereto, the
Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent, (ii) the Credit
Agreement dated as of November 10, 1998, among UCAR, the
Borrower, UCAR S.A., the Lenders party thereto, The Chase
Manhattan Bank, as administrative agent and collateral agent,
Credit Suisse First Boston, as syndication agent, and Morgan
Guaranty Trust Company of New York, as syndication agent (as
the same may be amended, supplemented or otherwise modified
from time to time, the "TRANCHE C FACILITY CREDIT AGREEMENT"
and together with the Existing Credit Agreement, the "US
CREDIT AGREEMENTS") and (iii) the Local Credit Facility
Agreements (the Local Credit Facility Agreements and US Credit
Agreements, the "CREDIT AGREEMENTS"). Capitalized terms used
herein but not otherwise defined have the meaning assigned to
them in Article I of the Credit Agreements.
1. Reference is hereby made to that certain Pledge Agreement, dated
as of November 10, 1998 (as amended, supplemented or otherwise modified as of
the date hereof, the "PLEDGE AGREEMENT"), made by UCAR, the Borrower and certain
U.S. Subsidiaries in favor of the Collateral Agent.
2. The Pledgor hereby confirms and reaffirms the security interest
in the Collateral granted to the Collateral Agent for the benefit of the Secured
Parties under the Pledge Agreement, and, as additional collateral security for
the prompt and complete payment when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations and in order to induce the Secured
Parties to make Loans and extend Letters of Credit under the Credit Agreements
and the other Loan Documents, the Pledgor hereby delivers to the Collateral
Agent, for the benefit of the Secured Parties, all of the issued and outstanding
shares of Capital Stock of [INSERT NAME OF NEW SUBSIDIARY] (the "NEW ISSUER")
listed in SCHEDULE 1 hereto, together with all stock certificates, options, or
rights of any nature whatsoever which may be issued or granted by the New Issuer
in respect of such stock while the Pledge Agreement, as supplemented hereby, is
in force (the "ADDITIONAL PLEDGED STOCK"; as used in the Pledge Agreement as
supplemented by this Supplement, "PLEDGED STOCK" shall be deemed to include the
Additional Pledged Stock) and hereby grants to the Collateral Agent, for
<PAGE>
2
the benefit of the Secured Parties, a first security interest in the Additional
Pledged Stock and all Proceeds thereof.
3. The Pledgor hereby represents and warrants that the
representations and warranties contained in Section 4 of the Pledge Agreement
are true and correct on the date of this Supplement with references therein to
the "PLEDGED STOCK" to include the Additional Pledged Stock, with references
therein to the "ISSUERS" to include the New Issuer, and with references to the
"PLEDGE AGREEMENT" to mean the Pledge Agreement as supplemented by this
Supplement.
4. This Supplement is supplemental to the Pledge Agreement, forms a
part thereof and is subject to the terms thereof and the Pledge Agreement is
hereby supplemented as provided herein. Without limiting the foregoing, SCHEDULE
I to the Pledge Agreement shall hereby be deemed to include each item listed on
SCHEDULE I to this Supplement and all references in the Pledge Agreement (other
than in Section 4 therein) to (a) "PLEDGED STOCK" shall be deemed to, and shall,
include the Additional Pledged Stock and (b) "ISSUERS" shall be deemed to, and
shall, include the New Issuer.
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have caused
this Supplement to be duly executed and delivered on the date first set forth
above.
[PLEDGOR]
by ____________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral Agent
by ____________________
Name:
Title:
<PAGE>
SCHEDULE I
TO PLEDGE AGREEMENT SUPPLEMENT
PLEDGED STOCK
OWNERSHIP
PLEDGOR ISSUER PLEDGED STOCK INTEREST
================== ================== ================== ==================
<PAGE>
Annex I TO
PLEDGE AGREEMENT SUPPLEMENT
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
foregoing Supplement and the Pledge Agreement referred to therein (the "PLEDGE
AGREEMENT"). The undersigned agrees for the benefit of the Secured Parties as
follows:
1. The undersigned will be bound by the terms of the Pledge
Agreement and will comply with such terms insofar as such terms are applicable
to the undersigned.
2. The undersigned will notify the Agent promptly in writing of the
occurrence of any of the events described in Section 5(a) of the Pledge
Agreement.
3. The terms of Section 9(c) of the Pledge Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
under or pursuant to or arising out of Section 9 of the Pledge Agreement.
[NAME OF ISSUER]
By ___________________________
Name:
Title :
Address for Notices:
------------------------------
------------------------------
Telecopy: _______________
<PAGE>
EXHIBIT 10.9(a)
CONFORMED COPY
Italian Facility
AMENDMENT dated as of November 10, 1998 (this
"AMENDMENT"), among UCAR S.p.A., an Italian corporation (the
"BORROWER"), the financial institutions party hereto (the
"LENDERS"), and THE CHASE MANHATTAN BANK, MILAN BRANCH, as
agent (in such capacity, the "ADMINISTRATIVE AGENT") for the
Lenders.
A. Reference is made to the Local Facility Credit Agreement dated as
of March 19, 1997 (the "CREDIT AGREEMENT") among the Borrower, the Lenders party
thereto and the Administrative Agent. Capitalized terms used but not otherwise
defined herein have the meanings assigned to them in the Credit Agreement.
B. The Borrower has requested that the Lenders amend certain
provisions of the Credit Agreement. The Lenders are willing to do so, subject to
the terms and conditions of this Amendment.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.01. AMENDMENTS TO SECTION 1.01. (a) The definition of "INTEREST
COMPONENT" in Section 1.01 of the Credit Agreement is hereby amended by
replacing the reference to "1.03333333333%" contained therein with a reference
to "1.03%".
(b) The definition of "LETTER OF CREDIT" in Section 1.01 of the Credit
Agreement is hereby amended by replacing the reference to "U.S. Credit
Agreement" with a reference to "Existing U.S. Credit Agreement".
(c) The definition of "LOAN DOCUMENTS" in Section 1.01 of the Credit
Agreement is hereby amended by replacing the reference to "Letter" contained
therein with a reference to "Letters".
(d) The definition of "LOCAL CURRENCY" or "LIT" shall mean the lawful
currency of Italy.
(e) The definition of "SECURITY DOCUMENTS" in Section 1.01 of the Credit
Agreement is hereby replaced in its entirety with the following: "SECURITY
DOCUMENTS" shall mean the agreements set forth on Schedule 1.01 and each of the
agreements and other instruments and documents executed and delivered pursuant
to the agreements set forth on
<PAGE>
2
Schedule 1.01, pursuant to Section 5.03 hereof or pursuant to Section 5.11 of
the U.S. Credit Agreements; PROVIDED that the agreements and other instruments
and documents delivered pursuant to Section 5.11 of the U.S. Credit Agreements
shall only constitute Security Documents hereunder to the extent that they serve
to guarantee or secure the Obligations of the Borrower hereunder or Obligations
of the Borrower in respect of Tranche A Letters of Credit under the Existing
U.S. Credit Agreement.
(f) The definition of "U.S. CREDIT AGREEMENT" in Section 1.01 of the Credit
Agreement is hereby deleted in its entirety.
(g) The following definitions are hereby added to Section 1.01 of the
Credit Agreement in the appropriate alphabetical order:
"EXISTING U.S. CREDIT AGREEMENT" shall mean the Credit Agreement
dated as of October 19, 1995, as amended and restated as of March 19, 1997
and November 10, 1998 (as the same may be amended, supplemented or
otherwise modified from time to time), among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware
corporation, the Subsidiary Borrowers party thereto, the Lenders party
thereto, the Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent, which is attached hereto as
Exhibit D-1.
"TARGET OPERATING DAY" means any day that is not (i) a Saturday or
Sunday, (ii) Christmas Day or New Year's Day or (iii) any other day on
which the Trans European Automated Real-time Gross Settlement Express
Transfer System ("TARGET") (or any successor settlement system) is not
operating (as determined by the Administrative Agent).
"TRANCHE C FACILITY CREDIT AGREEMENT" shall mean the Credit
Agreement dated as of November 10, 1998 (as the same may be amended,
supplemented or otherwise modified from time to time), among UCAR
International Inc., a Delaware corporation, UCAR Global Enterprises Inc.,
a Delaware corporation, UCAR S.A., a Swiss corporation, the Lenders party
thereto, The Chase Manhattan Bank, as administrative agent and collateral
agent, Credit Suisse First Boston, as syndication agent, and Morgan
Guaranty Trust Company of New York, as syndication agent, which is
attached hereto as Exhibit D-2.
<PAGE>
3
"U.S. CREDIT AGREEMENTS" shall mean the Existing U.S. Credit
Agreement and the Tranche C Facility Credit Agreement.
SECTION 1.02. MODIFICATION OF CREDIT AGREEMENT. (a) Unless otherwise
specified in paragraph (b) below, all references in the Credit Agreement to
"U.S. Credit Agreement" are hereby replaced with references to "U.S. Credit
Agreements".
(b) The references to U.S. Credit Agreement in Sections 3.02 and 9.16 of
the Credit Agreement are hereby replaced with references to "Existing U.S.
Credit Agreement".
SECTION 1.03. REPLACEMENT OF SCHEDULE 1.01 TO CREDIT AGREEMENT. Schedule
1.01 to the Credit Agreement is hereby replaced in its entirety with Schedule
1.01 attached hereto.
SECTION 1.04. REPLACEMENT OF EXHIBIT D TO CREDIT AGREEMENT. Exhibit D to
the Credit Agreement is hereby replaced in its entirety with Exhibits D-1 and
D-2 attached hereto.
SECTION 1.05. REPLACEMENT OF SECOND SENTENCE OF SECTION 5.03. The second
sentence in Section 5.03 of the Credit Agreement is hereby replaced in its
entirety with the following:
In addition, from time to time, the Borrower and the Subsidiaries will, at
their cost and expense, on or promptly (but in any event within 10
Business Days) following the date of acquisition by the Borrower or any
Subsidiary or any new subsidiary (subject to the receipt of required
consents from Governmental Authorities and required consents of other
third parties), promptly secure the Obligations of the Borrower and, to
the extent permitted by law, the other foreign Credit Parties under the
U.S. Credit Agreements (the "FOREIGN OBLIGATIONS") by causing the
following to occur: (i) promptly upon creating or acquiring any additional
subsidiary, the Capital Stock of such subsidiary will be pledged pursuant
to a pledge agreement reasonably satisfactory in form and substance to the
Administrative Agent and (ii) such subsidiary will become a guarantor of
the Obligations pursuant to a subsidiary guarantee agreement and provide
security
<PAGE>
4
for the Foreign Obligations pursuant to a security agreement, in each case
reasonably satisfactory in form and substance to the Administrative Agent.
SECTION 1.06. Amendment to Section 9.17. Section 9.17 of the Credit
Agreement is hereby replaced in its entirety with the following:
In the event that any obligation of any Loan Party (a) under this
Agreement or (b) any other Loan Document in respect of the obligations
under this Agreement (a "CLAIM") is paid with the proceeds of a Tranche A
L/C Disbursement, the Borrower, the Administrative Agent and the Lenders
hereby agree that Tranche A Lenders under the Existing U.S. Credit
Agreement holding participations in such Tranche A L/C Disbursement shall
be subrogated to the rights of the Administrative Agent and the Lenders
hereunder and under each other Loan Document in respect of such Claim to
the extent of such proceeds; PROVIDED that such right of subrogation shall
not be effective until, and shall be subordinated to, payment in full of
all Claims.
SECTION 1.07. AMENDMENT TO SECTION 9.19. The reference to "Section 2.10(b)"
in Section 9.19 of the Credit Agreement is hereby replaced with a reference to
"Section 2.11(b)".
SECTION 1.08. AMENDMENT TO ARTICLE IX. Article IX of the Credit Agreement
is hereby amended by adding the following Section at the end thereof:
SECTION 9.20. EUROPEAN ECONOMIC AND MONETARY UNION. (a)
DEFINITIONS. In this Section 9.20 and in each other provision of this
Agreement to which reference is made in this Section 9.20 expressly or by
implication, the following terms have the meanings given to them in this
Section 9.20:
"COMMENCEMENT OF THE THIRD STAGE OF EMU" means the date of
commencement of the third stage of EMU (at the date of this
Agreement expected to be January 1, 1999) or the date on which
circumstances arise which (in the opinion of the Administrative
Agent) have substantially the same effect and result in
substantially the same consequences as commencement of the third
stage of EMU as contemplated by the Treaty on European Union;
<PAGE>
5
"EMU" means economic and monetary union as contemplated in the
Treaty on European Union;
"EMU LEGISLATION" means legislative measures of the European
Council for the introduction of, changeover to or operation of a
single or unified European currency (whether known as the euro or
otherwise), being in part the implementation of the third stage of
EMU;
"EURO" means the single currency of participating member
states of the European Union;
"EURO UNIT" means the currency unit of the euro;
"NATIONAL CURRENCY UNIT" means the unit of currency (other
than a euro unit) of a participating member state;
"PARTICIPATING MEMBER STATE" means each state so described i
nany EMU legislation; and
"TREATY ON EUROPEAN UNION" means the Treaty of Rome of March
25, 1957, as amended by the Single European Act 1986 and the
Maastricht Treaty (which was signed at Maastricht on February 7,
1992, and came into force on November 1, 1993), as
amended from time to time.
(b) EFFECTIVENESS OF PROVISIONS. The provisions of paragraphs
(c) to (j) below (inclusive) shall be effective at and from the
commencement of the third stage of EMU, PROVIDED, that if and to the
extent that any such provision relates to any state (or the currency of
such state) that is not a participating member state on the commencement
of the third stage of EMU, such provision shall become effective in
relation to such state (and the currency of such state) at and from the
date on which such state becomes a participating member state.
(c) REDENOMINATION AND FOREIGN CURRENCIES. Each obligation
under this Agreement of a party to this Agreement which has been
denominated in the national currency unit of a participating member state
shall be redenominated into the euro unit in accordance with EMU
legislation, PROVIDED, that if and to the extent that any EMU legislation
provides that following the commencement of the third stage of EMU an
amount
<PAGE>
6
denominated either in the euro or in the national currency unit of a
participating member state and payable within that participating member
state by crediting an account of the creditor can be paid by the debtor
either in the euro unit or in that national currency unit, each party to
this Agreement shall be entitled to pay or repay any such amount either in
the euro unit or in such national currency unit.
(d) LOANS. Any Loan in the currency of a participating member
state shall be made in the euro unit.
(e) BUSINESS DAYS. (i) With respect to any amount denominated
or to be denominated in the euro or a national currency unit, any
reference to a "Business Day" shall be construed as a reference to a day
(other than a Saturday or Sunday) on which banks are generally open for
business in
(A) London and New York City and
(B) Frankfurt am Main, Germany (or such principal financial center
or centers in such participating member state or states as the
Administrative Agent may from time to time nominate for this
purpose).
(ii) For purposes of determining the date on which the LIBO Rate is
determined under this Agreement for any Loan denominated in the euro (or
any national currency unit) for any Interest Period therefor and for
purposes of determining the first and last day of any Interest Period,
references in this Agreement to "Business Days" shall be deemed to be
references to TARGET Operating Days.
(f) PAYMENTS TO THE ADMINISTRATIVE AGENT. Sections 2.17 shall
be construed so that, in relation to the payment of any amount of euro
units or national currency units, such amount shall be made available to
the Administrative Agent in immediately available, freely transferable,
cleared funds to such account with such bank in Frankfurt am Main, Germany
(or such other principal financial center in such participating member
state as the Administrative Agent may from time to time nominate for this
purpose) as the Administrative Agent shall from time to time nominate for
this purpose.
<PAGE>
7
(g) PAYMENTS BY THE ADMINISTRATIVE AGENT TO THE LENDERS. Any
amount payable by the Administrative Agent to the Lenders under this
Agreement in the currency of a participating member state shall be paid in
the euro unit.
(h) PAYMENTS BY THE ADMINISTRATIVE AGENT GENERALLY. With
respect to the payment of any amount denominated in the euro or in a
national currency unit, the Administrative Agent shall not be liable to
the Borrower or any of the Lenders in any way whatsoever for any delay, or
the consequences of any delay, in the crediting to any account of any
amount required by this Agreement to be paid by the Administrative Agent
if the Administrative Agent shall have taken all relevant steps to
achieve, on the date required by this Agreement, the payment of such
amount in immediately available, freely transferable, cleared funds (in
the euro unit or, as the case may be, in a national currency unit) to the
account with the bank in the principal financial center in the
participating member state which the Borrower or, as the case may be, any
Lender shall have specified for such purpose. In this paragraph (h), "all
relevant steps" means all such steps as may be prescribed from time to
time by the regulations or operating procedures of such clearing or
settlement system as the Administrative Agent may from time to time
determine for the purpose of clearing or settling payments of the euro.
(i) BASIS OF ACCRUAL. If the basis of accrual of interest or
fees expressed in this Agreement with respect to the currency of any state
that becomes a participating state shall be inconsistent with any
convention or practice in the London Interbank Market or, as the case may
be, the Milan Interbank Market for the basis of accrual of interest or
fees in respect of the euro, such convention or practice shall replace
such expressed basis effective as of and from the date on which such state
becomes a participating member state; PROVIDED, that if any Loan in the
currency of such state is outstanding immediately prior to such date, such
replacement shall take effect, with respect to such Loan, at the end of
the then current Interest Period.
(j) ROUNDING AND OTHER CONSEQUENTIAL CHANGES. Without
prejudice and in addition to any method of conversion or rounding
prescribed by any EMU legislation and without prejudice to the respective
<PAGE>
8
liabilities for indebtedness of the Borrower to the Lenders and the
Lenders to the Borrower under or pursuant to this Agreement:
(i) each reference in this Agreement to a minimum amount (or
an integral multiple thereof) in a national currency unit to be paid
to or by the Administrative Agent shall be replaced by a reference
to such reasonably comparable and convenient amount (or an integral
multiple thereof) in the euro unit as the Administrative Agent may
from time to time specify; and
(ii) except as expressly provided in this Section 9.20, each
provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to
time reasonably specify to be necessary or appropriate to reflect
the introduction of or changeover to the euro in participating
member states in accordance with customary practices in the market.
SECTION 2. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective on the date of the satisfaction in full of the following conditions
precedent (the "AMENDMENT EFFECTIVE DATE"):
(a) The Administrative Agent shall have received duly executed
counterparts hereof which, when taken together, bear the authorized
signatures of the Borrower, the Lenders and the Administrative Agent.
(b) The Administrative Agent shall have received favorable written
opinion by Gianni, Origoni & Partners, substantially similar to the
opinion given by such person on March 19, 1997 in connection with
execution of the Credit Agreement, in form and substance satisfactory to
the Administrative Agent and its counsel.
(c) The amendment and restatement of the Existing U.S. Credit
Agreement and the (ii) Tranche C Facility Credit Agreement shall have
become effective in accordance with its respective terms.
SECTION 3. CREDIT AGREEMENT. Except as specifically stated herein, the
Credit Agreement shall continue in full force and effect in accordance with the
provisions thereof
<PAGE>
9
and all Security Documents issued or granted in connection thereto shall
continue in full force and effect. As used therein, the terms "Agreement",
"herein", "hereunder", "hereto", "hereof" and words of similar import shall,
unless the context otherwise requires, refer to the Credit Agreement as modified
hereby.
SECTION 4. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF ITALY.
SECTION 5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be an original but all of which, when taken
together, shall constitute but one instrument. Delivery of an executed
counterpart of a signature page of this Amendment by telecopy shall be effective
as delivery of a manually executed counterpart of this Amendment.
SECTION 6. EXPENSES. The Borrower agrees to reimburse the Administrative
Agent for its out-of-pocket expenses in connection with this Amendment,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent.
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the date first
above written.
UCAR S.p.A.,
by
/S/ VITTORIO BELLINA
-----------------------------------
Name: Vittorio Bellina
Title: Director
THE CHASE MANHATTAN BANK, MILAN
BRANCH, individually and as
Administrative Agent,
by
/S/ MARIAN SCHULMAN
-----------------------------------
Name: Marian Schulman
Title: Vice President
BANCA COMMERCIALE ITALIANA
S.P.A., FILIALE DI MILANO,
by
/S/ KAREN PURELIS
-----------------------------------
Name: Karen Purelis
Title: Vice President and
Attorney-in-Fact
by
/S/ CHARLES DOUGERTY
-----------------------------------
Name: Charles Doughterty
Title: Vice President and
Attorney-in-Fact
<PAGE>
1
SCHEDULE 1.01
to the Local Facility
Credit Agreement for Italy
SECURITY DOCUMENTS
1. Pledge Agreement by UCAR International Inc., UCAR Global Enterprises Inc.
and certain U.S. Subsidiaries, dated October 19, 1995, as amended and
restated on November 10, 1998.
2. Pledge Agreement (35%) by certain U.S. Subsidiaries, dated November 10,
1998.
3. Parent Guarantee Agreement made by UCAR International Inc. and UCAR Global
Enterprises Inc., dated October 19, 1995, as amended and restated on
November 10, 1998.
4. Subsidiary Guarantee Agreement by each U.S. Subsidiary, dated October 19,
1995, as amended and restated on November 10, 1998.
5. Security Agreement by UCAR International Inc., UCAR Global Enterprises Inc.
and the U.S. Subsidiaries, dated April 22, 1998, as amended and restated on
November 10, 1998.
6. Intellectual Property Security Agreement by UCAR Global Enterprises Inc.
and the U.S. Subsidiaries, dated April 22, 1998, as amended and restated on
November 10, 1998.
7. Subsidiary Guarantee by UCAR S.p.A., dated March 19, 1997, as amended on
November 10, 1998.
8. Mexican Subsidiaries Guarantee by Servicios Administrativos Carmex S.A. de
C.V. and Servicios DYC S.A. de C.V., dated November 10, 1998.
9. Mexican Subsidiaries Guarantee by UCAR Carbon Mexicana S.A. de C.V. and
UCAR Mexicana S.A. de C.V., dated November 10, 1998.
10. Pledge by UCAR Holdings Inc., UCAR Mexicana S.A. de C.V. and UCAR Carbon
Mexicana S.A. de C.V. of 35% of the shares of UCAR Mexicana S.A. de C.V.,
99.94% of the shares of UCAR Carbon Mexicana and 100% of the shares of
Servicios Administrativos Carmex S.A. de C.V. and Servicios DYC S.A. de
C.V., respectively, dated November 10, 1998.
11. Mexican Mortgage dated November 10, 1998.
12. Pledge by UCAR Holdings Inc. of 65% of the shares of UCAR S.p.A., dated
November 10, 1998.
<PAGE>
2
13. Pledge by UCAR Holdings Inc. of 65% of the shares of UCAR Mexicana S.A. de
C.V., dated November 10, 1998.
14. Pledge by UCAR Holdings II Inc. of 65% of the shares of UCAR Holdings S.A.,
dated May 7, 1998, as amended on November 10, 1998.
15. Pledge by UCAR Holdings II Inc. of 65% of the shares of UCAR Electrodos,
S.L., dated October 19, 1995, as amended on March 19, 1997 and November 10,
1998.
16. Pledge by UCAR Carbon Company Inc. of 65% of the shares of EMSA (Property)
Ltd. and Carbographite Limited, dated November 10, 1998.
17. Pledge by UCAR Carbon Company Inc. of 65% of the shares of UCAR Limited,
dated November 10, 1998.
18. Pledge by UCAR S.p.A. of 100% of the shares of UCAR Energia S.r.l. and UCAR
Specialties S.r.l., dated March 19, 1997.
19. Pledge by UCAR Holdings Inc. of 34.9% of the shares of UCAR S.p.A., dated
November 10, 1998.
20. Italian Mortgage (in favor of BCI only), dated November 10, 1998.
21. Italian Security Interest Agreement dated July 29, 1998.
<PAGE>
EXHIBIT 10.10(a)
EXECUTION COPY
Spanish Facility
AMENDMENT dated as of November 10, 1998 (this
"AMENDMENT"), among UCAR ELECTRODOS S.L., a Spanish
corporation (the "BORROWER"), the financial institutions party
hereto (the "LENDERS"), and THE CHASE MANHATTAN BANK, C.M.B.,
S.A., as agent (in such capacity, the "ADMINISTRATIVE AGENT")
for the Lenders.
A. Reference is made to the Local Facility Credit Agreement dated as
of March 19, 1997 (the "CREDIT AGREEMENT") among the Borrower, the Lenders party
thereto and the Administrative Agent. Capitalized terms used but not otherwise
defined herein have the meanings assigned to them in the Credit Agreement.
B. The Borrower has requested that the Lenders amend certain
provisions of the Credit Agreement. The Lenders are willing to do so, subject to
the terms and conditions of this Amendment.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.01. AMENDMENTS TO SECTION 1.01. (a) The definition of "INTEREST
COMPONENT" in Section 1.01 of the Credit Agreement is hereby amended by
replacing the reference to "1.03333333333%" contained therein with a reference
to "1.03%".
(b) The definition of "LETTER OF CREDIT" in Section 1.01 of the Credit
Agreement is hereby amended by replacing the reference to "U.S. Credit
Agreement" with a reference to "Existing U.S. Credit Agreement".
(c) The definition of "LOAN DOCUMENTS" in Section 1.01 of the Credit
Agreement is hereby amended by replacing the reference to "Letter" contained
therein with a reference to "Letters".
(d) The definition of "SECURITY DOCUMENTS" in Section 1.01 of the Credit
Agreement is hereby replaced in its entirety with the following: "SECURITY
DOCUMENTS" shall mean the agreements set forth on Schedule 1.01 and each of the
agreements and other instruments and documents executed and delivered pursuant
to the agreements set forth on Schedule 1.01, pursuant to Section 5.03 hereof or
pursuant to Section 5.11 of the U.S. Credit Agreements; PROVIDED that the
agreements and other instruments and documents delivered pursuant to Section
5.11 of the U.S. Credit Agreements shall
<PAGE>
2
only constitute Security Documents hereunder to the extent that they serve to
guarantee or secure the Obligations of the Borrower hereunder or Obligations of
the Borrower in respect of Tranche A Letters of Credit under the Existing U.S.
Credit Agreement.
(e) The definition of "U.S. CREDIT AGREEMENT" in Section 1.01 of the Credit
Agreement is hereby deleted in its entirety.
(f) The following definitions are hereby added to Section 1.01 of the
Credit Agreement in the appropriate alphabetical order:
"EXISTING U.S. CREDIT AGREEMENT" shall mean the Credit Agreement
dated as of October 19, 1995, as amended and restated as of March 19,
1997 and November 10, 1998 (as the same may be amended, supplemented
or otherwise modified from time to time), among UCAR International
Inc., a Delaware corporation, UCAR Global Enterprises Inc., a Delaware
corporation, the Subsidiary Borrowers party thereto, the Lenders party
thereto, the Fronting Banks party thereto and The Chase Manhattan
Bank, as administrative agent and collateral agent, which is attached
hereto as Exhibit D-1.
"TRANCHE C FACILITY CREDIT AGREEMENT" shall mean the Credit
Agreement dated as of November 10, 1998 (as the same may be amended,
supplemented or otherwise modified from time to time), among UCAR
International Inc., a Delaware corporation, UCAR Global Enterprises
Inc., a Delaware corporation, UCAR S.A., a Swiss corporation, the
Lenders party thereto, The Chase Manhattan Bank, as administrative
agent and collateral agent, Credit Suisse First Boston, as syndication
agent, and Morgan Guaranty Trust Company of New York, as syndication
agent, which is attached hereto as Exhibit D-2.
"U.S. CREDIT AGREEMENTS" shall mean the Existing U.S. Credit
Agreement and the Tranche C Facility Credit Agreement.
SECTION 1.02. MODIFICATION OF CREDIT AGREEMENT. (a) Unless otherwise
specified in paragraph (b) below, all references in the Credit Agreement to
"U.S. Credit Agreement" are hereby replaced with references to "U.S. Credit
Agreements".
<PAGE>
3
(b) The references to U.S. Credit Agreement in Sections 3.02 and 9.16 of
the Credit Agreement are hereby replaced with references to "Existing U.S.
Credit Agreement".
SECTION 1.03. REPLACEMENT OF SCHEDULES 1.01 AND 2.06 TO CREDIT AGREEMENT.
Schedules 1.01 and 2.06 to the Credit Agreement are hereby replaced in their
entirety with Schedules 1.01 and 2.06 attached hereto.
SECTION 1.04. REPLACEMENT OF EXHIBIT D TO CREDIT AGREEMENT. Exhibit D to
the Credit Agreement is hereby replaced in its entirety with Exhibits D-1 and
D-2 attached hereto.
SECTION 1.05. REPLACEMENT OF SECOND SENTENCE OF SECTION 5.03. The second
sentence in Section 5.03 of the Credit Agreement is hereby replaced in its
entirety with the following:
In addition, from time to time, the Borrower and the Subsidiaries will, at
their cost and expense, on or promptly (but in any event within 10
Business Days) following the date of acquisition by the Borrower or any
Subsidiary or any new subsidiary (subject to the receipt of required
consents from Governmental Authorities and required consents of other
third parties), promptly secure the Obligations of the Borrower and, to
the extent permitted by law, the other foreign Credit Parties under the
U.S. Credit Agreements (the "FOREIGN OBLIGATIONS") by causing the
following to occur: (i) promptly upon creating or acquiring any additional
subsidiary, the Capital Stock of such subsidiary will be pledged pursuant
to a pledge agreement reasonably satisfactory in form and substance to the
Administrative Agent and (ii) such subsidiary will become a guarantor of
the Obligations pursuant to a subsidiary guarantee agreement and provide
security for the Foreign Obligations pursuant to a security agreement, in
each case reasonably satisfactory in form and substance to the
Administrative Agent.
SECTION 1.06 AMENDMENT TO SECTION 9.17. Section 9.17 of the Credit
Agreement is hereby replaced in its entirety with the following:
In the event that any obligation of any Loan Party (a) under this
Agreement or (b) any other Loan Document in respect of the obligations
under this Agreement (a "CLAIM") is paid with the proceeds of a Tranche A
L/C
<PAGE>
4
Disbursement, the Borrower, the Administrative Agent and the Lenders
hereby agree that Tranche A Lenders under the Existing U.S. Credit
Agreement holding participations in such Tranche A L/C Disbursement shall
be subrogated to the rights of the Administrative Agent and the Lenders
hereunder and under each other Loan Document in respect of such Claim to
the extent of such proceeds; PROVIDED that such right of subrogation shall
not be effective until, and shall be subordinated to, payment in full of
all Claims.
SECTION 1.07. AMENDMENT TO SECTION 9.20. The reference to "Section 2.10(b)"
in Section 9.20 of the Credit Agreement is hereby replaced with a reference to
"Section 2.11(b)".
SECTION 1.08. AMENDMENT TO ARTICLE IX. Article IX of the Credit Agreement
is hereby amended by adding the following Section at the end thereof:
SECTION 9.21. EUROPEAN ECONOMIC AND MONETARY UNION. (a)
DEFINITIONS. In this Section 9.21 and in each other provision of this
Agreement to which reference is made in this Section 9.21 expressly or by
implication, the following terms have the meanings given to them in this
Section 9.21:
"COMMENCEMENT OF THE THIRD STAGE OF EMU" means the date of
commencement of the third stage of EMU (at the date of this Agreement
expected to be January 1, 1999) or the date on which circumstances
arise which (in the opinion of the Administrative Agent) have
substantially the same effect and result in substantially the same
consequences as commencement of the third stage of EMU as contemplated
by the Treaty on European Union;
"EMU" means economic and monetary union as contemplated in the
Treaty on European Union;
"EMU LEGISLATION" means legislative measures of the European
Council for the introduction of, changeover to or operation of a
single or unified European currency (whether known as the euro or
otherwise), being in part the implementation of the third stage of
EMU;
"EURO" means the single currency of participating member states
of the European Union;
<PAGE>
5
"EURO UNIT" means the currency unit of the euro;
"NATIONAL CURRENCY UNIT" means the unit of currency (other than a
euro unit) of a participating member state;
"PARTICIPATING MEMBER STATE" means each state so described in any
EMU legislation; and
"TREATY ON EUROPEAN UNION" means the Treaty of Rome of March 25,
1957, as amended by the Single European Act 1986 and the Maastricht
Treaty (which was signed at Maastricht on February 7, 1992, and came
into force on November 1, 1993), as amended from time to time.
(b) EFFECTIVENESS OF PROVISIONS. The provisions of paragraphs (c) to
(j) below (inclusive) shall be effective at and from the commencement of
the third stage of EMU, PROVIDED, that if and to the extent that any such
provision relates to any state (or the currency of such state) that is not
a participating member state on the commencement of the third stage of EMU,
such provision shall become effective in relation to such state (and the
currency of such state) at and from the date on which such state becomes a
participating member state.
(c) REDENOMINATION AND FOREIGN CURRENCIES. Each obligation under this
Agreement of a party to this Agreement which has been denominated in the
national currency unit of a participating member state shall be
redenominated into the euro unit in accordance with EMU legislation,
PROVIDED, that if and to the extent that any EMU legislation provides that
following the commencement of the third stage of EMU an amount denominated
either in the euro or in the national currency unit of a participating
member state and payable within that participating member state by
crediting an account of the creditor can be paid by the debtor either in
the euro unit or in that national currency unit, each party to this
Agreement shall be entitled to pay or repay any such amount either in the
euro unit or in such national currency unit.
(d) LOANS. Any Loan in the currency of a participating member state
shall be made in the euro unit.
<PAGE>
6
(e) BUSINESS DAYS. (i) With respect to any amount denominated or to be
denominated in the euro or a national currency unit, any reference to a
"Business Day" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks are generally open for business in
(A) London and New York City and
(B) Frankfurt am Main, Germany (or such principal financial center
or centers in such participating member state or states as the
Administrative Agent may from time to time nominate for this
purpose).
(ii) For purposes of determining the date on which the LIBO Rate or
the MIBOR Rate is determined under this Agreement for any Loan denominated
in the euro (or any national currency unit) for any Interest Period
therefor and for purposes of determining the first and last day of any
Interest Period, references in this Agreement to "Business Days" shall be
deemed to be references to TARGET Operating Days.
(f) PAYMENTS TO THE ADMINISTRATIVE AGENT. Sections 2.17 shall
be construed so that, in relation to the payment of any amount of euro
units or national currency units, such amount shall be made available to
the Administrative Agent in immediately available, freely transferable,
cleared funds to such account with such bank in Frankfurt am Main, Germany
(or such other principal financial center in such participating member
state as the Administrative Agent may from time to time nominate for this
purpose) as the Administrative Agent shall from time to time nominate for
this purpose.
(g) PAYMENTS BY THE ADMINISTRATIVE AGENT TO THE LENDERS. Any
amount payable by the Administrative Agent to the Lenders under this
Agreement in the currency of a participating member state shall be paid in
the euro unit.
(h) PAYMENTS BY THE ADMINISTRATIVE AGENT GENERALLY. With
respect to the payment of any amount denominated in the euro or in a
national currency unit, the Administrative Agent shall not be liable to
the Borrower or any of the Lenders in any way whatsoever for any delay, or
the consequences of any delay, in the crediting to any account of any
amount required by this Agreement to be paid by the Administrative Agent
if the
<PAGE>
7
Administrative Agent shall have taken all relevant steps to achieve, on
the date required by this Agreement, the payment of such amount in
immediately available, freely transferable, cleared funds (in the euro
unit or, as the case may be, in a national currency unit) to the account
with the bank in the principal financial center in the participating
member state which the Borrower or, as the case may be, any Lender shall
have specified for such purpose. In this paragraph (h), "all relevant
steps" means all such steps as may be prescribed from time to time by the
regulations or operating procedures of such clearing or settlement system
as the Administrative Agent may from time to time determine for the
purpose of clearing or settling payments of the euro.
(i) BASIS OF ACCRUAL. If the basis of accrual of interest or
fees expressed in this Agreement with respect to the currency of any state
that becomes a participating state shall be inconsistent with any
convention or practice in the London Interbank Market or, as the case may
be, the Madrid Interbank Market for the basis of accrual of interest or
fees in respect of the euro, such convention or practice shall replace
such expressed basis effective as of and from the date on which such state
becomes a participating member state; PROVIDED, that if any Loan in the
currency of such state is outstanding immediately prior to such date, such
replacement shall take effect, with respect to such Loan, at the end of
the then current Interest Period.
(j) ROUNDING AND OTHER CONSEQUENTIAL CHANGES. Without
prejudice and in addition to any method of conversion or rounding
prescribed by any EMU legislation and without prejudice to the respective
liabilities for indebtedness of the Borrower to the Lenders and the
Lenders to the Borrower under or pursuant to this Agreement:
(i) each reference in this Agreement to a minimum amount (or
an integral multiple thereof) in a national currency unit to be paid
to or by the Administrative Agent shall be replaced by a reference
to such reasonably comparable and convenient amount (or an integral
multiple thereof) in the euro unit as the Administrative Agent may
from time to time specify; and
<PAGE>
8
(ii) except as expressly provided in this Section 9.21, each
provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to
time reasonably specify to be necessary or appropriate to reflect
the introduction of or changeover to the euro in participating
member states in accordance with customary practices in the market.
SECTION 2. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective on the date of the satisfaction in full of the following conditions
precedent (the "AMENDMENT EFFECTIVE DATE"):
(a) The Administrative Agent shall have received duly executed
counterparts hereof which, when taken together, bear the authorized
signatures of the Borrower, the Lenders and the Administrative Agent.
(b) The Administrative Agent shall have received favorable written
opinion by Uria & Menendez, substantially similar to the opinion given by
such person on March 19, 1997 in connection with execution of the Credit
Agreement, in form and substance satisfactory to the Administrative Agent
and its counsel.
(c) The (i) amendment and restatement of the Existing U.S. Credit
Agreement and the (ii) Tranche C Facility Credit Agreement shall have
become effective in accordance with its respective terms.
SECTION 3. CREDIT AGREEMENT. Except as specifically stated herein, the
Credit Agreement shall continue in full force and effect in accordance with the
provisions thereof. As used therein, the terms "Agreement", "herein",
"hereunder", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Credit Agreement as modified hereby.
SECTION 4. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE KINGDOM OF SPAIN.
SECTION 5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be an original but all of which, when taken
together, shall constitute but one instrument. Delivery of an executed
counterpart of a signature page of this Amendment by
<PAGE>
9
telecopy shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 6. EXPENSES. The Borrower agrees to reimburse the Administrative
Agent for its out-of-pocket expenses in connection with this Amendment,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the date first
above written.
UCAR ELECTRODOS, S.L.,
by /S/ HONORATO ECHEVARRIO
--------------------------------------
Name:Honorato Echevarrio
Title:General Manager
by /S/ INAKI SARRIONANDIA
--------------------------------------
Name:Inaki Sarrionandia
Title:Chief Financial Officer
THE CHASE MANHATTAN BANK, C.M.B.,
S.A., individually and as
Administrative Agent,
by: /S/ ADOLFO CAREAGA
--------------------------------------
Name:Adolfo Careaga
Title:Vice President
<PAGE>
1
SCHEDULE 1.01
to the Local Facility
Credit Agreement for Spain
SECURITY DOCUMENTS
1. Pledge Agreement by UCAR International Inc., UCAR Global Enterprises Inc.
and certain U.S. Subsidiaries, dated October 19, 1995, as amended and
restated on November 10, 1998.
2. Pledge Agreement (35%) by certain U.S. Subsidiaries, dated November 10,
1998.
3. Parent Guarantee Agreement made by UCAR International Inc. and UCAR Global
Enterprises Inc., dated October 19, 1995, as amended and restated on
November 10, 1998.
4. Subsidiary Guarantee Agreement by each U.S. Subsidiary, dated October 19,
1995, as amended and restated on November 10, 1998.
5. Security Agreement by UCAR International Inc., UCAR Global Enterprises Inc.
and the U.S. Subsidiaries, dated April 22, 1998, as amended and restated on
November 10, 1998.
6. Intellectual Property Security Agreement by UCAR Global Enterprises Inc.
and the U.S. Subsidiaries, dated April 22, 1998, as amended and restated on
November 10, 1998. 7. Subsidiary Guarantee by UCAR S.p.A., dated March 19,
1997, as amended on November 10, 1998.
8. Mexican Subsidiaries Guarantee by Servicios Administrativos Carmex S.A. de
C.V. and Servicios DYC S.A. de C.V., dated November 10, 1998.
9. Mexican Subsidiaries Guarantee by UCAR Carbon Mexicana S.A. de C.V. and
UCAR Mexicana S.A. de C.V., dated November 10, 1998.
10. Pledge by UCAR Holdings Inc., UCAR Mexicana S.A. de C.V. and UCAR Carbon
Mexicana S.A. de C.V. of 35% of the shares of UCAR Mexicana S.A. de C.V.,
99.94% of the shares of UCAR Carbon Mexicana and 100% of the shares of
Servicios Administrativos Carmex S.A. de C.V. and Servicios DYC S.A. de
C.V., respectively, dated November 10, 1998.
11. Mexican Mortgage dated November 10, 1998.
12. Pledge by UCAR Holdings Inc. of 65% of the shares of UCAR S.p.A., dated
November 10, 1998.
13. Pledge by UCAR Holdings Inc. of 65% of the shares of UCAR Mexicana S.A. de
C.V., dated November 10, 1998.
14. Pledge by UCAR Holdings II Inc. of 65% of the shares of UCAR Holdings S.A.,
dated May 7, 1998, as amended on November 10, 1998.
15. Pledge by UCAR Holdings II Inc. of 65% of the shares of UCAR Electrodos,
S.L., dated October 19, 1995, as amended on March 19, 1997 and November 10,
1998.
16. Pledge by UCAR Carbon Company Inc. of 65% of the shares of EMSA (Property)
Ltd. and Carbographite Limited, dated November 10, 1998.
17. Pledge by UCAR Carbon Company Inc. of 65% of the shares of UCAR Limited,
dated November 10, 1998.
<PAGE>
2
18. Pledge by UCAR Holdings II Inc. of 35% of stock of UCAR Electrodos, S.L.,
dated November 10, 1998.
19. Spanish Mortgage dated November 10, 1998.
<PAGE>
1
SCHEDULE 2.06
To the Local Facility
Credit Agreement for Spain
PRICING
The following terms shall have the meanings specified below:
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurocurrency Borrowing
denominated in Dollars for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of
(a) the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.
"ADJUSTED MIBOR RATE" shall mean the MIBOR Rate on any day plus the
Adjustment Factor.
"ADJUSTMENT FACTOR" shall mean a fraction (rounded upwards, if necessary,
to the next 1/16 of 1%), the numerator of which is the aggregate amount of all
brokerage fees, commissions or any other expenses, fees and taxes to be paid by
the Administrative Agent on behalf of the Lenders in connection with obtaining
such deposits expressed as a decimal and the denominator of which is the
aggregate amount of such deposits obtained.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate, including the failure of the Federal Reserve Bank of New
York to publish rates or the inability of the Administrative Agent to obtain
quotations in accordance with the terms thereof, the Alternate Base Rate shall
be determined by reference to the most recently available such rate until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Federal Funds Effective Rate shall be
effective on the effective date of such change.
"EURIBOR RATE" shall mean, with respect to any Eurocurrency Borrowing
denominated in Local Currency for any Interest Period, the rate published on the
Reuters screen for such Local Currency at 11.00 a.m.(Standard time) two TARGET
Operating Days before the first day of each Interest Period at which Local
Currency deposits for a maturity comparable to such Interest Period are offered
in the European interbank market.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal
<PAGE>
2
Funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"LIBO RATE" shall mean, with respect to any Eurocurrency Borrowing
denominated in Dollars, the rate (rounded upwards, if necessary, to the next
1/16 of 1%) at which dollar deposits approximately equal in principal amount to,
the Administrative Agent's portion of such Eurocurrency Borrowing denominated in
Dollars and for a maturity comparable to such Interest Period are offered to the
principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"MIBOR RATE" shall mean, with respect to any Eurocurrency Borrowing
denominated in Local Currency for any Interest Period, the rate of interest
quoted in the MBOR page of Reuters at or about 11.00 a.m.(Standard time) two
Business Days before the first day of each Interest Period at which Local
Currency deposits of an amount equal or similar to the principal amount or the
relevant Borrowing and with a maturity equal or similar to such Interest Period
are offered in the Madrid interbank market; PROVIDED, HOWEVER, that from that
date on which the MIBOR Rate ceases to exist, all references to the MIBOR Rate
shall be deemed references to the EURIBOR Rate.
"TARGET OPERATING DAY" means any day that is not (i) a Saturday or Sunday,
(ii) Christmas Day or New Year's Day or (iii) any other day on which the Trans
European Automated Real-time Gross Settlement Express Transfer System ("TARGET")
(or any successor settlement system) is not operating (as determined by the
Administrative Agent).
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent is subject with respect to Eurocurrency
Liabilities (as defined in Regulation D of the Board) or other categories of
liabilities or deposits by reference to which the LIBO Rate is determined. Such
<PAGE>
3
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurocurrency Loans denominated in Dollars shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets which may be available
from time to time to any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
<PAGE>
EXHIBIT 10.11(a)
CONFORMED COPY
French Facility
AMENDMENT dated as of November 10, 1998 (this
"AMENDMENT"), among UCAR HOLDINGS S.A., a French company
incorporated in the form of a societe anonyme with its
registered office at 4 Place des Etats-Unis, Zone Silic, 94750
Rungis, France (the "BORROWER"), the financial institutions
party hereto (the "LENDERS"), and THE CHASE MANHATTAN BANK,
PARIS BRANCH, as agent (in such capacity, the "ADMINISTRATIVE
AGENT") for the Lenders.
A. Reference is made to the Local Facility Credit Agreement dated as
of March 19, 1997 (the "CREDIT AGREEMENT") among the Borrower, the Lenders party
thereto and the Administrative Agent. Capitalized terms used but not otherwise
defined herein have the meanings assigned to them in the Credit Agreement.
B. The Borrower has requested that the Lenders amend certain
provisions of the Credit Agreement. The Lenders are willing to do so, subject to
the terms and conditions of this Amendment.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.01. AMENDMENTS TO SECTION 1.01. (a) The definition of "INTEREST
COMPONENT" in Section 1.01 of the Credit Agreement is hereby amended by
replacing the reference to "1.03333333333%" contained therein with a reference
to "1.03%".
(b) The definition of "LETTER OF CREDIT" in Section 1.01 of the Credit
Agreement is hereby amended by replacing the reference to "U.S. Credit
Agreement" with a reference to "Existing U.S. Credit Agreement".
(c) The definition of "LOAN DOCUMENTS" in Section 1.01 of the Credit
Agreement is hereby amended by replacing the reference to "Letter" contained
therein with a reference to "Letters".
(d) The definition of "SECURITY DOCUMENTS" in Section 1.01 of the Credit
Agreement is hereby replaced in its entirety with the following: "SECURITY
DOCUMENTS" shall mean the agreements set forth on Schedule 1.01 and each of the
agreements and other instruments and documents executed and delivered pursuant
to the agreements set forth on Schedule 1.01, pursuant to Section 5.03 hereof or
pursuant
<PAGE>
2
to Section 5.11 of the Existing U.S. Credit Agreement; PROVIDED that the
agreements and other instruments and documents delivered pursuant to Section
5.11 of the Existing U.S. Credit Agreement shall only constitute Security
Documents hereunder to the extent that they serve to guarantee or secure the
Obligations of the Borrower hereunder or Obligations of the Borrower in respect
of Tranche A Letters of Credit under the Existing U.S. Credit Agreement.
(e) The definition of "U.S. CREDIT AGREEMENT" in Section 1.01 of the Credit
Agreement is hereby deleted in its entirety.
(f) The following definitions are hereby added to Section 1.01 of the
Credit Agreement in the appropriate alphabetical order:
"EXISTING U.S. CREDIT AGREEMENT" shall mean the Credit Agreement
dated as of October 19, 1995, as amended and restated as of March 19, 1997
and November 10, 1998 (as the same may be amended, supplemented or
otherwise modified from time to time), among UCAR International Inc., a
Delaware corporation, UCAR Global Enterprises Inc., a Delaware
corporation, the Subsidiary Borrowers party thereto, the Lenders party
thereto, the Fronting Banks party thereto and The Chase Manhattan Bank, as
administrative agent and collateral agent, which is attached hereto as
Exhibit D-1.
"TRANCHE C FACILITY CREDIT AGREEMENT" shall mean the Credit
Agreement dated as of November 10, 1998 (as the same may be amended,
supplemented or otherwise modified from time to time), among UCAR
International Inc., a Delaware corporation, UCAR Global Enterprises Inc.,
a Delaware corporation, UCAR S.A., a Swiss corporation, the Lenders party
thereto, The Chase Manhattan Bank, as administrative agent and collateral
agent, Credit Suisse First Boston, as syndication agent, and Morgan
Guaranty Trust Company of New York, as syndication agent, which is
attached hereto as Exhibit D-2.
"U.S. CREDIT AGREEMENTS" shall mean the Existing U.S. Credit
Agreement and the Tranche C Facility Credit Agreement.
SECTION 1.02. MODIFICATION OF CREDIT AGREEMENT. (a) Unless otherwise
specified in paragraph (b) below, all
<PAGE>
3
references in the Credit Agreement to "U.S. Credit Agreement" are hereby
replaced with references to "Existing U.S. Credit Agreement".
(b) The references to "U.S. Credit Agreement" in Article VII(h) and Section
5.03 of the Credit Agreement are hereby replaced with references to "U.S. Credit
Agreements".
SECTION 1.03. REPLACEMENT OF SCHEDULES 1.01 AND 2.06 TO CREDIT AGREEMENT.
Schedules 1.01 and 2.06 to the Credit Agreement are hereby replaced in their
entirety with Schedules 1.01 and 2.06 attached hereto.
SECTION 1.04. REPLACEMENT OF EXHIBIT D TO CREDIT AGREEMENT. Exhibit D to
the Credit Agreement is hereby replaced in its entirety with Exhibits D-1 and
D-2 attached hereto.
SECTION 1.05. REPLACEMENT OF SECOND SENTENCE OF SECTION 5.03. The second
sentence in Section 5.03 of the Credit Agreement is hereby replaced in its
entirety with the following:
In addition, from time to time, the Borrower and the Subsidiaries will, at
their cost and expense, on or promptly (but in any event within 10
Business Days) following the date of acquisition by the Borrower or any
Subsidiary of any new subsidiary (subject to the receipt of required
consents from Governmental Authorities and required consents of other
third parties), promptly secure the Obligations of the Borrower and, to
the extent permitted by law, the other foreign Credit Parties under the
U.S. Credit Agreements (the "FOREIGN OBLIGATIONS") by causing the
following to occur: (i) promptly upon creating or acquiring any additional
subsidiary, the Capital Stock of such subsidiary will be pledged pursuant
to a pledge agreement reasonably satisfactory in form and substance to the
Administrative Agent and (ii) such subsidiary will become a guarantor of
the Obligations pursuant to a subsidiary guarantee agreement and provide
security for the Foreign Obligations pursuant to a security agreement, in
each case reasonably satisfactory in form and substance to the
Administrative Agent.
SECTION 1.06. AMENDMENT TO SECTION 9.17. Section 9.17 of the Credit
Agreement is hereby replaced in its entirety with the following:
<PAGE>
4
In the event that any obligation of any Loan Party (a) under this
Agreement or (b) any other Loan Document in respect of the obligations
under this Agreement (a "CLAIM") is paid with the proceeds of a Tranche A
L/C Disbursement, the Borrower, the Administrative Agent and the Lenders
hereby agree that Tranche A Lenders under the Existing U.S. Credit
Agreement holding participations in such Tranche A L/C Disbursement shall
be subrogated to the rights of the Administrative Agent and the Lenders
hereunder and under each other Loan Document in respect of such Claim to
the extent of such proceeds; PROVIDED that such right of subrogation shall
not be effective until, and shall be subordinated to, payment in full of
all Claims. To this effect, a letter of release ("QUITTANCE SUBROGATIVE")
in the form of Schedule 2.08 attached hereto shall be delivered to the
relevant Fronting Bank by the Administrative Agent on behalf of the
Lenders simultaneously with each payment of any obligation with the
proceeds of a Tranche A L/C Disbursement.
SECTION 1.07. AMENDMENT TO SECTION 9.20. The reference to "Section 2.10(b)"
in Section 9.20 of the Credit Agreement is hereby replaced with a reference to
"Section 2.11(b)."
SECTION 1.08. AMENDMENT TO ARTICLE IX. Article IX of the Credit Agreement
is hereby amended by adding the following Section at the end thereof:
SECTION 9.21. EUROPEAN ECONOMIC AND MONETARY UNION. (a)
DEFINITIONS. In this Section 9.21 and in each other provision of this
Agreement to which reference is made in this Section 9.21 expressly or by
implication, the following terms have the meanings given to them in this
Section 9.21:
"COMMENCEMENT OF THE THIRD STAGE OF EMU" means the date of
commencement of the third stage of EMU (at the date of this
Agreement expected to be January 1, 1999) or the date on which
circumstances arise which (in the opinion of the Administrative
Agent) have substantially the same effect and result in
substantially the same consequences as commencement of the third
stage of EMU as contemplated by the Treaty on European Union;
"EMU" means economic and monetary union as contemplated in the
Treaty on European Union;
<PAGE>
5
"EMU LEGISLATION" means legislative measures of the European
Council for the introduction of, changeover to or operation of a
single or unified European currency (whether known as the euro or
otherwise), being in part the implementation of the third stage of
EMU;
"EURO" means the single currency of participating member
states of the European Union;
"EURO UNIT" means the currency unit of the euro;
"NATIONAL CURRENCY UNIT" means the unit of currency (other
than a euro unit) of a participating member state;
"PARTICIPATING MEMBER STATE" means each state so described in
any EMU legislation; and
"TREATY ON EUROPEAN UNION" means the Treaty of Rome of March
25, 1957, as amended by the Single European Act 1986 and the
Maastricht Treaty (which was signed at Maastricht on February 7,
1992, and came into force on November 1, 1993), as amended from
time to time.
(b) EFFECTIVENESS OF PROVISIONS. The provisions of paragraphs
(c) to (j) below (inclusive) shall be effective at and from the
commencement of the third stage of EMU, PROVIDED, that if and to the
extent that any such provision relates to any state (or the currency of
such state) that is not a participating member state on the commencement
of the third stage of EMU, such provision shall become effective in
relation to such state (and the currency of such state) at and from the
date on which such state becomes a participating member state.
(c) REDENOMINATION AND FOREIGN CURRENCIES. Each obligation
under this Agreement of a party to this Agreement which has been
denominated in the national currency unit of a participating member state
shall be redenominated into the euro unit in accordance with EMU
legislation, PROVIDED, that if and to the extent that any EMU legislation
provides that following the commencement of the third stage of EMU an
amount denominated either in the euro or in the national currency unit of
a participating member state and payable within that participating member
state by
<PAGE>
6
crediting an account of the creditor can be paid by the debtor either in
the euro unit or in that national currency unit, each party to this
Agreement shall be entitled to pay or repay any such amount either in the
euro unit or in such national currency unit.
(d) LOANS. Any Loan in the currency of a participating
member state shall be made in the euro unit.
(e) BUSINESS DAYS. (i) With respect to any amount denominated
or to be denominated in the euro or a national currency unit, any
reference to a "Business Day" shall be construed as a reference to a day
(other than a Saturday or Sunday) on which banks are generally open for
business in
(A) Paris and New York City and
(B) Frankfurt am Main, Germany (or such principal financial center
or centers in such participating member state or states as the
Administrative Agent may from time to time nominate for this purpose).
(ii) For purposes of determining the date on which the LIBO Rate or
the PIBO Rate is determined under this Agreement for any Loan denominated
in the euro (or any national currency unit) for any Interest Period
therefor and for purposes of determining the first and last day of any
Interest Period, references in this Agreement to "Business Days" shall be
deemed to be references to TARGET Operating Days.
(f) PAYMENTS TO THE ADMINISTRATIVE AGENT. Sections 2.17 shall
be construed so that, in relation to the payment of any amount of euro
units or national currency units, such amount shall be made available to
the Administrative Agent in immediately available, freely transferable,
cleared funds to such account with such bank in Frankfurt am Main, Germany
(or such other principal financial center in such participating member
state as the Administrative Agent may from time to time nominate for this
purpose) as the Administrative Agent shall from time to time nominate for
this purpose.
(g) PAYMENTS BY THE ADMINISTRATIVE AGENT TO THE LENDERS. Any
amount payable by the Administrative Agent to the Lenders under this
Agreement in the currency of a participating member state shall be paid in
the euro unit.
<PAGE>
7
(h) PAYMENTS BY THE ADMINISTRATIVE AGENT GENERALLY. With
respect to the payment of any amount denominated in the euro or in a
national currency unit, the Administrative Agent shall not be liable to
the Borrower or any of the Lenders in any way whatsoever for any delay, or
the consequences of any delay, in the crediting to any account of any
amount required by this Agreement to be paid by the Administrative Agent
if the Administrative Agent shall have taken all relevant steps to
achieve, on the date required by this Agreement, the payment of such
amount in immediately available, freely transferable, cleared funds (in
the euro unit or, as the case may be, in a national currency unit) to the
account with the bank in the principal financial center in the
participating member state which the Borrower or, as the case may be, any
Lender shall have specified for such purpose. In this paragraph (h), "all
relevant steps" means all such steps as may be prescribed from time to
time by the regulations or operating procedures of such clearing or
settlement system as the Administrative Agent may from time to time
determine for the purpose of clearing or settling payments of the euro.
(i) BASIS OF ACCRUAL. If the basis of accrual of interest or
fees expressed in this Agreement with respect to the currency of any state
that becomes a participating state shall be inconsistent with any
convention or practice in the London Interbank Market or, as the case may
be, the Paris Interbank Market for the basis of accrual of interest or
fees in respect of the euro, such convention or practice shall replace
such expressed basis effective as of and from the date on which such state
becomes a participating member state; PROVIDED, that if any Loan in the
currency of such state is outstanding immediately prior to such date, such
replacement shall take effect, with respect to such Loan, at the end of
the then current Interest Period.
(j) ROUNDING AND OTHER CONSEQUENTIAL CHANGES. Without
prejudice and in addition to any method of conversion or rounding
prescribed by any EMU legislation and without prejudice to the respective
liabilities for indebtedness of the Borrower to the Lenders and the
Lenders to the Borrower under or pursuant to this Agreement:
(i) each reference in this Agreement to a minimum amount (or an
integral multiple thereof)
<PAGE>
8
in a national currency unit to be paid to or by the Administrative Agent
shall be replaced by a reference to such reasonably comparable and
convenient amount (or an integral multiple thereof) in the euro unit as the
Administrative Agent may from time to time specify; and
(ii) except as expressly provided in this Section 9.21, each provision
of this Agreement shall be subject to such reasonable changes of
construction as the Administrative Agent may from time to time reasonably
specify to be necessary or appropriate to reflect the introduction of or
changeover to the euro in participating member states in accordance with
customary practices in the market.
SECTION 2. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective on the date of the satisfaction in full of the following conditions
precedent (the "AMENDMENT EFFECTIVE DATE"):
(a) The Administrative Agent shall have received favorable written
opinions by Dubarry & Associes, counsel to UCAR Holdings S.A., and Gide
Loyrette Nouel, French counsel to the Administrative Agent, as well as a
certificate issued by the Chairman of the Board of Directors of UCAR
Holdings S.A. in form and substance satisfactory to the Administrative
Agent.
(b) The (i) amendment and restatement of the Existing U.S. Credit
Agreement and the (ii) Tranche C Facility Credit Agreement shall have
become effective in accordance with its respective terms.
SECTION 3. CREDIT AGREEMENT. Except as specifically stated herein, the
Credit Agreement shall continue in full force and effect in accordance with the
provisions thereof. As used therein, the terms "Agreement", "herein",
"hereunder", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Credit Agreement as modified hereby.
SECTION 4. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF FRANCE.
SECTION 5. EXPENSES. The Borrower agrees to reimburse the Administrative
Agent for its out-of-pocket expenses in connection with this Amendment,
including the reasonable
<PAGE>
9
fees, charges and disbursements of Cravath, Swaine & Moore, U.S. counsel for the
Administrative Agent and Gide Loyrette Nouel, French counsel for the
Administrative Agent.
SECTION 6. EFFECTIVE GLOBAL RATE. For the purposes of Articles L-313-1 and
seq. of the French Consumer Code, the effective global rate ("TAUX EFFECTIF
GLOBAL") payable by the Borrower under the Credit Agreement, as amended by this
Amendment, and the Existing U.S. Credit Agreement, is 6.75 percent per annum in
the case of ABR Loans, 6.53 percent in the case of Eurocurrency Loans
denominated in US Dollars and 4.76 percent in the case of Eurocurrency Loans
denominated in French Francs. The effective global rate has been computed on the
assumption of a notice of drawing for an ABR Loan or a Eurocurrency Loan, as the
case may be, of US Dollars 130,600,000 or its equivalent in French Francs, made
available to the Borrower on November 10, 1998 for successive Interest Periods
of one month until Maturity Date (as defined in the Credit Agreement).
The effective global rate takes into account (a) the contractual
interest rate applicable under Section 2.06 (Alternate Base Rate, Adjusted LIBO
Rate or PIBO Rate, as the case may be, as determined on the date hereof) of the
Credit Agreement (b) (i) the spread on Interest of Loan at the rate of 0.25%
calculated on the amount of U.S. Dollar 130,600,000, (ii) the Letter of Credit
fee at the rate of 0.75% calculated on the amount of U.S. Dollar 130,600,000,
(iii) the Fronting Bank fee at a rate of 0.25% calculated on the amount of U.S.
Dollar 130,600,000 as well as (c) any fees, costs and other expenses to be borne
by the Borrower which the said Code require to be taken into account.
<PAGE>
10
Made in New York, United States of America on November 10, 1998 in
four original copies.
UCAR HOLDINGS S.A.,
by: /S/ CORRADO DEGASPERIS
-------------------------------------
Name: Corrado DeGasperis
Title: Controller
THE CHASE MANHATTAN BANK, PARIS
BRANCH, individually and as
Administrative Agent,
by: /S/ MARIAN SCHULMAN
-------------------------------------
Name: Marian Schulman
Title: Vice President
BANQUE PARIBAS,
by: /S/ JOHN J. MCCORMICK, III
-------------------------------------
Name: John J. McCormick, III
Title: Vice President
by: /S/ DAVID I. CANAVAN
-------------------------------------
Name: David I. Canavan
Title: Director
<PAGE>
1
SCHEDULE 1.01
to the Local Facility
Credit Agreement for France
SECURITY DOCUMENTS
1. Pledge Agreement by UCAR International Inc., UCAR Global Enterprises Inc.
and certain U.S. Subsidiaries, dated October 19, 1995, as amended and
restated on November 10, 1998.
2. Pledge Agreement (35%) by certain U.S. Subsidiaries, dated November 10,
1998.
3. Parent Guarantee Agreement made by UCAR International Inc. and UCAR Global
Enterprises Inc., dated October 19, 1995, as amended and restated on
November 10, 1998.
4. Subsidiary Guarantee Agreement by each U.S. Subsidiary, dated October 19,
1995, as amended and restated on November 10, 1998.
5. Security Agreement by UCAR International Inc., UCAR Global Enterprises Inc.
and the U.S. Subsidiaries, dated April 22, 1998, as amended and restated on
November 10, 1998.
6. Intellectual Property Security Agreement by UCAR Global Enterprises Inc.
and the U.S. Subsidiaries, dated April 22, 1998, as amended and restated on
November 10, 1998.
7. Subsidiary Guarantee by UCAR S.p.A., dated March 19, 1997, as amended on
November 10, 1998.
8. Mexican Subsidiaries Guarantee by Servicios Administrativos Carmex S.A. de
C.V. and Servicios DYC S.A. de C.V., dated November 10, 1998.
9. Mexican Subsidiaries Guarantee by UCAR Carbon Mexicana S.A. de C.V. and
UCAR Mexicana S.A. de C.V., dated November 10, 1998.
10. Pledge by UCAR Holdings Inc., UCAR Mexicana S.A. de C.V. and UCAR Carbon
Mexicana S.A. de C.V. of 35% of the shares of UCAR Mexicana S.A. de C.V.,
99.94% of the shares of UCAR Carbon Mexicana and 100% of the shares of
Servicios Administrativos Carmex S.A. de C.V. and Servicios DYC S.A. de
C.V., respectively, dated November 10, 1998.
11. Mexican Mortgage dated November 10, 1998.
12. Pledge by UCAR Holdings Inc. of 65% of the shares of UCAR S.p.A., dated
November 10, 1998.
13. Pledge by UCAR Holdings Inc. of 65% of the shares of UCAR Mexicana S.A. de
C.V., dated November 10, 1998.
14. Pledge by UCAR Holdings II Inc. of 65% of the shares of UCAR Holdings S.A.,
dated May 7, 1998, as amended on November 10, 1998.
15. Pledge by UCAR Holdings II Inc. of 65% of the shares of UCAR Electrodos,
S.L., dated October 19, 1995, as amended on March 19, 1997 and November 10,
1998.
16. Pledge by UCAR Carbon Company Inc. of 65% of the shares of EMSA (Property)
Ltd. and Carbographite Limited, dated November 10, 1998.
17. Pledge by UCAR Carbon Company Inc. of 65% of the shares of UCAR Limited,
dated November 10, 1998.
<PAGE>
2
18. Pledge by UCAR Holdings III Inc. and UCAR Holdings S.A. of 100% of the
shares of UCAR S.N.C., dated March 19, 1997.
19. Pledge by UCAR Holdings II Inc. of 35% of the shares of UCAR Holdings S.A.,
dated November 10, 1998.
<PAGE>
1
SCHEDULE 2.06
To the Local Facility
Credit Agreement for France
PRICING
The following terms shall have the meanings specified below:
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurocurrency
Borrowing denominated in Dollars for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
product of (a) the LIBO Rate in effect for such Interest Period and (b)
Statutory Reserves.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate, including the failure of the Federal Reserve Bank of New
York to publish rates or the inability of the Administrative Agent to obtain
quotations in accordance with the terms thereof, the Alternate Base Rate shall
be determined by reference to the most recently available such rate until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Federal Funds Effective Rate shall be
effective on the effective date of such change.
"EURIBOR RATE" shall mean, with respect to any Eurocurrency
Borrowing denominated in Local Currency for any Interest Period, the rate
published on the Telerate screen for such Local Currency at 11.00 a.m.(Standard
time) two TARGET Operating Days before the first day of each Interest Period at
which Local Currency deposits for a maturity comparable to such Interest Period
are offered in the European interbank market.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"LIBO RATE" shall mean, with respect to any Eurocurrency Borrowing
denominated in Dollars, the rate (rounded upwards, if necessary, to the next
1/16 of 1%) at
<PAGE>
2
which dollar deposits approximately equal in principal amount to, the
Administrative Agent's portion of such Eurocurrency Borrowing denominated in
Dollars and for a maturity comparable to such Interest Period are offered to the
principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"PIBO RATE" shall mean, with respect to any Eurocurrency Borrowing
denominated in Local Currency for any Interest Period, the rate published on
page 20041 of the Telerate screen at 11.00 a.m.(Standard time) one Business Day
before the first day of each Interest Period at which Local Currency deposits
for a maturity comparable to such Interest Period are offered in the Paris
interbank market; PROVIDED, HOWEVER, that from that date on which the PIBO Rate
ceases to exist, all references to PIBO Rate shall be deemed references to the
EURIBOR Rate.
"TARGET OPERATING DAY" means any day that is not (i) a Saturday or
Sunday, (ii) Christmas Day or New Year's Day or (iii) any other day on which the
Trans European Automated Real-time Gross Settlement Express Transfer System
("TARGET") (or any successor settlement system) is not operating (as determined
by the Administrative Agent); and
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent is subject with respect to Eurocurrency
Liabilities (as defined in Regulation D of the Board) or other categories of
liabilities or deposits by reference to which the LIBO Rate is determined. Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurocurrency Loans denominated in Dollars shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets which may be available
from time to time to any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
<PAGE>
EXHIBIT 10.12(a)
CONFORMED COPY
Canadian Facility
AMENDMENT dated as of November 10, 1998
(this "AMENDMENT"), among UCAR INC., an Ontario
corporation (the "BORROWER"), the financial
institutions party hereto (the "LENDERS"), and THE
CHASE MANHATTAN BANK OF CANADA, as agent (in such
capacity, the "ADMINISTRATIVE AGENT") for the
Lenders.
A. Reference is made to the Local Facility Credit Agreement
dated as of March 19, 1997 (the "CREDIT AGREEMENT") among the Borrower, the
Lenders party thereto and the Administrative Agent. Capitalized terms used but
not otherwise defined herein have the meanings assigned to them in the Credit
Agreement.
B. The Borrower has requested that the Lenders amend certain
provisions of the Credit Agreement and the Security Documents. The Lenders are
willing to do so, subject to the terms and conditions of this Amendment.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.01. AMENDMENTS TO SECTION 1.01. (a) The definition of
"INTEREST COMPONENT" in Section 1.01 of the Credit Agreement is hereby amended
by replacing the reference to "1.03333333333%" contained therein with a
reference to "1.03%".
(b) The definition of "LETTER OF CREDIT" in Section 1.01 of the Credit
Agreement is hereby amended by replacing the reference to "U.S. Credit
Agreement" with a reference to "Existing U.S. Credit Agreement".
(c) The definition of "LOAN DOCUMENTS" in Section 1.01 of the Credit
Agreement is hereby amended by replacing the reference to "Letter" contained
therein with a reference to "Letters".
(d) The definition of "SECURITY DOCUMENTS" in Section 1.01 of the
Credit Agreement is hereby replaced in its entirety with the following:
"SECURITY DOCUMENTS" shall mean the agreements set forth on Schedule 1.01 and
each of the agreements and other instruments and documents executed and
delivered pursuant to the agreements set forth on Schedule 1.01, pursuant to
Section 5.03 hereof or pursuant to Section 5.11 of the U.S. Credit Agreements;
PROVIDED that the agreements and other instruments and documents delivered
<PAGE>
2
pursuant to Section 5.11 of the U.S. Credit Agreements shall only constitute
Security Documents hereunder to the extent that they serve to guarantee or
secure the Obligations of the Borrower hereunder or Obligations of the Borrower
in respect of Tranche A Letters of Credit under the Existing U.S. Credit
Agreement.
(e) The definition of "U.S. CREDIT AGREEMENT" in Section 1.01 of the
Credit Agreement is hereby deleted in its entirety.
(f) The following definitions are hereby added to Section 1.01 of the
Credit Agreement in the appropriate alphabetical order:
"EXISTING U.S. CREDIT AGREEMENT" shall mean the Credit
Agreement dated as of October 19, 1995, as amended and restated as of
March 19, 1997 and November 10, 1998 (as the same may be amended,
supplemented or otherwise modified from time to time), among UCAR
International Inc., a Delaware corporation, UCAR Global Enterprises
Inc., a Delaware corporation, the Subsidiary Borrowers party thereto,
the Lenders party thereto, the Fronting Banks party thereto and The
Chase Manhattan Bank, as administrative agent and collateral agent,
which is attached hereto as Exhibit D-1.
"TRANCHE C FACILITY CREDIT AGREEMENT" shall mean the Credit
Agreement dated as of November 10, 1998 (as the same may be amended,
supplemented or otherwise modified from time to time), among UCAR
International Inc., a Delaware corporation, UCAR Global Enterprises
Inc., a Delaware corporation, UCAR S.A., a Swiss corporation, the
Lenders party thereto, The Chase Manhattan Bank, as administrative
agent and collateral agent, Credit Suisse First Boston, as syndication
agent, and Morgan Guaranty Trust Company of New York, as syndication
agent, which is attached hereto as Exhibit D-2.
"U.S. CREDIT AGREEMENTS" shall mean the Existing U.S. Credit
Agreement and the Tranche C Facility Credit Agreement.
SECTION 1.02. MODIFICATION OF CREDIT AGREEMENT. (a) Unless otherwise
specified in paragraph (b) below, all references in the Credit Agreement to
"U.S. Credit Agreement" are hereby replaced with references to "U.S. Credit
Agreements".
<PAGE>
3
(b) The references to U.S. Credit Agreement in Sections 3.02 and 9.17
of the Credit Agreement are hereby replaced with references to "Existing U.S.
Credit Agreement".
SECTION 1.03. REPLACEMENT OF SCHEDULE 1.01 TO CREDIT AGREEMENT.
Schedule 1.01 to the Credit Agreement is hereby replaced in its entirety with
Schedule 1.01 attached hereto.
SECTION 1.04. REPLACEMENT OF EXHIBIT D TO CREDIT AGREEMENT. Exhibit D
to the Credit Agreement is hereby replaced in its entirety with Exhibits D-1 and
D-2 attached hereto.
SECTION 1.05. REPLACEMENT OF SECOND SENTENCE OF SECTION 5.03. The
second sentence in Section 5.03 of the Credit Agreement is hereby replaced in
its entirety with the following:
In addition, from time to time, the Borrower and the Subsidiaries will,
at their cost and expense, on or promptly (but in any event within 10
Business Days) following the date of acquisition by the Borrower or any
Subsidiary or any new subsidiary (subject to the receipt of required
consents from Governmental Authorities and required consents of other
third parties), promptly secure the Obligations of the Borrower and, to
the extent permitted by law, the other foreign Credit Parties under the
U.S. Credit Agreements (the "FOREIGN OBLIGATIONS") by causing the
following to occur: (i) promptly upon creating or acquiring any
additional subsidiary, the Capital Stock of such subsidiary will be
pledged pursuant to a pledge agreement reasonably satisfactory in form
and substance to the Administrative Agent and (ii) such subsidiary will
become a guarantor of the Obligations pursuant to a subsidiary
guarantee agreement and provide security for the Foreign Obligations
pursuant to a security agreement, in each case reasonably satisfactory
in form and substance to the Administrative Agent.
SECTION 1.06. AMENDMENT TO SECTION 9.17. Section 9.17 of the Credit
Agreement is hereby replaced in its entirety with the following:
In the event that any obligation of any Loan Party (a) under this
Agreement or (b) any other Loan Document in respect of the obligations
under this Agreement (a "CLAIM") is paid with the proceeds of a Tranche
A L/C Disbursement, the Borrower, the Administrative Agent
<PAGE>
4
and the Lenders hereby agree that Tranche A Lenders under the Existing
U.S. Credit Agreement holding participations in such Tranche A L/C
Disbursement shall be subrogated to the rights of the Administrative
Agent and the Lenders hereunder and under each other Loan Document in
respect of such Claim to the extent of such proceeds; PROVIDED that
such right of subrogation shall not be effective until, and shall be
subordinated to, payment in full of all Claims.
SECTION 1.07. AMENDMENTS TO SECURITY DOCUMENTS. Each Security Document
is hereby amended to redefine the "U.S. Credit Agreement" as being the Credit
Agreement, dated as of October 19, 1995, as amended and restated as of March 19,
1997, and as further amended and restated as of November 10, 1998 (as the same
may be amended, restated, supplemented or otherwise modified from time to time,
the "U.S. Credit Agreement"), among UCAR International Inc., a Delaware
corporation ("UCAR"), UCAR Global Enterprises Inc. ("UCAR Global"), the
Subsidiary Borrowers (as defined therein) party thereto, the Lenders (as defined
therein) party thereto, the Fronting Banks (as defined therein), and certain
other parties.
SECTION 1.08. AMENDMENT TO SECTION 9.20. The reference to "Section
2.10(b)" in Section 9.20 of the Credit Agreement is hereby replaced with a
reference to "Section 2.11(b)".
SECTION 2. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective on the date of the satisfaction in full of the following conditions
precedent (the "AMENDMENT EFFECTIVE DATE"):
(a) The Administrative Agent shall have received duly executed
counterparts hereof which, when taken together, bear the authorized
signatures of the Borrower, the Lenders and the Administrative Agent.
(b) The Administrative Agent shall have received favorable
written opinion by Blake, Cassels & Graydon, substantially similar to
the opinion given by such person on March 19, 1997 in connection with
execution of the Credit Agreement, in form and substance satisfactory
to the Administrative Agent and its counsel.
(c) The (i) amendment and restatement of the Existing U.S.
Credit Agreement and(ii) Tranche C
<PAGE>
5
Facility Credit Agreement shall have become effective in accordance
with its respective terms.
SECTION 3. CREDIT AGREEMENT. Except as specifically stated herein, the
Credit Agreement shall continue in full force and effect in accordance with the
provisions thereof. As used therein, the terms "Agreement", "herein",
"hereunder", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Credit Agreement as modified hereby.
SECTION 4. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE PROVINCE OF ONTARIO.
SECTION 5. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which shall be an original but all of which, when taken
together, shall constitute but one instrument. Delivery of an executed
counterpart of a signature page of this Amendment by telecopy shall be effective
as delivery of a manually executed counterpart of this Amendment.
SECTION 6. EXPENSES. The Borrower agrees to reimburse the
Administrative Agent for its out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent and of Blake, Cassels and
Graydon, special Canadian counsel for the Administrative Agent.
<PAGE>
6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
date first above written.
UCAR INC.,
by
/S/ MICHELLE F. RIDER
---------------------------------
Name:Michelle F. Rider
Title:Attorney-in-Fact
by
/S/ PETER B. MANCINO
----------------------------------
Name:Peter B. Mancino
Title:Attorney-in-Fact
THE CHASE MANHATTAN BANK OF
CANADA, individually and as
Administrative Agent,
by
/S/ CHRISTINE CHAN
---------------------------------
Name:Christine Chan
Title:Vice President
<PAGE>
1
SCHEDULE 1.01
to the Local Facility
Credit Agreement for Canada
SECURITY DOCUMENTS
1. Pledge Agreement by UCAR International Inc., UCAR Global Enterprises
Inc. and certain U.S. Subsidiaries, dated October 19, 1995, as amended
and restated on November 10, 1998.
2. Pledge Agreement (35%) by certain U.S. Subsidiaries, dated November 10,
1998.
3. Parent Guarantee Agreement made by UCAR International Inc. and UCAR
Global Enterprises Inc., dated October 19, 1995, as amended and
restated on November 10, 1998.
4. Subsidiary Guarantee Agreement by each U.S. Subsidiary, dated October
19, 1995, as amended and restated on November 10, 1998.
5. Security Agreement by UCAR International Inc., UCAR Global Enterprises
Inc. and the U.S. Subsidiaries, dated April 22, 1998, as amended and
restated on November 10, 1998.
6. Intellectual Property Security Agreement by UCAR Global Enterprises
Inc. and the U.S. Subsidiaries, dated April 22, 1998, as amended and
restated on November 10, 1998.
7. Subsidiary Guarantee by UCAR S.p.A., dated March 19, 1997, as amended
on November 10, 1998.
8. Mexican Subsidiaries Guarantee by Servicios Administrativos Carmex S.A.
de C.V. and Servicios DYC S.A. de C.V., dated November 10, 1998.
9. Mexican Subsidiaries Guarantee by UCAR Carbon Mexicana S.A. de C.V. and
UCAR Mexicana S.A. de C.V., dated November 10, 1998.
10. Pledge by UCAR Holdings Inc., UCAR Mexicana S.A. de C.V. and UCAR
Carbon Mexicana S.A. de C.V. of 35% of the shares of UCAR Mexicana S.A.
de C.V., 99.94% of the shares of UCAR Carbon Mexicana and 100% of the
shares of Servicios Administrativos Carmex S.A. de C.V. and Servicios
DYC S.A. de C.V., respectively, dated November 10, 1998.
11. Mexican Mortgage dated November 10, 1998.
12. Pledge by UCAR Holdings Inc. of 65% of the shares of UCAR S.p.A., dated
November 10, 1998.
<PAGE>
2
13. Pledge by UCAR Holdings Inc. of 65% of the shares of UCAR Mexicana S.A.
de C.V., dated November 10, 1998.
14. Pledge by UCAR Holdings II Inc. of 65% of the shares of UCAR Holdings
S.A., dated May 7, 1998, as amended on November 10, 1998.
15. Pledge by UCAR Holdings II Inc. of 65% of the shares of UCAR
Electrodos, S.L., dated October 19, 1995, as amended on March 19, 1997
and November 10, 1998.
16. Pledge by UCAR Carbon Company Inc. of 65% of the shares of EMSA
(Property) Ltd. and Carbographite Limited, dated November 10, 1998.
17. Pledge by UCAR Carbon Company Inc. of 65% of the shares of UCAR
Limited, dated November 10, 1998.
18. Canadian Security Agreement made by UCAR Inc. dated May 7, 1998.
19. Moveable Hypothec (Province of Quebec) made by UCAR Inc. dated May 7,
1998.
20. Mortgage made by UCAR Inc. dated May 7, 1998 for property in Welland,
Ontario.
21. General Assignment of Accounts Receivable (Province of New Foundland)
made by UCAR Inc. on May 8, 1998.
<PAGE>
EXHIBIT 10.22
THE UCAR INTERNATIONAL INC.
MANAGEMENT STOCK OPTION PLAN
This Management Stock Option Plan was originally adopted by the
Board of Directors of UCAR International Inc. as of January 26, 1995. It was
subsequently amended. This document restates in one document this Management
Stock Option Plan as amended through September 29, 1998.
ARTICLE I
PURPOSE OF PLAN
The Plan has been adopted by the Board to provide for the grant of
stock options to certain management employees of the Company and its
Subsidiaries and non-employee directors of the Company as a part of the
compensation and incentive arrangements for such employees and directors. The
Plan is intended to advance the best interests of the Company by allowing such
persons to acquire an ownership interest in the Company, thereby motivating them
to contribute to the success of the Company and to remain in the employ or
service of the Company and its Subsidiaries. It is anticipated that the
availability of stock options under the Plan will also enhance the Company's and
its Subsidiaries' ability to attract and retain individuals of exceptional
talent to contribute to the sustained progress, growth and profitability of the
Company.
ARTICLE II
DEFINITIONS
For purposes of the Plan, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:
"ACCELERATION EVENT" shall mean an event with respect to which the
Plan provides for the acceleration of the exercisability of Options, as provided
in Section 5.3.
"AFFILIATE" shall mean, with respect to any Person, (i) any other
Person that directly or indirectly Controls, is Controlled by or is under common
Control with such Person, or (ii) any director, officer, partner or employee of
such Person or any Person specified in clause (i) above.
"BOARD" shall mean the Board of Directors of the Company.
"CAUSE," if relevant to a particular Participant, shall have the
meaning of "Cause" set forth in such Participant's Option Agreement.
"CEO" shall mean the Chief Executive Officer of the Company.
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following events:
(i) any "person" or "group", within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act, becomes the "beneficial owner", as defined in
Rule 13d-3 under the Exchange Act, of more than 22.5% of either the then
outstanding Common Stock or the combined voting power of the then outstanding
voting securities of the Company;
(ii) any "person" or "group" within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act acquires by proxy or otherwise the right to
vote for the election of directors, on any merger or consolidation of the
Company or for any other matter or question with respect to more than 22.5% of
either the then outstanding Common Stock or the combined voting power of the
then outstanding voting securities of the Company;
(iii) Present Directors and New Directors cease for any reason to
constitute a majority of the Board (and, for these purposes, "Present Directors"
shall mean individuals who at the beginning of any consecutive twenty-four month
period were members of the Board and "New Directors" shall mean individuals
whose election as directors by the Board or whose nomination for election as
directors by the Company's stockholders was approved by a vote of at least
two-thirds of the Directors then in office who were Present Directors or New
Directors);
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company; or
(v) consummation of:
(x) a reorganization, merger or consolidation of the Company
(a "Business Combination"), unless, following such
Business Combination, (a) all or substantially all of
the "beneficial owners," as defined in Rule 13d-3 under
the Exchange Act, of the outstanding Common Stock and
the combined voting power of the outstanding voting
securities of the Company, respectively, immediately
prior to such Business Combination "beneficially own,"
as so defined, directly or indirectly, more than 50% of
the outstanding common equity securities and the
combined voting power of the outstanding voting
securities of the entity resulting from such Business
Combination (including, without limitation, an entity
which as a result of such Business Combination owns the
Company or all or substantially all of the Company's
assets either directly or indirectly through one or
more subsidiaries), respectively, in substantially the
same proportions as their ownership, immediately prior
to such Business Combination, of the outstanding Common
Stock of the Company and the combined voting power of
the outstanding voting securities of the Company,
respectively, (b) no "person" or "group," within the
meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act (excluding any entity resulting from such
Business Combination and any employee benefit plan (and
related trust)of the Company, its subsidiaries or such
entity), is the "beneficial owner," as defined in Rule
13d-3 under the Exchange Act, of more than 22.5% of
either the then outstanding common equity securities
of the entity resulting from such Business Combination
or the combined voting power of the outstanding voting
securities of such entity except to the extent that such
beneficial ownership existed immediately prior to such
Business Combination with respect to the Common Stock
and combined voting power of outstanding voting
securities of the Company and (c) at least a majority
of the members of the board of directors (or similar
governing body) of the entity resulting from such
Business Combination were members of the Board at the
time of the execution of the initial agreement providing
for such Business Combination or the time of the action
of the Board approving of such Business Combination,
whichever is earlier; or
(y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company,
whether held directly or indirectly through one or more
subsidiaries (excluding any grant of any pledge,
mortgage or security interest or any sale-leaseback or
any similar transaction, but including any foreclosure
sale);
provided, that, in the case of both clause (x) and (y) above, the
divestiture of less than substantially all of the assets of the
Company in one transaction or a series of related transactions,
whether effected by sale, lease, exchange, transfer, spin-off, sale
of the stock of or merger or consolidation of a subsidiary or
otherwise, shall not constitute a Change in Control of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur: (A) pursuant to clauses (i) and (ii) above, solely because more
than 22.5% of the then outstanding Common Stock or the combined voting power of
the then outstanding voting securities of the Company is held or acquired by one
or more employee benefit plans (or related trusts) maintained by the Company or
its subsidiaries; or (B) pursuant to clause (v)(y) above, if the Board
determines that any sale, lease, exchange or transfer does not involve
substantially all of the assets of the Company.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute.
"COMMITTEE" shall mean the Organization and Compensation Committee
of the Board.
"COMMON STOCK" shall mean the common stock of the Company, par value
$.01.
"COMPANY" shall mean UCAR International Inc., a Delaware corporation.
"CONTROL" (including, with correlative meaning, all conjugations
thereof) shall mean with respect to any Person, the ability of another Person to
control or direct the actions or policies of such first Person, whether by
ownership of voting securities, by contract or otherwise.
"CUMULATIVE EBITDA" shall mean with respect to any Performance
Option, the sum of the EBITDA for the period ending on the last day of the Plan
Year preceding the Determination Date.
"CUMULATIVE EBITDA TARGETS" shall mean with respect to any
Performance Option, the sum of the EBITDA Targets for the period ending on the
last day of the Plan Year preceding the Determination Date.
"DETERMINATION DATE" shall mean the last day of the Plan Year.
"DIRECTOR" shall mean any individual who is a member of the Board
and who is not an employee of the Company or a Subsidiary.
"DISABILITY" shall mean the inability of a Participant to perform in
all material respects his duties and responsibilities to the Company, or any
Subsidiary of the Company, by reason of a physical or mental disability or
infirmity which inability is reasonably expected to be permanent and has
continued (i) for a period of six consecutive months or (ii) such shorter period
as the Company may determine. A Participant (or his representative) shall
furnish the Company with satisfactory medical evidence documenting the
Participant's disability or infirmity.
"EBITDA" shall mean, with respect to the Company and its
Subsidiaries on a consolidated basis for any period, the consolidated net income
of the Company and its Subsidiaries for such period, as determined in accordance
with generally accepted accounting principles consistently applied, PLUS, to the
extent deducted in computing such consolidated net income, without duplication,
the sum of (a) income tax expenses and withholding tax expenses incurred in
connection with cross-border transactions involving non-domestic Subsidiaries,
(b) interest expense, (c) depreciation expense and amortization expense, (d) any
special charges and any extraordinary or non-recurring losses, (e) monitoring
and management fees paid to Blackstone Capital Partners II Merchant Banking Fund
L.P. or its affiliates, (f) other noncash items reducing consolidated net
income, and of noncash exchange, translation on performance losses relating to
any foreign currency hedging transactions or currency fluctuations, MINUS, to
the extent added in computing such consolidated net income, without duplication,
(i) interest income, (ii) extraordinary or non-recurring gains, (iii) other
noncash items increasing consolidated net income, (iv) noncash exchange,
translation or performance gains relating to any foreign currency hedging
transactions or currency fluctuations, and (v) all non-cash pension accruals
related to FAS `87; PROVIDED that all effects of the Recapitalization shall be
eliminated in computing EBITDA.
"EBITDA TARGET" shall mean with respect to each Plan Year, the
amount set forth in the following table opposite such Plan Year:
PLAN YEAR ENDING EBITDA TARGET
December 31, 1995 $ 216,900,000
December 31, 1996 $ 223,400,000
December 31, 1997 $ 256,600,000*
December 31, 1998 $ 271,700,000*
December 31, 1999 $ 287,800,000*
and such other targets as are established by the Committee after consultation
with the CEO with respect to subsequent Plan Years. Asterisked EBITDA Targets
shall not be more than the stated amount but may be adjusted downward by the
Committee, in its sole discretion and shall otherwise be subject to the
provisions of Section 10.3.
"EFFECTIVE DATE" shall mean the Recapitalization Closing Date.
"EMPLOYEE" shall mean any employee of the Company or any of its
Subsidiaries and, unless otherwise indicated, any Director.
"EMPLOYEE LOAN" shall mean any loan made to a Participant on the
Recapitalization Closing Date to assist the Participant in paying certain income
tax liability.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXERCISABLE PERCENTAGE" shall mean, with respect to any Option, the
cumulative percentage of the total number of Option Shares subject to such
Option (measured as of the Grant Date) which a Participant has the right to
receive upon exercising such Option.
"EXERCISE PRICE" shall mean the amount that a Participant must pay
to exercise an Option with respect to one share of Common Stock subject to such
Option, as determined in Section 4.2.
"FAIR MARKET VALUE" shall mean (i) with respect to any Option
granted prior to September 29, 1998, the average of the high and low trading
prices of the Common Stock for the 20 business days immediately preceding the
day of the valuation, (ii) with respect to any Option granted after September
29, 1998, the closing sale price (or, if there is none, the average of the
closing bid and asked prices) of the Common Stock on the last trading day
preceding the day of the valuation and (iii) with respect to any Option granted
on September 29, 1998 after the close of trading, the closing sale price of the
Common Stock on that day (i.e., $17.06).
"GOOD REASON," if relevant to a particular Participant, shall have
the meaning of "Good Reason" set forth in such Participant's Option Agreement.
"GRANT DATE" shall mean, with respect to the initial grant of
Options hereunder, the Recapitalization Closing Date and, thereafter, shall mean
the date the relevant Options are granted pursuant to this Plan.
"OPTION" shall mean, with respect to any Participant, (a) any Time
Option, Performance Option or Standard Option and (b) any option, warrant or
right to acquire shares of the capital stock of the Company issued in respect of
an option referred to in clause (a) above, by way of distribution or in
connection with a merger, consolidation, reorganization or other
recapitalization.
"OPTION AGREEMENT" shall mean the relevant Option Agreement between
a Participant and the Company.
"OPTION SHARES" shall mean, with respect to any Participant, (a) any
shares of Common Stock (or other shares of capital stock of the Company)
issuable or issued by the Company upon exercise of any Option by such
Participant and (b) any shares of the capital stock of the Company issuable or
issued in respect of any of the securities described in clause (a) above, by way
of stock dividend, stock split, merger, consolidation, reorganization or other
recapitalization.
"PARTICIPANT" shall mean any individual who holds an outstanding
Option granted under this Plan.
"PERFORMANCE OPTIONS" shall mean the options described in
Section 5.2.
"PERSON" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"PLAN" shall mean this Management Stock Option Plan, as amended from
time to time.
"PLAN YEAR" shall mean initially the short plan year beginning
January 26, 1995 and ending on December 31, 1995, and thereafter each of the
calendar years from 1996 through 2007.
"PUBLIC OFFERING" shall mean the sale of shares of Common Stock
pursuant to an effective registration statement under the Securities Act, which
results in an active trading market in Common Stock. If the Common Stock is
listed on a national securities exchange or is quoted on the NASDAQ National
Market, it shall be deemed to be actively traded.
"RECAPITALIZATION" shall mean the recapitalization of the Company
pursuant to the Recapitalization Agreement.
"RECAPITALIZATION AGREEMENT" shall mean the agreement dated as of
November 14, 1994 among Union Carbide Corporation, a New York corporation,
Mitsubishi Corporation, a Japanese corporation, the Company, and UCAR
International Acquisition Inc., a Delaware corporation.
"RECAPITALIZATION CLOSING DATE" shall mean the closing date of the
Recapitalization (i.e., January 26, 1995).
"RECAPITALIZATION PRICE" shall mean the per share price paid in the
Recapitalization (i.e., $7.60).
"RETIREMENT," if relevant to a particular Participant, shall have
the meaning of "Retirement" set forth in such Participant's Option Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"STANDARD OPTIONS" shall mean the options described in Section 5.2A.
"SUBSIDIARY" shall mean any corporation of which the Company owns,
directly or through one or more Subsidiaries, a fifty percent (50%) or more
equity interest in such corporation or has the right to nominate fifty percent
(50%) or more of the members of the board of directors or other governing body
of the corporation.
"TIME OPTIONS" shall mean the options described in Section 5.1.
"TRANSFER" shall mean, with respect to any Option, the gift, sale,
assignment, transfer, pledge, hypothecation or other disposition (whether for or
without consideration and whether voluntary, involuntary or by operation of law)
of such Option or any interest therein.
ARTICLE III
LIMITATION ON AVAILABLE OPTION SHARES
3.1 OPTION SHARES. The aggregate number of shares of Common Stock with
respect to which Options may be granted under the Plan shall not exceed
4,886,828 shares; PROVIDED, HOWEVER, that the aggregate number of shares of
Common Stock with respect to which Options may be granted shall be subject to
adjustment in accordance with the provisions of Section 10.2.
3.2 STATUS OF OPTION SHARES. The shares of Common Stock for which Options
may be granted under the Plan (i) may be either authorized and unissued shares,
treasury shares or a combination thereof, as the Committee or the Board shall
determine and (ii) shall be reserved by the Committee or the Board for issuance
under this Plan; provided, however, that any shares of Common Stock delivered or
deliverable upon exercise of Options granted to officers of the Company (within
the meaning of the rules of the New York Stock Exchange) or directors of the
Company on or after March 31, 1998 shall consist of treasury shares which shall
have been previously listed on the New York Stock Exchange. To the extent any
Options are forfeited, expire or are terminated prior to exercise, the Option
Shares in respect of which such Options were issued shall become available for
stock options granted pursuant to this Plan or any other plan or agreement
approved by the Committee.
ARTICLE IV
GRANT OF OPTIONS
4.1 OPTIONS. Options may be granted to Employees. Initially, Options
shall be granted by the Board. Thereafter, the Committee or the Board shall
grant Options to Employees (other than Directors) after consultation with the
CEO and the Board shall grant Options to Directors. Except as otherwise provided
herein, the Committee or the Board shall establish the terms and conditions
applicable to Options granted by it at the time of grant, which terms and
conditions shall be set forth in the relevant Option Agreements.
4.2 EXERCISE PRICE. The Exercise Price of Time Options and Performance
Options granted hereunder shall be not less than the Fair Market Value of the
Option Shares subject to such Options, determined as of the relevant Grant Date.
For purposes of the initial grant of Time Options and Performance Options
hereunder, the Exercise Price of such Options shall be the Recapitalization
Price. The Exercise Price of Standard Options granted hereunder shall be
specified by the Committee or the Board at the time of grant and set forth in
the relevant Option Agreements, but in no event shall the Exercise Price of a
Standard Option be less than the Fair Market Value of a share of Common Stock on
the relevant Grant Date.
4.3 FORM OF OPTION. Options granted under this Plan shall be non-qualified
stock options and are not intended to be "incentive stock options" within the
meaning of Section 422 of the Code or any successor provisions. Options shall be
exercisable with respect to the number of Option Shares covered by the Option to
the extent they become exercisable and shall thereafter be exercisable until
they expire or are terminated.
4.4 AVAILABLE OPTIONS All Options granted under this Plan prior to
September 29, 1998 have been Time Options or Performance Options.
Notwithstanding anything to the contrary contained herein, only Standard Options
shall be granted to Employees (other than Directors) and only Time Options or
Standard Options shall be granted to Directors under this Plan on or after
September 29, 1998.
ARTICLE V
EXERCISABILITY OF OPTIONS
5.1 TIME OPTIONS. Except as otherwise provided in the relevant Option
Agreement or Section 5.3, all Time Options shall become exercisable in
accordance with the following schedule:
EXERCISABLE PERCENTAGES
-----------------------
Prior to December 31, 1995 0%
On or after December 31, 1995 20%
On or after December 31, 1996 40%
On or after December 31, 1997 60%
On or after December 31, 1998 80%
On or after December 31, 1999 100%
5.2 PERFORMANCE OPTIONS. Except as otherwise provided in the
relevant Option Agreement or Section 5.3:
(a) Performance Options shall become exercisable with respect to
20% of the Option Shares subject to such Options, as of each Determination Date
that the Company's EBITDA for a Plan Year equals or exceeds the EBITDA Target
for that Plan Year (and with respect to the first Plan Year, EBITDA for the
entire calendar year).
(b) If, after the Grant Date of a Performance Option, the
Company's EBITDA for a Plan Year is less than 100% of the EBITDA Target for such
Plan Year ( a "Missed Year"), no such Performance Option shall become
exercisable with respect to any additional Option Shares (the "Missed Shares")
on the Determination Date for such Plan Year. If, in any Plan Year subsequent to
a Missed Year, EBITDA exceeds the EBITDA Target for such Plan Year AND
Cumulative EBITDA exceeds the Cumulative EBITDA Targets, then Performance
Options shall become exercisable with respect to the Missed Shares attributable
to such Missed Year (but only to the extent such Option has not otherwise
terminated).
5.2A STANDARD OPTIONS. Except as otherwise provided in this Plan,
Standard Options shall be subject to such terms and conditions as are
established by the Committee or the Board at the time of grant and set forth in
the relevant Option Agreements. Except as otherwise provided in the relevant
Option Agreement or Section 5.3, a Standard Option shall become exercisable at
such time or under such circumstances as the Committee or the Board shall
determine and specify in the relevant Option Agreement.
5.3 ACCELERATION EVENTS.
(a) Notwithstanding anything contained in this Article V to the
contrary: Time Options granted to Employees (other than Directors) shall become
exercisable upon the first to occur of the following events: (i) a Participant's
termination of employment on account of death or Disability, (ii) a Change of
Control and (iii) to the extent provided in a Participant's Option Agreement, a
Participant's termination by the Company without Cause or a Participant's
resignation for Good Reason; and Time Options granted to Directors shall become
exercisable upon the first to occur of the following events: (i) a Director
ceases to be a Director on account of death or Disability or (ii) a Change of
Control. The Committee or the Board may, but are not required to, provide for
the accelerated vesting and exercisability of Standard Options at the time of
grant and any such provisions shall be set forth in the relevant Option
Agreements. The Committee or the Board may, in its discretion, accelerate the
exercisability of any or all Options at any time and for any reason.
(b) Notwithstanding anything contained in this Article V to the
contrary, all outstanding Time Options and Performance Options (other than
Performance Options for the 1999 Plan Year) granted on or before March 17, 1998
have become vested and exercisable.
ARTICLE VI
EXERCISE OF OPTIONS
6.1 RIGHT TO EXERCISE. During the lifetime of a Participant, Options may be
exercised only by such Participant (except that, in the event of his Disability,
Options may be exercised by his or her legal guardian or legal representative).
In the event of the death of a Participant, exercise of Options shall be made
only by the executor or administrator of the deceased Participant's estate or
the Person or Persons to whom the deceased Participant's rights under Options
shall pass by will or the laws of descent and distribution.
6.2 PROCEDURE FOR EXERCISE. Vested Options may be exercised in whole or in
part with respect to any portion that is exercisable. To exercise an Option, a
Participant (or such other Person who shall be permitted to exercise the Option
as set forth in Section 6.1) must complete, sign and deliver to the Company a
notice of exercise in such form as the Company may from time to time adopt and
provide to a Participant (the "EXERCISE NOTICE"), together with payment in full
of the Exercise Price multiplied by the number of shares of Common Stock with
respect to which the Option is exercised. Payment of the Exercise Price shall be
made in cash (including check, bank draft or money order). The right to exercise
the Option shall be subject to the satisfaction of all conditions set forth in
the Exercise Notice. In lieu of paying the Exercise Price, on or after an
initial Public Offering, upon a Participant's (or such other Person's) request,
with the Committee's or the Board's consent, the Company shall give the
Participant a number of shares of Common Stock equal to (A) divided by (B) where
(A) is the excess of the (i) the Fair Market Value of a share of Common Stock on
the date of exercise, over (ii) the Exercise Price, multiplied by (iii) the
number of shares for which the Option is being exercised, and (B) is the Fair
Market Value of a share of Common Stock on the date of exercise.
6.3 [Omitted]
6.4 CONDITIONAL EXERCISE IN CONTEMPLATION OF AN ACCELERATION EVENT. In
contemplation of an Acceleration Event, a Participant may conditionally exercise
at least 15 days prior to the Acceleration Event all or a portion of his Options
which are exercisable and which will become exercisable upon the occurrence of
the Acceleration Event. Such conditional exercise shall become null and void if
the anticipated Acceleration Event does not occur within six (6) months
following the date of such conditional exercise. A conditional exercise shall
become binding upon a Participant (and such Participant shall become obligated
to pay the Exercise Price therefor) upon the occurrence of the Acceleration
Event.
6.5 WITHHOLDING OF TAXES. The Company shall withhold from any Participant
from any amounts due and payable by the Company to such Participant (or secure
payment from such Participant in lieu of withholding) the amount of any
withholding or other tax due from the Company with respect to any Option Shares
issuable under the Plan, and the Company may defer such issuance unless
indemnified to its satisfaction.
ARTICLE VII
EXPIRATION OF OPTIONS
7.1 EXPIRATION DATE. Time Options and Performance Options shall expire at
5:00 p.m. Eastern Standard Time on the day prior to the twelfth anniversary of
the Grant Date or upon such earlier time as provided in the relevant Option
Agreements (the "Expiration Date"). Standard Options shall expire at 5:00 p.m.
Eastern Standard Time on such date as shall be specified by the Committee or the
Board at the time of grant and set forth in the relevant Option Agreements.
7.2 LIMITED STOCK APPRECIATION RIGHT. Upon a Participant's request, the
Company may, in its sole discretion, cancel any vested Option (in whole or in
part) granted hereunder and pay the affected Participant the excess of the (i)
the Fair Market Value of a share of Common Stock, over (ii) the Exercise Price,
multiplied by (iii) the number of shares for which the Option is being cancelled
(the "CANCELLATION AMOUNT"); PROVIDED, HOWEVER, that coincident with any
transaction which is reasonably likely to result in a Change of Control the
Company may in its sole discretion, without a Participant's consent, cancel any
Option (in whole or in part) granted hereunder and pay the affected Participant
the Cancellation Amount.
ARTICLE VIII
RIGHTS AND LIMITATIONS
8.1 DIVIDEND EQUIVALENTS. The following Sections 8.1(a), 8.1(b) and 8.1(c)
shall apply to Options granted prior to September 29, 1998. The following
Section 8.1(d) shall apply to Options granted on or after September 29, 1998.
(a) If the Board declares a special or extraordinary dividend in
connection with a recapitalization, reorganization, restructuring or other
nonrecurring corporate event to the holders of Common Stock, the Company shall
pay to an escrow account on behalf of each Participant an amount (the "Dividend
Equivalent") equal to the dividend they would have received had they directly
owned each Option Share subject to Time Options and each Option Share with
respect to which Performance Options are vested.
(b) Upon a Participant's exercise of a Time Option or Performance
Option, the Company shall offset the Exercise Price of each Option Share subject
to such Option in respect of which a Dividend Equivalent was paid by the
Dividend Equivalent set aside with respect to such Option Share. Any Dividend
Equivalent in excess of the Exercise Price shall be paid in cash at the time the
dividend is paid.
(c) If the Time Options or Performance Options of a Participant with
respect to which a Dividend Equivalent is set aside are terminated or cancelled
prior to the date such Options are exercised, the Participant shall forfeit the
right to the Dividend Equivalent and any amounts set aside in the Participant's
escrow account in respect of such Dividend Equivalent shall revert to the
Company.
(d) If the Board declares a special or extraordinary dividend payable
on the Common Stock in connection with a recapitalization, reorganization,
restructuring or other nonrecurring corporate event, the Company shall notify
each Participant who (on the record date for determination of stockholders
entitled to receive such dividend) holds vested Standard Options or vested Time
Options granted on or after September 29, 1998 of the amount of the dividend
(the "Dividend Adjustment") which such Participant would have received if such
Participant had owned the Option Shares subject to such Options. Upon such
Participant's exercise of any of such Options, (i) the Company shall reduce the
Exercise Price of such Options (but not below $.01) by the amount of the
Dividend Adjustment with respect to the Option Shares issuable upon such
exercise and (ii) to the extent that such Dividend Adjustment exceeds the amount
of such reduction, such excess shall be promptly paid in cash to such
Participant. If any of such Options expire or are terminated or cancelled prior
to exercise thereof, the Participant shall forfeit all rights to all Dividend
Adjustments.
8.2 REGISTRATION OF OPTION SHARES. The Company shall file, at its own
expense, a registration statement on Form S-8 to register the Option Shares.
8.3 TRANSFER OF OPTIONS. Options may not be Transferred (other than by
will or descent), except that Options may be pledged, assigned or otherwise
Transferred to the Company to secure indebtedness on any Employee Loan.
ARTICLE IX
ADMINISTRATION
9.1 PLAN ADMINISTRATOR. This Plan shall be administered by the
Committee; provided, however, that the Committee may delegate to the CEO
responsibility for the routine administration of the Plan.
9.2 OPTION GRANTS. The Committee and the Board shall have authority to
select Employees (other than Directors) to receive Options and to grant Options
(except for the initial grant of Options, which shall be granted by the Board)
to Employees (other than Directors) in such amounts as it shall determine, in
its full discretion, after consultation with the CEO; provided, however, that
the Board or the Committee may delegate to the CEO responsibility to designate
Employees (other than Directors) to participate in a pool of Standard Options,
the terms and conditions of which (including the aggregate number of shares
subject to Options within the pool) shall have been specified by the Board or
the Committee.
9.3 ADDITIONAL AUTHORITY. As between a Participant and the Company:
the Committee and the Board shall have the sole and complete responsibility and
authority to (a) interpret and construe the terms of the Plan, (b) correct any
defect, error or omission or reconcile any inconsistency in the Plan or in any
Option granted hereunder and (c) make all other determinations and take all
other actions necessary or advisable for the implementation and administration
of the Plan; and the Committee's or the Board's determination on matters within
its authority shall be conclusive and binding upon the Participants, the Company
and all other Persons. The authority of the Committee and the Board granted
under this Article IX shall be additive to the authority granted to them under
Section 4.1.
ARTICLE X
MISCELLANEOUS
10.1 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board may amend or
terminate the Plan at any time. No suspension, termination or amendment of or to
the Plan shall affect adversely the rights of any Participant with respect to
Options issued hereunder prior to the date of such suspension, termination or
amendment without the consent of such Participant.
10.2 ADJUSTMENTS.
(A) PERFORMANCE TARGETS. The Committee, in consultation with the CEO,
shall adjust the performance targets for Plan Years following the Plan Year in
which an initial Public Offering occurs so that the Performance Options continue
to represent equivalent value for equivalent performance.
(B) CHANGES IN COMMON STOCK. In the event of a stock dividend, stock
split, or share combination, the Committee or the Board shall make such
adjustments in the number and type of options authorized by and shares subject
to the Plan and the number and type of shares covered by outstanding Options and
the Exercise Prices specified therein and such other amendments to the Plan as
the Board or the Committee, in good faith, determines to be appropriate and
equitable.
10.3 FUTURE ACQUISITIONS OR DISPOSITIONS. The EBITDA Targets are based
upon certain revenue and expense assumptions about the future business of the
Company and its Subsidiaries as of the Effective Date. Accordingly, if the
Company or any Subsidiary acquires, by purchase or otherwise, or disposes of, by
sale of stock or assets, the business, property, or fixed assets, of another
Person, which acquisition or disposition, either singly or together with one or
more other such transactions, will, in the Board's good faith determination,
affect the Company's EBITDA, the Committee shall, in good faith, adjust the
EBITDA Targets to reflect the projected effect of such transaction or
transactions.
10.4 NO RIGHT TO PARTICIPATE. Except as otherwise agreed by the Company,
no Employee shall have a right to be selected as a Participant or, having been
so selected, to be selected again to receive a grant of Options.
10.5 NO EMPLOYMENT CONTRACT. Nothing in this Plan shall interfere with or
limit in any way the right of the Company or any of its Subsidiaries to
terminate any Participant's employment at any time (with or without Cause), nor
confer upon any Participant any right to continued employment by the Company or
any of its Subsidiaries for any period of time or to continue such employee's
present (or any other) rate of compensation.
10.6 CONSTRUCTION OF PLAN. This terms of this Plan shall be administered
in accordance with the laws (excluding conflict of interest laws) of the State
of New York.
EXHIBIT 10.22(a)
THE UCAR INTERNATIONAL INC.
MANAGEMENT STOCK OPTION PLAN
(SENIOR MANAGEMENT VERSION)
This Management Stock Option Plan was originally adopted by
the Board of Directors of UCAR International Inc. as of January 26, 1995. It was
subsequently amended. This document restates in one document this Management
Stock Option Plan as amended through September 29, 1998.
ARTICLE I
PURPOSE OF PLAN
The Plan has been adopted by the Board to provide for the
grant of stock options to certain management employees of the Company and its
Subsidiaries and non-employee directors of the Company as a part of the
compensation and incentive arrangements for such employees and directors. The
Plan is intended to advance the best interests of the Company by allowing such
persons to acquire an ownership interest in the Company, thereby motivating them
to contribute to the success of the Company and to remain in the employ or
service of the Company and its Subsidiaries. It is anticipated that the
availability of stock options under the Plan will also enhance the Company's and
its Subsidiaries' ability to attract and retain individuals of exceptional
talent to contribute to the sustained progress, growth and profitability of the
Company.
ARTICLE II
DEFINITIONS
For purposes of the Plan, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
"ACCELERATION EVENT" shall mean an event with respect to which
the Plan provides for the acceleration of the exercisability of Options, as
provided in Section 5.3.
"AFFILIATE" shall mean, with respect to any Person, (i) any
other Person that directly or indirectly Controls, is Controlled by or is under
common Control with such Person, or (ii) any director, officer, partner or
employee of such Person or any Person specified in clause (i) above.
"BOARD" shall mean the Board of Directors of the Company.
"CAUSE," if relevant to a particular Participant, shall have
the meaning of "Cause" set forth in such Participant's Option Agreement.
<PAGE>
"CEO" shall mean the Chief Executive Officer of the Company.
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following events:
(i) any "person" or "group", within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act, becomes the "beneficial owner", as
defined in Rule 13d-3 under the Exchange Act, of more than 22.5% of either the
then outstanding Common Stock or the combined voting power of the then
outstanding voting securities of the Company;
(ii) any "person" or "group" within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act acquires by proxy or otherwise the right
to vote for the election of directors, on any merger or consolidation of the
Company or for any other matter or question with respect to more than 22.5% of
either the then outstanding Common Stock or the combined voting power of the
then outstanding voting securities of the Company;
(iii) Present Directors and New Directors cease for any reason
to constitute a majority of the Board (and, for these purposes, "Present
Directors" shall mean individuals who at the beginning of any consecutive
twenty-four month period were members of the Board and "New Directors" shall
mean individuals whose election as directors by the Board or whose nomination
for election as directors by the Company's stockholders was approved by a vote
of at least two-thirds of the Directors then in office who were Present
Directors or New Directors);
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company; or
(v) consummation of:
(x) a reorganization, merger or consolidation of the
Company (a "Business Combination"), unless, following
such Business Combination, (a) all or substantially all
of the "beneficial owners," as defined in Rule 13d-3
under the Exchange Act, of the outstanding Common Stock
and the combined voting power of the outstanding voting
securities of the Company, respectively, immediately
prior to such Business Combination "beneficially own,"
as so defined, directly or indirectly, more than 50% of
the outstanding common equity securities and the
combined voting power of the outstanding voting
securities of the entity resulting from such Business
Combination (including, without limitation, an entity
which as a result of such Business Combination owns the
Company or all or substantially all of the Company's
assets either directly or indirectly through one or
more subsidiaries), respectively, in substantially the
same proportions as their ownership, immediately prior
to such Business Combination, of the outstanding Common
Stock of the Company and the combined voting power of
the outstanding voting securities of the Company,
respectively, (b) no "person" or "group," within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act (excluding any entity resulting from such Business
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Combination and any employee benefit plan (and related
trust) of the Company, its subsidiaries or such
entity), is the "beneficial owner," as defined in Rule
13d-3 under the Exchange Act, of more than 22.5% of
either the then outstanding common equity securities of
the entity resulting from such Business Combination or
the combined voting power of the outstanding voting
securities of such entity except to the extent that
such beneficial ownership existed immediately prior to
such Business Combination with respect to the Common
Stock and combined voting power of outstanding voting
securities of the Company and (c) at least a majority
of the members of the board of directors (or similar
governing body) of the entity resulting from such
Business Combination were members of the Board at the
time of the execution of the initial agreement
providing for such Business Combination or the time of
the action of the Board approving of such Business
Combination, whichever is earlier; or
(y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of
all, or substantially all, of the assets of the
Company, whether held directly or indirectly through
one or more subsidiaries (excluding any grant of any
pledge, mortgage or security interest or any
sale-leaseback or any similar transaction, but
including any foreclosure sale);
provided, that, in the case of both clause (x) and (y) above,
the divestiture of less than substantially all of the assets
of the Company in one transaction or a series of related
transactions, whether effected by sale, lease, exchange,
transfer, spin-off, sale of the stock of or merger or
consolidation of a subsidiary or otherwise, shall not
constitute a Change in Control of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur: (A) pursuant to clauses (i) and (ii) above, solely because more
than 22.5% of the then outstanding Common Stock or the combined voting power of
the then outstanding voting securities of the Company is held or acquired by one
or more employee benefit plans (or related trusts) maintained by the Company or
its subsidiaries; or (B) pursuant to clause (v)(y) above, if the Board
determines that any sale, lease, exchange or transfer does not involve
substantially all of the assets of the Company.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute.
"COMMITTEE" shall mean the Organization and Compensation
Committee of the Board.
"COMMON STOCK" shall mean the common stock of the Company, par
value $.01.
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"COMPANY" shall mean UCAR International Inc., a Delaware
corporation.
"CONTROL" (including, with correlative meaning, all
conjugations thereof) shall mean with respect to any Person, the ability of
another Person to control or direct the actions or policies of such first
Person, whether by ownership of voting securities, by contract or otherwise.
"CUMULATIVE EBITDA" shall mean with respect to any Performance
Option, the sum of the EBITDA for the period ending on the last day of the Plan
Year preceding the Determination Date.
"CUMULATIVE EBITDA TARGETS" shall mean with respect to any
Performance Option, the sum of the EBITDA Targets for the period ending on the
last day of the Plan Year preceding the Determination Date.
"DETERMINATION DATE" shall mean the last day of the Plan Year.
"DIRECTOR" shall mean any individual who is a member of the
Board and who is not an employee of the Company or a Subsidiary.
"DISABILITY" shall mean the inability of a Participant to
perform in all material respects his duties and responsibilities to the Company,
or any Subsidiary of the Company, by reason of a physical or mental disability
or infirmity which inability is reasonably expected to be permanent and has
continued (i) for a period of six consecutive months or (ii) such shorter period
as the Company may determine. A Participant (or his representative) shall
furnish the Company with satisfactory medical evidence documenting the
Participant's disability or infirmity.
"EBITDA" shall mean, with respect to the Company and its
Subsidiaries on a consolidated basis for any period, the consolidated net income
of the Company and its Subsidiaries for such period, as determined in accordance
with generally accepted accounting principles consistently applied, PLUS, to the
extent deducted in computing such consolidated net income, without duplication,
the sum of (a) income tax expenses and withholding tax expenses incurred in
connection with cross-border transactions involving non-domestic Subsidiaries,
(b) interest expense, (c) depreciation expense and amortization expense, (d) any
special charges and any extraordinary or non-recurring losses, (e) monitoring
and management fees paid to Blackstone Capital Partners II Merchant Banking Fund
L.P. or its affiliates, (f) other noncash items reducing consolidated net
income, and of noncash exchange, translation on performance losses relating to
any foreign currency hedging transactions or currency fluctuations, MINUS, to
the extent added in computing such consolidated net income, without duplication,
(i) interest income, (ii) extraordinary or non-recurring gains, (iii) other
noncash items increasing consolidated net income, (iv) noncash exchange,
translation or performance gains relating to any foreign currency hedging
transactions or currency fluctuations, and (v) all non-cash pension accruals
related to FAS `87; PROVIDED that all effects of the Recapitalization shall be
eliminated in computing EBITDA.
"EBITDA TARGET" shall mean with respect to each Plan Year, the
amount set forth in the following table opposite such Plan Year:
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PLAN YEAR ENDING EBITDA TARGET
December 31, 1995 $ 216,900,000
December 31, 1996 $ 223,400,000
December 31, 1997 $ 256,600,000*
December 31, 1998 $ 271,700,000*
December 31, 1999 $ 287,800,000*
and such other targets as are established by the Committee after consultation
with the CEO with respect to subsequent Plan Years. Asterisked EBITDA Targets
shall not be more than the stated amount but may be adjusted downward by the
Committee, in its sole discretion and shall otherwise be subject to the
provisions of Section 10.3.
"EFFECTIVE DATE" shall mean the Recapitalization Closing Date.
"EMPLOYEE" shall mean any employee of the Company or any of
its Subsidiaries and, unless otherwise indicated, any Director.
"EMPLOYEE LOAN" shall mean any loan made to a Participant on
the Recapitalization Closing Date to assist the Participant in paying certain
income tax liability.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"EXERCISABLE PERCENTAGE" shall mean, with respect to any
Option, the cumulative percentage of the total number of Option Shares subject
to such Option (measured as of the Grant Date) which a Participant has the right
to receive upon exercising such Option.
"EXERCISE PRICE" shall mean the amount that a Participant must
pay to exercise an Option with respect to one share of Common Stock subject to
such Option, as determined in Section 4.2.
"FAIR MARKET VALUE" shall mean (i) with respect to any Option
granted prior to September 29, 1998, the average of the high and low trading
prices of the Common Stock for the 20 business days immediately preceding the
day of the valuation, (ii) with respect to any Option granted after September
29, 1998, the closing sale price (or, if there is none, the average of the
closing bid and asked prices) of the Common Stock on the last trading day
preceding the day of the valuation and (iii) with respect to any Option granted
on September 29, 1998 after the close of trading, the closing sale price of the
Common Stock on that day (i.e., $17.06).
"GOOD REASON," if relevant to a particular Participant, shall
have the meaning of "Good Reason" set forth in such Participant's Option
Agreement.
"GRANT DATE" shall mean, with respect to the initial grant of
Options hereunder, the Recapitalization Closing Date and, thereafter, shall mean
the date the relevant Options are granted pursuant to this Plan.
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"OPTION" shall mean, with respect to any Participant, (a) any
Time Option, Performance Option or Standard Option and (b) any option, warrant
or right to acquire shares of the capital stock of the Company issued in respect
of an option referred to in clause (a) above, by way of distribution or in
connection with a merger, consolidation, reorganization or other
recapitalization.
"OPTION AGREEMENT" shall mean the relevant Option Agreement
between a Participant and the Company.
"OPTION SHARES" shall mean, with respect to any Participant,
(a) any shares of Common Stock (or other shares of capital stock of the Company)
issuable or issued by the Company upon exercise of any Option by such
Participant and (b) any shares of the capital stock of the Company issuable or
issued in respect of any of the securities described in clause (a) above, by way
of stock dividend, stock split, merger, consolidation, reorganization or other
recapitalization.
"PARTICIPANT" shall mean any individual who holds an
outstanding Option granted under this Plan.
"PERFORMANCE OPTIONS" shall mean the options described in
Section 5.2.
"PERSON" shall mean an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"PLAN" shall mean this Management Stock Option Plan, as
amended from time to time.
"PLAN YEAR" shall mean initially the short plan year beginning
January 26, 1995 and ending on December 31, 1995, and thereafter each of the
calendar years from 1996 through 2007.
"PUBLIC OFFERING" shall mean the sale of shares of Common
Stock pursuant to an effective registration statement under the Securities Act,
which results in an active trading market in Common Stock. If the Common Stock
is listed on a national securities exchange or is quoted on the NASDAQ National
Market, it shall be deemed to be actively traded.
"RECAPITALIZATION" shall mean the recapitalization of the
Company pursuant to the Recapitalization Agreement.
"RECAPITALIZATION AGREEMENT" shall mean the agreement dated as
of November 14, 1994 among Union Carbide Corporation, a New York corporation,
Mitsubishi Corporation, a Japanese corporation, the Company, and UCAR
International Acquisition Inc., a Delaware corporation.
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"RECAPITALIZATION CLOSING DATE" shall mean the closing date of
the Recapitalization (i.e., January 26, 1995).
"RECAPITALIZATION PRICE" shall mean the per share price paid
in the Recapitalization (i.e., $7.60).
"RETIREMENT," if relevant to a particular Participant, shall
have the meaning of "Retirement" set forth in such Participant's Option
Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
"STANDARD OPTIONS" shall mean the options described in Section
5.2A.
"SUBSIDIARY" shall mean any corporation of which the Company
owns, directly or through one or more Subsidiaries, a fifty percent (50%) or
more equity interest in such corporation or has the right to nominate fifty
percent (50%) or more of the members of the board of directors or other
governing body of the corporation.
"TIME OPTIONS" shall mean the options described in Section
5.1.
"TRANSFER" shall mean, with respect to any Option, the gift,
sale, assignment, transfer, pledge, hypothecation or other disposition (whether
for or without consideration and whether voluntary, involuntary or by operation
of law) of such Option or any interest therein.
ARTICLE III
LIMITATION ON AVAILABLE OPTION SHARES
3.1 OPTION SHARES. The aggregate number of shares of Common
Stock with respect to which Options may be granted under the Plan shall not
exceed 1,953,172 shares, all of which shall be treasury shares; PROVIDED,
HOWEVER, that the aggregate number of shares of Common Stock with respect to
which Options may be granted shall be subject to adjustment in accordance with
the provisions of Section 10.2.
3.2 STATUS OF OPTION SHARES. The shares of Common Stock for
which Options may be granted under the Plan (i) may be either authorized and
unissued shares, treasury shares or a combination thereof, as the Committee or
the Board shall determine and (ii) shall be reserved by the Committee or the
Board for issuance under this Plan; provided, however, that any shares of Common
Stock delivered or deliverable upon exercise of Options granted to officers of
the Company (within the meaning of the rules of the New York Stock Exchange) or
directors of the Company on or after March 31, 1998 shall consist of treasury
shares which shall have been previously listed on the New York Stock Exchange.
To the extent any Options are forfeited, expire or are terminated prior to
exercise, the Option Shares in respect of which such Options were issued shall
become available for stock options granted pursuant to this Plan or any other
plan or agreement approved by the Committee.
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ARTICLE IV
GRANT OF OPTIONS
4.1 OPTIONS. Options may be granted to Employees. Initially,
Options shall be granted by the Board. Thereafter, the Committee or the Board
shall grant Options to Employees (other than Directors) after consultation with
the CEO and the Board shall grant Options to Directors. Except as otherwise
provided herein, the Committee or the Board shall establish the terms and
conditions applicable to Options granted by it at the time of grant, which terms
and conditions shall be set forth in the relevant Option Agreements.
4.2 EXERCISE PRICE. The Exercise Price of Time Options and
Performance Options granted hereunder shall be not less than the Fair Market
Value of the Option Shares subject to such Options, determined as of the
relevant Grant Date. For purposes of the initial grant of Time Options and
Performance Options hereunder, the Exercise Price of such Options shall be the
Recapitalization Price. The Exercise Price of Standard Options granted hereunder
shall be specified by the Committee or the Board at the time of grant and set
forth in the relevant Option Agreements, but in no event shall the Exercise
Price of a Standard Option be less than the Fair Market Value of a share of
Common Stock on the relevant Grant Date.
4.3 FORM OF OPTION. Options granted under this Plan shall be
non-qualified stock options and are not intended to be "incentive stock options"
within the meaning of Section 422 of the Code or any successor provisions.
Options shall be exercisable with respect to the number of Option Shares covered
by the Option to the extent they become exercisable and shall thereafter be
exercisable until they expire or are terminated.
4.4 AVAILABLE OPTIONS All Options granted under this Plan
prior to September 29, 1998 have been Time Options or Performance Options.
Notwithstanding anything to the contrary contained herein, only Standard Options
shall be granted to Employees (other than Directors) and only Time Options or
Standard Options shall be granted to Directors under this Plan on or after
September 29, 1998.
ARTICLE V
EXERCISABILITY OF OPTIONS
5.1 TIME OPTIONS. Except as otherwise provided in the relevant
Option Agreement or Section 5.3, all Time Options shall become exercisable in
accordance with the following schedule:
EXERCISABLE PERCENTAGES
Prior to December 31, 1995 0%
On or after December 31, 1995 20%
On or after December 31, 1996 40%
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EXERCISABLE PERCENTAGES
On or after December 31, 1997 60%
On or after December 31, 1998 80%
On or after December 31, 1999 100%
5.2 PERFORMANCE OPTIONS. Except as otherwise provided in the
relevant Option Agreement or Section 5.3:
(a) Performance Options shall become exercisable with respect
to 20% of the Option Shares subject to such Options, as of each Determination
Date that the Company's EBITDA for a Plan Year equals or exceeds the EBITDA
Target for that Plan Year (and with respect to the first Plan Year, EBITDA for
the entire calendar year).
(b) If, after the Grant Date of a Performance Option, the
Company's EBITDA for a Plan Year is less than 100% of the EBITDA Target for such
Plan Year ( a "Missed Year"), no such Performance Option shall become
exercisable with respect to any additional Option Shares (the "Missed Shares")
on the Determination Date for such Plan Year. If, in any Plan Year subsequent to
a Missed Year, EBITDA exceeds the EBITDA Target for such Plan Year AND
Cumulative EBITDA exceeds the Cumulative EBITDA Targets, then Performance
Options shall become exercisable with respect to the Missed Shares attributable
to such Missed Year (but only to the extent such Option has not otherwise
terminated).
5.2A STANDARD OPTIONS. Except as otherwise provided in this
Plan, Standard Options shall be subject to such terms and conditions as are
established by the Committee or the Board at the time of grant and set forth in
the relevant Option Agreements. Except as otherwise provided in the relevant
Option Agreement or Section 5.3, a Standard Option shall become exercisable at
such time or under such circumstances as the Committee or the Board shall
determine and specify in the relevant Option Agreement.
5.3 ACCELERATION EVENTS.
(a) Notwithstanding anything contained in this Article V to
the contrary: Time Options granted to Employees (other than Directors) shall
become exercisable upon the first to occur of the following events: (i) a
Participant's termination of employment on account of death or Disability, (ii)
a Change of Control and (iii) to the extent provided in a Participant's Option
Agreement, a Participant's termination by the Company without Cause or a
Participant's resignation for Good Reason; and Time Options granted to Directors
shall become exercisable upon the first to occur of the following events: (i) a
Director ceases to be a Director on account of death or Disability or (ii) a
Change of Control. The Committee or the Board may, but are not required to,
provide for the accelerated vesting and exercisability of Standard Options at
the time of grant and any such provisions shall be set forth in the relevant
Option Agreements. The Committee or the Board may, in its discretion, accelerate
the exercisability of any or all Options at any time and for any reason.
(b) Notwithstanding anything contained in this Article V to
the contrary, all outstanding Time Options and Performance Options (other than
Performance Options for the 1999 Plan Year) granted on or before March 17, 1998
have become vested and exercisable.
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ARTICLE VI
EXERCISE OF OPTIONS
6.1 RIGHT TO EXERCISE. During the lifetime of a Participant,
Options may be exercised only by such Participant (except that, in the event of
his Disability, Options may be exercised by his or her legal guardian or legal
representative). In the event of the death of a Participant, exercise of Options
shall be made only by the executor or administrator of the deceased
Participant's estate or the Person or Persons to whom the deceased Participant's
rights under Options shall pass by will or the laws of descent and distribution.
6.2 PROCEDURE FOR EXERCISE. Vested Options may be exercised in
whole or in part with respect to any portion that is exercisable. To exercise an
Option, a Participant (or such other Person who shall be permitted to exercise
the Option as set forth in Section 6.1) must complete, sign and deliver to the
Company a notice of exercise in such form as the Company may from time to time
adopt and provide to a Participant (the "EXERCISE NOTICE"), together with
payment in full of the Exercise Price multiplied by the number of shares of
Common Stock with respect to which the Option is exercised. Payment of the
Exercise Price shall be made in cash (including check, bank draft or money
order). The right to exercise the Option shall be subject to the satisfaction of
all conditions set forth in the Exercise Notice. In lieu of paying the Exercise
Price, on or after an initial Public Offering, upon a Participant's (or such
other Person's) request, with the Committee's or the Board's consent, the
Company shall give the Participant a number of shares of Common Stock equal to
(A) divided by (B) where (A) is the excess of the (i) the Fair Market Value of a
share of Common Stock on the date of exercise, over (ii) the Exercise Price,
multiplied by (iii) the number of shares for which the Option is being
exercised, and (B) is the Fair Market Value of a share of Common Stock on the
date of exercise.
6.3 [Omitted]
6.4 CONDITIONAL EXERCISE IN CONTEMPLATION OF AN ACCELERATION
EVENT. In contemplation of an Acceleration Event, a Participant may
conditionally exercise at least 15 days prior to the Acceleration Event all or a
portion of his Options which are exercisable and which will become exercisable
upon the occurrence of the Acceleration Event. Such conditional exercise shall
become null and void if the anticipated Acceleration Event does not occur within
six (6) months following the date of such conditional exercise. A conditional
exercise shall become binding upon a Participant (and such Participant shall
become obligated to pay the Exercise Price therefor) upon the occurrence of the
Acceleration Event.
6.5 WITHHOLDING OF TAXES. The Company shall withhold from any
Participant from any amounts due and payable by the Company to such Participant
(or secure payment from such Participant in lieu of withholding) the amount of
any withholding or other tax due from the Company with respect to any Option
Shares issuable under the Plan, and the Company may defer such issuance unless
indemnified to its satisfaction.
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ARTICLE VII
EXPIRATION OF OPTIONS
7.1 EXPIRATION DATE. Time Options and Performance Options
shall expire at 5:00 p.m. Eastern Standard Time on the day prior to the twelfth
anniversary of the Grant Date or upon such earlier time as provided in the
relevant Option Agreements (the "Expiration Date"). Standard Options shall
expire at 5:00 p.m. Eastern Standard Time on such date as shall be specified by
the Committee or the Board at the time of grant and set forth in the relevant
Option Agreements.
7.2 LIMITED STOCK APPRECIATION RIGHT. Upon a Participant's
request, the Company may, in its sole discretion, cancel any vested Option (in
whole or in part) granted hereunder and pay the affected Participant the excess
of the (i) the Fair Market Value of a share of Common Stock, over (ii) the
Exercise Price, multiplied by (iii) the number of shares for which the Option is
being cancelled (the "CANCELLATION AMOUNT"); PROVIDED, HOWEVER, that coincident
with any transaction which is reasonably likely to result in a Change of Control
the Company may in its sole discretion, without a Participant's consent, cancel
any Option (in whole or in part) granted hereunder and pay the affected
Participant the Cancellation Amount.
ARTICLE VIII
RIGHTS AND LIMITATIONS
8.1 DIVIDEND EQUIVALENTS. The following Sections 8.1(a),
8.1(b) and 8.1(c) shall apply to Options granted prior to September 29, 1998.
The following Section 8.1(d) shall apply to Options granted on or after
September 29, 1998.
(a) If the Board declares a special or extraordinary dividend
in connection with a recapitalization, reorganization, restructuring or other
nonrecurring corporate event to the holders of Common Stock, the Company shall
pay to an escrow account on behalf of each Participant an amount (the "Dividend
Equivalent") equal to the dividend they would have received had they directly
owned each Option Share subject to Time Options and each Option Share with
respect to which Performance Options are vested.
(b) Upon a Participant's exercise of a Time Option or
Performance Option, the Company shall offset the Exercise Price of each Option
Share subject to such Option in respect of which a Dividend Equivalent was paid
by the Dividend Equivalent set aside with respect to such Option Share. Any
Dividend Equivalent in excess of the Exercise Price shall be paid in cash at the
time the dividend is paid.
(c) If the Time Options or Performance Options of a
Participant with respect to which a Dividend Equivalent is set aside are
terminated or cancelled prior to the date such Options are exercised, the
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Participant shall forfeit the right to the Dividend Equivalent and any amounts
set aside in the Participant's escrow account in respect of such Dividend
Equivalent shall revert to the Company.
(d) If the Board declares a special or extraordinary dividend
payable on the Common Stock in connection with a recapitalization,
reorganization, restructuring or other nonrecurring corporate event, the Company
shall notify each Participant who (on the record date for determination of
stockholders entitled to receive such dividend) holds vested Standard Options or
vested Time Options granted on or after September 29, 1998 of the amount of the
dividend (the "Dividend Adjustment") which such Participant would have received
if such Participant had owned the Option Shares subject to such Options. Upon
such Participant's exercise of any of such Options, (i) the Company shall reduce
the Exercise Price of such Options (but not below $.01) by the amount of the
Dividend Adjustment with respect to the Option Shares issuable upon such
exercise and (ii) to the extent that such Dividend Adjustment exceeds the amount
of such reduction, such excess shall be promptly paid in cash to such
Participant. If any of such Options expire or are terminated or cancelled prior
to exercise thereof, the Participant shall forfeit all rights to all Dividend
Adjustments.
8.2 REGISTRATION OF OPTION SHARES. The Company shall file, at
its own expense, a registration statement on Form S-8 to register the Option
Shares.
8.3 TRANSFER OF OPTIONS. Options may not be Transferred (other
than by will or descent), except that Options may be pledged, assigned or
otherwise Transferred to the Company to secure indebtedness on any Employee
Loan.
ARTICLE IX
ADMINISTRATION
9.1 PLAN ADMINISTRATOR. This Plan shall be administered by the
Committee; provided, however, that the Committee may delegate to the CEO
responsibility for the routine administration of the Plan.
9.2 OPTION GRANTS. The Committee and the Board shall have
authority to select Employees (other than Directors) to receive Options and to
grant Options (except for the initial grant of Options, which shall be granted
by the Board) to Employees (other than Directors) in such amounts as it shall
determine, in its full discretion, after consultation with the CEO; provided,
however, that the Board or the Committee may delegate to the CEO responsibility
to designate Employees (other than Directors) to participate in a pool of
Standard Options, the terms and conditions of which (including the aggregate
number of shares subject to Options within the pool) shall have been specified
by the Board or the Committee.
9.3 ADDITIONAL AUTHORITY. As between a Participant and the
Company: the Committee and the Board shall have the sole and complete
responsibility and authority to (a) interpret and construe the terms of the
Plan, (b) correct any defect, error or omission or reconcile any inconsistency
in the Plan or in any Option granted hereunder and (c) make all other
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determinations and take all other actions necessary or advisable for the
implementation and administration of the Plan; and the Committee's or the
Board's determination on matters within its authority shall be conclusive and
binding upon the Participants, the Company and all other Persons. The authority
of the Committee and the Board granted under this Article IX shall be additive
to the authority granted to them under Section 4.1.
ARTICLE X
MISCELLANEOUS
10.1 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board
may amend or terminate the Plan at any time. No suspension, termination or
amendment of or to the Plan shall affect adversely the rights of any Participant
with respect to Options issued hereunder prior to the date of such suspension,
termination or amendment without the consent of such Participant.
10.2 ADJUSTMENTS.
(A) PERFORMANCE TARGETS. The Committee, in consultation with
the CEO, shall adjust the performance targets for Plan Years following the Plan
Year in which an initial Public Offering occurs so that the Performance Options
continue to represent equivalent value for equivalent performance.
(B) CHANGES IN COMMON STOCK. In the event of a stock dividend,
stock split, or share combination, the Committee or the Board shall make such
adjustments in the number and type of options authorized by and shares subject
to the Plan and the number and type of shares covered by outstanding Options and
the Exercise Prices specified therein and such other amendments to the Plan as
the Board or the Committee, in good faith, determines to be appropriate and
equitable.
10.3 FUTURE ACQUISITIONS OR DISPOSITIONS. The EBITDA Targets
are based upon certain revenue and expense assumptions about the future business
of the Company and its Subsidiaries as of the Effective Date. Accordingly, if
the Company or any Subsidiary acquires, by purchase or otherwise, or disposes
of, by sale of stock or assets, the business, property, or fixed assets, of
another Person, which acquisition or disposition, either singly or together with
one or more other such transactions, will, in the Board's good faith
determination, affect the Company's EBITDA, the Committee shall, in good faith,
adjust the EBITDA Targets to reflect the projected effect of such transaction or
transactions.
10.4 NO RIGHT TO PARTICIPATE. Except as otherwise agreed by
the Company, no Employee shall have a right to be selected as a Participant or,
having been so selected, to be selected again to receive a grant of Options.
10.5 NO EMPLOYMENT CONTRACT. Nothing in this Plan shall
interfere with or limit in any way the right of the Company or any of its
Subsidiaries to terminate any Participant's employment at any time (with or
13
<PAGE>
without Cause), nor confer upon any Participant any right to continued
employment by the Company or any of its Subsidiaries for any period of time or
to continue such employee's present (or any other) rate of compensation.
10.6 CONSTRUCTION OF PLAN. This terms of this Plan shall be
administered in accordance with the laws (excluding conflict of interest laws)
of the State of New York.
14
<PAGE>
EXHIBIT 10.24
NON-QUALIFIED STOCK OPTION AGREEMENT
(Standard Option Version)
Non-Qualified Stock Option Agreement (this "Option Agreement"),
dated as of September 29, 1998 (i.e., the Grant Date), between UCAR
International Inc. (the "Company") and ____________________________________ (the
"Participant").
Pursuant to the UCAR International Inc. Management Stock Option Plan
as amended through the date hereof (the "Plan"), a copy of which has been
furnished to the Participant and the terms of which are incorporated herein by
reference, the Company intends to provide incentives to certain management
employees of the Company and its subsidiaries by providing them with
opportunities to purchase shares of Common Stock.
The Board of Directors of the Company or a duly constituted
committee thereof has determined that it would be in the best interest of the
Company and its stockholders to grant the options provided herein to the
Participant under the Plan.
In consideration of the covenants contained herein and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise indicated, whenever capitalized terms are used in
this Option Agreement, they shall have the meanings set forth in the Plan or, if
not defined in the Plan, as set forth in the written employment agreement
between the Participant and the Company or a Subsidiary or, if not defined in
the Plan or such an agreement or if there is no such agreement, as set forth
below.
"CAUSE" shall mean (i) gross neglect or willful and continuing
refusal by the Participant to substantially perform his duties (other than due
to Disability), (ii) breach by the Participant of confidentiality obligations
owed to the Company or any Subsidiary, (iii) willful engagement by the
Participant in conduct which is demonstrably injurious to the Company or any
Subsidiary (including, without limitation, a breach by the Participant of
non-competition or non-solicitation obligations owed to the Company or any
Subsidiary) or (iv) conviction or plea of NOLO CONTENDERE by the Participant to
a felony or a misdemeanor involving moral turpitude.
"RETIREMENT" means the Participant's retirement from employment by
the Company and its Subsidiaries (i) with the right to receive a non-actuarially
reduced pension benefit under the UCAR Carbon Retirement Plan or (ii) if not
eligible to participate therein or if such plan is not then in effect or shall
have been changed in a manner which makes it materially more onerous to become
eligible to receive such a benefit than it is on the Grant Date, at any time
after attaining age 62 with at least 10 years of employment with the Company and
its Subsidiaries or after attaining age 65 or after attaining that age where the
sum of the Participant's age and years of employment with the Company and its
Subsidiaries equals or exceeds 85.
ARTICLE II
GRANT OF OPTIONS
2.1 GRANT OF OPTIONS. The Participant is hereby granted Options
representing the right to acquire ________ shares of Common Stock. Such Options
are Standard Options. Unless otherwise indicated herein, references herein to
"Options" means the Options granted hereby.
2.2 EXERCISE PRICE. The Exercise Price of the Options shall be
$17.06 per share (i.e., the Fair Market Value of the Common Stock on the Grant
Date or the last trading day prior to the Grant Date, whichever is provided in
the Plan).
ARTICLE III
EXERCISABILITY OF OPTIONS
Options shall vest upon the earliest to occur of the events
described in Sections 3.1, 3.2, 3.3 or 3.4, but subject to the limitations set
forth in Section 3.6, and shall become exercisable as described in Section 3.5:
3.1 TIME VESTING. If not sooner vested, all Options shall vest on
September 29, 2005 (i.e., the seventh anniversary of the Grant Date).
3.2 VESTING UPON CHANGE IN CONTROL. If not sooner vested, all
Options shall vest upon the occurrence of a Change in Control.
3.3 ACCELERATED VESTING.
(a) One-third (_____) of the Options shall vest on September
29, 1999 (i.e., the first anniversary of the Grant Date) or the Participant's
termination of employment by the Company or its Subsidiaries without Cause or
lay-off prior to September 29, 1999;
(b) Regardless of whether Options shall have vested under
Section 3.3(a): one-third (_____) of the Options shall vest on the date when the
Fair Market Value of the Common Stock shall have exceeded, for 20 consecutive
trading days, $20.50 per share (i.e., approximately 120% of the Fair Market
Value of the Common Stock on the Grant Date); and one-third (_____) of the
Options shall vest on the date when the Fair Market Value of the Common Stock
shall have exceeded, for 20 consecutive trading days, $24.00 per share (i.e.,
approximately 140% of the Fair Market Value of the Common Stock on the Grant
Date).
3.4 DISCRETIONARY VESTING. The Committee or the Board may, in its
sole discretion, accelerate the vesting of any or all Options at any time and
for any reason.
3.5 EXERCISE; RESTRICTION ON EXERCISE. No unvested Options shall be
exerciseable. All vested Options shall become exercisable at the time they first
vest and shall cease to be exercisable at the time they expire as provided in
Section 3.6 or Article V; provided, however, that no vested Options shall be
exercisable until the first anniversary of the Grant Date (i.e., September 29,
1999) unless such Options shall be vested under Section 3.2 or 3.4.
3.6 EFFECT OF TERMINATION OF EMPLOYMENT AND OTHER EVENTS ON VESTING;
EXPIRATION OF UNVESTED OPTIONS. Unless otherwise determined by the Board or the
Committee, unvested Options (excluding, for purposes of clause (ii) below,
Options which vest pursuant to Section 3.3(a)) shall cease to vest and shall
expire upon (i) the Participant's Retirement, death or Disability, (ii) the
Participant's termination of employment by the Company or its Subsidiaries
without Cause or lay-off, (iii) the Participant's termination of employment by
the Company or its Subsidiaries for Cause, (iv) the Participant's resignation
from employment with the Company or its Subsidiaries or (v) expiration as
provided in Article V.
ARTICLE IV
EXERCISE OF OPTIONS
4.1 PERSON WHO CAN EXERCISE. Options may only be exercised by the
Participant, except that, in the event of Disability, Options may be exercised
by the Participant's legal guardian or legal representative and, in the event of
death, Options may be exercised by the executor or administrator of the
Participant's estate or the Person or Persons to whom the Participant's rights
under the Options pass by will or the laws of descent and distribution.
4.2 PROCEDURE FOR EXERCISE. Vested Options may be exercised in whole
or in part with respect to any portion thereof that is exercisable. To exercise
an Option, the Participant (or such other Person who shall be permitted to
exercise the Option as set forth in Section 4.1) must complete, sign and deliver
to the Company an Exercise Notice together with payment in full of the Exercise
Price multiplied by the number of shares of Common Stock with respect to which
the Option is exercised. Payment of the Exercise Price shall be made in cash
(including check, bank draft or money order). The right to exercise the Option
shall be subject to the satisfaction of all conditions set forth in the Exercise
Notice. In lieu of paying the Exercise Price, upon the Participant's (or such
other Person's) request, with the Committee's or the Board's consent (which may
or may not be given in its sole discretion), the Company shall deliver to the
Participant a number of shares of Common Stock equal to (A) divided by (B) where
(A) is the excess of (i) the Fair Market Value of a share of Common Stock on the
date on which the Exercise Notice is received by the Company (i.e., the exercise
date), over (ii) the Exercise Price, multiplied by (iii) the number of shares
for which the Option is being exercised, and (B) is the Fair Market Value of a
share of Common Stock on the exercise date.
4.3 CONDITIONAL EXERCISE IN CONTEMPLATION OF ACCELERATED VESTING. In
contemplation of accelerated vesting, the Participant (or such other Person who
shall be permitted to exercise Options as set forth in Section 4.1) may
conditionally exercise, at least 15 days prior to such accelerated vesting, all
or a portion of the Options which are exercisable and which will become
exercisable upon such accelerated vesting. Such conditional exercise shall
become null and void if such accelerated vesting does not occur within six (6)
months following the date of such conditional exercise. A conditional exercise
shall become binding upon the Participant (or such other Person) and such
Participant (or such other Person) shall become obligated to pay the Exercise
Price therefor upon the occurrence of such accelerated vesting.
4.4 LIMITED STOCK APPRECIATION RIGHT. Upon the written request of
the Participant (or such other Person who shall be permitted to exercise Options
as set forth in Section 4.1), the Company may, in its sole discretion, cancel
any vested Option (in whole or in part) and pay the Participant the excess of
the (i) the Fair Market Value of a share of Common Stock on the date on which
the request is received by the Company, over (ii) the Exercise Price, multiplied
by (iii) the number of Option Shares subject to the Option which is being
cancelled (the "Cancellation Amount"); PROVIDED, HOWEVER, that, coincident with
any transaction which is reasonably likely to result in a Change in Control, the
Company may, in its sole discretion, without a Participant's consent, cancel any
Option (in whole or in part) and pay the Participant the Cancellation Amount.
4.5 WITHHOLDING OF TAXES. The Company and its Subsidiaries shall
withhold from any amounts due and payable by the Company and its Subsidiaries to
the Participant (or secure payment from the Participant in lieu of withholding)
the amount of any withholding or other tax due from the Company with respect to
any Option Shares issuable under this Option Agreement, and the Company may
defer such issuance until such withholding or payment is made unless otherwise
indemnified to its satisfaction with respect thereto.
ARTICLE V
EXPIRATION OF OPTIONS
5.1 EXPIRATION. Vested and unvested Options shall expire at 5:00
p.m. Eastern Standard Time on September 29, 2008 (i.e., the tenth anniversary of
the Grant Date).
5.2 EARLIER EXPIRATION. Options shall expire sooner than
provided in Section 5.1 as follows:
(a) all unvested Options shall expire as provided in
Section 3.6;
(b) upon the Participant's termination of employment by the
Company or its Subsidiaries for Cause, all vested Options shall expire
immediately;
(c) upon the Participant's termination of employment by the
Company or its Subsidiaries in connection with a lay-off, all vested Options
shall expire upon the earlier of (i) the third anniversary of such termination
or (ii) the expiration of the Options under Section 5.1;
(d) upon the Participant's resignation from employment with
the Company or its Subsidiaries other than in connection with death, Disability
or Retirement, all vested Options shall expire upon the effective date of such
resignation or termination; and
(e) upon the Participant's termination of employment by the
Company or its Subsidiaries for any reason other than for Cause or in connection
with death, Disability or a lay-off, all vested Options shall expire upon the
effective date of such resignation or termination.
5.3 CANCELLATION. Vested and unvested Options which expire
unexercised shall be treated as cancelled.
ARTICLE VI
MISCELLANEOUS
6.1 OPTIONS NOT TRANSFERABLE. Options may not be Transferred (other
than by will or laws of descent and distribution). Any attempt to effect a
Transfer of Options that is not permitted by the Plan or this Option Agreement
shall be null and void.
6.2 NOTICES. All notices, requests and demands to or upon a party
hereto must, to be effective, be in writing and shall be deemed to have been
duly given or made when delivered by hand or three days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as follows or to such other address of which the intended receiving
party hereto shall have been duly notified hereunder:
(a) If to the Company, to the following address:
UCAR International Inc.
39 Old Ridgebury Road
Danbury, CT 06817
Attn: Corporate Secretary
Telecopy: (203) 207-7770
(b) If to the Participant, to the address or telecopy number as shown on the
signature page hereto.
6.3 AMENDMENT. This Option Agreement may be amended only by a
writing executed by the parties hereto which specifically states that it is
amending this Option Agreement.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed therein without regard to the conflicts of
law principles thereof.
<PAGE>
6.5 TITLES. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Option
Agreement.
IN WITNESS WHEREOF, this Option Agreement has been executed and
delivered by the parties hereto.
PARTICIPANT UCAR INTERNATIONAL INC.
___________________ By: __________________________
Signed Name: ________________________
Title: _______________________
Name: _______________________________
Home Address: _______________________
_______________________
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
(Director Version)
This Non-Qualified Stock Option Agreement (the "Option Agreement"),
dated as of ________________, is made by and between UCAR International Inc., a
Delaware corporation (the "Company"), and _________________ (the "Participant").
Pursuant to the UCAR International Inc. Management Stock Option Plan
(the "Plan") (a copy of which is attached hereto and the terms of which are
hereby incorporated by reference), the Company intends to provide incentives to
non-employee directors of the Company by providing them with opportunities for
ownership of shares of Common Stock.
The Board of Directors of the Company (the "Board") has determined
that it would be in the best interests of the Company and its stockholders to
grant the Options provided for herein to the Participant under the Plan.
In consideration of the mutual covenants herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever capitalized terms are used in the Option Agreement as
defined terms they shall have the meaning set forth in the Plan or as set forth
below, unless the context clearly indicates to the contrary.
"EXERCISE PRICE" shall mean the amount that the Participant must pay
to exercise an Option with respect to one share of Common Stock subject to such
Option, as determined in Section 2.2.
"FAIR MARKET VALUE" shall mean, with respect to any Common Stock,
the average of the high and low trading prices of the 20 business days
immediately preceding the day of the valuation.
ARTICLE II
GRANT OF OPTIONS
2.1 GRANT OF OPTIONS. The Board hereby grants to the Participant Time
Options representing the right to acquire ____________ shares of Common Stock.
2.2 EXERCISE PRICE. The Exercise Price of Options granted hereunder
shall be $_____ per share.
ARTICLE III
EXERCISABILITY OF OPTIONS
3.1 OPTIONS. All Options granted pursuant hereto shall [vest and
become exercisable] on ____________.
3.2 ACCELERATION EVENTS. [Notwithstanding Section 3.1, all Options
granted pursuant hereto [are fully vested at the time of grant and] shall become
[fully vested and exercisable] upon the first to occur of the following
Acceleration Events: (i) a Director ceases to be a Director on account of death
or Disability or (ii) a Change in Control.]
ARTICLE IV
EXERCISE OF OPTIONS
4.1 RIGHT TO EXERCISE. The Options granted hereunder may only be
exercised by the Participant (except that, in the event of his Disability,
Options may be exercised by his or her legal guardian or legal representative).
In the event of the Participant's death, exercise of Options shall be made only
by the executor or administrator of the deceased Participant's estate or the
Person or Persons to whom the deceased Participant's rights under the Option
shall pass by will or the laws of descent and distribution.
4.2 PROCEDURE FOR EXERCISE. Options may be exercised in whole or in
part with respect to any portion that is exercisable. To exercise any Option
granted hereunder, the Participant (or such other Person who shall be permitted
to exercise the Option as set forth in Section 4.1) must complete, sign and
deliver to the Company (to the attention of the Company's Secretary) a notice of
exercise substantially in the form of ANNEX I to the Plan (or in such other form
as the Board may from time to time adopt and provide to the Participant) (the
"EXERCISE NOTICE"), together with payment in full of the Exercise Price
multiplied by the number of shares of Common Stock with respect to which the
Option is exercised. Payment of the Exercise Price shall be made in cash
(including check, bank draft or money order). The Participant's right to
exercise the Option shall be subject to the satisfaction of all conditions set
forth in the Exercise Notice. In lieu of paying the Exercise Price, upon the
Participant's request, with the Committee's approval (which may or may not be
given in its sole discretion) the Company shall deliver to the Participant a
number of shares of Common Stock equal to (A) divided by (B) where (A) is the
excess of (i) the Fair Market Value of a share of Common Stock, over (ii) the
Exercise Price, multiplied by (iii) the number of shares for which the Option is
being exercised, and (B) is the Fair Market Value of a share of Common Stock.
4.3 CONDITIONAL EXERCISE IN CONTEMPLATION OF AN ACCELERATION EVENT.
In contemplation of an Acceleration Event, the Participant may conditionally
exercise, at least 15 days prior to such event, all or a portion of his Options
which are exercisable and which will become exercisable upon the occurrence of
the Acceleration Event. Such conditional exercise shall become null and void if
the anticipated Acceleration Event does not occur within six (6) months
following the date of such conditional exercise. A conditional exercise shall
become binding upon the Participant (and such Participant shall become obligated
to pay the Exercise Price therefor) upon the occurrence of the Acceleration
Event.
4.4 LIMITED STOCK APPRECIATION RIGHT. Upon the Participant's request,
the Company may, cancel any Option (in whole or in part) granted hereunder and
pay the affected Participant, the excess of the (i) the Fair Market Value of a
share of Common Stock, over (ii) the Exercise Price, multiplied by (iii) the
number of shares for which the Option is being cancelled.
4.5 WITHHOLDING OF TAXES. The Company shall withhold from the
Participant from any amounts due and payable by the Company (or secure payment
from such Participant in lieu of withholding) the amount of any withholding or
other tax due from the Company with respect to any Option Shares issuable under
the Plan, and the Company may defer such issuance unless indemnified to its
satisfaction.
ARTICLE V
EXPIRATION OF OPTIONS
5.1 EXPIRATION DATE. Options shall expire at 5:00 p.m. Eastern
Standard Time on January 25, 2007.
5.2 EARLIER EXPIRATION DATE. Notwithstanding Section 5.1, Options
shall expire four (4) years following the date the Participant ceases to be a
Director.
ARTICLE VI
MISCELLANEOUS
6.1 OPTIONS NOT TRANSFERABLE. Options may not be Transferred (other
than by will or descent). Any attempt to effect a Transfer of Options that is
not permitted by the Plan or this Agreement shall be null and void and of no
effect.
6.2 NOTICES. All notices, requests and demands to or upon the parties
hereto to be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or three days after being deposited in the mail,
postage prepaid, or, in the case of telecopy notice, when received, addressed as
follows to the Company and the Participant, or to such other address as may be
hereafter notified by the parties hereto:
(a) If to the Company, to it at the following address:
UCAR International Inc.
39 Old Ridgebury Road
Danbury, CT 06817
Attn: Corporate Secretary
Telecopy: (203) 207-7770
(b) If to the Participant, to him at his address or telecopy number
as shown on the signature page hereto,or at such other address or telecopy
number as either party shall have specified by notice in writing to the other.
6.3 AMENDMENT. This Option Agreement may be amended only by a writing
executed by the parties hereto which specifically states that it is amending
this Option Agreement.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed therein without regard to the conflicts of
law principles thereof.
6.5 TITLES. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Option
Agreement.
* * *
<PAGE>
IN WITNESS WHEREOF, this Option Agreement has been executed and
delivered by the parties hereto.
UCAR INTERNATIONAL INC.
___________________________________________
Peter B. Mancino
PARTICIPANT
Name: _____________________________________
__________________
Signed
Home Address:_______________________________
<PAGE>
EXHIBIT 10.33
UCAR INTERNATIONAL INC.
EXECUTIVE EMPLOYEE STOCK PURCHASE PROGRAM
(Senior Management Version)
To: ____________________
UCAR International Inc. is pleased to announce the adoption of an
Executive Employee Stock Purchase Program in which you are invited to
participate. The Program has been designed to assist employees in meeting the
voluntary stock ownership guidelines adopted by the Board of Directors for the
Chief Executive Officer, other Officers and members of the Company and Business
Councils. You have no obligation to purchase shares under either those
guidelines or the Program.
Under the Program, you have the right to purchase shares of common
stock in an amount up to your annual base salary. The purchase price per share
is the closing price of the common stock on the NYSE on the trading day
immediately preceding the exercise date. For those participants who exercised
the right to purchase shares effective prior to October 15, 1998, the purchase
price is $17.06 per share (the closing price of the common stock on the NYSE on
the date on which the Program was adopted by the Board of Directors). If your
base salary increases or the market value of the shares you purchased under the
Program decreases while the Program is still in effect, you may purchase
additional shares to bring the market value of the shares purchased by you under
the Program up to your annual base salary then in effect.
The purchase price for shares shall be due at the time of exercise.
For those participants who exercised the right to purchase shares effective
prior to October 15, 1998, the purchase price for their shares shall be due on
or before December 31, 1998. You are responsible for any taxes incurred in
connection with the sale of any shares purchased under the Program. You should
consult your tax advisor as to the tax consequences of any such sale.
To exercise your right to purchase shares under the Program, please
complete, sign and deliver to the Human Resources Department (attention: Brian
Blowes) a copy of the attached Stock Purchase Notice. You should retain a copy
of the completed Purchase Notice for your records. Except for those participants
who exercised their right to purchase shares prior to October 15, 1998, the date
on which the Purchase Notice is delivered to the Company shall be deemed to be
the exercise date. Those participants who exercised their right to purchase
shares effective prior to October 15, 1998 should complete, sign and deliver a
confirming Purchase Notice. These confirming Purchase Notices should be dated as
of the date of original exercise of the right to purchase shares.
In order to facilitate the sale of shares under the Program, all
sales will be effected through accounts at BNY Brokerage. If you have not
already opened an account at BNY Brokerage, please contact Brian Blowes to make
arrangements to do so.
The Company intends to register, under the Securities Act of 1933
and applicable state securities laws, the sale of shares under the Program
and/or the resale thereof. At the time you intend to resell shares purchased
under the Program, you should first confirm with the General Counsel that either
the resale registration is still in effect or that such registration is not
necessary or an exemption therefrom is available. The absence of a required
resale registration could result in restrictions on the resale of shares
purchased under the Program.
Shares purchased under the Program will consist of newly issued
shares (if you are not a reporting person under Section 16(a) of the Securities
Exchange Act of 1934) or treasury shares (if you are such a person).
The maximum number of shares which may be sold under the Program to
participants who are reporting persons under Section 16(a) of the Securities
Exchange Act of 1934 is limited to the number of treasury shares previously
listed on the NYSE which have not been allocated for use under some other
employee benefit program. Accordingly, notwithstanding anything contained herein
to the contrary, no shares will be sold under the Program to such a participant
if the sale would exceed this limitation. For purposes of complying with this
limitation, except for sales made to participants who exercised their right to
purchase shares effective prior to October 15, 1998, (i) shares will be sold
under the Program to participants in the order in which Purchase Notices are
received by the Company, (ii) no shares will be sold to such a participant
pursuant to a Purchase Notice if the full number of shares cannot be sold to
such a participant pursuant to any earlier received Purchase Notice (from the
same or any other participant) due to this limitation and (iii) if the full
number of shares cannot be sold to such a participant due to this limitation,
the maximum number of shares which is permissible to sell in compliance with
this limitation will be sold.
You are reminded of your continuing obligation under securities laws
not to sell shares while in possession of material, non-public information about
the Company. In addition, you are also reminded of your potential liability for
short swing profits under Section 16(b) of the Securities Exchange Act of 1934.
Such liability may exist if you have sold any shares within six months before
the date you purchase shares under the Program or if you intend to sell any
shares within six months after the date you purchase shares under the Program.
Likewise, such liability may exist if you have purchased or sold shares in a
UCAR Stock Fund within the UCAR Carbon Savings Plan within such six month
period. Accordingly, if you have any concerns regarding the applicability of
these rules to you, you should consult with the General Counsel prior to
purchasing any shares under the Program.
The Program was adopted on September 29, 1998 and may be
discontinued at any time. The Program shall be governed by and construed in
accordance with the laws of the State of Connecticut without regard to the
conflicts of law principles thereof.
Date: October 5, 1998
<PAGE>
UCAR INTERNATIONAL INC.
EXECUTIVE EMPLOYEE STOCK PURCHASE PROGRAM
STOCK PURCHASE NOTICE
UCAR International Inc.
39 Old Ridgebury Road
Danbury, Connecticut 06817
Attention: Brian Blowes, Human Resources Department
BNY Brokerage
101 Barclay Street, 12W
New York, New York 10286
Attention: Tom Meder
The Bank of New York
101 Barclay Street, 12W
New York, New York 10286
Attention: Diana Ajjan
Reference is made to the UCAR International Inc. Executive Employee
Stock Purchase Program. I hereby exercise my right to purchase shares of common
stock under the Program and, accordingly, agree as follows:
1. I irrevocably and unconditionally agree to purchase ___________
shares (the "Shares") of common stock from the Company at the purchase price per
share specified under the Program.
2. I have deposited (or will deposit prior to the closing of the
purchase) funds in my brokerage account maintained at BNY Brokerage sufficient
to pay the purchase price for the Shares.
3. I instruct BNY Brokerage to withdraw from my brokerage account
(and pay to the Company or the common stock transfer agent for the account of
the Company) sufficient funds to pay the purchase price for the Shares against
receipt from the transfer agent of the Shares (in either certificated or
uncertificated form registered in either my name or street name). Completion of
these transactions shall constitute the closing of the purchase and shall take
place promptly after the date hereof.
4. This Agreement is subject to the terms and conditions of the
Program, which is incorporated by reference herein. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Connecticut without regard to the conflicts of law principles thereof. Any
proceeding with respect to this Agreement shall be brought in a court of
competent jurisdiction in the State of Connecticut and I submit to the exclusive
jurisdiction of such courts for such purpose. I irrevocably waive any objections
which I may now or hereafter have to the laying of the venue of any such
proceeding brought in any such court and waive any claims that any such
proceeding brought in any such court has been brought in an inconvenient forum.
Very truly yours,
Signature:___________________________________
Name:________________________________________
Number of Shares:____________________________
Date: October 12, 1998
Accepted. Bank of New York
is instructed to take such actions
as may be necessary to effect the
purchase described herein.
UCAR INTERNATIONAL INC.
By:___________________________________
Name:
Title:
<PAGE>
EXHIBIT 10.34
UCAR INTERNATIONAL INC.
EXECUTIVE EMPLOYEE LOAN PROGRAM
To: ________________________
UCAR International Inc. is pleased to announce the adoption of an
Executive Employee Loan Program in which you are invited to participate. The
Program has been designed to assist the Chief Executive Officer, other Officers
and other members of the Company and Business Councils in meeting various needs
during this time of transition at the Company.
Under the Program, prior to the dates set forth below, you have the right
to borrow up to an amount equal to your annual base salary. Loans made under the
Program shall not bear interest, shall be unsecured and shall be made on a full
recourse basis. Loans under the Program shall be due on the earlier of (i) the
date you cease to be employed by the Company for any reason or (ii) five years
from the date such loans are made.
Since loans made under the Program will be non-interest bearing, borrowers
will have imputed income (for tax purposes) equal to the interest that would
have been paid on the loans, calculated using an interest rate designated by the
Internal Revenue Service. At such time as you may be required to pay additional
income taxes on the imputed interest income, the Company shall pay you an amount
(a "gross-up payment") equal to the additional federal, state and local income
taxes that will be incurred on the imputed interest income (as well as on the
gross-up payment) so that, on a net after-tax basis, you do not owe more state,
federal or local income taxes than you would have owed had no interest income
been imputed. Such amount shall be determined by the Company in its reasonable
discretion.
<PAGE>
No loans shall be made under the Program after December 31, 1998 to
current employees who are eligible to participate in the Program on the date
hereof. New and current employees who become eligible to participate in the
Program after the date hereof (including employees who are promoted after the
date hereof, even if they are eligible to participate in the Program on the date
hereof) will have the right to obtain loans under the Program within 90 days
after the date they are notified of their eligibility (or promotion).
To exercise your right to borrow under the Program, please complete, sign
and deliver to the Human Resources Department (Attention: Brian Blowes) a copy
of each of the attached Loan Notice and the attached Promissory Note. You should
retain a copy of the completed Loan Notice and Promissory Note for your records.
Loans will be funded promptly after the date on which the completed Loan
Notice and Promissory Note are delivered to the Company. To facilitate
administration of the Program, unless you otherwise instruct, proceeds from
loans will be deposited in your account at BNY Brokerage. If you have not
already opened an account at BNY Brokerage and would like to do so, please
contact Brian Blowes.
Notwithstanding anything contained herein to the contrary, no loan shall
be made under the Program if it would result in a violation of any of the
agreements relating to debt of the Company. For purposes of complying with this
limitation, except for loans made to participants who exercised their right to
obtain loans effective prior to October 15, 1998, (i) loans shall be made to
participants in the order in which Loan Notices are received by the Company,
(ii) no loan shall be made pursuant to a Loan Notice if any loan pursuant to any
earlier received Loan Notice (from the same or any other participant) cannot be
funded in full due to this limitation and (iii) if a loan cannot be made in full
due to this limitation, it shall be made to the maximum extent permissible in
compliance with this limitation.
The Program was adopted on September 29, 1998 and may be discontinued
at any time. The Program shall be governed by and construed in accordance
with the laws of the State of Connecticut without regard to the conflicts of
law principles thereof.
Date: October 5, 1998
<PAGE>
UCAR INTERNATIONAL INC.
EXECUTIVE EMPLOYEE LOAN PROGRAM
LOAN NOTICE
UCAR Global Enterprises Inc.
39 Old Ridgebury Road
Danbury, Connecticut 06817
Attention: Brian Blowes, Human Resources Department
Reference is made to the UCAR Employee International Inc. Executive
Employee Loan Program. I hereby exercise my right to borrow $ __________ under
the Program (the "Loan") and, accordingly, agree as follows:
1. Attached is a duly executed and completed Promissory Note payable
to the order of UCAR Global Enterprises Inc. evidencing the Loan.
2. Please deposit the proceeds of the Loan into my account at BNY
Brokerage (or such other account of which I shall have given
written notice to you) promptly after the date hereof.
3. If the Loan cannot be funded at all pursuant to the Program, this
request is withdrawn and you are instructed to promptly return
the Promissory Note to me.
4. If the Loan cannot be funded in full pursuant to the Program,
this request is deemed modified to request the maximum amount
that can be funded and you are directed to adjust the principal
amount of the Promissory Note accordingly.
5. This Agreement is subject to the terms and conditions of the
Program, which is incorporated by reference herein. This
Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut without regard to
the conflicts of law principles thereof. Any proceeding with
respect to this Agreement shall be brought in a court of
competent jurisdiction in the State of Connecticut and I submit
to the exclusive jurisdiction of such courts for such purpose. I
irrevocably waive any objections which I may now or hereafter
have to the laying of the venue of any such proceeding
brought in any such court and waive any claims that any such
proceeding brought in any such court has been brought in an
inconvenient forum.
Very truly yours,
Signature: _________________________________
Name:_______________________________________
Date:_______________________________________
<PAGE>
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned maker (the "Borrower') hereby
unconditionally and irrevocably promises to pay to order of UCAR Global
Enterprises Inc., a Delaware corporation with its principal office located at 39
Old Ridgebury Road, Danbury, Connecticut 06817 (the "Lender"), the principal
amount of US$ ______________ . All sums due hereunder shall be payable at such
principal office or at such other location designated by the Lender of which the
Lender shall have given written notice to the Borrower at the Borrower's most
recent address as shown on the payroll records of UCAR International Inc. or its
subsidiaries (collectively, the "Company").
The principal sum shall be due and payable on the earlier of (i) the fifth
anniversary of the date hereof or (ii) if prior thereto the Borrower ceases to
be an employee of the Company for any reason, the Borrower's last day of
employment with the Company.
The balance of the principal sum outstanding from time to time hereunder
prior to maturity shall not bear interest and after maturity shall bear interest
at the rate of twelve percent (12%) per annum (or, if lower, the maximum rate
permitted by applicable law). All accrued and unpaid interest, if any, shall be
due and payable together with the balance of the principal sum outstanding
hereunder, if any, or on demand, whichever is earlier.
The Borrower shall have the right at any time and from time to time to
prepay all or all or any part of any sum due hereunder without penalty or
premium.
Payment of all sums due hereunder shall be made in lawful money of the
United States of America.
If the Borrower shall be adjudicated a bankrupt or file a petition seeking
protection as a debtor under any bankruptcy, insolvency or similar law, then all
sums due or to become due hereunder shall become immediately due and payable.
The Borrower agrees to pay to the Lender, upon demand, all costs and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, which may be incurred by the Lender in connection with the collection
of any sum due hereunder. The Lender shall be entitled to exercise any and all
remedies available to it hereunder or otherwise in connection with such
collection. The Borrower waives presentment for payment, notice of demand,
non-payment or dishonor, protest and all other notices and rights of approval in
connection with delivery, acceptance, performance and enforcement of, and
default under, this Note or any extensions, modifications or forbearances that
may be allowed. The Borrower also waives any right to a jury trial in connection
with any enforcement or collection of this Note and all laws for the benefit of
debtors to the full extent permitted by law. If any sums due hereunder is not
paid when due, the Company shall have the right to set off against the sums due
hereunder any amount owing by the Company in any capacity to the Borrower. No
delay or omission by the Lender in exercising any remedy hereunder or otherwise
shall impair such remedy or be construed to be a waiver of any default hereunder
or an acquiescence therein. No waiver by the Lender of any default hereunder
shall be effective unless set forth in a written instrument signed by the
Lender.
The Lender shall have the right, which right may be exercised at any time
without notice to or the consent of the Borrower, to assign, transfer or pledge
this Note and any renewals, extensions and modifications hereof. This Note may
not be changed or terminated orally. This Note shall bind the heirs, legal
representatives, successors and assigns of the Borrower and shall inure to the
benefit of the Lender and its successors and assigns. This Note shall be
governed by and construed in accordance with the laws of the State of
Connecticut without regard to the conflicts of law principles thereof. Any
proceeding with respect to this Agreement shall be brought in a court of
competent jurisdiction in the State of Connecticut and the Borrower hereby
submits to the exclusive jurisdiction of such courts for such purpose. The
Borrower hereby irrevocably waives any objections which the Borrower may now or
hereafter have to the laying of the venue of any such proceeding brought in any
such court and waives any claims that any such proceeding brought in any such
court has been brought in an inconvenient forum.
IN WITNESS WHEREOF, the Borrower has executed and delivered the Promissory
Note as of the day and year below written.
Signature:__________________________________
Name:_______________________________________
Address:____________________________________
Date:_______________________________________
<PAGE>
EXHIBIT 10.36
UCAR CARBON COMPANY INC.
EQUALIZATION BENEFIT PLAN
(Amended and Restated as of January 1, 1997)
<PAGE>
EQUALIZATION BENEFIT PLAN
GENERAL
This is an excess benefit plan for participants in the Retirement
Plan who receive a benefit from the Retirement Plan which is limited by Code
Section 415. This Plan has been established primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees.
Specifically, the purpose of this Plan is to provide a retirement
benefit, equal to the excess of :
(1) the retirement benefit which would be provided by the
Retirement Plan determined without regard to Code Section 415,
OVER
(2) the retirement benefit actually provided by the Retirement
Plan. This Plan is completely separate from the Retirement Plan, the Enhanced
Retirement Income Plan and the Supplemental Retirement Income Plan, is unfunded
for purposes of Title I of the Employee Retirement Income Security Act of 1974,
as amended and is not qualified for special tax treatment under the Code.
<PAGE>
ARTICLE I
ELIGIBILITY
SECTION 1. A Participant, or survivor of a Participant who has not
declined the coverage of a survivor's benefit under the Retirement Plan shall be
eligible to participate in this Plan if such Participant receives a retirement
benefit from the Retirement Plan which is limited by Code Section 415.
ARTICLE II
ADMINISTRATION
SECTION 1. (a) The Compensation Committee shall have the authority
to administer this Plan. The Compensation Committee may adopt such rules as it
may deem necessary for the proper administration of this Plan and its decision
in all matters involving the interpretation and application of the Plan shall be
final, conclusive, and binding on all parties.
(b) The Compensation Committee may, in its sole discretion,
designate any persons(s) or committee to administer this Plan. To the extent
provided by the Compensation Committee, such person(s) or committee designated
to administer this Plan shall have the same powers and responsibilities as the
Compensation Committee.
<PAGE>
ARTICLE III
AMOUNT OF BENEFIT
SECTION 1. (a) The monthly amount of Equalization Retirement
Income payable to a Participant shall be the excess, if any, of:
(i) the Participant's monthly retirement benefit, computed by
using the applicable benefit formula provided in Article V of
the Retirement Plan and determined without regard to the
limitations of Code Sections 415, OVER
(ii) the monthly amount of such Participant's or surviving
spouse's retirement benefit payable under the Retirement Plan.
(b) Any benefits either payable under, or which have been satisfied
through, the purchase of non-qualified annuities in connection with this Plan
shall be deducted from the amounts payable pursuant to subparagraph (a) above.
SECTION 2. For purposes of calculating the amount of a Participant's
Equalization Retirement Income pursuant to Section 1 of this Article III, the
amount of a Participant's monthly retirement benefit under the Retirement Plan
shall be determined without any adjustment on account of (i) a survivor's
benefit or (ii) an election to receive level retirement income.
SECTION 3. If a Participant does not decline the coverage of a
survivor's benefit, the monthly amount of Equalization Retirement Income which
such Participant would otherwise have received shall be reduced by applying the
same factors used in the Retirement Plan in connection with calculating a
survivor's benefit.
SECTION 4. The monthly amount of Equalization Retirement Income
payable to the survivor of a Participant shall be calculated in the same manner
that such survivor's benefit is calculated under the Retirement Plan.
ARTICLE IV
VESTING
SECTION 1. A Participant shall be vested in such Participant's right
to receive Equalization Retirement Income under this Plan in the same manner and
to the same extent as provided under the Retirement Plan .
ARTICLE V
PAYMENTS
SECTION 1. Equalization Retirement Income shall be paid monthly to a
Participant or such Participant's survivor commencing with the month that such
Participant or survivor commences benefits under the Retirement Plan, and shall
cease or be suspended at the same time the Participant or survivor ceases or
suspends benefits under the Retirement Plan. However, Equalization Retirement
Income shall in no event be payable after the death of a Participant who has
declined the coverage of a survivor's benefit.
SECTION 2. Unless otherwise elected, Equalization Retirement Income
payable under this Plan shall include the coverage of a survivor's benefit. A
survivor's benefit payable from this Plan shall be paid to that person
designated to receive a survivor's benefit under the Retirement Plan.
SECTION 3. Equalization Retirement Income shall be distributed to
the Participant in the same form, and with the same actuarial adjustments, as
such Participant's distributions from the Retirement Plan.
SECTION 4. Notwithstanding the provisions of Section 1 of this
Article V, Participants may elect at any time immediately preceding retirement
(i) a lump sum during the calendar year following the year such election is
made, or (ii) substantially equal installments over a period of at least 2 but
not more than 10 years commencing as of the January 1 of the calendar year
following such election. If a Participant elects a lump sum or a series of
payments over a period from 2 to 10 years, this election is irrevocable. This
election shall be the same as that made pursuant to the Enhanced Retirement
Income Plan and the Supplemental Retirement Income Plan.
If a Participant elects a monthly annuity as in the Retirement Plan,
he or she may again elect a lump sum or series of payments over a period of from
2 to 10 years when the calculation of the lump sum benefit changes. The
calculation of the benefit may change (i) because of profit sharing or awards
paid in the year following the last year worked or (ii) because the interest
rate used to calculate the lump sum is not available until the November after
the monthly annuity benefit is recalculated.
The lump sum payment or installment payments described above shall
be calculated using (A) a discount rate equal to the average of the Moody's
Municipal 10 year Aaa Bond Yield Averages and the Moody's Municipal Long Term
Aaa Bond Yield Averages, and (B) the UP-94G Mortality Table. The Compensation
Committee or its designee shall determine the procedures for such elections and
the time and method of payment for payments in accordance with this Section 4.
For Participants who make the election described in this Section 4, the
provisions of Sections 1, 2 and 3 of this Article V shall not apply.
ARTICLE VI
MISCELLANEOUS
SECTION 1. Unless otherwise defined in this Plan, all defined terms
shall have the same meaning as set forth in the Retirement Plan.
(a) "Code" means the Internal Revenue Code of 1986, as
amended.
(b) "Compensation Committee" means the Organization and
Compensation Committee of the Board of Directors of the Corporation.
(c) "Corporation" means UCAR Carbon Company Inc.
(d) "Enhanced Retirement Income Plan" means the UCAR Carbon
Company Inc. Enhanced Retirement Income Plan.
(e) "Equalization Retirement Income" means the benefit payable
to a Participant pursuant to Article III of this Plan.
(f) "Participant" means an employee of the Corporation who is
eligible to participate in the Plan pursuant to Article I.
(g) "Plan" means this UCAR Carbon Company Inc. Equalization
Benefit Plan, as amended and restated as of January 1, 1997.
(h) "Retirement Plan" as used in this Plan means the UCAR
Carbon Retirement Plan.
(i) "Supplemental Retirement Income Plan" means the UCAR
Carbon Company Inc. Supplemental Retirement Income Plan.
SECTION 2. The Corporation may amend or terminate this Plan at any
time, but any such amendment or termination shall not adversely affect the
rights of any Participant or survivor of any Participant then receiving benefits
under this Plan, or the vested rights of any Participant or survivor.
SECTION 3. Except to the extent required by law, no assignment of
the rights and interests of a Participant or survivor of a Participant under
this Plan shall be permitted nor shall such rights be subject to attachment or
other legal processes for debts.
SECTION 4. This Plan is intended to be unfunded for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended and
the rights of a Participant and survivor of a Participant shall be no greater
than the right of an unsecured general creditor of the Corporation.
SECTION 5. For purposes of this Plan, a Participant will be
considered retired on the first day of the month following the last month in
which such Participant is employed.
SECTION 6. The Corporation may satisfy all or any part of its
obligation to provide benefits under this Plan by purchasing, and distributing
to a Participant or survivor of a Participant, an annuity from an insurance
carrier to provide such benefits.
SECTION 7. Neither selection as a Participant nor participation in
this Plan shall affect the Corporation's right to discharge any Participant.
UCAR CARBON COMPANY INC.
By: /s/ Fred C. Wolf
----------------------------------
<PAGE>
EXHIBIT 10.37
Amendment to UCAR Carbon Company Inc. Equalization Benefit Plan:
RESOLVED, that the UCAR Carbon Company Inc. Equalization
Benefit Plan (the "Plan") is hereby amended to provide for the
forfeiture of a participant's benefit under the Plan if the
participant engages in actions which are detrimental to the
interests of the Corporation as set forth in Exhibit A (with
such changes therein as the officers of the Corporation, or
any of them acting individually, may deem necessary or
appropriate to carry out the purposes and intent of this
resolution).
Dated: September 16, 1998
<PAGE>
EXHIBIT 10.38
UCAR CARBON COMPANY INC.
SUPPLEMENTAL RETIREMENT
INCOME PLAN
(Amended and Restated as of January 1, 1997)
<PAGE>
SUPPLEMENTAL RETIREMENT INCOME PLAN
General
This is a supplemental retirement income plan for participants
in the Retirement Plan who receive compensation in excess of the compensation
which may be considered by the Retirement Plan under Code Section 401(a)(17).
This Plan has been established primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.
Specifically, the purpose of this Plan is to provide a
retirement benefit, equal to the excess of:
(1) the retirement benefit which would be provided by the
Retirement Plan determined without regard to Code Section 415
or Code Section 401(a)(17), over
(2) the retirement benefit actually provided by the
Retirement Plan and the Equalization Benefit Plan.
This Plan is completely separate from the Retirement Plan, the
Enhanced Retirement Income Plan and the Equalization Benefit Plan, is unfunded
for purposes of Title I of the Employee Retirement Income Security Act of 1974,
as amended and is not qualified for special tax treatment under the Code.
<PAGE>
ARTICLE I
Eligibility
Section 1. A Participant, or the survivor of a Participant who
has not declined the coverage of a survivor's benefit, shall be eligible to
participate in this Plan if such Participant (i) participates in the Retirement
Plan and (ii) receives compensation in excess of the compensation which may be
considered by the Retirement Plan under Code Section 401(a)(17).
ARTICLE II
Administration
Section 1. (a) The Compensation Committee shall have the
authority to administer this Plan. The Compensation Committee may adopt such
rules as it may deem necessary for the proper administration of this Plan and
its decision in all matters involving the interpretation and application of the
Plan shall be final, conclusive, and binding on all parties.
(b) The Compensation Committee may, in its sole discretion,
designate any persons(s) or committee to administer this Plan. To the extent
provided by the Compensation Committee, such person(s) or committee designated
to administer this Plan shall have the same powers and responsibilities as the
Compensation Committee.
<PAGE>
ARTICLE III
Amount of Supplemental Retirement Income
Section 1 (a) A Participant's monthly amount of Supplemental
Retirement Income shall be the excess, if any, of:
(i) the Participant's monthly retirement benefit, computed by
using the applicable benefit formula provided in Article V of
the Retirement Plan and determined without regard to the
limitations of Code Sections 401(a)(17) and 415, over ----
(ii) the monthly amount of such Participant's retirement
benefit actually payable under the Retirement Plan and the
Equalization Benefit Plan.
(b) Any benefits either payable under, or which have been
satisfied through the purchase of, non-qualified annuities in connection with
this Supplemental Retirement Income Plan and/or the Equalization Benefit Plan
shall be deducted from the amounts payable pursuant to subparagraph (a) above.
Section 2. For purposes of calculating the amount of a
Participant's Supplemental Retirement Income pursuant to Section 1 of this
Article III, the amount of a Participant's monthly retirement benefit under the
Retirement Plan and the Equalization Benefit Plan shall be determined without
any adjustment on account of (i) a survivor's benefit or (ii) an election to
receive level retirement income.
<PAGE>
Section 3. If a Participant does not decline the coverage of a
survivor's benefit, the monthly amount of Supplemental Retirement Income which
such Participant would otherwise have received shall be reduced by applying the
same factors used in the Retirement Plan in connection with calculating a
survivor's benefit.
Section 4. The monthly amount of Supplemental Retirement
Income payable to the survivor of a Participant shall be calculated in the same
manner that such survivor's benefit is calculated under the Retirement Plan.
ARTICLE IV
Vesting
Section 1. A Participant shall be vested in such Participant's
right to receive Supplemental Retirement Income under this Plan in the same
manner and to the same extent as provided under the Retirement Plan.
<PAGE>
ARTICLE V
Payments
Section 1. Supplemental Retirement Income shall be paid
monthly to a Participant or such Participant's survivor commencing with the
month that such Participant or survivor commences benefits under the Retirement
Plan, and shall cease or be suspended at the same time the Participant or
survivor ceases or suspends benefits under the Retirement Plan. However,
Supplemental Retirement Income shall in no event be payable after the death of a
Participant who has declined the coverage of a survivor's benefit.
Section 2. Unless otherwise elected, Supplemental Retirement
Income payable under this Plan shall include the coverage of a survivor's
benefit. A survivor's benefit payable from this Plan shall be paid to that
person designated to receive a survivor's benefit under the Retirement Plan.
Section 3. Supplemental Retirement Income shall be distributed
to the Participant in the same form, and with the same actuarial adjustments, as
such Participant's distributions from the Retirement Plan.
Section 4. Notwithstanding the provisions of Section 1 of
this Article V, Participants may elect at any time immediately preceding
retirement (i) a lump sum during the calendar year following the year such
election is made, or (ii) substantially equal installments over a period of at
least 2 but not more than 10 years commencing as of the January 1 of the
calendar year following such election. If a Participant elects a lump sum or a
series of payments over a period from 2 to 10 years, this election is
irrevocable. This election shall be the same as that made pursuant to the
Equalization Benefit Plan and the Enhanced Retirement Income Plan.
<PAGE>
If a Participant elects a monthly annuity as in the Retirement
Plan, he or she may again elect a lump sum or series of payments over a period
of from 2 to 10 years when the calculation of the lump sum benefit changes. The
calculation of the benefit may change: (i) because of profit sharing or awards
paid in the year following the last year worked or (ii) because the interest
rate used to calculate the lump sum is not available until the November after
the monthly annuity benefit is recalculated.
The lump sum payment or installment payments described above
shall be calculated using (A) a discount rate equal to the average of the
Moody's Municipal 10 year Aaa Bond Yield Averages and the Moody's Municipal Long
Term Aaa Bond Yield Averages, and (B) the UP-94G Mortality Table. The
Compensation Committee or its designee shall determine the procedures for such
elections and the time and method of payment for payments in accordance with
this Section 4. For Participants who make the election described in this Section
4, the provisions of Sections 1, 2 and 3 of this Article V shall not apply.
Section 5. If the Board of Directors determines, after a
hearing, that a Participant who is eligible to receive or is receiving
Supplemental Retirement Income has engaged in any activities which, in the
opinion of the Board, are detrimental to the interests of, or are in competition
with the Corporation or any of its subsidiaries, such Supplemental Retirement
Income shall thereupon be terminated.
<PAGE>
ARTICLE VI
Miscellaneous
Section 1. Unless otherwise defined in this Plan, all defined
terms shall have the same meaning as set forth in the Retirement Plan.
(a) "Code" means the Internal Revenue Code of 1986,
as amended.
(b) "Compensation Committee" means the Organization
and Compensation Committee of the Board of Directors of
the Corporation.
(c) "Corporation" means UCAR Carbon Company Inc.
(d) "Enhanced Retirement Income Plan" means the UCAR
Carbon Company Inc. Enhanced Retirement Income Plan.
(e) "Equalization Benefit Plan" means the UCAR Carbon
Company Inc. Equalization Benefit Plan. (f)
"Participant" means an employee of the Corporation
who is eligible to participate in the Plan pursuant
to Article I.
(g) "Plan" means the UCAR Carbon Company Inc.
Supplemental Retirement Income Plan, as amended and restated as of January 1,
1997.
(h) "Retirement Plan" means the UCAR Carbon
Retirement Plan.
(i) "Supplemental Retirement Income" as used in this
Plan means the benefit payable to a Participant pursuant to Article III of this
Plan.
<PAGE>
Section 2. The Corporation may amend or terminate this Plan at
any time, but any such amendment or termination shall not adversely affect the
rights of any Participant or survivor, of any Participant then receiving
benefits under this Plan, or the vested rights of any Participant or survivor.
Section 3. Except to the extent required by law, no assignment
of the rights and interests of a Participant or survivor of a Participant under
this Plan shall be permitted nor shall such rights be subject to attachment or
other legal processes for debts.
Section 4. This Plan is intended to be unfunded for purposes
of Title I of the Employee Retirement Income Security Act of 1974, as amended
and the rights of a Participant and a survivor of a Participant shall be no
greater than the right of an unsecured general creditor of the Corporation.
Section 5. For purposes of this Plan, a Participant will be
considered retired on the first day of the month following the last month in
which such Participant is employed.
Section 6. The Corporation may satisfy all or any part of its
obligation to provide benefits under this Plan by purchasing, and distributing
to a Participant or survivor of a Participant, an annuity from an insurance
carrier to provide such benefits.
Section 7. Neither selection as a Participant nor
participation in this Plan shall affect the Corporation's right to discharge any
Participant.
UCAR CARBON COMPANY INC.
By: /s/ Fred C. Wolf
___________________________
<PAGE>
EXHIBIT 10.39
UCAR CARBON COMPANY INC.
ENHANCED RETIREMENT
INCOME PLAN
(Effective as of January 1, 1997)
<PAGE>
ENHANCED RETIREMENT INCOME PLAN
GENERAL
This is an enhanced retirement income plan for participants in the
Retirement Plan who receive a retirement benefit under the Retirement Plan which
is limited by Code Section 415 or Code Section 401(a)(17). This Plan has been
established primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees.
Specifically, the purpose of this Plan is to provide a retirement
benefit equal to the excess of:
(1) the retirement benefit which would be provided by the Retirement
Plan, determined without regard to Code Section 415 or Code Section 401(a)(17),
if
(a) average monthly Compensation included Awards and base
salary deferred pursuant to the terms of the Compensation
Deferral Program or any succesor or predecessor program,
and/or
(b) all Awards, whether deferred or not, were averaged
separately from Base Compensation (as defined in the
Retirement Plan);
OVER
(2) the retirement benefit actually provided by the Retirement Plan,
the Equalization Benefit Plan and the Supplemental Retirement Income Plan.
This Plan is completely separate from the Retirement Plan, the
Supplemental Retirement Income Plan and the Equalization Benefit Plan, is
unfunded for purposes of Title I of the Employee Retirement Income Security Act
of 1974, as amended, and is not qualified for special tax treatment under the
Code.
ARTICLE I
ELIGIBILITY
SECTION 1. A Participant, or the survivor of a Participant who has
not declined the coverage of a survivor's benefit, shall be eligible to
participate in this Plan if such Participant receives a retirement benefit from
the Retirement Plan which is limited by Code Section 401(a)(17) or Code Section
415, or is a participant in the Compensation Deferral Program.
ARTICLE II
ADMINISTRATION
SECTION 1. (a) The Compensation Committee shall have the authority
to administer this Plan. The Compensation Committee may adopt such rules as it
may deem necessary for the proper administration of this Plan and its decision
in all matters involving the interpretation and application of the Plan shall be
final, conclusive, and binding on all parties.
(b) The Compensation Committee may, in its sole discretion,
designate any person(s) or committee to administer this Plan. To the extent
provided by the Compensation Committee, such person(s) or committee designated
to administer this Plan shall have the same powers and responsibilities as the
Compensation Committee.
ARTICLE III
AMOUNT OF ENHANCED RETIREMENT INCOME
SECTION 1.
(a) A Participant's monthly Enhanced Retirement Income shall be computed by
using the applicable formula provided in Article V of the Retirement
Plan; provided, however, that average monthly Compensation shall be
determined without regard to Code Section 415 and Code Section 401(a)(17)
and shall be computed by determining the sum of the following amounts:
(i) the larger of:
(I) 1/36 of a Participant's Base Salary related to the three
full calendar years in which such Base Salary was largest
during the ten full calendar years next preceding the
date of death or retirement, or
(II) 1/36 of a Participant's Base Salary for the thirty-six
(36) full calendar months next preceding the date of
death or retirement; and
(ii) 1/36 of the Participant's Awards related to the three full
calendar years in which such Awards were the largest during
the ten full calendar years next preceding the date of
death or retirement; provided, that the calendar years in
which the Participant was hired or terminated employment
shall each be considered a full calendar year for the
purposes of this clause (ii);
REDUCED BY
(iii) the monthly amount of such Participant's retirement benefit
actually payable under the Retirement Plan, the Equalization
Benefit Plan and the Supplemental Retirement
Income Plan.
(b) For purposes of this Section 1, an "Award" will be related to the
calendar year in which a Participant performed the services for which the
Award was paid.
(c) For purposes of this Section 1, the amount of "Base Salary" received in
any calendar month shall be calculated in the same manner in which
average monthly Compensation used to compute pension benefits under the
Retirement Plan is calculated (determined without regard to Incentive
Compensation, as defined therein); provided, however, that Base Salary
shall also include any base salary deferred by a Participant pursuant to
the terms of the Compensation Deferral Program, in the calendar year in
which it would otherwise have been paid.
(d) Any benefits either payable under, or which have been satisfied through
the purchase of, non-qualified annuities in connection with this Enhanced
Retirement Income Plan, the Supplemental Retirement Income Plan and/or
the Equalization Benefit Plan shall be deducted from the amounts payable
pursuant to subparagraph (a) above.
SECTION 2. If the Enhanced Retirement Income payable to a
Participant under this Plan commences before the grant to such Participant of an
Award (whether or not deferred) which may be used to determine average monthly
Compensation under Section 1 of this Article III, the monthly amount of Enhanced
Retirement Income payable hereunder shall be recalculated after such Award is
granted (whether or not deferred).
SECTION 3. For purposes of calculating the amount of a Participant's
Enhanced Retirement Income pursuant to Section 1 of this Article III, the amount
of a Participant's monthly retirement income and monthly pension under the
Retirement Plan, the Equalization Benefit Plan and the Supplemental Retirement
Income shall be determined without any adjustment on account of (i) a survivor's
benefit or (ii) an election to receive level retirement income.
SECTION 4. If a Participant does not decline the coverage of a
survivor's benefit, the monthly amount of Enhanced Retirement Income which such
Participant would otherwise have received shall be reduced by applying the same
factors used in the Retirement Plan in connection with calculating a survivor's
benefits.
SECTION 5. The monthly amount of Enhanced Retirement Income payable
to the eligible survivor of a Participant shall be calculated in the same manner
that such survivor's benefit is calculated under the Retirement Plan.
ARTICLE IV
VESTING
SECTION 1. A Participant will be vested in such Participant's right
to receive Enhanced Retirement Income under the Plan in the same manner and to
the same extent as provided under the Retirement Plan.
ARTICLE V
PAYMENTS
SECTION 1. Enhanced Retirement Income shall be paid monthly to a
Participant or such Participant's survivor commencing with the month such
Participant or such survivor commence benefits under the Retirement Plan, and
shall cease or be suspended at the same time the Participant or such survivor
ceases or suspends benefits under the Retirement Plan. Enhanced Retirement
Income shall in no event be payable after the death of a Participant who has
declined the coverage of a survivor's benefit.
SECTION 2. Unless otherwise elected, Enhanced Retirement Income
payable under this Plan shall include the coverage of a survivor's benefit. A
survivor's benefit payable from this Plan shall be paid to that person
designated to receive a survivor's benefit under the Retirement Plan.
SECTION 3. Enhanced Retirement Income shall be received in the same
form, and with the same actuarial adjustments, as the Participant is receiving
distributions from the Retirement Plan.
SECTION 4. Notwithstanding the provisions of Section 1 of this
Article V, Participants may elect at any time immediately preceding retirement
(i) a lump sum during the calendar year following the year such election is
made, or (ii) substantially equal installments over a period of at least 2 but
not more than 10 years commencing as of the January 1 of the calendar year
following such election. If a Participant elects a lump sum or a series of
payments over a period from 2 to 10 years, this election is irrevocable. This
election shall be the same as that made pursuant to the Equalization Benefit
Plan and the Supplemental Retirement Income Plan.
If a Participant elects a monthly annuity as in the Retirement Plan,
he or she may again elect a lump sum or series of payments over a period of from
2 to 10 years when the calculation of the lump sum benefit changes. The
calculation of the benefit may change (i) because of profit sharing or awards
paid in the year following the last year worked or (ii) because the interest
rate used to calculate the lump sum is not available until the November after
the monthly annuity benefit is recalculated.
The lump sum payment or installment payments described above shall
be calculated using (A) a discount rate equal to the average of the Moody's
Municipal 10 year Aaa Bond Yield Averages and the Moody's Municipal Long Term
Aaa Bond Yield Averages, and (B) the UP-94G Mortality Table. The Compensation
Committee or its designee shall determine the procedures for such elections and
the time and method of payment for payments in accordance with this Section 4.
For Participants who make the election described in this Section 4, the
provisions of Sections 1, 2 and 3 of this Article V shall not apply.
SECTION 5. If the Board of Directors determines, after a hearing,
that a Participant who is eligible to receive or is receiving Enhanced
Retirement Income has engaged in any activities which, in the opinion of the
Board, are detrimental to the interests of, or are in competition with the
Corporation or any of its subsidiaries, such Enhanced Retirement Income shall
thereupon be terminated.
ARTICLE VI
MISCELLANEOUS
SECTION 1. Unless otherwise defined in this Plan, all defined terms
shall have the same meaning as set forth in the Retirement Plan.
(a) "Award" means those awards which are made: (i) under any cash
award plan and (ii) under any other variable compensation plans (whether or not
deferred) designated by the Board of Directors.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Compensation Committee" means the Organization and
Compensation Committee of the Board of Directors of the Corporation.
(d) "Compensation Deferral Program" as used in this Plan means
the UCAR International Inc. Compensation Deferral Program.
(e) "Corporation" means UCAR Carbon Company Inc.
(f) "Enhanced Retirement Income" means the benefit payable to a
Participant pursuant to Article III of this Plan.
(g) "Equalization Benefit Plan" means the UCAR Carbon Company
Inc. Equalization Benefit Plan.
(h) "Participant" means an employee who is eligible to participate
in this Plan pursuant to Article I.
(i) "Plan" means this UCAR Carbon Company Inc. Enhanced Retirement
Income Plan, as amended and restated January 1, 1997.
(j) "Retirement Plan" means the UCAR Carbon Retirement Plan.
(k) "Supplemental Retirement Income Plan" means the UCAR Carbon
Company Inc. Supplemental Retirement Income Plan.
SECTION 2. The Corporation may amend or terminate this Plan at any
time, but any such amendment or termination shall not adversely affect the
rights of any Participant or survivor of any Participant then receiving benefits
under this Plan, or the vested rights of any Participant or survivor.
SECTION 3. Except to the extent required by law, no assignment of
the rights and interests of a Participant or survivor under this Plan will be
permitted nor shall such rights be subject to attachment or other legal
processes for debts.
SECTION 4. This Plan is intended to be unfunded for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended and
the right of a Participant and a survivor of a Participant shall be no greater
than the right of an unsecured general creditor of the Corporation.
SECTION 5. For purposes of this Plan, a Participant will be
considered retired on the first day of the month following the last month in
which such Participant is employed.
SECTION 6. The Corporation may satisfy all or any part of its
obligation to provide benefits hereunder by purchasing, and distributing to a
Participant, or survivor, an annuity from an insurance carrier to provide such
benefits.
SECTION 7. Neither selection as a Participant or participation in
this Plan shall affect the Corporation's right to discharge any Participant.
UCAR CARBON COMPANY INC.
By: /s/ Fred C. Wolf
______________________________
<PAGE>
EXHIBIT 10.40
[U.S. Version]
[Date]
- -------------------------
- -------------------------
Dear _____________________:
The Board of Directors (the "Board") of UCAR International Inc. (the
"Corporation") authorized your participation in the arrangements set forth
between UCAR Carbon Company (the "Company") and you in this Severance
Compensation Agreement. The Board recognizes that the possibility of a Change in
Control of the Corporation exists, as is the case with many publicly held
corporations, and the uncertainty and questions which it may raise among
management may result in the departure or distraction of management personnel to
the detriment of the Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from a
possible Change in Control of the Corporation. The Board has also determined
that it is in the best interests of the Company, the Corporation and the
Corporation's stockholders to ensure your continued availability to the Company
in the event of a potential Change in Control of the Corporation.
In order to induce you to remain in the employ of the Company and in
consideration of your continued service to the Company, the Company and the
Corporation agree that you shall receive the severance benefits set forth in
this Severance Compensation Agreement ("Agreement") in the event your employment
with the Company is terminated subsequent to a Change in Control of the
Corporation under the circumstances described below.
1. DEFINITIONS.
a. "CHANGE IN CONTROL OF THE CORPORATION" shall be deemed to occur if
any of the following circumstances shall occur:
(i) any "person" or "group" within the meaning of Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 ("Act")
becomes the "beneficial owner" as defined in Rule 13d-3
under the Act of more than 22.5% of the then outstanding
voting securities of the Corporation;
(ii) any "person" or "group" within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act acquires by proxy or
otherwise the right to vote for the election of directors,
on any merger or consolidation of the Corporation or for any
other matter or question with respect to more than 22.5% of
either the then outstanding Common Stock or the combined
voting power of the then outstanding voting securities of
the Corporation;
(iii) Present Directors and New Directors cease for any reason to
constitute a majority of the Board (and, for these purposes,
"Present Directors" shall mean individuals who at the
beginning of any consecutive twenty-four month period were
members of the Board and "New Directors" shall mean
individuals whose election as directors by the Board or
whose nomination for election as directors by the
Corporation's stockholders was approved by a vote of at
least two-thirds of the Directors then in office who were
Present Directors or New Directors);
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation; or
(v) consummation of:
(x) a reorganization, merger or consolidation of the
Corporation (a "Business Combination"), unless,
following such Business Combination, (a) all or
substantially all of the "beneficial owners", as defined
in Rule 13d-3 under the Exchange Act, of the outstanding
Common Stock and the combined voting power of the
outstanding voting securities of the Corporation,
respectively, immediately prior to such Business
Combination "beneficially own", as so defined, directly
or indirectly, more than 50% of the outstanding common
equity securities and the combined voting power of the
outstanding voting securities of the entity resulting
from such Business Combination (including, without
limitation, an entity which as a result of such Business
Combination owns the Corporation or all or substantially
all of the Corporation's assets either directly or
through one or more subsidiaries), respectively, in
substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the
outstanding Common Stock of the Corporation and the
combined voting power of the outstanding voting
securities of the Corporation, respectively, (b) no
"person" or "group", within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act (excluding any
entity resulting from such Business Combination and any
employee benefit plan (and related trust) of the
Corporation, its subsidiaries or such entity) is the
"beneficial owner", as defined in Rule 13 d-3 under the
Exchange Act of more than 22.5% of either the then
outstanding common equity securities of the entity
resulting from such Business Combination or the combined
voting power of the outstanding voting securities of
such entity except to the extent that such beneficial
ownership existed immediately prior to such Business
Combination with respect to the Common Stock and
combined voting power of outstanding voting securities
of the Corporation and (c) at least a majority of the
members of the board of directors (or similar governing
body) of the entity resulting from such Business
Combination were members of the Board at the time of the
execution of the initial agreement providing for such
Business Combination or the time of the action of the
Board approving of such Business Combination, whichever
is earlier; or
(y)any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all,
or substantially all, of the assets of the Corporation,
whether held directly or indirectly through one or more
subsidiaries (excluding any grant of any pledge,
mortgage or security interest or any sale - leaseback or
any similar transaction, but including any foreclosure
sale);
Provided, that, in the case of both clause (x) and (y)
above, the divestiture of less than substantially all of
the assets of the Corporation in one transaction or a
series of related transactions, whether effected by
sale, lease, exchange, transfer, spin-off, sale of the
stock of or merger or consolidation of a subsidiary or
otherwise, shall not constitute a Change in Control of
the Corporation.
Notwithstanding the foregoing, a Change in Control of the Corporation
shall not be deemed to occur: (A) pursuant to clauses (i) and (ii) above, solely
because more than 22.5% of the then outstanding Common Stock or the combined
voting power of the then outstanding voting securities of the Corporation is
held or acquired by one or more employee benefit plans (or releated trusts)
maintained by the Corporation or its subsidiaries; or (B) pursuant to
Subparagraph (v)(y) above, if the Board determines that any sale, lease,
exchange or transfer does not involve substantially all of the assets of the
Corporation.
b. "CODE" shall mean the Internal Revenue Code of 1986, as amended.
c. "DATE OF TERMINATION" shall mean:
(i) in case employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and
(ii) in all other cases, the date specified in the Notice of
Termination (which shall not be less than thirty (30) nor
more than sixty (60) days, respectively, from the date such
Notice of Termination is given).
d. "DISABILITY" shall mean total physical or mental disability
rendering you unable to perform the duties of your employment for a continuous
period of six (6) months. Any question as to the existence of your Disability
upon which you and the Company cannot agree shall be determined by a qualified
physician not employed by the Company and selected by you (or, if you are unable
to make such selection, it shall be made by any adult member of your immediate
family), and approved by the Company. The determination of such physician made
in writing to the Company and to you shall be final and conclusive for all
purposes of this Agreement.
e. "GOOD REASON FOR RESIGNATION" shall mean, without your express
written consent, any of the following:
(i) (A) a change in your status or position with the Company,
which in your reasonable judgment does not represent a
status or position comparable to your status or position
immediately prior a Change in Control of the Corporation or
a promotion from your status or position immediately prior
to a Change in Control of the Corporation; or
(B) a reduction in the level of your reporting
responsibility as it existed immediately prior to a Change
in Control of the Corporation; or
(C) the assignment to you of any duties or responsibilities
or diminution of duties or responsibilities which in your
reasonable judgment are inconsistent with your status or
position with the Company in effect immediately prior to a
Change in Control of the Corporation;
it being understood that any of the foregoing in connection
with a termination of your employment for Retirement,
Disability or Termination for Cause shall not constitute
Good Reason for Resignation;
(ii) a reduction by the Company in the annual rate of your base
salary as in effect immediately prior to the date of a
Change in Control of the Corporation or as the same may be
increased from time to time thereafter, or the Company's
failure to increase the annual rate of your base salary for
a calendar year in an amount at least equal to the average
percentage increase in base salary for all employees of the
Company with Severance Compensation Agreements in the
preceding calendar year. Within three (3) days after your
request, the Company shall notify you of the average
percentage increase in base salary for all such employees of
the Company in the calendar year preceding your request;
(iii) the failure by the Company to continue in effect any
compensation plan in which you participate as in effect
immediately prior to a Change in Control of the Corporation,
including but not limited to the Retirement Program, the
Savings Program, any of the Incentive Compensation Plans, or
any substitute plans adopted prior to a Change in Control of
the Corporation, unless an arrangement satisfactory to you
(embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or the failure by the
Company to continue your participation therein on at least
as favorable a basis, both in terms of the amount of
benefits provided and the level of your participation
relative to other participants, as existed immediately prior
to a Change in Control of the Corporation;
(iv) the Company requiring you to be based outside of a
thirty-five (35) mile radius from where your office is
located immediately prior to a Change in Control of the
Corporation except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to a Change in
Control of the Corporation;
(v) the failure by the Company to continue to provide you with
benefits at least as favorable as those enjoyed by you (and
your dependents, if applicable) under any of the Company's
pre-retirement and post-retirement life insurance, medical,
health and accident, and disability plans or any other plan,
program or policy of the Company intended to benefit
employees in which you were participating immediately prior
to a Change in Control of the Corporation, the taking of any
action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any
material fringe benefit enjoyed by you immediately prior to
a Change in Control of the Corporation, or the failure by
the Company to provide you with the number of annual paid
vacation days to which you were annually entitled
immediately prior to a Change in Control of the Corporation;
(vi) the failure of the Company to obtain a satisfactory
agreement from any Successor (as defined in Paragraph 4a
hereof) to assume and agree to perform this Agreement, as
contemplated in Paragraph 4a hereof; or
(vii) the failure of the Company to pay to you an Incentive
Compensation Award, deferred compensation or other
compensation award earned, but not paid, prior to a Change
in Control of the Corporation.
f. "INCENTIVE COMPENSATION" means any compensation, variable
compensation, bonus, benefit or award paid or payable in cash under an Incentive
Compensation Plan.
g. "INCENTIVE COMPENSATION AWARD" shall mean a cash payment or
payments awarded to you under any Incentive Compensation Plan.
h. "INCENTIVE COMPENSATION PLAN(S)" shall mean any variable
compensation or incentive compensation plan maintained by the Company in which
you were a participant immediately prior to a Change in Control of the
Corporation including, but not limited to:
(i) UCAR International Inc. Management Incentive Plan.
i. "NOTICE OF TERMINATION" shall mean a written notice as provided in
Paragraph 8 hereof.
j. "RETIREMENT" shall mean a voluntary termination of employment in
accordance with the Retirement Program or any other retirement arrangement,
which is established with your consent with respect to you.
k. "RETIREMENT PROGRAM" shall mean the UCAR Carbon Retirement Plan and
any excess or supplemental pension plans maintained by the Company or the
Corporation.
l. "SAVINGS PROGRAM" shall mean the UCAR Carbon Savings Plan.
m. "TERMINATION FOR CAUSE" shall mean termination of your employment
upon your willfully engaging in conduct demonstrably and materially injurious to
the Company, monetarily or otherwise, provided that there shall have been
delivered to you a copy of a resolution duly adopted by the unanimous
affirmative vote of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of the
conduct set forth and specifying the particulars thereof in detail.
For purposes of this clause m, no act, or failure to act, on your part shall be
deemed "willful" unless done, or omitted to be done, by you in bad faith and
without reasonable belief that your action or omission was in the best interest
of the Company. Any act or failure to act based upon authority given pursuant to
a resolution duly adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done or omitted to be done by
you in good faith and in the best interests of the Company.
n. "VARIABLE COMPENSATION YEAR" means a calendar year of an Incentive
Compensation Plan.
2. COMPENSATION UPON TERMINATION OR WHILE DISABLED. Following a Change
in Control of the Corporation, you shall be entitled to the following benefits:
a. TERMINATION OTHER THAN FOR RETIREMENT, DEATH, DISABILITY OR
TERMINATION FOR CAUSE; TERMINATION BY YOUR RESIGNATION WITH GOOD REASON FOR
RESIGNATION. If your employment by the Company shall be terminated subsequent to
a Change in Control of the Corporation and during the term of this Agreement (a)
by the Company other than for Retirement, Death, Disability or Termination for
Cause, or (b) by you for Good Reason for Resignation, then you shall be entitled
to the benefits provided below, without regard to any contrary provision of any
plan:
(i) ACCRUED SALARY. The Company shall pay you, not later than
the fifth day following the Date of Termination, your base
salary and vacation pay accrued through the Date of
Termination (including any banked vacation, vested vacation
for the calendar year in which the Date of Termination
occurs) at the rate in effect at the time the Notice of
Termination is given (or at the rate in effect immediately
prior to a Change in Control of the Corporation, if such
rate was higher).
(ii) ACCRUED INCENTIVE COMPENSATION. The Company shall pay you,
not later than thirty (30) days following your Date of
Termination, the amount of your accrued Incentive
Compensation which shall be determined as follows:
(A) If the Date of Termination is after the end of a
Variable Compensation Year, but before Incentive
Compensation for said Variable Compensation Year has been
paid, the Company shall pay to you under this Agreement for
your service during such Variable Compensation Year the
following:
The amount of your target variable compensation
payment (i.e., the percent of your salary grade
midpoint at risk) for such Variable Compensation
Year.
(B) In addition, if the Date of Termination is other than
the first day of a Variable Compensation Year, the Company
shall pay to you under this Agreement for your service
during such Variable Compensation Year up to the Date of
Termination, the following:
The amount of your target variable compensation
payment (i.e., the percent of your salary grade
midpoint at risk) for such Variable Compensation
Year (or if such target has not then been
established, your target variable compensation
award for the immediately preceding Variable
Compensation Year), multiplied by a fraction, the
numerator of which is the total number of days
which have elapsed in the current Variable
Compensation Year to the Date of Termination, and
the denominator of which is three hundred
sixty-five (365).
If there is more than one Incentive Compensation Plan, your
accrued Incentive Compensation under each Incentive
Compensation Plan shall be determined separately for each
such Plan.
For the purpose this Paragraph 2a(ii), the amount of your
target variable compensation payment shall be used, whether
or not such Incentive Compensation was actually paid to you
or was includible in your gross income for Federal income
tax purposes.
(iii) INSURANCE COVERAGE. The Company shall arrange to provide you
(and your dependents, if applicable) with life, disability,
accident, dental and medical benefits substantially
equivalent to those which you are receiving, or were
entitled to receive, from the Company or a subsidiary of the
Company immediately prior to a Change in Control of the
Corporation. Such benefits shall be provided to you for the
longer of (x) thirty six (36) months after such Date of
Termination or (y) the period during which such benefits
would have been provided to you, as a terminated employee,
under the applicable life, disability, accident, dental and
medical plans in effect immediately prior to a Change in
Control of the Corporation (except that after a period of
thirty six (36) months such benefits shall be provided to
you on the same financial terms and conditions as provided
for under the respective plans). Such benefits shall be
provided to you in lieu of any continuation coverage you
would be eligible for under COBRA.
If you are a participant in the Company's Executive Life
Insurance Plan, you shall have the same rights thereunder as
a person who retires with a non-actuarially reduced pension
(whether or not you are eligible for such a pension).
(iv) SEVERANCE PAYMENT. The Company shall pay as a severance
payment to you, not later than the fifth day following the
Date of Termination, a lump sum severance payment (the
"Severance Payment") equal to two and ninety-nine hundreths
(2.99) times the sum of the amounts set forth in the
following paragraphs (A) and (B), less the amount set forth
in paragraph (C):
(A) the greater of your annual base salary which was payable
to you by the Company immediately prior to the Date of
Termination or your annual base salary which was payable to
you by the Company immediately prior to a Change in Control
of the Corporation; plus
(B) the greater of:
(I) The amount of your target variable
compensation payment (i.e., the percent of your
salary grade midpoint at risk) for the year in
which the Date of Termination occurs (or if such
target has not then been established, your target
variable compensation award for the immediately
preceding Variable Compensation Year); or
(II) The amount of your target variable
compensation payment (i.e., the percent of your
salary grade midpoint at risk) for the year in
which the Change in Control of the Corporation
occurs (or if such target has not then been
established, your target variable compensation
award for the immediately preceding Variable
Compensation Year); minus
(C) the amount of any payment or the value of any
benefit received or to be received by you pursuant
to any termination or layoff pay policy or plan of
the Company.
For purposes of calculations under this subparagraph (iv),
the amounts of base salary and target variable compensation
payments shall be the amounts calculated without regard to
whether or not such amounts were paid or includible in your
gross income for Federal income tax purposes.
(v) REDUCTION IN SEVERANCE PAYMENT. The Severance Payment shall
be reduced only in the event specifically provided in this
subparagraph (v). If the aggregate present value, as
determined for purposes of Code Section 280G, of all amounts
that are parachute payments for purposes of such Section
exceeds the limitation set forth in Code Section
280G(b)(2)(A)(ii) by an amount not exceeding $50,000, then
there shall be a reduction in the amount of your Severance
Payment so that such limit is not exceeded.
(vi) PAYMENT OF TAXES.
(A) For purposes of this subparagraph (vi), the following
terms shall have the following meanings:
(I) PAYMENT shall mean any payment or distribution (or
acceleration of benefits) by the Company to or for
your benefit (whether paid or payable or
distributed or distributable (or accelerated)
pursuant to the terms of this Agreement or any
termination or layoff plan referred to in clause
(C) of subparagraph (iv) of this Section 2a (thus
excluding among other things any payment under an
employment agreement), but determined without
regard to any additional payments required under
this subparagraph (vi)). In addition, Payment
shall also include the amount of income deemed to
be received by you as a result of the acceleration
of the exercisability of any of your options to
purchase stock of the Corporation, the
acceleration of the lapse of any restrictions on
performance stock or restricted stock of the
Corporation held by you or the acceleration of
payment from any deferral plan.
(II) EXCISE TAX shall mean the excise tax imposed by
Section 4999 of the Code, or any interest or
penalties incurred by you with respect to such
excise tax.
(III) INCOME TAX shall mean all taxes other than the
Excise Tax (including any interest or penalties
imposed with respect to such taxes) including,
without limitation, any income and employment
taxes imposed by any federal (including (i) FICA
and Medicare taxes, and (ii) the tax resulting
from the loss of any federal deductions or
exemptions which would have been available to you
but for receipt of the Payment), state, local,
commonwealth or foreign government.
(B) In the event it shall be determined that a Payment
would be subject to an Excise Tax, then you shall
be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after
payment by you of Income Tax and Excise Tax
imposed upon the Gross-Up Payment, you retain an
amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment.
(C) All determinations required to be made under this
subparagraph (vi), including whether and when a
Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall
be made by the public accounting firm that is
retained by the Company as of the date immediately
prior to a Change in Control of the Corporation
(the "Accounting Firm") which shall provide
detailed supporting calculations both to the
Company and to you within fifteen (15) business
days of the receipt of notice from you that there
has been a Payment, or such earlier time as is
requested by the Company (collectively, the
"Determination"). In the event that the Accounting
Firm is serving as accountant or auditor for the
individual, entity or group effecting a Change in
Control of the Corporation, you may appoint
another nationally recognized public accounting
firm to make the determinations required hereunder
(which accounting firm shall then be referred to
as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as
determined pursuant to this subparagraph (vi),
shall be paid by the Company to you within ten
(10) days of the Determination. If the Accounting
Firm determines that no Excise Tax is payable by
you, you may request the Accounting Firm to
furnish you with a written opinion that failure to
report the Excise Tax on your applicable federal
income tax return would not result in the
imposition of a negligence or similar penalty. The
Determination by the Accounting Firm shall be
binding upon the Company and you. As a result of
the uncertainty in the application of Section 4999
of the Code at the time of the Determination, it
is possible that Gross-Up Payments which will not
have been made by the Company should have been
made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the
event that the Company exhausts its remedies
pursuant to subparagraph (vi)(D) below and you
thereafter are required to make payment of any
Excise Tax or Income Tax, the Accounting Firm
shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall
be promptly paid by the Company to or for your
benefit.
(D) You shall notify the Company in writing of any
claim by the Internal Revenue Service that, if
successful, would require the payment by the
Company of the Gross-Up Payment or the
Underpayment. Such notification shall be given as
soon as practicable but no later than ten (10)
business days after you are informed in writing of
such claim and shall apprise the Company of the
nature of such claim and the date on which such
claim is requested to be paid. You shall not pay
such claim prior to the expiration of the 30-day
period following the date on which you give such
notice to the Company (or such shorter period
ending on the date that any payment of taxes with
respect to such claim is due). If the Company
notifies you in writing prior to the expiration of
such period that it desires to contest such claim,
you shall:
(1) give the Company any information
reasonably requested by the Company
relating to such claim,
(2) take such action in connection with
contesting such claim as the Company shall
reasonably request in writing from time to
time, including, without limitation,
accepting legal representation with respect
to such claim by an attorney reasonably
selected by the Company,
(3) cooperate with the Company in good faith
in order effectively to contest such
claim, and
(4) permit the Company to participate in any
proceeding relating to such claim;
provided, however, that the Company shall bear and
pay directly all costs and expenses (including
additional interest and penalties) incurred in
connection with such contest and shall indemnify
and hold you harmless, on an after-tax basis, for
any Excise Tax or Income Tax imposed as a result
of such representation and payment of costs and
expenses. Without limitation on the foregoing
provisions of this subparagraph (vi)(D), the
Company shall control all proceedings taken in
connection with such contest and, at its sole
option, may pursue or forego any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect
of such claim and may, at its sole option, either
direct you to pay the tax claimed and sue for a
refund or contest the claim in any permissible
manner, and you agree to prosecute such contest to
a determination before any administrative
tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company
shall determine; provided further, that if the
Company directs you to pay such claim and sue for
a refund, the Company shall advance the amount of
such payment to you on an interest-free basis and
shall indemnify and hold you harmless, on an
after-tax basis, from any Excise Tax or Income Tax
imposed with respect to such advance or with
respect to any imputed income with respect to such
advance; and provided further, that any extension
of the statute of limitations relating to payment
of taxes for your taxable year with respect to
which such contested amount is claimed to be due
is limited solely to such contested amount.
Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and
you shall be entitled to settle or contest, as the
case may be, any other issue raised by the
Internal Revenue Service or any other taxing
authority.
(E) If, after the receipt by you of an amount advanced
by the Company pursuant to subparagraph (vi)(D)
above, you become entitled to receive, and
receive, any refund with respect to such claim,
you shall (subject to the Company's complying with
the requirements of subparagraph (vi)(D)) promptly
pay to the Company the amount of such refund
(together with any interest paid or credited
thereon after taxes applicable thereto). If, after
the receipt by you of an amount advanced by the
Company pursuant to subparagraph (vi)(D), a
determination is made that you shall not be
entitled to any refund with respect to such claims
and the Company does not notify you in writing of
its intent to contest such denial of refund prior
to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven
and shall not be required to be repaid.
(vii) NO DUTY TO MITIGATE. You shall not be required to mitigate
the amount of any payment provided for in this Paragraph 2
by seeking other employment or otherwise, nor shall the
amount of any payment or benefit hereunder be reduced by any
compensation earned by you as the result of employment by
another employer or by retirement benefits after the Date of
Termination, or otherwise; provided, however, should you
become reemployed in a job which (a) offers medical plan
benefits which are equal to or greater than the medical plan
benefits provided to you under subparagraph 2(a)(iii), and
(b) such medical plan benefits are offered to you at no
cost, you shall no longer be eligible to receive medical
plan benefits under this Agreement.
b. PAYMENTS WHILE DISABLED. During any period prior to the Date of
Termination and during the term of this Agreement that you are unable to perform
your full-time duties with the Company, whether as a result of your Disability
or as a result of a physical or mental disability that is not total and
therefore is not a Disability, you shall continue to receive your base salary at
the rate in effect at the commencement of any such period, together with all
other compensation and benefits that are payable or provided under the Company's
benefit plans, including its disability plans. After the Date of Termination for
Disability, your benefits shall be determined in accordance with the Retirement
Program, insurance and other applicable programs of the Company. The
compensation and benefits, other than salary, payable or provided pursuant to
this subparagraph b shall be the greater of (x) the amounts computed under the
Retirement Program, disability benefit plans, insurance and other applicable
programs in effect immediately prior to a Change in Control of the Corporation
and (y) the amounts computed under the Retirement Program, disability benefit
plans, insurance and other applicable programs in effect at the time the
compensation and benefits are paid.
c. PAYMENTS IF TERMINATED FOR CAUSE, OR TERMINATION BY YOU OTHER THAN
WITH GOOD REASON FOR RESIGNATION. If your employment shall be terminated by the
Company as a Termination for Cause or by you other than with Good Reason for
Resignation, the Company shall pay you your full base salary and accrued
vacation pay (including any banked vacation, vested vacation for the calendar
year in which the Date of Termination occurs) through the Date of Termination,
at the rate in effect at the time Notice of Termination is given, plus any
benefits or awards which have been earned or become payable but which have not
yet been paid to you. You shall receive any payment due under this subparagraph
c on your Date of Termination. Thereafter, the Company shall have no further
obligation to you under this Agreement.
d. AFTER RETIREMENT OR DEATH. If your employment shall be terminated
by your Retirement, or by reason of your death, your benefits shall be
determined in accordance with the Company's retirement and insurance programs
then in effect.
3. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and
shall continue in effect through December 31, 1999; provided, however, that
commencing on January 1, 2000 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Company or you shall have
given notice that it or you does not wish to extend this Agreement.
Notwithstanding any such notice by the Company not to extend, if a Change in
Control of the Corporation shall have occurred during the original or any
extended term of this Agreement, or within three months thereafter, this
Agreement shall continue in effect. In any event, the term of this Agreement
shall expire on the first (1st) anniversary of the date of a Change in Control
of the Corporation. This Agreement shall terminate if your employment is
terminated by you or the Company prior to a Change in Control of the
Corporation.
4. SUCCESSORS; BINDING AGREEMENT.
a. SUCCESSORS OF THE COMPANY. The Company will require any Successor
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assent at
least five business days prior to the time a person becomes a Successor (or
where the Company does not have at least five business days advance notice that
a person may become a Successor, within three business days after having notice
that such person may become or has become a Successor) shall constitute Good
Reason for Resignation by you and, if a Change in Control of the Corporation has
occurred or thereafter occurs, shall entitle you immediately to the benefits
provided in Paragraph 2a hereof upon delivery by you of a Notice of Termination.
For purposes of this Agreement, "Successor" shall mean any person that obtains
or succeeds to, or has the practical ability to control (either immediately or
with the passage of time), the Company's business directly, by merger or
consolidation, or indirectly, by purchase of voting securities of the Company by
acquisition of rights to vote voting securities of the Company or otherwise,
including but not limited to any person or group that acquires the beneficial
ownership or voting rights described in Paragraph 1a(i) or (ii).
b. YOUR SUCCESSOR. This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die following your Date of Termination while any amount would still be
payable to you hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
5. NATURE OF PAYMENTS. All payments to you under this Agreement shall
be considered severance payments in consideration of your past service to the
Company.
6. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
7. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
8. NOTICE. Any purported termination of your employment by the Company
or by you following a Change in Control of the Corporation shall be communicated
to the other party by a written Notice of Termination. A Notice of Termination
by you shall indicate in reasonable detail the facts and circumstances claimed
to provide a basis for a Good Reason for Resignation. For the purpose of this
Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first page of
this Agreement, provided that all notices to the Company shall be directed to
the attention of the Board with a copy to the Secretary of the Company or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. FEES AND EXPENSES. The Company shall pay all legal fees and related
expenses incurred by you as a result of your termination following a Change in
Control of the Corporation or by you in seeking to obtain or enforce any right
or benefit provided by this Agreement (including all fees and expenses, if any,
incurred in contesting or disputing any such termination or incurred by you in
seeking advice in connection therewith).
10. MISCELLANEOUS. No provision of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver or
discharge is agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.
11. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware (without regard to the choice of laws provisions thereof).
<PAGE>
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
UCAR CARBON COMPANY INC.
By:------------------------------------------
Title: Vice President
Agreed to this day
of , 1999
- --------------------------
<PAGE>
UCAR International Inc. agrees to be jointly and severally liable for
the benefits required to be paid by the Company pursuant to the terms of this
Agreement.
Agreed and Accepted
UCAR INTERNATIONAL INC.
By:-----------------------------------------
Title: Vice President
Agreed to this day
of , 1999
- --------------------------
<PAGE>
[International Version]
[Date]
- --------------------------------
- --------------------------------
Dear --------------------:
The Board of Directors (the "Board") of UCAR International Inc. (the
"Corporation") authorized your participation in the arrangements set forth
between (the "Company") and you in this Severance Compensation Agreement. The
Board recognizes that the possibility of a Change in Control of the Corporation
exists, as is the case with many publicly held corporations, and the uncertainty
and questions which it may raise among management may result in the departure or
distraction of management personnel to the detriment of the Corporation and its
stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from a
possible Change in Control of the Corporation. The Board has also determined
that it is in the best interests of the Company, the Corporation and the
Corporation's stockholders to ensure your continued availability to the Company
in the event of a potential Change in Control of the Corporation.
In order to induce you to remain in the employ of the Company and in
consideration of your continued service to the Company, the Company and the
Corporation agree that you shall receive the severance benefits set forth in
this Severance Compensation Agreement ("Agreement") in the event your employment
with the Company is terminated subsequent to a Change in Control of the
Corporation under the circumstances described below.
1. DEFINITIONS.
a. "CHANGE IN CONTROL OF THE CORPORATION" shall be deemed
to occur if any of the following circumstances shall occur:
(i) any "person" or "group" within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934
("Act") becomes the "beneficial owner" as defined in Rule
13d-3 under the Act of more than 22.5% of the then
outstanding voting securities of the Corporation;
(ii) any "person" or "group" within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act acquires by proxy
or otherwise the right to vote for the election of
directors, on any merger or consolidation of the
Corporation or for any other matter or question with
respect to more than 22.5% of either the then
outstanding Common Stock or the combined voting power of
the then outstanding voting securities of the
Corporation;
(iii) Present Directors and New Directors cease for any reason
to constitute a majority of the Board (and, for these
purposes, "Present Directors" shall mean individuals who
at the beginning of any consecutive twenty-four month
period were members of the Board and "New Directors"
shall mean individuals whose election as directors by
the Board or whose nomination for election as directors
by the Corporation's stockholders was approved by a vote
of at least two-thirds of the Directors then in office
who were Present Directors or New Directors);
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation;
or
(v) consummation of:
(x) a reorganization, merger or consolidation of the
Corporation (a "Business Combination"), unless,
following such Business Combination, (a) all or
substantially all of the "beneficial owners", as
defined in Rule 13d-3 under the Exchange Act, of
the outstanding Common Stock and the combined
voting power of the outstanding voting securities
of the Corporation, respectively, immediately
prior to such Business Combination "beneficially
own", as so defined, directly or indirectly, more
than 50% of the outstanding common equity
securities and the combined voting power of the
outstanding voting securities of the entity
resulting from such Business Combination
(including, without limitation, an entity which as
a result of such Business Combination owns the
Corporation or all or substantially all of the
Corporation's assets either directly or through
one or more subsidiaries), respectively, in
substantially the same proportions as their
ownership, immediately prior to such Business
Combination, of the outstanding Common Stock of
the Corporation and the combined voting power of
the outstanding voting securities of the
Corporation, respectively, (b) no "person" or
"group", within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act (excluding any entity
resulting from such Business Combination and any
employee benefit plan (and related trust) of the
Corporation, its subsidiaries or such entity) is
the "beneficial owner", as defined in Rule 13 d-3
under the Exchange Act of more than 22.5% of
either the then outstanding common equity
securities of the entity resulting from such
Business Combination or the combined voting power
of the outstanding voting securities of such
entity except to the extent that such beneficial
ownership existed immediately prior to such
Business Combination with respect to the Common
Stock and combined voting power of outstanding
voting securities of the Corporation and (c) at
least a majority of the members of the board of
directors (or similar governing body) of the
entity resulting from such Business Combination
were members of the Board at the time of the
execution of the initial agreement providing for
such Business Combination or the time of the
action of the Board approving of such Business
Combination, whichever is earlier; or
(y) any sale, lease, exchange or other transfer (in
one transaction or a series of related
transactions) of all, or substantially all, of the
assets of the Corporation, whether held directly
or indirectly through one or more subsidiaries
(excluding any grant of any pledge, mortgage or
security interest or any sale - leaseback or any
similar transaction, but including any foreclosure
sale);
Provided, that, in the case of both clause (x) and
(y) above, the divestiture of less than
substantially all of the assets of the Corporation
in one transaction or a series of related
transactions, whether effected by sale, lease,
exchange, transfer, spin-off, sale of the stock of
or merger or consolidation of a subsidiary or
otherwise, shall not constitute a Change in
Control of the Corporation.
Notwithstanding the foregoing, a Change in Control of the Corporation
shall not be deemed to occur: (A) pursuant to clauses (i) and (ii) above, solely
because more than 22.5% of the then outstanding Common Stock or the combined
voting power of the then outstanding voting securities of the Corporation is
held or acquired by one or more employee benefit plans (or releated trusts)
maintained by the Corporation or its subsidiaries; or (B) pursuant to
Subparagraph (v)(y) above, if the Board determines that any sale, lease,
exchange or transfer does not involve substantially all of the assets of the
Corporation.
b. "DATE OF TERMINATION" shall mean:
(i) in case employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time
performance of your duties during such thirty (30) day
period), and
(ii) in all other cases, the date specified in the Notice of
Termination (which shall not be less than thirty (30) nor
more than sixty (60) days, respectively, from the date such
Notice of Termination is given).
c. "DISABILITY" shall mean total physical or mental disability
rendering you unable to perform the duties of your employment for a continuous
period of six (6) months. Any question as to the existence of your Disability
upon which you and the Company cannot agree shall be determined by a qualified
physician not employed by the Company and selected by you (or, if you are unable
to make such selection, it shall be made by any adult member of your immediate
family), and approved by the Company. The determination of such physician made
in writing to the Company and to you shall be final and conclusive for all
purposes of this Agreement.
d. "GOOD REASON FOR RESIGNATION" shall mean, without your
express written consent, any of the following:
(i) (A) a change in your status or position with the Company,
which in your reasonable judgment does not represent a
status or position comparable to your status or position
immediately prior to a Change in Control of the Corporation
or a promotion from your status or position immediately
prior to a Change in Control of the Corporation; or
(B) a reduction in the level of your reporting
responsibility as it existed immediately prior to a Change
in Control of the Corporation; or
(C) the assignment to you of any duties or responsibilities
or diminution of duties or responsibilities which in your
reasonable judgment are inconsistent with your status or
position with the Company in effect immediately prior to a
Change in Control of the Corporation;
it being understood that any of the foregoing in connection
with a termination of your employment for Retirement,
Disability or Termination for Cause shall not constitute
Good Reason for Resignation;
(ii) a reduction by the Company in the annual rate of your
base salary as in effect immediately prior to the date
of a Change in Control of the Corporation or as the same
may be increased from time to time thereafter, or the
Company's failure to increase the annual rate of your
base salary for a calendar year in an amount at least
equal to the average percentage increase in base salary
for all employees of the Company with Severance
Compensation Agreements in the preceding calendar year.
Within three (3) days after your request, the Company
shall notify you of the average percentage increase in
base salary for all such employees of the Company in the
calendar year preceding your request;
(iii) the failure by the Company to continue in effect any
compensation plan in which you participate as in effect
immediately prior to a Change in Control of the
Corporation, including but not limited to any Company
retirement plan, any of the Incentive Compensation
Plans, or any substitute plans adopted prior to a Change
in Control of the Corporation, unless an arrangement
satisfactory to you (embodied in an ongoing substitute
or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue your
participation therein on at least as favorable a basis,
both in terms of the amount of benefits provided and the
level of your participation relative to other
participants, as existed immediately prior to a Change
in Control of the Corporation;
(iv) the Company requiring you to be based outside of a
thirty-five (35) mile radius from where your office is
located immediately prior to a Change in Control of the
Corporation except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to a Change
in Control of the Corporation;
(v) the failure by the Company to continue to provide you
with benefits at least as favorable as those enjoyed by
you (and your dependents, if applicable) under any of
the Company's pre-retirement and post-retirement life
insurance, medical, health and accident, and disability
plans or any other plan, program or policy of the
Company intended to benefit employees in which you were
participating immediately prior to a Change in Control
of the Corporation, the taking of any action by the
Company which would directly or indirectly materially
reduce any of such benefits or deprive you of any
material fringe benefit enjoyed by you immediately prior
to a Change in Control of the Corporation, or the
failure by the Company to provide you with the number of
annual paid vacation days to which you were annually
entitled immediately prior to a Change in Control of the
Corporation;
(vi) the failure of the Company to obtain a satisfactory
agreement from any Successor (as defined in Paragraph 4a
hereof) to assume and agree to perform this Agreement, as
contemplated in Paragraph 4a hereof; or
(vii) the failure of the Company to pay to you an Incentive
Compensation Award, deferred compensation or other
compensation award earned, but not paid, prior to a Change
in Control of the Corporation.
e. "INCENTIVE COMPENSATION" means any compensation,
variable compensation, bonus, benefit or award paid or payable in cash under
an Incentive Compensation Plan.
f. "INCENTIVE COMPENSATION AWARD" shall mean a cash payment
or payments awaded to you under any Incentive Compensation Plan.
g. "INCENTIVE COMPENSATION PLAN(S)" shall mean any variable
compensation or incentive compensation plan maintained by the Company in
which you were a participant immediately prior to a Change in Control of the
Corporation including, but not limited to:
(i) UCAR International Inc. Management Incentive Plan.
h. "NOTICE OF TERMINATION" shall mean a written notice as
provided in Paragraph 8 hereof.
i. "RETIREMENT" shall mean a voluntary termination of
employment in accordance with any Company retirement plan or any retirement
arrangement which is established with your consent with respect to you.
j. "TERMINATION FOR CAUSE" shall mean termination of your employment
upon your willfully engaging in conduct demonstrably and materially injurious to
the Company, monetarily or otherwise, provided that there shall have been
delivered to you a copy of a resolution duly adopted by the unanimous
affirmative vote of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of the
conduct set forth and specifying the particulars thereof in detail.
For purposes of this clause l, no act, or failure to act, on your part shall be
deemed "willful" unless done, or omitted to be done, by you in bad faith and
without reasonable belief that your action or omission was in the best interest
of the Company. Any act or failure to act based upon authority given pursuant to
a resolution duly adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done or omitted to be done by
you in good faith and in the best interests of the Company.
k. "VARIABLE COMPENSATION YEAR" means a calendar year of an
Incentive Compensation Plan.
2. COMPENSATION UPON TERMINATION OR WHILE DISABLED. Following a
Change in Control of the Corporation, you shall be entitled to the following
benefits:
a. TERMINATION OTHER THAN FOR RETIREMENT, DEATH, DISABILITY OR
TERMINATION FOR CAUSE; TERMINATION BY YOUR RESIGNATION WITH GOOD REASON FOR
RESIGNATION. If your employment by the Company shall be terminated subsequent to
a Change in Control of the Corporation and during the term of this Agreement (a)
by the Company other than for Retirement, Death, Disability or Termination for
Cause, or (b) by you for Good Reason for Resignation, then you shall be entitled
to the benefits provided below, without regard to any contrary provision of any
plan:
(i) ACCRUED SALARY. The Company shall pay you, not later than
the fifth day following the Date of Termination, your base
salary and vacation pay accrued through the Date of
Termination (including any banked vacation, vested vacation
for the calendar year in which the Date of Termination
occurs) at the rate in effect at the time the Notice of
Termination is given (or at the rate in effect immediately
prior to a Change in Control of the Corporation, if such
rate was higher).
(ii) ACCRUED INCENTIVE COMPENSATION. The Company shall pay you,
not later than thirty (30) days following your Date of
Termination, the amount of your accrued Incentive
Compensation which shall be determined as follows:
(A) If the Date of Termination is after the end of a
Variable Compensation Year, but before Incentive
Compensation for said Variable Compensation Year has been
paid, the Company shall pay to you under this Agreement for
your service during such Variable
Compensation Year the following:
The amount of your target variable compensation payment
(i.e., the percent of your salary grade midpoint at
risk) for such Variable Compensation Year.
(B) In addition, if the Date of Termination is other than
the first day of a Variable Compensation Year, the Company
shall pay to you under this Agreement for your service
during such Variable Compensation Year up to the Date of
Termination, the following:
The amount of your target variable compensation payment
(i.e., the percent of your salary grade midpoint at
risk) for such Variable Compensation Year (or if such
target has not then been established, your target
variable compensation award for the immediately
preceding Variable Compensation Year), multiplied by a
fraction, the numerator of which is the total number of
days which have elapsed in the current Variable
Compensation Year to the Date of Termination, and the
denominator of which is three hundred sixty-five (365).
If there is more than one Incentive Compensation Plan, your
accrued Incentive Compensation under each Incentive
Compensation Plan shall be determined separately for each
such Plan.
For the purpose this Paragraph 2a(ii), the amount of your
target variable compensation payment shall be used, whether
or not such Incentive Compensation was actually paid to you
or was includible in your gross income for income tax
purposes.
(iii) SEVERANCE PAYMENT. The Company shall pay as a severance
payment to you, not later than the fifth day following the
Date of Termination, a lump sum severance payment (the
"Severance Payment") equal to two and ninety-nine hundreths
(2.99) times the sum of the amounts set forth in the
following paragraphs (A) and (B), less the amount set forth
in paragraph (C):
(A) the greater of your annual base salary which was
payable to you by the Company immediately prior to the Date
of Termination or your annual base salary which was payable
to you by the Company immediately prior to a Change in
Control of the Corporation; plus
(B) the greater of:
(I) The amount of your target variable compensation
payment (i.e., the percent of your salary grade midpoint
at risk) for the year in which the Date of Termination
occurs (or if such target has not then been established,
your target variable compensation award for the
immediately preceding Variable Compensation Year); or
(II) The amount of your target variable compensation
payment (i.e., the percent of your salary grade midpoint
at risk) for the year in which the Change in Control of
the Corporation occurs (or if such target has not then
been established, your target variable compensation
award for the immediately preceding Variable
Compensation Year); minus
(C) the amount of any payment or the value of any benefit
received or to be received by you pursuant to any
termination or layoff pay policy or plan of the Company.
For purposes of calculations under this subparagraph (iv),
the amounts of base salary and target variable compensation
payments shall be the amounts calculated without regard to
whether or not such amounts were paid or includible in your
gross income for income tax purposes.
(iv) REDUCTION IN SEVERANCE PAYMENT. The Severance Payment shall
be reduced but not below zero by the amount of any other
payment or the value of any benefit received or to be
received by you upon your termination of employment with the
Company (whether payable pursuant to the terms of this
Agreement, any other plan, agreement or arrangement with the
Company or an affiliate or any severance benefits required
to be paid by the Company pursuant to the laws of the
country in which you are employed), unless you shall have
effectively waived your receipt or enjoyment of such payment
or benefit prior to the date of payment of the Severance
Payment.
(v) NO DUTY TO MITIGATE. You shall not be required to mitigate
the amount of any payment provided for in this Paragraph 2
by seeking other employment or otherwise, nor shall the
amount of any payment or benefit hereunder be reduced by any
compensation earned by you as the result of employment by
another employer or by retirement benefits after the Date of
Termination, or otherwise.
b. PAYMENTS WHILE DISABLED. During any period prior to the Date of
Termination and during the term of this Agreement that you are unable to perform
your full-time duties with the Company, whether as a result of your Disability
or as a result of a physical or mental disability that is not total and
therefore is not a Disability, you shall continue to receive your base salary at
the rate in effect at the commencement of any such period, together with all
other compensation and benefits that are payable or provided under the Company's
benefit plans, including its disability plans. After the Date of Termination for
Disability, your benefits shall be determined in accordance with any retirement
plan, insurance and other applicable programs of the Company. The compensation
and benefits, other than salary, payable or provided pursuant to this
subparagraph b shall be the greater of (x) the amounts computed under any
retirement plan, disability benefit plans, insurance and other applicable
programs in effect immediately prior to a Change in Control of the Corporation
and (y) the amounts computed under any retirement plan, disability benefit
plans, insurance and other applicable programs in effect at the time the
compensation and benefits are paid.
c. PAYMENTS IF TERMINATED FOR CAUSE, OR TERMINATION BY YOU OTHER
THAN WITH GOOD REASON FOR RESIGNATION. If your employment shall be terminated by
the Company as a Termination for Cause or by you other than with Good Reason for
Resignation, the Company shall pay you your full base salary and accrued
vacation pay (including any banked vacation, vested vacation for the calendar
year in which the Date of Termination occurs) through the Date of Termination,
at the rate in effect at the time Notice of Termination is given, plus any
benefits or awards which have been earned or become payable but which have not
yet been paid to you. You shall receive any payment due under this subparagraph
c on your Date of Termination. Thereafter, the Company shall have no further
obligation to you under this Agreement.
d. AFTER RETIREMENT OR DEATH. If your employment shall be
terminated by your Retirement, or by reason of your death, your benefits shall
be determined in accordance with the Company's retirement and insurance programs
then in effect.
3. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and
shall continue in effect through December 31, 1999; provided, however, that
commencing on January 1, 2000 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Company or you shall have
given notice that it or you does not wish to extend this Agreement.
Notwithstanding any such notice by the Company not to extend, if a Change in
Control of the Corporation shall have occurred during the original or any
extended term of this Agreement, or within three months thereafter, this
Agreement shall continue in effect. In any event, the term of this Agreement
shall expire on the first (1st) anniversary of the date of a Change in Control
of the Corporation. This Agreement shall terminate if your employment is
terminated by you or the Company prior to a Change in Control of the
Corporation.
4. SUCCESSORS; BINDING AGREEMENT.
a. SUCCESSORS OF THE COMPANY. The Company will require any Successor
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assent at
least five business days prior to the time a person becomes a Successor (or
where the Company does not have at least five business days advance notice that
a person may become a Successor, within three business days after having notice
that such person may become or has become a Successor) shall constitute Good
Reason for Resignation by you and, if a Change in Control of the Corporation has
occurred or thereafter occurs, shall entitle you immediately to the benefits
provided in Paragraph 2a hereof upon delivery by you of a Notice of Termination.
For purposes of this Agreement, "Successor" shall mean any person that obtains
or succeeds to, or has the practical ability to control (either immediately or
with the passage of time), the Company's business directly, by merger or
consolidation, or indirectly, by purchase of voting securities of the Company by
acquisition of rights to vote voting securities of the Company or otherwise,
including but not limited to any person or group that acquires the beneficial
ownership or voting rights described in Paragraph 1a(i) or (ii).
b. YOUR SUCCESSOR. This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die following your Date of Termination while any amount would still be
payable to you hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
5. NATURE OF PAYMENTS. All payments to you under this Agreement
shall be considered severance payments in consideration of your past service to
the Company.
6. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
7. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
8. NOTICE. Any purported termination of your employment by the Company or
by you following a Change in Control of the Corporation shall be communicated to
the other party by a written Notice of Termination. A Notice of Termination by
you shall indicate in reasonable detail the facts and circumstances claimed to
provide a basis for a Good Reason for Resignation. For the purpose of this
Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first page of
this Agreement, provided that all notices to the Company shall be directed to
the attention of the Board with a copy to the Secretary of the Company or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. FEES AND EXPENSES. The Company shall pay all legal fees and related
expenses incurred by you as a result of your termination following a Change in
Control of the Corporation or by you in seeking to obtain or enforce any right
or benefit provided by this Agreement (including all fees and expenses, if any,
incurred in contesting or disputing any such termination or incurred by you in
seeking advice in connection therewith).
10. MISCELLANEOUS. No provision of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver or
discharge is agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.
11. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware (without regard to the choice of laws provisions thereof).
<PAGE>
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
---------------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
Agreed to this day
of , 1999
- --------------------------------
<PAGE>
UCAR International Inc. agrees to be jointly and severally liable for the
benefits required to be paid by the Company pursuant to the terms of this
Agreement; provided, however, that UCAR International Inc. shall not be liable
for any severance payments required to be made by the Company under the laws of
the country in which you are employed.
Agreed and Accepted
UCAR INTERNATIONAL INC.
By:
-----------------------------------------
Title: Vice President
Agreed to this day
of , 1999
- -----------------------------
Each of the undersigned parties hereby agree to irrevocably submit to the
jurisdiction of any State or Federal court sitting in the state of Delaware and
any appellate court thereof, in any action or proceeding against UCAR
International Inc. arising out of or relating to this Agreement, and each of the
undersigned parties hereby irrevocably agree that all claims in respect of such
action or proceeding shall only be heard and determined in such State or Federal
court sitting in the state of Delaware.
UCAR INTERNATIONAL INC.
By:
-----------------------------------------
Title: Vice President
Agreed to this day
of , 1999
- ---------------------------------
<PAGE>
KPMG EXHIBIT 18.1
Stamford Square
3001 Summer Street
Stamford, CT 06905
February 26, 1999
UCAR International Inc.
39 Old Ridgebury Road
Danbury, CT
Gentlemen:
We have audited the consolidated balance sheets of UCAR International Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
each of the years in the three-year period ended December 31, 1998, and have
reported thereon under date of February 26, 1999. The aforementioned
consolidated financial statements and our audit report thereon are included in
the Company's annual report on Form 10-K for the year ended December 31, 1998.
As stated in Note 2 to those financial statements, the Company changed its
method of accounting for the cost of certain U.S. inventories from the last-in
first-out (LIFO) method to the first-in first-out (FIFO) method and states that
the newly adopted accounting principle is preferable in the circumstances
because it provides improved consistency in accounting for worldwide inventories
and avoids potential distortions of future profits from anticipated decrements.
In accordance with your request, we have reviewed and discussed with Company
officials the circumstances and business judgment and planning upon which the
decision to make this change in the method of accounting was based.
With regard to the aforementioned accounting change, authoritative criteria have
not been established for evaluating the preferability of one acceptable method
of accounting over another acceptable method. However, for purposes of the
Company's compliance with the requirements of the Securities and Exchange
Commission, we are furnishing this letter.
Based on our review and discussion, with reliance on management's business
judgment and planning, we concur that the newly adopted method of accounting is
preferable in the Company's circumstances.
Very truly yours,
/s/ KPMG LLP
<PAGE>
EXHIBIT 21.1
Subsidiaries of UCAR International Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION INTERNATIONAL INC.
- --------------------------------------------------------------------------------
1. UCAR Global Delaware 100%
Enterprises Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION GLOBAL ENTERPRISES INC.
- --------------------------------------------------------------------------------
2. UCAR Carbon Company
Inc. Delaware 100%
- --------------------------------------------------------------------------------
3. UCAR Holdings II Inc. Delaware 100%
- --------------------------------------------------------------------------------
4. UCAR Carbon S.A. Brazil 95.3%(a)
- --------------------------------------------------------------------------------
5. UCAR S.A. Switzerland 100%(b)
- --------------------------------------------------------------------------------
6. UCAR Holding S.A. Austria 67%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION CARBON COMPANY INC.
- --------------------------------------------------------------------------------
7. UCAR Holdings Inc. Delaware 100%
- --------------------------------------------------------------------------------
8. UCAR Limited United Kingdom 100%(c)
- --------------------------------------------------------------------------------
9. EMSA (Pty.) Ltd. South Africa 100%
- --------------------------------------------------------------------------------
10. Carbographite Limited South Africa 100%
- --------------------------------------------------------------------------------
11. UCAR International
Trading Inc. Delaware 100%
- --------------------------------------------------------------------------------
12. UCAR Carbon
Technology Corporation Delaware 100%
- --------------------------------------------------------------------------------
13. UCAR Carbon Foreign
Sales Corporation Virgin Islands 100%
- --------------------------------------------------------------------------------
14. UCAR Composites Inc. California 100%
- --------------------------------------------------------------------------------
15. Union Carbide
Grafito, Inc. New York 100%
- --------------------------------------------------------------------------------
16. Unicarbon Comercial Brazil 100%
Ltda.
- --------------------------------------------------------------------------------
17. UCAR Carbon
(Malaysia) Sdn. Bhd. Malaysia 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS II INC.
- --------------------------------------------------------------------------------
18. UCAR Holdings III Delaware 100%
Inc.
- --------------------------------------------------------------------------------
19. UCAR Electrodos, S.L. Spain 100%(d)
- --------------------------------------------------------------------------------
20. UCAR Inc. Canada 100%
- --------------------------------------------------------------------------------
21. UCAR Elektroden GmbH Germany 70%
- --------------------------------------------------------------------------------
22. UCAR Holdings Limited United Kingdom 100%
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS GMBH
- --------------------------------------------------------------------------------
23. UCAR Grafit OAO Russia 96.27%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
24. UCAR Mexicana, S.A.
de C.V. Mexico 100%(e)
- --------------------------------------------------------------------------------
25. UCAR S.p.A. Italy 100%(f)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
26. UCAR S.N.C. France 100%(g)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
27. Carbone Savoie France 70%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION MEXICANA, S.A. DE C.V.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
28. UCAR Carbon
Mexicana, S.A. de C.V. Mexico 100%(h)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR CARBON
NAME OF SUBSIDIARY INCORPORATION MEXICANA, S.A. DE C.V.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
29. Servicios
Administratoes Mexico 100%(i)
Carmex, S.A. de C.V.
- --------------------------------------------------------------------------------
30. Servicios DYC, S.A.
de C.V. Mexico 100%(j)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNERSHIP BY UCAR S.P.A.
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP BY UCAR S.P.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
31. UCAR Energia S.r.l. Italy 100%
- --------------------------------------------------------------------------------
32. UCAR Specialties S.r.l. Italy 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR CARBON
NAME OF SUBSIDIARY INCORPORATION S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
33. UCAR Produtos de
Carbono S.A. Brazil 99.9%(k)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UNICARBON
NAME OF SUBSIDIARY INCORPORATION COMERCIAL LTDA.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
34. UCAR Carbon S.A. Brazil 2.33%(l)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION OWNERSHIP BY UCAR S.A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
35. UCAR Holding GmbH Austria 33%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JURISDICTION OF OWNERSHIP BY UCAR
NAME OF SUBSIDIARY INCORPORATION HOLDINGS LIMITED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
36. UCAR Holdings S.A. France 100%(m)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(a) 95.3% owned by UCAR Global Enterprises Inc. 2.33% owned by Unicarbon
Comercial Ltda. Third parties own the other shares of UCAR Carbon S.A.
(b) 99.9% owned by UCAR Global Enterprises Inc. Nominees own the other three
shares of UCAR S.A.
(c) 99.9% owned by UCAR Carbon Company Inc. A nominee owns the other share of
UCAR Limited.
(d) 99.9% owned by UCAR Holdings II Inc. UCAR Carbon Company Inc. owns the other
0.1% of UCAR Electrodos S.L.
(e) 99.9% owned by UCAR Holdings Inc. UCAR Carbon Company Inc. owns the other
share of UCAR Mexicana, S.A. de C.V.
(f) 99.9% owned by UCAR Holdings Inc. UCAR Carbon Company Inc. owns the other
0.1% of UCAR S.p.A.
(g) 99.9% owned by UCAR Holdings S.A. UCAR Holdings III Inc. owns the other
share of UCAR S.N.C.
(h) 99.9% owned by UCAR Mexicana, S.A. de C.V. UCAR Carbon Company Inc. owns the
other 0.1% of UCAR Carbon Mexicana, S.A. de C.V.
(i) 99.9% owned by UCAR Carbon Mexicana, S.A. de C.V. A nominee owns the other
shares of Servicios Administratoes Carmex, S.A. de C.V.
(j) 99.9% owned by UCAR Carbon Mexicana, S.A. de C.V. A nominee owns the other
shares of Servicios DYC, S.A. de C.V.
<PAGE>
(k) 99.9% owned by UCAR Carbon S.A. Third parties own the other shares of UCAR
Productos de Carbono S.A.
(l) See note (a).
(m) 99.4% owned by UCAR Holdings Limited. UCAR International Inc., UCAR Global
Enterprises Inc., UCAR Carbon Company Inc. and three nominees own the other
shares of UCAR Holdings S.A.
<PAGE>
KPMG
EXHIBIT 23.1
Stamford Square
3001 Summer Street
Stamford, CT 06905
Consent of Independent Auditors
The Board of Directors
UCAR International Inc.
We consent to the incorporation by reference in each of the Registration
Statements of UCAR International Inc. on Form S-3 (No. 333-26097), and on Form
S-8 (Nos. 33-95546, 33-95548, 33-95550, 333-02560, 333-02598, and 333-36653) of
our report dated February 26, 1999, relating to the consolidated balance sheets
of UCAR International Inc. and subsidiaries as of December 31, 1998 and 1997,
and the related consolidated statements of income, Stockholders' equity and cash
flows and related schedule for each of the years in the three-year period ended
December 31, 1998, appearing and incorporated by reference in the Annual Report
on Form 10-K of UCAR International Inc for the year ended December 31, 1998.
/s/ KPMG LLP
March 26, 1999
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY CONSOLIDATED FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF UCAR INTERNATIONAL INC.,INCLUDED IN ITS
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 58
<SECURITIES> 11
<RECEIVABLES> 203
<ALLOWANCES> 5
<INVENTORY> 264
<CURRENT-ASSETS> 578
<PP&E> 1,220
<DEPRECIATION> 752
<TOTAL-ASSETS> 1,137
<CURRENT-LIABILITIES> 375
<BONDS> 722
0
0
<COMMON> 0
<OTHER-SE> (287)
<TOTAL-LIABILITY-AND-EQUITY> 1,137
<SALES> 947
<TOTAL-REVENUES> 947
<CGS> 604
<TOTAL-COSTS> 604
<OTHER-EXPENSES> 155
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 73
<INCOME-PRETAX> 4
<INCOME-TAX> 32
<INCOME-CONTINUING> (28)
<DISCONTINUED> 0
<EXTRAORDINARY> (7)
<CHANGES> 0
<NET-INCOME> (37)
<EPS-PRIMARY> (0.83)
<EPS-DILUTED> (0.83)
</TABLE>
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
RESTATED FINANCIAL DATA SCHEDULE FOR THE FISCAL YEARS ENDED DECEMBER 31, 1997
AND 1996
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 58 95
<SECURITIES> 20 0
<RECEIVABLES> 248 191
<ALLOWANCES> 6 6
<INVENTORY> 235 <F1> 205 <F1>
<CURRENT-ASSETS> 595 <F1> 512 <F1>
<PP&E> 1,289 1,087
<DEPRECIATION> 724 653
<TOTAL-ASSETS> 1,262 <F1> 1,017 <F1>
<CURRENT-LIABILITIES> 501 <F1> 249
<BONDS> 604 581
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (227)<F1> 17 <F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,262 <F1> 1,017 <F1>
<SALES> 1,097 948
<TOTAL-REVENUES> 1,097 948
<CGS> 686 583
<TOTAL-COSTS> 686 583
<OTHER-EXPENSES> 349 8
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 64 61
<INCOME-PRETAX> (122) 207
<INCOME-TAX> 39 68
<INCOME-CONTINUING> (161) 139
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0 <F1>
<NET-INCOME> (160) 145 <F1>
<EPS-PRIMARY> (3.49) 3.15 <F1>
<EPS-DILUTED> (3.49) 3.00 <F1>
<FN>
<F1> Restated for change in accounting for the cost of certain U.S. inventories
from the last-in first-out method (LIFO) to the first-in first-out (FIFO)
method.
</FN>
</TABLE>
