-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QhjYhTbChIC+1I1/KwFcjOBQcdlOqphQ3IGMy1NlWQxo2i7SQMXJiHtqovGFmIZt 9o8ADJuFyI07TMYhVYlEZA== 0000313058-95-000006.txt : 19951119 0000313058-95-000006.hdr.sgml : 19951119 ACCESSION NUMBER: 0000313058-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHDOWN INC CENTRAL INDEX KEY: 0000313058 STANDARD INDUSTRIAL CLASSIFICATION: CEMENT, HYDRAULIC [3241] IRS NUMBER: 720296500 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06117 FILM NUMBER: 95589685 BUSINESS ADDRESS: STREET 1: 1200 SMITH ST STE 2400 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7136506200 MAIL ADDRESS: STREET 1: 1200 SMITH STREET SUITE 2400 CITY: HOUSTON STATE: TX ZIP: 77002 10-Q 1 --------------------------------------------------------------------- --------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 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 1-6117 SOUTHDOWN, INC. (Exact name of registrant as specified in its charter) Louisiana 72-0296500 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1200 Smith Street Suite 2400 Houston, Texas 77002 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 650-6200 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 periods 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 At September 30, 1995 there were 17.3 million common shares outstanding. ------------------------------------------------------------------ ------------------------------------------------------------------ SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES INDEX Page No. Part I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Consolidated Balance Sheet September 30, 1995 and December 31, 1994 1 Statement of Consolidated Earnings Three months and nine months ended September 30, 1995 and 1994 2 Statement of Consolidated Cash Flows Nine months ended September 30, 1995 and 1994 3 Statement of Consolidated Revenues and Operating Earnings by Business Segment Three months and nine months ended September 30, 1995 and 1994 4 Statement of Shareholders' Equity Nine months ended September 30, 1995 4 Notes to Consolidated Financial Statements 5 Independent Accountants' Review Report 8 Item 2. Management' s Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. OTHER INFORMATION Item 1. Legal Proceedings 16 Item 6. Exhibits and Reports on Form 8-K 18 PART I. FINANCIAL INFORMATION Item 1. Financial Statements SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (Unaudited)
(in millions) ------------------------------- September 30, December 31, 1995 1994 -------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 10.5 $ 7.4 Accounts and notes receivable, less allowance for doubtful accounts of $9.5 and $7.2 88.3 73.0 Inventories (Note 3) 71.7 54.0 Deferred income taxes 11.1 26.5 Assets held for sale - 13.2 Prepaid expenses and other 3.9 3.5 -------------- ------------- Total current assets 185.5 177.6 Property, plant and equipment, less accumulated depreciation, depletion and amortization of $327.6 and $306.0 562.6 560.2 Goodwill 80.5 78.6 Other long-term assets: Long-term receivables 23.0 15.3 Other 48.5 49.3 -------------- ------------- $ 900.1 $ 881.0 -------------- ------------- -------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 1.3 $ 0.3 Accounts payable and accrued liabilities 94.3 103.2 -------------- ------------- Total current liabilities 95.6 103.5 Long-term debt (Note 4) 199.5 185.8 Deferred income taxes 110.3 122.7 Minority interest in consolidated joint venture 31.9 28.9 Long-term portion of postretirement benefit obligation 80.7 82.0 Other long-term liabilities and deferred credits 18.0 21.0 -------------- ------------- 536.0 543.9 -------------- ------------- Shareholders' equity: Preferred stock redeemable at issuer's option (Note 5) 151.9 152.0 Common stock, $1.25 par value 21.6 21.6 Capital in excess of par value 126.9 126.6 Reinvested earnings 63.7 36.9 -------------- ------------- 364.1 337.1 -------------- ------------- $ 900.1 $ 881.0 -------------- ------------- -------------- -------------
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES STATEMENT OF CONSOLIDATED EARNINGS (Unaudited)
(in millions, except per share data) -------------------------------------------- Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 1995 1994 1995 1994 --------- --------- -------- -------- Revenues $ 170.4 $ 158.3 $ 444.5 $ 419.0 --------- --------- -------- -------- Costs and expenses: Operating 118.0 117.0 304.7 301.1 Depreciation, depletion and amortization 10.2 9.6 29.9 29.4 Selling and marketing 3.8 3.4 11.3 10.2 General and administrative 9.3 8.3 27.8 28.7 Other income, net (1.7) - (4.4) (3.7) --------- --------- -------- -------- 139.6 138.3 369.3 365.7 Minority interest in earnings of consolidated joint venture 2.6 1.4 4.3 2.5 --------- --------- -------- -------- 142.2 139.7 373.6 368.2 --------- --------- -------- -------- Operating earnings 28.2 18.6 70.9 50.8 Interest, net of amounts capitalized (6.6) (6.4) (20.0) (22.6) --------- --------- -------- -------- Earnings from continuing operations 21.6 12.2 50.9 28.2 Federal and state income tax expense (7.1) (3.6) (16.7) (8.8) --------- --------- -------- -------- Earnings from continuing operations 14.5 8.6 34.2 19.4 Loss from discontinued operations, net of income taxes (Note 2) - (2.1) - (4.1) --------- --------- -------- -------- Net earnings $ 14.5 $ 6.5 $ 34.2 $ 15.3 --------- --------- -------- -------- --------- --------- -------- -------- Dividends on preferred stock (Note 5) $ (2.4) $ (2.5) $ (7.3) $ (7.0) --------- --------- -------- -------- --------- --------- -------- -------- Earnings (loss) per common share (Note 5): Primary Earnings from continuing operations $ 0.68 $ 0.35 $ 1.53 $ 0.69 Loss from discontinued operations, net of income taxes - (0.12) - (0.23) --------- --------- --------- --------- $ 0.68 $ 0.23 $ 1.53 $ 0.46 --------- --------- --------- --------- --------- --------- --------- --------- Fully diluted Earnings from continuing operations $ 0.62 $ 0.35 $ 1.46 $ 0.69 Loss from discontinued operations, net of income taxes - (0.12) - (0.23) --------- --------- --------- --------- $ 0.62 $ 0.23 $ 1.46 $ 0.46 --------- --------- --------- --------- --------- --------- --------- --------- Average shares outstanding (Exhibit 11) Primary 17.6 17.7 17.5 17.8 --------- --------- -------- -------- --------- --------- -------- -------- Fully diluted 23.5 17.7 23.4 17.8 --------- --------- -------- -------- --------- --------- -------- --------
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES STATEMENT OF CONSOLIDATED CASH FLOWS (Unaudited)
(in millions) ------------------------- Nine Months Ended September 30, ------------------------- 1995 1994 ---------- --------- Operating activities: Earnings from continuing operations $ 34.2 $ 19.4 Adjustments to reconcile earnings from continuing operations to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 29.9 29.4 Deferred income tax expense 9.4 1.6 Amortization of debt issuance costs 2.0 2.7 Changes in operating assets and liabilities (51.0) (5.0) Other adjustments 2.7 2.5 Net cash used in discontinued operations (2.5) (2.9) ---------- --------- Net cash provided by operating activities 24.7 47.7 ---------- --------- Investing activities: Additions to property, plant and equipment (19.3) (16.1) Acquisitions, net of cash acquired (12.6) - Proceeds from asset sales 8.8 2.0 Other (0.5) (3.8) Net cash used in discontinued operations (1.5) (5.0) ---------- --------- Net cash used in investing activities (25.1) (22.9) ---------- --------- ---------- --------- Financing activities: Additions to long-term debt 13.4 11.0 Reductions in long-term debt (0.4) (110.7) Dividends (8.2) (4.9) Changes in minority interest (1.3) (1.3) Proceeds from sale of preferred stock - 86.3 Securities issuance costs - (4.3) ---------- --------- Net cash provided by (used in) financing activities 3.5 (23.9) ---------- --------- Net increase in cash and cash equivalents 3.1 0.9 Cash and cash equivalents at beginning of period 7.4 7.4 ---------- --------- Cash and cash equivalents at end of period $ 10.5 $ 8.3 ---------- --------- ---------- ---------
Cash payments for income taxes totaled $9.9 million and $257,000 in 1995 and 1994, respectively. In order not to incur additional interest charges, in early January 1995 the Company also paid a $7.6 million tax assessment, including interest, proposed by the Internal Revenue Service in a preliminary audit report issued in late 1994. Interest paid, net of amounts capitalized, was $13.8 million and $18.1 million in 1995 and 1994, respectively. SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES STATEMENT OF CONSOLIDATED REVENUES AND OPERATING EARNINGS BY BUSINESS SEGMENT (Unaudited)
(in millions) ------------------------------------------- Three Months Ended Nine Months Ended September 30, September 30, -------------------- ------------------ 1995 1994 1995 1994 --------- -------- -------- --------- Contributions to revenues: Cement $124.3 $ 115.7 $ 313.2 $ 296.6 Concrete products 56.7 53.6 162.9 156.8 Intersegment sales (10.6) (11.0) (31.6) (34.4) --------- -------- -------- --------- $170.4 $ 158.3 $ 444.5 $ 419.0 --------- -------- -------- --------- --------- -------- -------- --------- Contributions to operating earnings (loss) before interest expense and income taxes: Cement $ 32.7 $ 21.6 $ 84.5 $ 66.1 Concrete products 0.7 3.3 4.6 6.2 Corporate General and administrative (5.8) (5.0) (18.1) (19.5) Depreciation, depletion and amortization (1.0) (1.3) (3.1) (3.7) Miscellaneous income 1.6 - 3.0 1.7 --------- -------- -------- --------- $ 28.2 $ 18.6 $ 70.9 $ 50.8 --------- -------- -------- --------- --------- -------- -------- ---------
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)
(in millions) -------------------------------------------------------------------- Preferred Stock Common Stock Capital ----------------- ------------------ in excess of Reinvested Shares Amount Shares Amount par value earnings ------- ------- ------- -------- ------------ ----------- Balance at December 31, 1994 4.6 $152.0 17.3 $ 21.6 $ 126.6 $ 36.9 Net earnings - - - - - 34.2 Dividends on preferred stock (Note 5) - - - - - (7.3) Other - (0.1) - - 0.3 (0.1) ------- -------- ------- --------- --------- --------- Balance at September 30, 1995 4.6 $151.9 17.3 $ 21.6 $ 126.9 $ 63.7 ------- -------- ------- --------- --------- --------- ------- -------- ------- --------- --------- ---------
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1 - Unaudited Consolidated Financial Statements: The Consolidated Balance Sheet of Southdown, Inc. and subsidiary companies (the Company) at September 30, 1995 and the Statements of Consolidated Earnings, Consolidated Cash Flows, Consolidated Revenues and Operating Earnings by Business Segment and Shareholders' Equity for the periods indicated herein have been prepared by the Company without audit. The Consolidated Balance Sheet at December 31, 1994 is derived from the December 31, 1994 audited financial statements, but does not include all disclosures required by generally accepted accounting principles. It is assumed that these financial statements will be read in conjunction with the audited financial statements and notes thereto included in the Company's 1994 Annual Report on Form 10-K. In the opinion of management, the statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis and all such adjustments are of a normal recurring nature. The interim statements for the period ended September 30, 1995 are not necessarily indicative of results to be expected for the full year. Certain data from the prior year have been reclassified for purposes of comparison. Note 2 - Discontinued Environmental Services Segment: During the fourth quarter of 1994, the Company adopted a formal plan to exit the environmental services business and recorded a $21.6 million charge to earnings to reflect (i) the difference between the book value of the environmental services assets and the estimated proceeds from the disposal of those assets and (ii) the estimated losses to be incurred prior to the sale of the assets and other direct costs of exiting the business. During April 1995, the Company sold all the outstanding shares of stock of its remaining hazardous waste processing facilities for a combination of $11.8 million in cash and notes plus certain working capital items. The Company remains contingently liable for certain environmental remediation issues, known and unknown, under the indemnification provisions of the sales agreements. As a result of the decision to exit the environmental services business, prior periods have been restated to present the results from the Environmental Services segment as discontinued operations. Summary operating results of the discontinued Environmental Services segment are as follows: (unaudited in millions) -------------------------------- Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 1994 1994 ------ ------ Revenue: As previously reported $ 167.2 $ 444.2 Less amounts attributable to discontinued operations 8.9 25.2 ----------- ---------- Revenue from continuing operations $ 158.3 $ 419.0 ----------- ---------- ----------- ---------- Pre-tax operating loss from discontinued operations $ (3.1) $ (6.2) ----------- ---------- ----------- ---------- Note 3 - Inventories: (unaudited in millions) -------------------------------- September 30, December 31, 1995 1994 -------------- ------------ Finished goods $ 19.5 $ 15.1 Work in progress 17.2 6.5 Raw materials 5.9 4.6 Supplies 29.1 27.8 --------- -------- $ 71.7 $ 54.0 --------- -------- --------- -------- Inventories stated on the LIFO method were $28.8 million of total inventories at September 30, 1995 and $19.2 million of total inventories at December 31, 1994 compared with current costs of $37.1 million and $27.5 million, respectively. For interim reporting purposes, the Company charges cost of goods sold for its cement manufacturing operations on the basis of predetermined standard cost estimates established by management. The Company defers as a charge or credit to inventory any difference between actual manufacturing costs and the standard. At year-end, any variation remaining between the result at standard cost and actual cost is charged or credited to cost of goods sold. Note 4 - Revolving Credit Facility: On November 3, 1995, the Company entered into a Restated Revolving Credit Facility with the same banks as in its previous revolving credit facility. The Restated Revolving Credit Facility, at $200 million, remains the same size as the previous revolving credit facility, but (i) extends the maturity to October 30, 2000, (ii) initially reduces borrowing rates and Letter of Credit fees based on leverage ratios and capital expenditure levels, (iii) provides the Company with enhanced flexibility under certain restrictive covenants, (iv) eases certain administrative burdens and (v) allows the Company to redeem or repurchase subordinated debt and capital stock within certain limits. Note 5 - Capital Stock: Common Stock At September 30, 1995 17,284,000 shares of common stock were issued and outstanding. Preferred Stock Redeemable at Issuer's Option Series A Preferred Stock - The Company had 1,994,000 shares of Preferred Stock, $0.70 Cumulative Convertible Series A (Series A Preferred Stock) outstanding at September 30, 1995, December 31, 1994 and September 30, 1994. Dividends paid on the Series A Preferred Stock were approximately $350,000 and $1 million, respectively, during each of the three and nine month periods ended September 30, 1995 and 1994. Series B Preferred Stock - The Company had 914,360 shares of Preferred Stock, $3.75 Convertible Exchangeable Series B (Series B Preferred Stock) outstanding at September 30, 1995, and 917,160 shares outstanding at December 31, 1994 and September 30, 1994. Dividends accrued on the Series B Preferred Stock were approximately $860,000 during the three months ended September 30, 1995 and 1994. Dividends accrued on the Series B Preferred Stock were approximately $2.6 million during each of the nine months ended September 30, 1995 and 1994. Series D Preferred Stock - On January 27, 1994, the Company issued 1,725,000 shares of Preferred Stock, $2.875 Cumulative Convertible Series D (Series D Preferred Stock) all of which were outstanding at September 30, 1995, December 31, 1994, and September 30, 1994. Dividends accrued on the Series D Preferred Stock were approximately $1.2 million and $1.3 million, respectively, during the three month periods ended September 30, 1995 and 1994. Dividends accrued on the Series D Preferred Stock were approximately $3.7 million and $3.4 million, respectively, during the nine month periods ended September 30, 1995 and 1994. Note 6 - Contingencies: See Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Known Events, Trends and Uncertainties" for discussion of certain contingencies. Note 7 - Review by Independent Accountants: The unaudited financial information presented in this report has been reviewed by the Company's independent public accountants. The review was limited in scope and did not constitute an audit of the financial information in accordance with generally accepted auditing standards such as is performed in the year-end audit of financial statements. The report of Deloitte & Touche LLP relating to its limited review of the financial information as of September 30, 1995 and for the nine-month periods ended September 30, 1995 and 1994 follows. INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Shareholders and Board of Directors of Southdown, Inc. Houston, Texas We have reviewed the accompanying consolidated balance sheet of Southdown, Inc. and subsidiary companies as of September 30, 1995, and the related consolidated statements of earnings and cash flows for the nine months ended September 30, 1995 and 1994 and the statement of shareholders' equity for the nine months ended September 30, 1995. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of the interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Southdown, Inc. and subsidiary companies as of December 31, 1994 and the related consolidated statements of earnings, shareholders' equity and cash flows for the year then ended (not presented herein); and in our report dated January 27, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1994 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Deloitte & Touche LLP Houston, Texas October 25, 1995 (November 3, 1995 as to Note 4) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Consolidated Third Quarter Earnings Net earnings for the third quarter of 1995 were $14.5 million, $0.62 per share fully diluted. Net earnings for the prior year quarter were $6.5 million, $0.23 per share, including a loss from the discontinued environmental services operation of $2.1 million, $0.12 per share. Third quarter 1995 operating earnings improved 52% or $9.6 million over the same quarter of the prior year. The improvement reflects the second consecutive record quarterly earnings achieved by the Cement segment. The increase was attributable to an 8% improvement in cement sales prices and lower unit costs of sales compared with the prior year quarter. Operating earnings for the Concrete Products segment declined primarily because higher operating costs more than offset a 6% improvement in ready- mixed concrete sales prices. Consolidated Year-to-Date Earnings Net earnings for the nine months ended September 30, 1995 were $34.2 million, $1.46 per share, fully diluted, compared with $15.3 million, $0.46 per share, in the prior year period, including a loss from the discontinued environmental services operation of $4.1 million, $0.23 per share. The year-over-year improvement resulted from a 28% increase in cement earnings, a 9% reduction in corporate expenses and a 12% reduction in interest expense. The Cement segment benefited from a 10% improvement in average sales prices, partly offset by a 3% decrease in sales volume and higher unit cost of sales. Excluding the prior year gain of $1.4 million on the sale of the surplus used mixer trucks, operating earnings reported by the Concrete Products segment were approximately the same as the prior year period. The reduction of interest expense reflects the early retirement of $90 million of 12% notes during the first nine months of 1994. Segment Operating Earnings Cement Third Quarter - Operating earnings of the Cement segment for the three month period ended September 30, 1995 were $32.7 million which represented a record quarter and a 51% improvement over the $21.6 million reported in the prior year quarter. Cement sales prices improved an average of $4.30 per ton for the quarter, reflecting price increases in all of the Company's markets, while sales volumes were approximately the same as the previous year's quarter. The segment's 1995 per unit operating costs were lower than the prior year quarter primarily because the prior year quarter included an unfavorable clinker inventory adjustment at the Fairborn, Ohio plant, expenses to repair kiln damage from an unusual storm at the Victorville, California plant and a kiln outage at the Lyons, Colorado plant. Year-to-Date - Operating earnings for the nine months ended September 30, 1995 were $84.5 million compared with $66.1 million in the prior year period. Despite higher unit cost of sales and lower sales volumes, operating earnings improved because of a $5.40 per ton increase in average cement sales prices reflecting increases in all the Company's market areas since mid-1994. The 3% reduction in sales volume primarily reflects the impact of inclement weather in several market areas, most notably Ohio, Colorado and southern California. Even though manufacturing costs per ton during the first nine months of 1995 were 2% lower than the prior year period, unit cost of sales were higher. The increase in unit cost of sales reflects: (i) an 56% increase in outside purchases of higher cost finished cement to supply what had earlier been anticipated to be increased demand at various cement plants and sales terminals and (ii) higher terminal operating costs in the Company's Florida market area where an additional terminal was acquired in late 1994. The segment's operating results for 1995 were also impacted by a second quarter $1 million charge related to a litigation settlement. Sales volumes, average unit price and cost data and unit operating profit margins relating to the Company's cement plant operations appear in the following table:
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1995 1994 1995 1994 -------- -------- -------- -------- Tons of cement sold (thousands) 1,759 1,769 4,527 4,687 -------- -------- -------- -------- -------- -------- -------- -------- Weighted average per ton data: Sales price (net of freight) $ 61.55 $ 57.25 $ 60.70 $ 55.30 Cost of sales (1) 41.31 43.31 42.85(2) 41.83 -------- -------- -------- -------- Margin $ 20.24 $ 13.94 $ 17.85 $ 13.47 -------- -------- -------- -------- -------- -------- -------- -------- ______________ (1) Includes fixed and variable manufacturing costs, cost of purchased cement, selling expenses, plant general and administrative costs, other plant overhead and miscellaneous costs. (2) Excludes a $1 million charge in the nine months ended September 30, 1995 related to a litigation settlement.
Concrete Products Third Quarter - The Concrete Products segment's operating earnings for the quarter ended September 30, 1995 declined to $0.7 million compared with $3.3 million in the prior year quarter primarily because higher operating costs more than offset a $2.98 improvement in average ready-mixed concrete sales prices. Higher operating costs in Florida were primarily attributable to higher priced raw materials. The negative impact on sales volumes of a decline in residential construction and continued abnormally heavy rainfall in much of Florida resulted in fixed costs being spread over fewer units. Operating results at the California ready-mixed concrete operations were adversely impacted by an industry-wide labor strike. As a result, despite the acquisition of an additional California ready-mixed concrete operation, 1995 ready-mixed sales volumes were lower than the prior year quarter. Operating expenses at the California ready-mixed concrete operations also increased over 1994 because of higher than expected maintenance costs and startup costs resulting from the opening of two non- union batch plants. Higher expenses resulting from the labor strike also adversely impacted California aggregate operations during the third quarter of 1995. Year-to-Date - Excluding a prior year $1.4 million gain on the sale of surplus used mixer trucks, the Concrete Products operating earnings declined from $4.8 million for the nine months ended September 30, 1994 to $4.6 million for the nine months ended September 30, 1995. Higher ready- mixed concrete sales prices attributable to price increases implemented during the previous twelve months were offset by lower sales volumes of ready-mixed concrete and higher operating costs. The decline in ready-mixed sales volumes reflects strike related problems in California and, in Florida, a decline in residential construction as well as continued abnormally rainy weather. Operating costs were higher because of: (i) lower volumes which resulted in fixed costs being spread over fewer units; (ii) higher priced raw materials and; (iii) costs associated with a labor strike in California. The segment's operating results also includes the aggregate operations in southern California and the block, resale and flyash operations in Florida which combined totalled $4.7 million of operating earnings in the 1995 period compared with $4.1 million in the 1994 period. Sales volumes, unit price and cost data and unit operating margins relating to the Company's sales of ready-mixed concrete appear in the following table:
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1995 1994 1995 1994 -------- -------- -------- -------- Yards of ready-mixed concrete sold (thousands) 875 883 2,555 2,695 -------- -------- -------- -------- -------- -------- -------- -------- Weighted average per cubic yard data: Sales price $ 51.91 $ 48.93 $ 51.05 $ 47.29 Operating costs (1) 51.96 47.27 51.08 47.04 -------- -------- -------- -------- Margin (2) $ (0.05) $ 1.66 $ (0.03) $ 0.25 -------- -------- -------- -------- -------- -------- -------- -------- ______________ (1) Includes variable and fixed plant costs, delivery, selling, general and administrative and miscellaneous operating costs, but excluding the $304,000 and $1.4 million gain, respectively, realized on the 1994 sale of surplus used mixer trucks. (2) Does not include aggregate, concrete block and other related products.
Corporate Third Quarter - Corporate general and administrative expenses were $5.8 million in the third quarter of 1995 compared with $5.0 million in the prior year quarter. Despite lower personnel related costs and legal fees, corporate general and administrative expense increased primarily because the prior year quarter included a $1.9 million credit to pension expense which represented the excess of pension income over pension costs for the first nine months of 1994. In the current quarter, the credit to pension expense for the three months ended September 30, 1995 was $501,000. Miscellaneous income in the 1995 quarter included a $1.3 million gain realized on the sale of a surplus limestone mine in West Virginia. Year-to-Date - Corporate general and administrative expenses for the first nine months of 1995 were $1.4 million below the prior year period p r imarily because of lower personnel related costs and legal fees. Miscellaneous income for the current year period reflects the above mentioned $1.3 million gain. Liquidity and Capital Resources The discussion of liquidity and capital resources included on pages 30 through 38 of the Company's Annual Report on Form 10-K for the year ended December 31, 1994 should be read in conjunction with the discussion of liquidity and capital resources contained herein. On November 3, 1995, the Company entered into a Restated Revolving Credit Facility with the same banks as in its previous revolving credit facility. The Restated Revolving Credit Facility, at $200 million, remains the same size as the previous revolving credit facility, but (i) extends the maturity to October 30, 2000, (ii) initially reduces borrowing rates and Letter of Credit fees based on leverage ratios and capital expenditure levels, (iii) provides the Company with enhanced flexibility under certain restrictive covenants, (iv) eases certain administrative burdens and (v) allows the Company to redeem or repurchase subordinated debt and capital stock within certain limits. The Restated Revolving Credit Facility, as did the Revolving Credit Facility, includes $17.4 million of borrowing capacity that is restricted solely for potential funding of obligations under an agreement between the Company and the U.S. Maritime Administration (MARAD) related to certain shipping operations owned previously by Moore McCormack Resources, Inc. The Company's contingent obligation to MARAD and, thus, the restriction on the Company's borrowing capacity under the Restated Revolving Credit Facility, declines by approximately $2.5 million a year. The terms of both the Revolving Credit Facility and the Restated Revolving Credit Facility permit the issuance of standby letters of credit up to a maximum of $95 million in lieu of borrowings. At September 30, 1995, $36.0 million of borrowings and $61.4 million of letters of credit were outstanding under the Revolving Credit Facility, leaving $85.2 million of unused and unrestricted capacity. In the first nine months of 1995, internally generated funds from operations and borrowings under the Company's Revolving Credit Facility were utilized to (i) fund working capital requirements, including the build-up of inventories, (ii) invest approximately $19.3 million in plant, property and equipment, (iii) acquire additional ready-mix concrete operations in Florida and in southern California for a total of $12.6 million, and (iv) pay dividends on preferred stock. The Company's planned capital expenditures for 1995 have been revised downward to approximately $32 million, approximately $22 million for the Cement segment and $10 million for the Concrete Products segment, primarily because of delays encountered in the permitting and engineering phases of the announced finish grinding expansion project at the Company's Ohio plant now expected to be completed in 1997. Early in 1994, the Company realized approximately $82 million in net proceeds from the sale of 1,725,000 shares of a new issue of preferred stock. The net proceeds were used to prepay an $18 million promissory note and to reduce borrowings under the Company's Revolving Credit Facility, some of which had been utilized to redeem the $90 million outstanding principal amount of the Company's 12% Senior Subordinated Notes Due 1997. Other borrowings in 1994 under the Company's Revolving Credit Facility were utilized to finance the seasonal increases in accounts receivables and make investments of approximately $16.1 million in property, plant and equipment and pay dividends on preferred stock. Changes in Financial Condition The change in the financial condition of the Company between December 31, 1994 and September 30, 1995 reflects borrowings under the Company's Revolving Credit Facility to fund working capital requirements, capital expenditures and preferred stock dividends. Accounts and notes receivable increased because of the additional sales activity occurring in the summer construction season relative to the winter months and also reflect notes received as partial consideration in connection with the sale of the Company's remaining hazardous waste processing facilities. The increase in inventories reflects both the seasonal build-up in cement inventories in preparation for the peak selling months in the second and third quarters and the less than anticipated cement sales volumes because of inclement weather in several market areas. The decrease in deferred income taxes reflects the realization of temporary differences related to the disposition of the Environmental Services segment and the reduction of net operating loss carry forwards. The decline in assets held for sale reflects the sale of the remaining hazardous waste processing facilities. Accounts payable and accrued liabilities decreased because of the timing of payments on normal trade and other obligations. Known Events, Trends and Uncertainties Environmental Matters The Company is subject to extensive Federal, state and local air, water and other environmental laws and regulations. These constantly changing laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of certain substances at the Company's various operating facilities. Owners and operators of industrial facilities may be subject to fines or other actions imposed by the U.S. Environmental Protection Agency (U.S. EPA) and corresponding state regulatory agencies for violations of laws or regulations relating to hazardous substances. The Company has incurred fines imposed by various environmental regulatory agencies in the past. Although several of the Company's previously and currently owned facilities at several locations are presently the subject of various local, state and federal environmental proceedings and inquiries, including being named a potentially responsible party with regard to Superfund sites, primarily at several locations to which they are alleged to have shipped materials for disposal, most of these matters are in their preliminary stages and final results may not be determined for years. Based on information developed to date, the Company has no reason to believe it will be required to spend significant sums with regard to these locations either individually or in the aggregate. However, until it is determined what, if any, contribution the Company made to these locations and until all environmental studies, investigations, remediation work and negotiations with potential sources of recovery have been completed, it is impossible to determine the ultimate cost of resolving these environmental matters. The Clean Air Act Amendments of 1990 provide comprehensive federal regulation of various sources of air pollution, and establish a new federal operating permit program for virtually all manufacturing operations, including the cement industry. The Clean Air Act Amendments will likely result in increased capital and operational expenses for the Company in the future, the amounts of which are not presently determinable. The Company, on a pre-determined phase-in schedule, has recently begun the process of submitting the required permit applications and payment of annual permit fees. In addition, the U.S. EPA is developing air toxics regulations for a broad spectrum of industrial sectors, including portland cement manufacturing. U.S. EPA has indicated that the new maximum achievable control technology standards could require significant reduction of air pollutants below existing levels prevalent in the industry. Management has no reason to believe, however, that these new standards would place the Company at a disadvantage with respect to its competitors. To the contrary, given the age, condition, design and other features of the Company's cement manufacturing facilities, these more stringent standards may enhance the Company's competitive position. Industrial operations have been conducted at some of the Company's cement manufacturing facilities for almost 100 years. Management believes that the Company's current procedures and practices for handling and management of materials are generally consistent with industry standards and legal requirements and that appropriate precautions are taken to protect employees and others from harmful exposure to hazardous materials. However, because of the complexity of operations and legal requirements, there can be no assurance that past or future operations will not result in operational errors, violations, remediation liabilities or claims by employees or others alleging exposure to toxic or hazardous materials. Cement kiln dust - Many of the raw materials, products and by- products associated with the operation of any industrial facility, including those for the production of cement or concrete products, may contain chemical elements or compounds that are designated as hazardous substances. One by- product of the cement manufacturing process at many of the Company's cement plants is cement kiln dust (CKD). Under the Bevill amendment to the Resource Conservation and Recovery Act, CKD is currently exempt from management as a hazardous waste, except CKD which is produced by kilns burning hazardous waste derived fuel and which fails to meet certain criteria. However, CKD that is infused with water may produce a leachate with an alkalinity high enough to be classified as hazardous and may also leach certain hazardous trace metals present therein. The Company has recorded charges totaling $11.7 million as the estimated remediation cost for one CKD disposal site in Ohio where such leaching has occurred. Approximately $11.3 million of the reserved amount had been expended through September 30, 1995 and the construction phase of the interim action is essentially complete. Most of the balance of the reserved amount will be utilized to cover a pump and treatment and monitoring phase, together with a feasibility study to be conducted in late 1995 to evaluate the effectiveness of the remediation project. On a voluntary basis, the Company is also investigating two other inactive Ohio CKD disposal sites. The two additional sites in question were part of a cement manufacturing facility that was owned and operated by a now dissolved cement company from 1924 to 1945 and by a division of USX Corporation (USX) from 1945 to 1975. The Company believes that USX is a responsible party because it owned and operated the larger of the two sites (USX Site) at the time of disposal of the hazardous substances, arranged for the disposal of the hazardous substances and transported the hazardous substances to the USX Site. Therefore, based on the advice of counsel, the Company believes there is a reasonable basis for the apportionment of cleanup costs relating to the USX Site between the Company and USX with USX shouldering substantially all of the cleanup costs because, based on the facts known at this time, the Company itself disposed of no CKD at the USX Site and is potentially liable under CERCLA only because of its current ownership of the USX Site. On September 24, 1993, the Company filed a complaint against USX, alleging that USX is a potentially responsible party under CERCLA and under applicable Ohio law, and therefore jointly and severally liable for costs associated with cleanup of the USX Site. Based on the limited information available, the Company has received two preliminary estimates of the potential magnitude of the remediation costs of the USX Site, $8 million and $32 million, depending on the assumptions used. The Company and USX have held settlement discussions with respect to this matter. In late September 1995, the Company and USX entered into a partial settlement agreement wherein the Company dismissed its claim for response costs incurred prior to September 29, 1995 and USX agreed to pay the Company a specified amount representing half of certain costs already incurred by the Company at the USX Site. The Company and USX are jointly funding the initial project of a phased approach to investigating and remediating the problems at the USX Site. The court granted a jointly requested stay of litigation until October 6, 1995 and has subsequently extended the previously ordered stay of proceedings until April 3, 1996. Under CERCLA and applicable Ohio law, a court generally applies equitable principles in determining the amount of contribution which a potentially responsible party must provide with respect to a cleanup of hazardous substances and such determination is within the sole discretion of the court. In addition, no regulatory agency has directly asserted a claim against the Company as the owner of the USX Site requiring it to remediate the property, and no cleanup of the USX Site has yet been initiated. No substantial investigative work has been undertaken at other CKD sites in Ohio or elsewhere. Although data necessary to enable the Company to estimate total remediation costs is not available, the Company acknowledges that it is at least reasonably possible the ultimate cost to remediate the CKD disposal problem could be significantly more than the amounts reserved. Other Contingencies Discontinued Moore McCormack Operations - In conjunction with the acquisition of Moore McCormack in 1988, the Company assumed certain liabilities for operations that Moore McCormack had previously discontinued. These liabilities, some of which are contingent, represent guarantees and undertakings related primarily to Moore McCormack's divestiture of certain businesses in 1986 and 1987. Payments relating to liabilities from these discontinued operations were $1.6 million in the first nine months of 1995, $1.6 million in the first nine months of 1994 and $2.5 million in fiscal 1994. The Company is either a guarantor or directly liable under certain charter hire debt agreements totaling approximately $4 million at September 30, 1995, declining through February 1997. Although the estimated liability under these guaranties has been included in the liability for discontinued Moore McCormack operations, enforcement of the guaranty, while not resulting in a charge to earnings, would result in a substantial cash outlay by the Company. However, the Company believes it currently has sufficient borrowing capacity under its Restated Revolving Credit Facility to fund these guaranties, if required, as well as meet its other borrowing needs for the foreseeable future. Restructured Accounts Receivable - For many years, the Company has from time-to-time offered extended credit terms to certain of its customers, including converting trade receivables into longer term notes receivable. This practice became more prevalent during recent years, particularly in the southern California market area where many of the Company's customers have been adversely affected by the prolonged recession in the construction industry in that region. Four such customers were indebted to the Company at September 30, 1995 in the amount of $16.5 million. In February 1995, one of the four customers filed for protection under Chapter 11 of the United States Bankruptcy Code and the Company is presently evaluating its options for collection of outstanding balances. Also in February 1995, a second of these four customers restructured its debt which resulted in the Company becoming a secured creditor. In August 1995, the third customer of this group restructured its debt with the Company resulting in an extension of the maturity date of the note for two years. The fourth customer is in compliance with the terms of its agreement with the Company. In the opinion of management, the Company is adequately r e s erved for credit risks related to its potentially uncollectible receivables. However, the Company continues to assess its allowance for doubtful accounts and may increase or decrease its periodic provision for doubtful accounts as additional information regarding the collectibility of these and other accounts become available. Claims for Indemnification - Prior to the sale of the Company's then oil and gas subsidiary, Pelto Oil Company (Pelto) in 1989 to Energy Development Corporation (EDC), Pelto entered into certain gas settlement agreements, including one with Tennessee Gas Pipeline Company (Tennessee Gas). The Minerals Management Service (MMS) of the Department of the Interior has reviewed the 1988 agreement Pelto entered into with Tennessee Gas to determine whether a payment to Pelto thereunder is associated with Federal or Indian leases and whether, in its view, any additional royalties may be due as a result of that payment. By letter dated October 18, 1995, the MMS's Houston Compliance Division advised EDC that it had determined that a lump sum payment made by Tennessee Gas to Pelto was, for several alleged reasons, royalty bearing. The letter advised EDC of a preliminary determination of underpayment of royalties in the amount of $1.35 million attributable to these proceeds. An official order to pay such royalties will be issued by the MMS if a response to the preliminary determination is not received by the MMS on or before November 20, 1995. In late October 1995, the Company was notified by EDC that EDC was exercising its indemnification rights under the 1989 stock purchase agreement for Pelto with respect to this matter. In 1994, the Company timely filed its notice of appeal and its statement of reasons supporting its appeal regarding an earlier similar MMS determination of royalty underpayment, in an amount unspecified, with respect to a separate $5.9 million gas settlement payment from Transcontinental Gas P i p e Line Corporation (Transco) to Pelto. EDC is also seeking indemnification from the Company on the Transco matter. The Company disagrees with both MMS determinations; however, if the determinations as to the two payments to Pelto are ultimately upheld, the Company could have liability for royalties on those sums, plus late payment charges. Such expenditures would result in a charge to discontinued operations. PART II. OTHER INFORMATION Item 1. Legal Proceedings (a) The information appearing under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Known Events, Trends and U n c ertainties - Environmental Matters" is incorporated hereunder by reference, pursuant to Rule 12b-23. (b) The Company owns two inactive CKD disposal sites in Ohio that were formerly owned by a division of USX Corporation (USX). In September 1993, the Company filed a complaint against USX alleging that with respect to the larger of these two sites (USX Site), USX is a potentially responsible party and therefore jointly and severally liable for costs associated with cleanup of the USX Site. (Southdown, Inc. v. USX C o rporation, Case No. C-3-93-354, U.S. District Court, Southern District of Ohio Western Division). On July 13, 1994, the Magistrate Judge issued a Supplemental Report and Recommendation recommending that a USX motion to dismiss be denied in its entirety, reconfirming his previous recommendation. On February 27, 1995, the District Judge affirmed the Magistrate Judge's recommendation that the USX motion to dismiss be denied. USX and the Company are continuing their settlement discussions. In late September 1995, the Company and USX entered into a partial settlement agreement wherein the Company dismissed its claim for response costs incurred prior to September 29, 1995 and USX agreed to pay the Company a specified amount representing half of certain costs already incurred by the Company at the USX Site. The Company and USX are jointly funding the initial project of a phased approach to investigating and remediating the problems at the USX Site. The court granted a jointly requested stay of litigation until October 6, 1995 and has s u b s equently extended the previously ordered stay of proceedings until April 3, 1996. (c) In late August 1993, the Company was notified by Energy Development Corporation (EDC), the 1989 purchaser of the common stock of the Company's then oil and gas subsidiary, Pelto Oil Company (Pelto), that EDC was exercising its indemnification rights under the 1989 stock purchase agreement with respect to a Department of Energy (DOE) Remedial Order regarding the audit of crude oil produced and sold during the period September 1973 through January 1981 from an offshore, federal waters field in which the Company's oil and gas subsidiary owned an interest. The DOE alleged certain price overcharges and sought to recover a total of $68 million in principal and interest from Murphy Oil Corporation (Murphy), as operator of the property. Murphy estimated the Company's share of this total to be approximately $4 million. On January 24, 1994, the presiding Administrative Law Judge at the Federal Energy Regulatory Commission (FERC) rendered a favorable decision for Murphy, materially reducing the amount it potentially owed to the DOE. This decision also had the effect of precluding the DOE from recovering from Murphy for any alleged overcharges attributable to Pelto's "in-kind" production. In late July 1994, Murphy notified the Company that it had settled with the DOE by agreeing to pay $10.7 million and that it would contact the Company later concerning the Company's alleged share of this amount. The Company advised Murphy that it does not accept liability for any portion of the settlement amount paid to the DOE other than its pro rata share of attorney's fees, which the Company has paid. On April 12, 1995, Murphy filed a complaint against the Company in the U.S. District Court for the Southern District of Texas, Houston Division (Murphy Exploration & Production Company v. Southdown, Inc. - Case No. H-95-1049) alleging that the Company is liable for the Company's pro rata share of the $10.7 million payment made to the DOE by Murphy in its capacity as operator of the property. Murphy alleges this amount is at least $634,487 and also seeks attorney's fees. Both Murphy and the Company have filed motions for partial summary judgment in this matter. (d) In late 1988, Southern Prestressed, Inc. (SPI), a wholly owned subsidiary of Lohja, Inc., was designated the Buyer in an Agreement for Sale of Properties (Agreement) whereby certain prestressed concrete product plants owned and operated by the Company were acquired. On June 30, 1995, SPI filed suit against the Company (Southern Prestressed, Inc. v. Florida Mining & Materials Concrete Corp. and Southdown, Inc., Case No. C95-2217, Thirteenth Judicial Circuit Court, Hillsborough County, Florida) alleging environmental contamination at certain of the facilities SPI acquired from the Company and seeking compensation under the indemnification provisions of the Agreement. (e) In Jack Blair, et al. vs. Ideal Basic Industries, Inc., United Cement, Lime, Gypsum and Allied Workers International Union, and Dixie Cement Company (Chancery Court of Knox County, Tennessee, No. 03A1-CH-00029), the plaintiffs are fifteen former employees of Ideal Basic Industries, Inc. (Ideal), and the defendants are Ideal, Dixie Cement Company (Dixie) (a former subsidiary of Moore McCormack Resources, Inc. which was acquired by the Company in 1988), and the United Cement, Lime, Gypsum and Allied Workers International Union (Union). The plaintiffs' claims arise out of a December 1983 transaction in which Dixie purchased a cement plant from Ideal. Among other things, the plaintiffs allege that they were not hired by Dixie because of their ages, that their retirements were not voluntary because they were induced to retire through factual misrepresentations made by Ideal employees, allegedly acting as agents of Dixie, as to their retirement benefits and Dixie's plans to rehire former Ideal employees, and that Dixie induced Ideal to breach its collective bargaining agreement with the Union. Dixie has assumed the defense of Ideal with respect to the claim under Section 301 of the National Labor Relations Act based on the indemnification provision of the agreement pursuant to which the Knoxville plant was acquired. The plaintiffs are seeking compensatory damages (including back pay and benefits), liquidated damages (under the federal age discrimination statute), punitive damages, treble damages ( u n der the same statute prohibiting interference with contracts), interest and attorney's fees. In December 1992, the trial court granted summary judgment in favor of Dixie on all claims against Dixie. However, in November 1994, the Tennessee Court of Appeals reversed the summary judgment order, and remanded the case to the trial court. In January 1995, Dixie filed an application for an appeal by permission to the Supreme Court of Tennessee. In early May 1995, the Supreme Court of Tennessee denied Dixie's application and returned the case to the Chancery Court of Knox County, Tennessee for trial. On August 25, 1995, after a hearing in the Chancery Court of Knox County, Tennessee, the Chancery Court granted Dixie's motion to reopen discovery as to all issues, including damages issues, ordered Plaintiffs to respond to outstanding discovery requests within thirty days thereafter, and denied the motion of Ideal seeking reconsideration of the Court's July 7, 1992 order setting aside a summary judgment order previously entered in favor of Ideal. The Union has filed a motion to dismiss the Plaintiffs' state law claims against the Union which has been set for hearing on November 13, 1995. Discovery has recommenced and depositions of the Plaintiffs as to the damages issues have been tentatively scheduled for November 13-15, 1995. At the hearing on August 28, 1995, the Court indicated that the case would be tried in the fall of 1996; however, the parties have not received notice of a specific trial date. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 11 Statement of Computation of Per Share Earnings 27 Financial Data Schedule 99.1 Third Amended and Restated Credit Agreement as of November 3, 1995 among the Company; Wells Fargo Bank, N.A.; Societe Generale, Southwest Agency; Credit Suisse; Caisse National De Credit Agricole; Banque Paribas; CIBC Inc.; The Bank of Nova Scotia; and The First National Bank of Boston. 99.2 Agreement dated June 21, 1995 by and between the Company and the International Union of Operating Engineers, Local Union No. 9. 99.3 Agreement dated October 27, 1994 by and between the Company and Teamster Local No. 420, 495, 692 and 986C. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended September 30, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SOUTHDOWN, INC. ------------------------------ (Registrant) Date: November 10, 1995 By: JAMES L. PERSKY ------------------------------ James L. Persky Executive Vice President - Finance & Administration (Principal Financial Officer) Date: November 10, 1995 By: ALLAN KORSAKOV ------------------------------ Allan Korsakov Corporate Controller (Principal Accounting Officer) EX-11 2 Exhibit 11 SOUTHDOWN, INC. AND SUBSIDIARIES STATEMENT OF COMPUTATION OF PER SHARE EARNINGS (In millions, except per share amounts - Unaudited)
Three Months Nine Months Ended Ended September 30, September 30, --------------- --------------- 1995 1994 1995 1994 ------- ------- ------ ------- Earnings (loss) for primary earnings per share: Earnings from continuing operations before preferred stock dividends $ 14.5 $ 8.6 $ 34.2 $ 19.4 Preferred stock dividends (2.4) (2.5) (7.3) (7.0) ------- ------- ------- -------- Earnings from continuing operations 12.1 6.1 26.9 12.4 Loss from discontinued operations, net of income taxes - (2.1) - (4.1) ------- ------- ------- -------- Net earnings for primary earnings per share $ 12.1 $ 4.0 $ 26.9 $ 8.3 ------- ------- ------- -------- ------- ------- ------- -------- Earnings (loss) for fully diluted earnings per share: Earnings from continuing operations before preferred stock dividends $ 14.5 $ 8.6 $ 34.2 $ 19.4 Antidilutive preferred stock dividends - (2.5) - (7.0) ------- ------- ------- -------- Earnings from continuing operations 14.5 6.1 34.2 12.4 Loss from discontinued operations, net of income taxes - (2.1) - (4.1) ------- ------- ------- -------- Net earnings for fully diluted earnings per share $ 14.5 $ 4.0 $ 34.2 $ 8.3 ------- ------- ------- -------- ------- ------- ------- -------- Average shares outstanding: Common stock 17.3 17.2 17.3 17.2 Common stock equivalents from assumed exercise of stock options and warrants (treasury stock method) 0.3 0.5 0.2 0.6 ------- ------- ------- -------- Total for primary earnings per share 17.6 17.7 17.5 17.8 Other potentially dilutive securities: - assumed conversion of Series A convertible preferred stock at one-half share of common stock 1.0 1.0 1.0 1.0 - assumed conversion of Series B convertible preferred stock at 2.5 shares of common stock 2.3 2.3 2.3 2.3 - assumed conversion of the Series D convertible preferred stock at 1.51 shares of common stock 2.6 2.6 2.6 2.4 ------- ------- ------- -------- Total for fully diluted earnings per share 23.5 23.6 23.4 23.5 Less: Antidilutive securities Series A preferred stock - (1.0) - (1.0) Series B preferred stock - (2.3) - (2.3) Series D preferred stock - (2.6) - (2.4) ------- ------- ------- -------- 23.5 17.7 23.4 17.8 ------- ------- ------- -------- ------- ------- ------- -------- Earnings (loss) per share: Primary Earnings from continuing operations $ 0.68 $ 0.35 $ 1.53 $ 0.69 Loss from discontinued operations, net of income taxes - (0.12) - (0.23) ------- ------- ------- -------- $ 0.68 $ 0.23 $ 1.53 $ 0.46 ------- ------- ------- -------- ------- ------- ------- -------- Fully diluted Earnings from continuing operations $ 0.62 $ 0.35 $ 1.46 $ 0.69 Loss from discontinued operations, net of income taxes - (0.12) - (0.23) ------- ------- ------- -------- ------- ------- ------- -------- $ 0.62 $ 0.23 $ 1.46 $ 0.46 ------- ------- ------- -------- ------- ------- ------- --------
EX-27 3
5 This schedule contains summary financial information extracted from the Company's consolidated balance sheet as of September 30, 1995 and the related statement of consolidated earnings and is qualified in its entirety by reference to such statements. 1,000,000 9-MOS DEC-31-1995 SEP-30-1995 11 0 98 10 72 186 890 328 900 96 200 22 0 152 191 908 445 445 332 374 0 0 20 51 17 34 0 0 0 34 1.53 1.46
EX-99 4 Exhibit 99.1 - ------------ THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 3, 1995 among SOUTHDOWN, INC., as Borrower, THE FINANCIAL INSTITUTIONS SIGNATORY HERETO, as Banks, and WELLS FARGO BANK, N.A., as Agent $200,000,000 This THIRD AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of N o v e m ber 3, 1995, among SOUTHDOWN, INC., a Louisiana corporation ("Borrower"), on the one hand, and, on the other hand, the financial institutions which either now or in the future are signatories hereto (collectively referred to as "Banks" and individually as a "Bank"), and WELLS FARGO BANK, N.A., a national banking association, as agent (hereinafter, in such capacity, together with any successors thereto in such capacity, referred to as "Agent") for Banks hereunder. RECITALS WHEREAS, Borrower, certain Banks, and Agent are parties to that certain Credit Agreement dated as of April 5, 1988, that has been amended pursuant to that certain Amendment Number One to Credit Agreement dated as of May 18, 1988, that certain Amendment Number Two to Credit Agreement dated as of June 17, 1988, that certain Amendment Number Three to Credit Agreement dated as of August 25, 1988, that certain Amendment Number Four to Credit Agreement dated as of September 23, 1988, that certain Amendment Number Five to Credit Agreement dated as of December 31, 1988, that certain Amendment Number Six to Credit Agreement dated as of December 31, 1988, that certain Amendment Number Seven to Credit Agreement dated as of April 28, 1989, that certain Amendment Number Eight to Credit Agreement dated as of May 22, 1989, that certain Amendment Number Nine to Credit Agreement dated as of September 1, 1989, that certain Amendment Number Ten to Credit Agreement dated as of October 31, 1989, that certain Amendment Number Eleven to Credit Agreement dated as of May 11, 1990, that certain Amendment Number Twelve to Credit Agreement dated as of June 27, 1990, and that certain Amendment Number Thirteen to Credit Agreement dated as of March 28, 1991 (as amended, the "1988 Credit Agreement"); WHEREAS, Borrower, certain Banks, and Agent are parties to that certain Amended and Restated Credit Agreement, dated as of April 30, 1991, which amended and restated the 1988 Credit Agreement in its entirety and that has been amended pursuant to that certain Amendment Number One to Credit Agreement dated as of June 14, 1991, that certain Amendment Number Two to Credit Agreement dated as of September 27, 1991, that certain Amendment Number Three to Credit Agreement dated as of October 31, 1991, that certain Amendment Number Four to Credit Agreement dated as of March 6, 1992, that certain Amendment Number Five to Credit Agreement dated as of December 18, 1992, that certain Amendment Number Six to Credit Agreement dated as of June 8, 1993, and that certain Amendment Number Seven to Credit Agreement dated as of September 8, 1993 (as amended, the "1991 Credit Agreement"); WHEREAS, Borrower, certain Banks, and Agent are parties to that certain Second Amended and Restated Credit Agreement, dated as of November 19, 1993, which amended and restated the 1991 Credit Agreement in its entirety and that has been amended pursuant to that certain Amendment Number One to Credit Agreement dated as of February 18, 1994 and that certain Amendment Number Two to Credit Agreement dated as of December 20, 1994 (as amended, the "1993 Credit Agreement"); WHEREAS, Borrower has requested from Banks and Agent the restructuring of the credit facilities provided pursuant to the 1993 Credit Agreement. Banks and Agent have agreed to restructure the credit facilities on the terms and conditions set forth herein; and WHEREAS, Borrower, Banks, and Agent have agreed to amend and restate the 1993 Credit Agreement in its entirety as set forth herein. In consideration of the foregoing and the mutual covenants, conditions, and provisions hereinafter set forth, the parties hereto amend and, as so amended, restate in its entirety the 1993 Credit Agreement, and agree as follows: ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS 1.1 Definitions. For purposes of this Agreement, the following capitalized terms shall have the following meanings: "ABN-AMRO Letter of Credit" means and refers to that certain letter of credit issued by ABN-AMRO Bank for the account of Borrower in a face amount equal to approximately Nine Million Three Hundred Thousand Dollars ($9,300,000). "Acquired Indebtedness" means Debt of a Person existing at the time such Person becomes a Subsidiary or assumed in connection with the acquisition of Assets from such Person, and not incurred in connection with, or in anticipation of, such Person becoming a Subsidiary or such acquisition. "Affiliate" means and refers to, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, the terms "controlling," "controlled by," and "under common control with", as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract, or otherwise. " A gent" shall have the meaning set forth in the introduction to this Agreement. "Agent's Fees" shall mean those fees that have been separately agreed upon between Borrower and Agent, which fees shall be for the sole account of Agent. "Agent's Fee Letter" shall mean that certain letter, dated as of September 18, 1995, from Agent to Borrower, setting forth, among other items, the Agent's Fees. "Agreement" means and refers to this Third Amended and Restated Credit Agreement between Borrower, on the one hand, and Agent and Banks, on the other hand, together with all exhibits and schedules hereto. "Ancillary Documents" means and refers to the Loan Documents. "Applicable Base Rate Margin" means and refers to, with respect to Base Rate Loans, Leverage Ratio Applicable Base Rate Margin greater than or 1.00 percentage points equal to 2.75:1.0 less than 2.75:1.0 but 0.50 percentage points greater than or equal to 2.25:1.0 less than 2.25:1.0, 0.25 percentage points but greater than or equal to 1.75:1.0 less than 1.75:1.0, 0.00 percentage points but greater than or equal to 1.25:1.0 less than 1.25:1.0, 0.00 percentage points but greater than or equal to .75:1.0 less than .75:1.0 0.00 percentage point The Applicable Base Rate Margin shall be based upon the Borrower's Leverage Ratio which will be calculated quarterly as at the end of each fiscal quarter of the Borrower based upon the four (4) immediately preceding fiscal quarters, including the quarter then ended. The applicable margin shall be redetermined quarterly on the date Agent receives quarterly financial statements pursuant to Section 5.2(a) hereof, (or, in the case of the fourth fiscal quarter in each fiscal year, a certification by the chief financial officer or treasurer of Borrower). "Applicable Commercial Letter of Credit Margin" means and refers to, with respect to Commercial Letters of Credit, Leverage Ratio Applicable Commercial Letter of Credit Margin greater than or equal to 2.75:1.0 .35 percentage points less than 2.75:1.0, but greater than or equal to 2.25:1.0 .30 percentage points less than 2.25:1.0, but greater than or equal to 1.75:1.0 .25 percentage points less than 1.75:1.0, but greater than or equal to 1.25:1.0 .20 percentage points less than 1.25:1.0, but greater than or equal to .75:1.0 .15 percentage points less than .75:1.0 .125 percentage points The Applicable Commercial Letter of Credit Margin shall be based upon the Borrower's Leverage Ratio which will be calculated quarterly as at the end of each fiscal quarter of the Borrower based upon the four (4) immediately preceding fiscal quarters, including the quarter then ended. The applicable margin shall be redetermined quarterly on the date Agent receives quarterly financial statements pursuant to Section 5.2(a) hereof, (or, in the case of the fourth fiscal quarter in each fiscal year, a certification by the chief financial officer or treasurer of Borrower). Anything to the contrary contained herein notwithstanding, there shall not be any increase to, or refund of, any letter of credit fee previously paid with respect to a Commercial Letter of Credit that is outstanding on the day on which the Applicable Commercial Letter of Credit Margin changes. "Applicable Commitment Fee Percentage" means and refers to, with respect to the calculation of the Commitment Fee provided for in Section 2.13 hereof, Leverage Ratio Applicable Commitment Fee Percentage greater than or 0.50 percentage points equal to 2.75:1.0 less than 2.75:1.0, 0.375 percentage points but greater than or equal to 2.25:1.0 less than 2.25:1.0, 0.300 percentage points but greater than or equal to 1.75:1.0 less than 1.75:1.0, 0.250 percentage points but greater than or equal to 1.25:1.0 less than 1.25:1.0, 0.250 percentage points but greater than or equal to .75:1.0 less than .75:1.0 0.225 percentage points The Applicable Commitment Fee Percentage shall be based upon Borrower's Leverage Ratio which will be calculated quarterly as at the end of each fiscal quarter of Borrower based upon the four (4) immediately preceding fiscal quarters, including the quarter then ended. The applicable percentage shall be redetermined quarterly on the date Agent receives quarterly financial statements pursuant to Section 5.2(a) hereof, (or, in the case of the fourth fiscal quarter in each fiscal year, a certification by the chief financial officer or treasurer of Borrower). "Applicable LIBOR Rate Margin" means and refers to, Leverage Ratio Applicable LIBOR Rate Margin greater than or 2.125 percentage points equal to 2.75:1.0 less than 2.75:1.0, but greater than or 1.625 percentage points equal to 2.25:1.0 less than 2.25:1.0, but greater than or 1.25 percentage points equal to 1.75:1.0 less than 1.75:1.0, but greater than or 1.00 percentage points equal to 1.25:1.0 less than 1.25:1.0, but greater than or .75 percentage points equal to .75:1.0 less than .75:1.0 .50 percentage points The Applicable LIBOR Rate Margin shall be based upon the Borrower's Leverage Ratio which will be calculated quarterly as at the end of each fiscal quarter of the Borrower based upon the four (4) immediately preceding fiscal quarters, including the quarter then ended. The applicable margin shall be redetermined quarterly on the date Agent receives quarterly financial statements pursuant to Section 5.2(a) hereof, (or, in the case of the fourth fiscal quarter in each fiscal year, a certification by the chief financial officer or treasurer of Borrower). Anything to the contrary contained herein notwithstanding, (a) any LIBOR Rate Loan that is outstanding on the day on which the Applicable LIBOR Rate Margin changes, shall, until the end of the Interest Period relating to such LIBOR Rate Loan, continue to bear interest at the Applicable LIBOR Rate Margin that was in effect on the date such LIBOR Rate Loan was made, and (b) the letter of credit fee with respect to any Letter of Credit (other than a Commercial Letter of Credit) that is outstanding on the day on which the Applicable LIBOR Rate Margin changes, automatically shall be adjusted as of the date on which the Applicable LIBOR Rate Margin is adjusted. "Asset" means and refers to any interest in any kind of property or asset, whether real, personal, or mixed, tangible or intangible. "Asset Acquisition" means and refers to the acquisition of all or substantially all of the Assets of a Person. "Assignment and Assumption Agreement" means an Assignment and Assumption Agreement among an assigning Bank, such Bank's assignee thereunder, Borrower, and Agent, substantially in the form of Exhibit A-1 attached hereto. "Bank" and "Banks" shall have the respective meanings set forth in the introduction to this Agreement. "Base LIBOR Rate" means the average of the rate per annum at which Dollar deposits are offered to Agent in the London interbank e u rocurrency market on the second LIBOR Business Day prior to the commencement of an Interest Period at or about 11:00 A.M. (London time), for delivery on the first day of such Interest Period, for a term comparable to the number of days in such Interest Period and in an amount approximately equal to the principal amount to which such Interest Period shall apply. "Base Rate" means, for any day, the higher of (a) the Federal Funds Rate in effect on such day plus 0.50%, and (b) the Prime Rate. Each change in the interest rate on the Loans based on a change in the Base Rate shall be effective as of the effective date of such change in the Base Rate. "Base Rate Borrowing" means and refers to any Borrowing designated by Borrower as a Base Rate Borrowing pursuant to Sections 2.8 and 2.9 of this Agreement or any Loans deemed to be a Base Rate Borrowing pursuant to Section 2.9 of this Agreement. "Base Rate Loan" means each portion of a Loan bearing interest at a rate determined by reference to the Base Rate. "Board of Directors" means the Board of Directors of Borrower or any committee thereof duly authorized to act on behalf of the Board of Directors. "Borrower" shall have the meaning set forth in the introduction to this Agreement. "Borrower Common Stock" means and refers to the common stock of Borrower. "Borrowing" means and refers to a borrowing under this Agreement consisting of Loans made severally by each Bank to Borrower. "Brooksville Plant" means and refers to that certain cement plant of Borrower located at or near Brooksville, Florida, including (a) all interests and estates of Borrower in real property on which such cement plant is located, including improvements, buildings, and structures located thereon, (b) all interests and estates of Borrower in real property related to or used in connection with the operation of such cement plant, such as related quarries, parking or storage areas, Related Terminals, or rights of way, including improvements, buildings, and structures located thereon, and (c) all tangible and intangible interests of Borrower in personal property constituting part of or integral to the use or operation of such cement plant, such as fixtures, machinery, equipment, licenses, permits, operating and maintenance agreements, and related books and records (but excluding accounts, inventory, and proceeds thereof). "Capital Expenditures" means and refers to, when used in connection with any Person for any period, any expenditure by such Person that, in conformity with GAAP, has been or should be included in the additions to property, plant, and equipment or in acquisitions, net of cash acquired, in each case, as reflected in such Person's statement of consolidated cash flows for such period prepared on substantially the same basis as Borrower's statement of consolidated cash flows for its fiscal year ended December 31, 1994. "Capitalized Lease" means and refers to any lease of property (whether real, personal, or mixed real and personal) by a Person as lessee that should, in conformity with GAAP, be accounted for as a capital lease on the balance sheet of that Person. "Capitalized Lease Obligations" means and refers to any and all lease obligations that, in accordance with GAAP, have been or are required to be capitalized on the books of a lessee. "Capital Stock" of any Person means any and all shares, interests, participations, or other equivalents (however designated) of, or rights, warrants, or options to purchase, corporate stock or any other equity interest (however designated) of or in such Person. "Cash Equivalents" means and refers to: (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one (1) year from the date of acquisition thereof; (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one (1) year from the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody's; (c) commercial paper maturing no more than one (1) year from the date of acquisition thereof and, at the time of acquisition, having a rating of A-2 or P-2, or better, from S&P or Moody's; (d) certificates of deposit or bankers' acceptances maturing within one (1) year from the date of acquisition thereof either (i) issued by any of the Banks or any bank organized under the laws of the United States of America or any state thereof or the District of Columbia which Bank or other bank has a rating of A or A2, or better, from S&P or Moody's, or (ii) certificates of deposit less than or equal to One Hundred Thousand Dollars ($100,000) in the aggregate issued by any other bank insured by the Federal Deposit Insurance Corporation. "Cement Plants" means and refers to the Brooksville Plant, the Fairborn Plant, the Knoxville Plant, the Lyons Plant, the Odessa Plant, and the Victorville Plant. " C E R C LA" means and refers to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time (by SARA or otherwise), set forth at 42 U.S.C. Section 9601-9657, and all rules and regulations promulgated thereunder as of the date hereof. "Change of Control" means and refers to the occurrence of one or more of the following events: (a) 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 Borrower to any Person or related group for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates thereof, (b) the shareholders of Borrower shall approve any plan or proposal for the liquidation or dissolution of Borrower, (c) any Person or Group, together with any Affiliates thereof, shall, as a result of a tender or exchange offer, a merger, consolidation or similar transaction, open market purchases, privately negotiated purchases, or otherwise, have become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Borrower representing at least thirty percent (30%) of the Voting Stock of Borrower, or (d) a majority of the members of the Board of Directors shall not constitute Continuing Directors. For purposes of this definition, "Board of Directors" does not include any committee thereof. "Closing Date" means and refers to the date of the first Borrowing under this Agreement. "Code" means and refers to the Internal Revenue Code of 1986, as amended from time to time, or any successor or superseding tax laws of the United States of America, together with all regulations promulgated thereunder. "Collateral" means and refers to (a) the interests of Borrower in the capital stock of Mojave, (b) the interests of Borrower in and to the Cement Plants (other than the Brooksville Plant) and the interest of Borrower in KCC (subject to any exclusions contained in the applicable security documents), and (c) the interests of Mojave in its equipment, fixtures, and certain of its general intangibles (subject to any exclusions contained in the applicable security agreement). "Collateral Release Agreement" means and refers to an agreement, substantially in the form of Exhibit C-1 attached hereto, among Agent, Borrower, and each of the Specified Subsidiaries, pursuant to which Agent agrees to the release of (a) its Liens in the Capital Stock of each of the Specified Subsidiaries (other than Mojave) and of City Concrete Products, Inc., (b) its Liens in and to the Assets of each of the Specified Subsidiaries (other than Mojave), (c) its Liens in and to the accounts, inventory, chattel paper, instruments (other than the Capital Stock of Mojave), and certain general intangibles (other than the interest of Borrower in and to KCC) of Borrower and Mojave, (d) its Liens in the Florida Collateral, and (e) the guaranties previously executed and delivered by each of the Specified Subsidiaries (other than the Mojave Guaranty). "Commercial Letter of Credit" means and refers to any sight letter of credit issued hereunder for the purpose of supporting Borrower's obligations incurred in the ordinary course of business and which is conditioned upon the presentation of documents (as that term is defined in Section 5103(b) of the UCC). "Commercial Paper Letters of Credit" means and refers to, depending on the context, any or all of the Letters of Credit issued pursuant to the terms of Sections 2.1(b) or 2.2 of this Agreement for the purpose of supporting commercial paper issued by Borrower. "Commercial Paper Letter of Credit Amount" means and refers to an amount equal to Seventy-Five Million Dollars ($75,000,000). "Commercial Paper Letter of Credit Usage" means and refers to, as of the date any determination thereof is to be made, the sum of: (a) the Stated Amount of each Commercial Paper Letter of Credit then outstanding; and (b) the aggregate amount of all Unpaid Drawings with respect to Commercial Paper Letters of Credit. For purposes of this definition, any amount described which is denominated in a currency other than Dollars shall be valued in Dollars based on the applicable Exchange Rate for such currency as of the date of determination. "Commitment Fee" shall have the meaning set forth in Section 2.13 of this Agreement. "Consolidated Current Assets" means and refers to the total of all Assets of Borrower and its Subsidiaries that have been or properly should be classified as current assets in accordance with GAAP and determined on a consolidated basis. "Consolidated Current Liabilities" means and refers to the total of all of the liabilities of Borrower and its Subsidiaries that have been or properly should be classified as current liabilities in accordance with GAAP and determined on a consolidated basis. "Consolidated EBITDA" means and refers to, for any period, an amount for Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, equal to (a) operating earnings, plus or minus, as applicable (b) consolidated non-cash charges to the extent that such charges were included in the calculation of operating earnings. "Consolidated Net Income" means and refers to, for any period, the net income (or deficit) of Borrower and its Subsidiaries for such period (on a consolidated basis), after deducting portions of income properly attributable to minority interests, if any, in the stock and surplus of such Subsidiaries; provided, however, that there shall be excluded: (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its Subsidiaries or such Person's Assets are acquired by Borrower or any of its Subsidiaries; (b) the income (or deficit) of any Person (other than a Subsidiary of Borrower) in which Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income has been actually received by Borrower or such Subsidiary in the form of dividends, management fees, or other distributions, loans, or other mechanisms to achieve the economic benefit to Borrower of dividends; and (c) the undistributed earnings of any Subsidiary of Borrower to the extent that the declaration or payment of dividends or other distributions, loans, or other mechanisms to achieve the economic effect to Borrower of dividends by such Subsidiary is not at the time permitted by the terms of its charter or any a g r e e ment, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to such Subsidiary. "Consolidated Tangible Net Worth" means and refers to, on the date of determination thereof, the amount calculated as: (a) the consolidated stockholders' equity of Borrower and its Subsidiaries plus the aggregate amount of Permitted Preferred Stock to the extent not already included in consolidated stockholders' equity, minus (b) the consolidated aggregate amount of Intangible Assets of Borrower and its Subsidiaries. "Contingent Obligation" means and refers to, as to any Person and without duplication of amounts, any obligation of such Person guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with recourse to such Person) any Debt, Noncancellable Lease, dividend, reimbursement obligations relating to letters of credit, or any other obligation that pertains to Debt, a Noncancellable Lease, a dividend, or a reimbursement obligation related to letters of credit (each, a "primary obligation") of any other Person ("primary obligor") in any manner, whether directly or indirectly, including any obligation of such Person, irrespective of whether contingent, (a) to purchase any such primary obligation, (b) to advance or supply funds (whether in the form of a loan, advance, stock purchase, capital contribution, or otherwise) (i) for the purchase, repurchase, or payment of any such primary obligation or any Asset constituting direct or indirect security therefor, or (ii) to maintain working capital or equity capital of the primary obligor, or otherwise to maintain the net worth, solvency, or other financial condition of the primary obligor, (c) to purchase or make payment for any Asset, securities, services, or Noncancellable Lease if primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to otherwise assure or hold harmless the owner of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include (y) trade payables or accrued liabilities of the Person making the Contingent Obligation, or (z) non-pension post retirement benefits. The amount of any Contingent Obligation of any Person shall be deemed to be an amount equal to the net present value of the maximum amount of such Person's liability with respect to the stated or determinable amount of the primary obligation for which such Contingent Obligation is incurred or, if not stated or determinable, the net present value of the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined, reasonably and in good faith, by Borrower. "Continuing Director" means and refers to (a) any member of the Board of Directors who was a director of Borrower on the Closing Date, and (b) any person who becomes a member of the Board of Directors after the Closing Date if such person was appointed or nominated for election to the Board of Directors by a majority of the Continuing Directors, but excluding any such person originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors of Borrower (as such terms are used in Rule 14a-11 under the Exchange Act) and whose initial assumption of office resulted form such contest or the settlement thereof. "Contractual Obligation" means and refers to, as applied to any Person, any provision of any security issued by that Person or of any m a t erial indenture, mortgage, deed of trust, contract, undertaking, agreement, or other instrument to which that Person is a party or by which it or any of its owned Assets is bound or to which it or any of its owned Assets is subject. "Controlled Group" means and refers to all domestic and foreign members of a controlled group of corporations under Section 1563(a) of the Code (determined without regard to Section 1563(b)(2)(c) of the Code) and all trades or businesses (irrespective of whether incorporated) under common control of Borrower or its Subsidiaries. "Damages" means and refers to those damages set forth in 42 U.S.C.Section 9601, 42 U.S.C. Section 9607(a), and 42 U.S.C.Section 9611(b). "Debt" means and refers to, with respect to any Person, the aggregate amount of, without duplication: (a) all indebtedness for borrowed money; (b) all indebtedness evidenced by bonds, debentures, notes, or other similar instruments; (c) all Capitalized Lease Obligations; (d) all indebtedness of others secured by a Lien on any Asset of such Person, irrespective of whether such indebtedness is assumed; and (e) any obligation owed for all or any part of the deferred purchase price of Assets or services that is due more than twelve (12) months from the date of the incurrence of the obligation in respect thereto. "Defaulting Bank" shall have the meaning ascribed thereto in Section 2.10(c). " D i s closure Statement" means and refers to that statement, executed and delivered by a Responsible Officer of Borrower pursuant to Section 3.1(b) hereof, as amended from time to time to the extent permitted hereby, which statement sets forth information regarding, or exceptions to, the representations, warranties, and covenants made by Borrower herein. The Disclosure Statement may be amended, from time to time, to reflect Borrower's formation or acquisition of new Subsidiaries or other changes so long as the amendment contains the relevant information as would have been required hereunder as of the Closing Date and so long as such amendment does not disclose violations of the covenants contained in this Agreement and so long as Borrower, or the relevant Subsidiary, as and if applicable, complies with the provisions of Section 5.11 hereof in connection with such amendment. "Dollars and $" means and refers to United States of America dollars or such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America. "Domestic Business Day" means and refers to a day (other than a Saturday or Sunday) on which major commercial banks are open for business in San Francisco, California, Houston, Texas, and New York, New York. "Environment" shall have the meaning set forth in 42 U.S.C. Section 9601(8). "Environmental Protection Statute" means and refers to any local, state, or federal law, statute, regulation, or ordinance enacted in connection with or relating to the protection or regulation of the Environment, including those laws, statutes, and regulations regulating the disposal, removal, production, storing, refining, handling, transferring, p r o cessing, discharge, emission, release, investigation, remediation, cleanup, use, treatment, or transporting of Hazardous Waste or Hazardous S u b s tances, regulating the discharge or emission of pollutants or contaminants into water or air, regulating industrial health and safety, and protecting human health, and any regulations, issued or promulgated in connection with such statutes by any governmental agency or instrumentality. "EPA" means and refers to the United States Environmental Protection Agency, or any successor thereto. "ERISA" means and refers to the Employee Retirement Income Security Act of 1974, as the same may from time to time be amended or supplemented, including any rules or regulations issued in connection therewith. "ERISA Affiliate" means and refers to, as to any Person, any trade or business (irrespective of whether incorporated) that is a member of a group of which such Person is a member (determined immediately following the Closing Date and thereafter) and that is under common control within the meaning of the regulations promulgated under Section 414 of the Code (except that such rules and regulations also shall be deemed to apply to foreign corporations). "Event of Default" shall have the meaning set forth in Section 7.1 of this Agreement. "Exchange Act" means and refers to the Securities Exchange Act of 1934, as amended from time to time, and any successor statute, and the rules and regulations thereunder. "Exchange Subordinated Debt" means and refers to the Borrower's 7 1/2% Convertible Subordinated Debentures, due 2013, that are issuable, at the option of Borrower, in exchange for the Series B Preferred Stock. "Exchange Rate" means and refers to the nominal rate of exchange of Issuing Bank in a chosen foreign exchange market for the purchase by Issuing Bank, by cable or transfer of any currency other than Dollars at 12:00 noon, local time, one Domestic Business Day prior to any date of determination, expressed as the number of units of such currency per one (1) Dollar. "Existing Subordinated Debt" means and refers to the Debt of Borrower evidenced by the Senior Subordinated Notes. "Fairborn Plant" means and refers to that certain cement plant of Borrower located at or near Fairborn, Ohio, including (a) all interests and estates of Borrower in real property on which such cement plant is located, including improvements, buildings, and structures located thereon, (b) all interests and estates of Borrower in real property related to or used in connection with the operation of such cement plant, such as related quarries, parking or storage areas, Related Terminals, or rights of way, including improvements, buildings, and structures located thereon, and (c) all tangible and intangible interests of Borrower in personal property constituting part of or integral to the use or operation of such cement plant, such as fixtures, machinery, equipment, licenses, permits, operating and maintenance agreements, and related books and records (but excluding accounts, inventory, and proceeds thereof). "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day as published by the Federal Reserve Bank of New York on the Domestic Business Day immediately following such day; provided, however, that (a) if the day for which such rate is to be determined is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Domestic Business Day as published on the immediately following Domestic Business Day, and (b) if such rate is not published for any Domestic Business Day, then the Federal Funds Rate shall be the average of the quotations for such day on such transactions received by Agent from three (3) federal funds brokers of recognized standing selected by Agent. "Federal Reserve Board" means and refers to the Board of Governors of the Federal Reserve System or any successor thereto. "Florida Collateral" means and refers to the interests of Borrower in real property, equipment, and fixtures situate in the State of Florida, including the Brooksville Plant. "Foreign Bank" means and refers to any Bank other than a Bank organized and existing under the laws of the United States of America or any political subdivision thereof or therein. "Free Cash Flow Ratio" means and refers to, for the period to be determined, the ratio of (a) Consolidated EBITDA minus Capital Expenditures, to (b) the sum of cash Interest Expense, current provision for income taxes, dividends, and the current portion of Funded Debt as of the last day of such period (exclusive of Debt under this Agreement, the Subordinated Debt (to the extent that it is redeemed, repurchased, exchanged, or refinanced), and the Debt evidenced by the Pollution Control Bonds). For purposes of calculating the Free Cash Flow Ratio, Capital Expenditures shall be calculated (a) as of December 31, 1996 exclusive of Capital Expenditures, up to a maximum amount of $40,000,000, incurred or expended in connection with improvements made to the Fairborn Plant, (b) as of December 31, 1997 exclusive of Capital Expenditures, up to a maximum amount of $40,000,000 less the amount excluded during fiscal year 1996, incurred or expended in connection with improvements made to the Fairborn Plant, (c) exclusive of Capital Expenditures incurred or expended in connection with the consummation of a Permitted Acquisition to the extent that Borrower consummates such Permitted Acquisition with the Net Issuance Proceeds of Qualified Offerings that were raised for the express purpose of consummating such Permitted Acquisition, (d) exclusive of Capital Expenditures incurred or expended to the extent of Net Issuance Proceeds of Qualified Offerings obtained by Borrower in the applicable fiscal year; provided, however, that such exclusion shall not reduce Capital Expenditures to less than $25,000,000 in any fiscal year and, if any balance thereof remains, such balance may be used to reduce Capital Expenditures in the next succeeding fiscal year (but not any subsequent fiscal year) and the utilization of such balance shall not reduce Capital Expenditures in such succeeding fiscal year to less than $25,000,000, and (e) as of any fiscal quarter ending March 31, June 30, or September 30 of any fiscal year, as being equal to $25,000,000 for the four (4) immediately preceding fiscal quarters (including the quarter then ended), irrespective of the actual amount of Capital Expenditures. In order to take advantage of any of such exclusions, Borrower shall be required to designate the calculation thereof to Agent in connection with the delivery of the Officer's Compliance Certificate pursuant to Section 5.2(f). "Fund," "Trust Fund," or "Super Fund" means and refers to the Hazardous Substance Response Trust Fund, established pursuant to 42 U.S.C. Section9631 and the Post-closure Liability Trust Fund, established pursuant to 42 U.S.C. Section 9641. The above provisions have been amended or repealed by SARA and the "Fund," "Trust Fund," or "Super Fund" are now maintained pursuant to Section 9507 of the Code. "Funded Debt" means and refers to all consolidated Debt of Borrower or its Subsidiaries that matures one (1) year or more from the date of issuance, or that is renewable or extendable, at the sole option of Borrower or its Subsidiaries, as applicable, by its terms or by the terms of any instrument or agreement relating thereto to a date that is one (1) year or more from the date of issuance thereof, or that, under a revolving credit or similar agreement, obligates the lender to extend credit over a period of one (1) year or more from the date of issuance. "GAAP" means and refers to generally accepted accounting principles recognized as such by the American Institute of Certified Public Accountants in the opinions and pronouncements of the Accounting Principles Board and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination. "Governmental Authority" means and refers to any federal, state, local, or other governmental department, commission, board, bureau, agency, central bank, court, tribunal, or other instrumentality, domestic or foreign. "Hazardous Substances" shall have the meaning set forth in 42 U.S.C.Section 9601(14); provided, however, that the exclusions set forth therein shall not apply. "Hazardous Waste" shall have the meaning set forth in 42 U.S.C. Section 6903(5), and 40 C.F.R. Section 261.3. "Hedge Agreements" means and refers to any interest rate swap agreement, interest rate cap agreement, commodity or foreign currency h e dge, option, or future contracts, or other similar agreements or arrangements entered into by Borrower. "Highest Lawful Rate" means and refers to, with respect to any Bank, the maximum non-usurious interest rate, as in effect from time to time, that may be charged, contracted for, reserved, received, or collected by such Bank in connection with this Agreement or the Notes, or any of the Loan Documents. "Indemnified Liabilities" shall have the meaning set forth in Section 10.2 of this Agreement. "Indemnitees" shall have the meaning set forth in Section 10.2 of this Agreement. "Intangible Assets" means and refers to, with respect to any Person, that portion of the book value of all of such Person's Assets that would be treated as intangibles under GAAP. "Interest Expense" means and refers to, with respect to any period of determination, the total consolidated interest expense, determined in accordance with GAAP, of Borrower and its Subsidiaries. "Interest Payment Date" means and refers to, with respect to any LIBOR Rate Loan, the last day of each Interest Period applicable to such Loan; provided, however, that in the case of any Interest Period in excess of three (3) months, "Interest Payment Date" also shall include the end of each three-month period following the commencement of that Interest Period. "Interest Period" means, with respect to each LIBOR Rate Borrowing, the period commencing on the date of such LIBOR Rate Borrowing and ending one (1), two (2), three (3), or, subject to the availability of funds, six (6) months thereafter, as Borrower may elect pursuant to the applicable Notice of Borrowing or Notice of Conversion/Continuation; provided, however, that: (a) any Interest Period that would otherwise end on a day that is not a LIBOR Business Day shall be extended to the next succeeding LIBOR Business Day unless such LIBOR Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding LIBOR Business Day; (b) any Interest Period that begins on the last LIBOR Business Day of the calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c), end on the last LIBOR Business Day of the calendar month in which it would have ended if there were a numerically corresponding day in such calendar month; and (c) if any Interest Period includes a date on which a payment of principal of any Loan is required to be made under this Agreement, but does not begin or end on such date, then (x) the principal amount of such LIBOR Rate Borrowing required to be repaid on such date shall have an Interest Period ending on such date; and (y) the remainder (if any) of such LIBOR Rate Borrowing shall have an Interest Period determined as set forth in the lead-in to this definition; provided, however, that the foregoing shall not be deemed to relieve Borrower from any of its obligations under Section 2.15. "Investment" means and refers to, as applied to any Person, any direct or indirect purchase or other acquisition by that Person of stock or other securities of any other Person or any beneficial interest therein, or any direct or indirect loan, advance, or capital contribution by that Person to any other Person, including all Debt and accounts receivable from that other Person that are not current assets and did not arise from sales, leases, or rendition of services to that other Person in the ordinary and usual course of business. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, less, in the case of any loan or advance, any repayment of the principal thereof. "Issuing Bank" shall mean Wells Fargo or any other Bank that, on behalf of all Banks, issues a Letter of Credit requested by Borrower hereunder. "Junior Payment Amount" means and refers to the sum of (i) Fifty Million Dollars ($50,000,000), plus (ii) the Net Issuance Proceeds of Qualified Offerings. "KCC" means and refers to Kosmos Cement Company, a Kentucky partnership. "Keepwell Agreement" means and refers to, collectively, that certain Keepwell Agreement dated December 29, 1983, between MMRI and the Interlake Steamship Company, a Delaware corporation, and that certain letter agreement, dated March 23, 1987, from MMRI addressed to the Secretary of Transportation, in care of MARAD. "Knoxville Plant" means and refers to that certain cement plant of Borrower located at or near Knoxville, Tennessee, including (a) all interests and estates of Borrower in real property on which such cement plant is located, including improvements, buildings, and structures located thereon, (b) all interests and estates of Borrower in real property related to or used in connection with the operation of such cement plant, such as related quarries, parking or storage areas, Related Terminals, or rights of way, including improvements, buildings, and structures located thereon, and (c) all tangible and intangible interests of Borrower in personal property constituting part of or integral to the use or operation of such cement plant, such as fixtures, machinery, equipment, licenses, permits, operating and maintenance agreements, and related books and records (but excluding accounts, inventory, and proceeds thereof). "Lending Office" shall have the meaning ascribed thereto in Section 2.18 hereof. "Letters of Credit" means and refers to, depending on the context, any or all of the Commercial Paper Letters of Credit, the Commercial Letters of Credit, or the Standby Letters of Credit issued pursuant to the terms of Sections 2.1(b) or 2.2 of this Agreement or those letters of credit described on Schedule L-1 attached hereto. "Letter of Credit Amount" means and refers to an amount equal to Ninety-Five Million Dollars ($95,000,000). "Letter of Credit Usage" means and refers to, as of any date of determination, (a) the aggregate Stated Amount of the Letters of Credit then outstanding, plus (b) the aggregate amount of all Unpaid Drawings. For purposes of this definition, any amount that is denominated in a currency other than Dollars shall be valued in Dollars based on the applicable Exchange Rate for such currency as of the date of determination. "Leverage Ratio" means and refers to, for the period to be determined, the ratio of (a) the aggregate amount of Funded Debt as of the last day of such period, provided, however, that in the event that the ABN- AMRO Letter of Credit remains outstanding beyond January 31, 1996, Funded Debt shall be deemed to include the Stated Amount from time to time thereafter of such letter of credit, to (b) Consolidated EBITDA. "LIBOR Business Day" means a Business Day on which dealings in Dollar deposits are carried on in the London interbank market. "LIBOR Rate" means for each Interest Period for each LIBOR Rate Loan owed to a Bank the rate per annum (rounded upward, if necessary, to the nearest whole 1/16 of 1%) determined by Agent pursuant to the following formula: Base LIBOR Rate LIBOR Rate = -------------------------------------- 100% - Reserve Percentage of such Bank "LIBOR Rate Borrowing" means and refers to any Borrowing designated by Borrower as a LIBOR Rate Borrowing pursuant to Sections 2.8 or 2.9 of this Agreement. "LIBOR Rate Loan" means each portion of a Loan bearing interest at a rate determined by reference to the LIBOR Rate. "Lien" means and refers to any lien, mortgage, pledge, security interest, charge, or encumbrance of any kind (including any conditional sale or other title retention agreement or any lease in the nature thereof) and any agreement to give or refrain from giving any lien, mortgage, pledge, security interest, charge, or other encumbrance of any kind. "Loan" and "Loans" means and refers to the loans, including drawings under Letters of Credit, to be made severally (not jointly and not jointly and severally) by Banks to Borrower pursuant to Article 2 of this Agreement. "Loan Documents" shall mean the Real Property Collateral D o cuments, the Agent's Fee Letter, the Personal Property Collateral Documents, and all other written documents, agreements, or instruments, including financing statements and fixture filings, other than this Agreement and the Notes, that have been or are entered into by Borrower, Mojave, Agent, or Banks, as the case may be, in connection with the transactions contemplated by this Agreement. "Lyons Plant" means and refers to that certain cement plant of Borrower located at or near Lyons, Colorado, including (a) all interests and estates of Borrower in real property on which such cement plant is located, including improvements, buildings, and structures located thereon, (b) all interests and estates of Borrower in real property related to or used in connection with the operation of such cement plant, such as related quarries, parking or storage areas, Related Terminals, or rights of way, including improvements, buildings, and structures located thereon, and (c) all tangible and intangible interests of Borrower in personal property constituting part of or integral to the use or operation of such cement plant, such as fixtures, machinery, equipment, licenses, permits, operating and maintenance agreements, and related books and records (but excluding accounts, inventory, and proceeds thereof). "Majority Banks" means and refers to, as of the date of determination thereof, Banks having at least a majority of the aggregate unpaid principal amount then outstanding of the Loans, or if no Loans are outstanding at the date of determination, Banks having at least a majority of the Revolving Credit Facility Commitment. "MARAD" means and refers to the United States Department of Transportation acting by and through the Maritime Administration. "MARAD Reserve" means and refers to an amount equal to the lesser of Twenty Million Dollars ($20,000,000) or the then outstanding obligation of Borrower (as successor to MMRI) under the Keepwell Agreement, that, so long as the Keepwell Agreement remains in effect, shall be reserved under the Revolving Credit Facility Commitment and shall not be available for borrowing or for any other purpose other than payment of obligations under the Keepwell Agreement. "Material Adverse Change" means and refers to a material adverse change in the business, Assets, operations, business prospects, or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, as compared with the business, Assets, operations, business prospects, or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, as of December 31, 1994. "Material Adverse Effect" means and refers to a material adverse effect on the business, Assets, operations, business prospects, or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole. " M aterial Subsidiaries" means and refers to those Subsidiaries of Borrower owning assets valued at greater than One Hundred Thousand Dollars ($100,000). "Maturity Date" means and refers to October 30, 2000. "MMRI" means and refers to Moore McCormack Resources, Inc., a former Delaware corporation that was merged with and into Borrower, with Borrower being the surviving entity in such merger. "Mojave" means and refers to Mojave Northern Railroad Company, a California corporation. "Mojave Guaranty" means and refers to that certain Second Amended and Restated Continuing Guaranty, executed by Mojave, guaranteeing Debt of Borrower owing to Agent and the Banks, and any modifications or amendments thereto, substantially in the form of Exhibit M-1 attached hereto. "Mojave Security Agreement" means and refers to that certain Second Amended and Restated Security Agreement, executed by Mojave, as debtor, in favor of Agent, on behalf of Banks, as secured party, securing t h e Mojave Guaranty, and any modifications or amendments thereto, substantially in the form of Exhibit M-2 attached hereto. "Moody's" means and refers to Moody's Investors Service, Inc. "Multiemployer Plan" means and refers to a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA or a "multiemployer pension plan" as defined in Section 3(37) of ERISA or Section 414 of the Code, or any similar type of plan established and regulated under the laws of any foreign country, that is maintained for employees of such Person or any ERISA Affiliate of such Person. "Net Issuance Proceeds" means and refers to, in respect of any Qualified Offering, cash proceeds received by Borrower in connection therewith, net of out-of-pocket costs and expenses paid or incurred in connection therewith. "1988 Credit Agreement" shall have the meaning ascribed thereto in the recitals to this Agreement. "1991 Credit Agreement" shall have the meaning ascribed thereto in the recitals to this Agreement. "1993 Credit Agreement" shall have the meaning ascribed thereto in the recitals to this Agreement. "Noncancellable Lease" means and refers to any lease of a Person that is not cancellable without penalty at any time pursuant to the terms thereof or any lease of a Person the cancellation of which, pursuant to the terms thereof, would not be economical. "Notes" means and refers to any one or more of the promissory notes, dated as of the Closing Date, substantially in the form of Exhibit N-1 attached hereto, issued by Borrower to the order of a Bank in a face amount equal to such Bank's pro rata share of the Revolving Credit Facility Commitment in effect on the Closing Date. "Notice of Borrowing" means and refers to an irrevocable notice from Borrower to Agent of Borrower's intention to borrow all or any portion of the Loans (or request the issuance of all or any portion of the L e t ters of Credit) that Borrower is entitled to borrow hereunder, substantially in the form of Exhibit N-2 attached hereto, executed by a Responsible Officer of Borrower and delivered to Agent pursuant to Section 2.8 hereof. "Notice of Conversion/Continuation" means and refers to an irrevocable notice from Borrower to Agent of Borrower's request to convert all or any portion of such of the Loans bearing interest at one rate to that of another rate or continue Loans at a particular rate of interest, substantially in the form of Exhibit N-3 hereto, executed by a Responsible Officer of Borrower and delivered to Agent pursuant to Section 2.9 hereof. "Odessa Plant" means and refers to that certain cement plant of Borrower located at or near Odessa, Texas, including (a) all interests and estates of Borrower in real property on which such cement plant is located, including improvements, buildings, and structures located thereon, (b) all interests and estates of Borrower in real property related to or used in connection with the operation of such cement plant, such as related quarries, parking or storage areas, Related Terminals, or rights of way, including improvements, buildings, and structures located thereon, and (c) all tangible and intangible interests of Borrower in personal property constituting part of or integral to the use or operation of such cement plant, such as fixtures, machinery, equipment, licenses, permits, operating and maintenance agreements, and related books and records (but excluding accounts, inventory, and proceeds thereof). "Officer's Compliance Certificate" means and refers to that certificate of a Responsible Officer of Borrower described in Section 3.1(k) of this Agreement. "Operating Lease" means and refers to, as applied to any Person, any Noncancellable Lease of any Asset, that is not a Capitalized Lease, other than any such lease under which that Person is the lessor. "Overdue Rate" shall have the meaning set forth in Section 2.6 hereof. "PBGC" means and refers to the Pension Benefit Guaranty Corporation as defined in Title IV of ERISA, or any successor thereto. "Pension Plan" or "Plan" means and refers to any pension, retirement, disability, health, welfare, life insurance or other employee benefit plan, defined benefit, defined contribution, profit sharing, deferred c o mpensation, stock option, employee stock ownership, employee stock purchase, restricted stock, bonus or other incentive plan, vacation benefit, fringe benefit, severance, thrift or other employee benefit plan or arrangement, including any Pension Plan (other than any Multiemployer Plan) or any plan similar to any of those plans described above that is established or maintained under the law of any foreign country, irrespective of whether any of the foregoing is funded, that was, is, or will be sponsored or maintained by Borrower or its ERISA Affiliates (excluding any plans in which personnel of Borrower or its ERISA Affiliates are not participating) in which any personnel of Borrower or its ERISA Affiliates participate or from which any such personnel may derive a benefit. "Pension Protection Act" means and refers to the Pension Protection Act, Pub. L. No. 101-508, Title IX, Subtitle D, Part II, 101 Stat. 1330 et seq. (1987), as amended by Pub. L. No. 101-239, Title VII, 103 Stat. 2438 et seq. (1989), and any successor statute. "Permitted Acquisitions" means and refers to Investments or Asset Acquisitions that (a) are in an aggregate amount during the term of this Agreement of not more than One Hundred Million Dollars ($100,000,000), (b) are in Persons, or of Assets, that are engaged in, or useful in connection with, businesses that are substantially the same as those conducted by Borrower and its Subsidiaries on the Closing Date, (c) if the consideration paid or payable for any such Investment or Asset Acquisition, or series of related transactions, is in excess of Ten Million Dollars ($10,000,000), are Investments in or Asset Acquisitions by a Person that is a corporation, a limited liability company, or a limited liability partnership, (d) if the consideration paid or payable for any such Investment or Asset Acquisition, or series of related transactions, is in excess of Fifty Million Dollars ($50,000,000), result in (or continue) Borrower owning not less than fifty percent (50%) of the Voting Stock (or membership interests or partnership interests in the case of a limited liability company or limited liability partnership) of the Person in which the Investment is made or the Person that is to acquire the Assets and with respect to which Borrower also has the right, whether by contract, vote, or otherwise, to exercise substantial input in the management and control of the business of such Person, (e) are not made utilizing Assets that compose the Collateral, and (f) are not made utilizing Assets that compose the Brooksville Plant. For purposes of the foregoing, a contribution of Dollars or Assets by Borrower to a newly created Subsidiary of Borrower for the purpose of permitting such Subsidiary to complete an Investment or Asset Acquisition shall not itself constitute an Investment if such Dollars or Assets are, in fact, used to complete the proposed Investment or Asset Acquisition. "Permitted Junior Payments" means and refers to, so long as at each time thereof, no Event of Default or Unmatured Event of Default has occurred and is continuing and no such Event of Default or Unmatured Event of Default would result therefrom, (a) the redemption, payment, r e p u rchase, retirement for value, or acquisition, in one or more transactions, in an aggregate amount (excluding any consideration paid in the form of Borrower Common Stock) of up to the Junior Payment Amount of (i) principal amount of the Senior Subordinated Notes, (ii) Preferred Stock, (iii) Borrower Common Stock, or (iv) any combination of the foregoing; provided, however, that the redemption, payment, or acquisition of Borrower Common Stock shall constitute a Permitted Junior Payment only (y) if, after g i ving effect to such proposed redemption, payment, or acquisition, Borrower's Leverage Ratio (which will be calculated by utilizing the Funded Debt extant as of the date of such redemption, payment, repurchase, retirement for value, or acquisition after giving effect to the incurrence of any Funded Debt incurred in connection with such transaction and by utilizing the Consolidated EBITDA for the four (4) immediately preceding fiscal quarters) would be less than or equal to 2.00:1.00, and (z) up to an aggregate amount of Twenty Five Million Dollars ($25,000,000), (b) the incurrence of the Exchange Subordinated Debt pursuant to Section 6.1(c), and (c) the conversion of any Permitted Preferred Stock into, or the redemption or acquisition of any Permitted Preferred Stock for, Borrower Common Stock and payments of immaterial amounts in lieu of fractional shares in connection with any such conversion or redemption; provided, however, that if no Event of Default or Unmatured Event of Default had occurred and was continuing on the date that Borrower gives notice of redemption or otherwise commences any action preliminary to making a Permitted Junior Payment, Borrower shall be entitled to make such Permitted Junior Payment notwithstanding the occurrence or continuation of an Event of Default or Unmatured Event of Default (other than an Event of Default or Unmatured Event of Default under Section 7.1(a) hereof) as of the date such Permitted Junior Payment is to be made. "Permitted Liens" shall mean and refer to: (i) Liens for Taxes, assessments, or governmental charges or claims the payment of which is not, at such time, required by Section 5.4 of this Agreement; (ii) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen, and other Liens imposed by law and incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made therefor; (iii) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance, and other types of social security, or to secure the performance of statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds, and other similar obligations (exclusive of obligations for the payment of borrowed money); (iv) any attachment or judgment Lien in existence less than thirty (30) days after the date of entry thereof or with respect to which execution has been stayed; (v) leases or subleases granted to others not interfering with the ordinary and usual course of business of Borrower or any of its Subsidiaries; (vi) easements, rights-of-way, mineral reservations, restrictions, and other similar defects or irregularities of title not interfering in any material respect with the ordinary and usual course of business of Borrower or any of its Subsidiaries; (vii) Liens granted by Borrower in favor of Agent, on behalf of Banks, pursuant to the Personal Property Collateral Documents and the Real Property Collateral Documents; (viii) Liens granted by Mojave in favor of Agent, on behalf of Banks, pursuant to the Personal Property Collateral Documents and the Real Property Collateral Documents; (ix) banker's liens in the nature of rights of setoff arising in the ordinary and usual course of business of Borrower or any of its Subsidiaries and the Lien granted in favor of The Bank of Nova Scotia in the deposit account of Borrower maintained at The Bank of Nova Scotia, such Lien being granted solely to secure Borrower's reimbursement obligations respecting the letters of credit issued by The Bank of Nova Scotia that are outstanding on the Closing Date; (x) the Liens reflected in the Disclosure Statement securing Debt extant on the Closing Date; (xi) purchase money Liens granted by Borrower or any of its Subsidiaries in Assets acquired in the ordinary course of business to secure the payment of the purchase price of such Assets; (xii) Liens, in the nature of agreements to refrain from giving any lien, mortgage, pledge, security interest, charge, or other encumbrance, with respect to Assets of Borrower and its Subsidiaries the value of which is immaterial in relation to the value of all of the Assets of Borrower and its Subsidiaries; (xiii) Liens securing Acquired Indebtedness permitted to be incurred under Section 6.1(k) if such Liens secured such Acquired I n debtedness at the time such Acquired Indebtedness becomes an obligation of Borrower or any of its Subsidiaries and such Liens were not incurred in connection with, or in anticipation of, such Acquired I n debtedness becoming an obligation of Borrower or one of its Subsidiaries; provided, however, that such Liens shall not extend to or cover any Assets of Borrower or any of its Subsidiaries other than the Assets that secured the Acquired Indebtedness prior to such Acquired I n debtedness becoming an obligation of Borrower or one of its Subsidiaries; (xiv) Liens securing up to Thirty Million Dollars ($30,000,000) of the principal of the Indebtedness of Borrower and its Subsidiaries incurred pursuant to Section 6.1(k) of this Agreement and interest thereon, so long as such Liens do not attach or extend to the Collateral, the Brooksville Plant, or the accounts or inventory of Borrower or any of its Subsidiaries; (xv) Liens securing refinancing Indebtedness to the extent any such Lien replaces a Lien securing the Indebtedness so refinanced and is limited to the Assets that were subject to the Lien securing the Indebtedness so refinanced; and (xvi) Liens not specified in clauses (i) through (xv) of this definition and granted by Borrower or any of its Subsidiaries in the ordinary and usual course of business of, and consistent with past practices of, Borrower or any of its Subsidiaries (other than Liens securing Debt permitted under clauses (b), (c), (d), (e), (j), (k), (l), and (m) of Section 6.1) and Liens in the nature of deposits with a trustee or other depository in connection with a redemption, payment, acquisition, repurchase, retirement for value, or conversion that constitutes a Permitted Junior Payment. "Permitted Preferred Stock" means and refers to (a) the Series A Preferred Stock, (b) the Series B Preferred Stock, (c) the Series C Preferred Stock, (d) the Series D Preferred Stock, and (e) Preferred Stock issued by Borrower (and not by one or more of its Subsidiaries) that is not Prohibited Preferred Stock. "Person" means and refers to natural persons, c o rporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust c o m p anies, land trusts, vehicle trusts, business trusts, or other o r ganizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof. "Personal Property Collateral Documents" means and refers to the Stock Pledge, the Security Agreement, the Mojave Guaranty, the Mojave Security Agreement, and any and all other documents, agreements, or instruments to be executed or delivered in connection herewith or therewith. "Pollution Control Bonds" means and refers to means and refers to (a) those certain Floating Rate Monthly Demand Pollution Control Revenue Bonds (Southdown, Inc. Project) Series 1983 issued by the California Pollution Control Financing Authority pursuant to the Indenture of Trust dated as of February 15, 1993, (b) those certain Floating Rate Monthly Demand Industrial Development Revenue Bonds (Southdown, Inc. Project) Series 1983 issued by the California Pollution Control Financing Authority pursuant to the Indenture of Trust dated as of April 1, 1983, (c) those certain Floating Rate Monthly Demand Pollution Control Revenue Bonds (Southdown, Inc. Project) Series 1983B issued by the California Pollution Control Financing Authority pursuant to the Indenture of Trust dated as of September 1, 1983, (d) those certain County of Jefferson, Kentucky, Pollution Control Revenue Bonds Series 1973 (The Flintkote Company Project) issued by the County of Jefferson, Kentucky pursuant to the Indenture of Trust dated as of January 1, 1973, (e) that certain Industrial Development Revenue Refunding Bond (Moore McCormack Resources, Inc. Project) Series 1988 issued by the Industrial Development Board of the County of Knox pursuant to the Trust Indenture dated June 30, 1988, and (f) those certain Pollution Control Revenue Bonds (Florida Mining & Materials Corp. Project), Series C issued by Hernando County, Florida pursuant to the Trust Indenture dated May 20, 1981, as supplemented. "Preferred Stock" means and refers to any class or series of equity securities of Borrower or its Subsidiaries that is entitled, upon any distribution of Assets of Borrower or its Subsidiaries, as the case may be, whether by dividend or by liquidation, to a preference over another class or series of equity securities of Borrower or its Subsidiaries, as applicable. "Prime Rate" means the rate of interest announced within Wells Fargo at its principal office in San Francisco as its "prime rate", with the understanding that the "prime rate" is one of Wells Fargo's base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publication or publications as Wells Fargo may designate. "Prohibited Preferred Stock" means and refers to any Preferred Stock that by its terms (a) is mandatorily redeemable on or before October 30, 2002 or, on or before October 30, 2002, is redeemable at the option of the holder thereof for cash (or Assets or securities other than distributions in kind of preferred stock of the same class and series or of Borrower Common Stock) of Borrower or any of its Subsidiaries; provided, however, that Preferred Stock that is not otherwise Prohibited Preferred Stock shall not be deemed to be Prohibited Preferred Stock by reason of this clause (a) by virtue of the inclusion of a mandatory purchase or redemption obligation that is triggered solely by a change of control so long as the governing definition of change of control is not more restrictive than the definition of `Change of Control' contained in this Agreement, or (b) is convertible or exchangeable on or before October 30, 2002, mandatorily or at the option of the holder thereof, into Debt of Borrower or any of its Subsidiaries unless the Debt into which such Preferred Stock is convertible or exchangeable does not provide for the scheduled repayment of any of the principal thereof on or prior to October 30, 2002. "Qualified Offerings" means and refers to all offerings (whether one or more) by Borrower, on or after November 3, 1995, of equity securities other than Prohibited Preferred Stock. "Quarterly Payment Date" means and refers to the last day of each December, March, June, and September so long as any portion of the Loans are outstanding. "RCRA" means and refers to the Resource Conservation and Recovery Act of 1976, as amended, set forth at 42 U.S.C.Section 6901-6991i, including any rules or regulations issued in connection therewith. "Real Property Collateral Documents" means and refers to t h ose mortgages, deeds of trust, fixture filings, or amendments or modifications thereto, executed and delivered by Borrower in favor of Agent for benefit of the Banks in order to encumber the fee and leasehold estates and related fixtures that compose the Cement Plants (other than the Brooksville Plant). "Regulatory Change" shall have the meaning ascribed thereto in Section 2.15 hereof. "Related Terminals" means those certain terminals of Borrower located at the locations specified in part R-1 of the Disclosure Statement, including (a) all interests and estates of Borrower in real property on which such terminals are located, including improvements, buildings, and structures located thereon, (b) all interests and estates of Borrower in real property related to or used in connection with the operation of such terminals, such as related parking or storage areas, or rights of way, including improvements, buildings, and structures located thereon, and (c) all tangible and intangible interests of Borrower in personal property constituting part of or integral to the use or operation of such terminals, such as fixtures, machinery, equipment, licenses, permits, operating and maintenance agreements, and related books and records (but excluding accounts, inventory, and proceeds thereof). "Remedial Action" means and refers to all response actions set forth in 42 U.S.C.Section 9601(23), (24), and (25), whether or not these activities are conducted under CERCLA. " R eportable Event" means and refers to any event described in Section Section 4043 (excluding subsections(b)(7) and (9)) of ERISA. "Reserve Percentage" means and refers to, as of the date of determination thereof, for any Bank, the maximum percentage (rounded upward, if necessary to the nearest one-hundredth (1/100th) of one percent (1%)), as determined by such Bank in accordance with its usual procedures (which determination shall be conclusive in the absence of manifest error), that is in effect on such date as prescribed by the Federal Reserve Board for determining the reserve requirements (including supplemental, marginal, and e m ergency reserve requirements) with respect to eurocurrency funding (currently referred to as "eurocurrency liabilities") of that Bank, but so long as such Bank shall not be required or directed, under applicable regulations of the Federal Reserve Board, to maintain such reserves, the Reserve Percentage shall be zero. "Responsible Officer" means and refers to the President, Chief Executive Officer, Chief Financial Officer, Treasurer, Controller, or Chief Operating Officer of Borrower, or such other officer of Borrower designated by a Responsible Officer in a writing delivered to Agent. "Revolving Credit Facility" means and refers to the revolving loan and letter of credit facility set forth in Article 2 of this Agreement. "Revolving Credit Facility Commitment" means and refers to, on the date of determination thereof, and subject to the effect of the provisions of Section 2.12 hereof, the total amount of Banks' commitments to extend credit to Borrower under the Revolving Credit Facility, which commitment for any Bank shall be the amount set forth opposite the name of such Bank under the appropriate heading on Schedule R-2 attached hereto, and the total amount of which shall be the total of such amounts set forth on such schedule. As of the Closing Date, the Revolving Credit Facility Commitment is $200,000,000. "Revolving Credit Facility LC Subfacility" means and refers to the letter of credit facility that is a subfacility of the Revolving Credit Facility and is set forth in Section 2.1(b) of this Agreement. "Revolving Credit Facility Loans" means and refers to the Loans made to Borrower under the Revolving Credit Facility. "Revolving Credit Facility Usage" shall mean, on the date any determination thereof is to be made, the sum of, without duplication: (a) the outstanding amount of the Revolving Credit Facility Loans; plus (b) the Letter of Credit Usage; plus (c) the MARAD Reserve; plus (d) any amounts reserved under Section 6.1(d). "S&P" means and refers to Standard & Poor's Ratings Group, a division of McGraw-Hill Companies, Inc. on the date hereof, or any successor. "SARA" means and refers to the Superfund Amendments and Reauthorization Act of 1986, as amended from time to time, set forth in Public Law 99-499 et seq., and all rules and regulations promulgated thereunder. "SEC" means and refers to the United States Securities and Exchange Commission, and any successor thereto. "Securities Act" means and refers to the Securities Act of 1933, as amended from time to time, including any rules and regulations promulgated in connection therewith and any successor statue. "Security Agreement" means and refers to that certain Amended and Restated Security Agreement, executed by Borrower, as debtor, in favor of Agent, on behalf of Banks, as secured party, together with any amendments or modifications thereto, substantially in the form of Exhibit S-1 attached hereto. " S e n ior Subordinated Notes" means and refers to Borrower's Series B 14% Senior Subordinated Notes, due 2001, issued under the Subordinated Indenture of which One Hundred Twenty-Five Million Dollars ($125,000,000) were outstanding on the Closing Date. "Series A Preferred Stock" means and refers to Borrower's Preferred Stock, $.70 Cumulative Convertible Series A. "Series B Preferred Stock" means and refers to Borrower's Preferred Stock, $3.75 Convertible Exchangeable Series B. "Series C Preferred Stock" means and refers to the Preferred Stock, Cumulative Junior Participating Series C that is issuable by Borrower on the terms and conditions, and entitled to the preferences, limitations, and relative rights, set forth in Borrower's Restated Articles of Incorporation, as amended. "Series D Preferred Stock" means and refers to Borrower's Preferred Stock, $2.875 Cumulative Convertible Series D. " S p ecified Subsidiaries" means and refers to the Subsidiaries of Borrower that are set forth on Schedule S-1 attached hereto. "Standby Letter of Credit" means any standby letter of credit issued hereunder for the purpose of supporting: (a) any letters of credit or any obligations or liabilities supported on the Closing Date by letters of credit to be replaced or supported by letters of credit issued u n der this Agreement by an Issuing Bank; (b) worker's compensation liabilities of Borrower or any of its Subsidiaries; (c) the obligations of third party insurers of Borrower or any of its Subsidiaries; (d) performance, p a yment, deposit, or surety obligations of Borrower or any of its Subsidiaries; or (e) the Letters of Credit described on Schedule L-1 attached hereto. "Stated Amount" means and refers to the maximum amount available to be drawn under each Letter of Credit, without regard to whether any conditions to drawing could then be met. "Stock Pledge" means and refers to that certain Amended and Restated Security Agreement-Stock Pledge, executed by Borrower, as d e btor, in favor of Agent, on behalf of Banks, as secured party, hypothecating the capital stock of Mojave, together with any modifications or amendments thereto, substantially in the form of Exhibit S-2 attached hereto. "Subordinated Debt" means and refers to (a) the Existing Subordinated Debt, and (b) the Exchange Subordinated Debt. "Subordinated Indenture" means and refers to that certain Indenture, dated as of October 15, 1991, entered into between Borrower and State Street Bank and Trust Company of Connecticut, N.A., as trustee, respecting the Senior Subordinated Notes, as amended as of December 10, 1993 and as further amended from time to time in conformity with the terms hereof. "Subsidiary" means, with respect to any Person: (a) any corporation in which such Person, directly or indirectly through its Subsidiaries, owns more than fifty percent (50%) of the stock of any class or classes having by the terms thereof the ordinary voting power to elect a majority of the directors of such corporation; and (b) any partnership, association, joint venture, or other entity in which such Person, directly or indirectly through its Subsidiaries, has more than a fifty percent (50%) equity interest at the time. "Taxes" means and refers to any taxes, charges, fees, levies or other assessments based upon or measured by net or gross income, gross receipts, sales, use, ad valorem, transfer, franchise, withholding, payroll, employment, excise, occupation, premium or property taxes, together with any interest and penalties, additions to tax and additional amounts imposed by any federal, state, local or foreign taxing authority upon any Person. " T ermination Event" means and refers to: (a) a Reportable Event; (b) the withdrawal of Borrower or any of its ERISA Affiliates from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (c) the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA excluding, for purposes of this clause (c), any standard termination under Section 4041(b) of ERISA;d) the institution of proceedings to terminate a Pension Plan by the PBGC; or(e)any other event or condition which would likely constitute grounds under Sect.4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan. "UCC" shall mean the California Uniform Commercial Code, as amended or supplemented from time to time, and any successor statute. "Unmatured Event of Default" means and refers to an event, act, or occurrence that, with solely the giving of notice or the lapse of time (or both), would become an Event of Default. "Unpaid Drawings" means and refers to all drawings under any Letter of Credit paid by the Issuing Bank with respect thereto, on behalf of Banks, for which such Issuing Bank has not been reimbursed by Borrower or funded by Loans pursuant to Section 2.1 hereof. "Victorville Plant" means and refers to that certain cement plant of Borrower located at or near Victorville, California, including (a) all interests and estates of Borrower in real property on which such cement plant is located, including improvements, buildings, and structures located thereon, (b) all interests and estates of Borrower in real property related to or used in connection with the operation of such cement plant, such as related quarries, parking or storage areas, Related Terminals, or rights of way, including improvements, buildings, and structures located thereon, and (c) all tangible and intangible interests of Borrower in personal property constituting part of or integral to the use or operation of such cement plant, such as fixtures, machinery, equipment, licenses, permits, operating and maintenance agreements, and related books and records (but excluding accounts, inventory, and proceeds thereof). "Voidable Transfer" has the meaning ascribed thereto in Section 11.18. "Voting Stock" means, with respect to any Person, Capital Stock of any class or classes if the holders of such Capital Stock are ordinarily, in the absence of contingencies, entitled to vote for the election of the directors (or other persons performing similar functions) of such Person even if the right to so vote has been suspended by the happening of such a contingency. "Wells Fargo" means and refers to Wells Fargo Bank, N.A., a national banking association. 1.2 Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and to the singular include the plural, the part includes the whole, the terms "include" and "including" are not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or". References in this Agreement to a "determination" by Agent or Majority Banks, as applicable, include good faith estimates by Agent or Majority Banks, as applicable, in the case of quantitative determinations, and good faith beliefs by Agent or Majority Banks, as applicable, in the case of qualitative determinations. The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Article, section, subsection, exhibit, and schedule references are to this Agreement unless otherwise specified. Any reference herein to this Agreement, the Notes, or any of the Loan Documents includes any and all alterations, amendments, changes, extensions, modifications, renewals, or supplements thereto or thereof, as applicable. Any terms used herein that are not accounting terms and that are not separately defined shall have the meanings ascribed thereto in the UCC. Any reference to the provision by Borrower of cash collateral to Agent, on behalf of Banks, to secure any obligations of Borrower arising under this Agreement shall mean that Borrower shall have entered into such documents as Agent shall have required, and shall have taken such actions as may be required, in order for Agent, on behalf of Banks, to possess a perfected, first priority security interest in such cash collateral. 1.3 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP as in effect from time to time, including applicable statements, bulletins, and interpretations issued by the Financial Accounting Standards Board and bulletins, opinions, interpretations, and statements issued by the American Institute of Certified Public Accountants or its committees. When used herein, the term "financial statements" shall include the notes and schedules thereto. 1.4 Disclosure Statement, Exhibits, Schedules. The Disclosure Statement delivered by Borrower pursuant hereto and all of the e x h ibits and schedules attached to this Agreement shall be deemed incorporated herein by reference. ARTICLE 2. AMOUNT AND TERMS OF LOANS 2.1 Revolving Credit Facility. (a) Revolving Credit Facility Loans. Subject to the terms and conditions hereof, each Bank severally agrees to make Revolving Credit Facility Loans to Borrower, pro rata in proportion of its share of the Revolving Credit Facility Commitment, from the Closing Date to but not including the Maturity Date, at such times and in such amounts as Borrower may request in accordance with Section 2.8 hereof, which amounts may be borrowed, repaid without penalty or premium, and reborrowed subject to the limitations set forth herein; provided, however, that: (i) the aggregate principal amount at any time outstanding of all Revolving Credit Facility Loans made by any Bank shall not exceed such Bank's pro rata share of the Revolving Credit Facility Commitment then in effect; and (ii) the aggregate principal amount of any Borrowing under the Revolving Credit Facility shall not exceed the positive difference between: (x) the Revolving Credit Facility Commitment then in effect; minus (y) the amount of the Revolving Credit Facility Usage immediately prior to such Borrowing. Subject to the foregoing: (i) each Base Rate Borrowing shall be in a minimum principal amount of One Million Dollars ($1,000,000) or such lesser amount as is the then unfunded balance of the Revolving Credit Facility Commitment and, thereafter, in integral multiples of One Hundred Thousand Dollars ($100,000); and (ii) each LIBOR Rate Borrowing shall be in a minimum principal amount of Five Million Dollars ($5,000,000) and, thereafter, in integral multiples of One Million Dollars ($1,000,000). No Bank shall have any obligation to make Revolving Credit Facility Loans on or after the Maturity Date. (b) Revolving Credit Facility Letters of Credit. As part of Revolving Credit Facility and subject to the terms and conditions hereof, Borrower may request, in accordance with Section 2.2 hereof, that an Issuing Bank issue Letters of Credit for the account of Borrower, and, subject to the terms and conditions hereof, the Banks agree that an Issuing Bank will issue such Letters of Credit. On the Closing Date, any and all Letters of Credit set forth on Schedule L-1 shall be deemed issued under this Section 2.1(b). The foregoing notwithstanding, (a) no Issuing Bank shall issue any Commercial Paper Letter of Credit under the Revolving Credit Facility if, after giving effect to such issuance, the Commercial Paper Letter of Credit Usage would exceed the Commercial Paper Letter of Credit Amount, (b) no Issuing Bank shall issue any Letter of Credit if, after giving effect to such issuance, the Letter of Credit Usage would exceed the Letter of Credit Amount, and (c) no Issuing Bank shall issue any Letter of Credit if, after giving effect to such issuance, the Revolving Credit Facility Usage would exceed the Revolving Credit Facility Commitment then in effect. (c) MARAD. Subject to the terms and conditions hereof and so long as a Borrowing under Revolving Credit Facility is otherwise permitted, in the event MARAD has made a demand provided for, and in accordance with paragraph 5 of the Keepwell Agreement, and Borrower has failed to comply therewith, each Bank severally agrees to make advances under the Revolving Credit Facility to MARAD (for the benefit of Borrower), pro rata in proportion of such Bank's share of the Revolving Credit Facility Commitment, from the Closing Date to but not including the Maturity Date, in such amounts that in the aggregate shall not exceed the lesser of (i) Borrower's obligation that is then due and payable to MARAD under the Keepwell Agreement, (ii) the amount of the MARAD Reserve at such time, and (iii) the amount of Revolving Credit Facility Loans that are available to be borrowed under this Agreement, but only upon receipt by Agent of a written request from the United States Secretary of Transportation (the "Secretary") for such an advance and after ten (10) Domestic Business Days prior notice by the Secretary to Borrower of such a request. Any such advances requested by MARAD shall be advanced to such account of MARAD as requested by the Secretary and shall be deemed to be Revolving Credit Facility Loans and Base Rate Loans. Borrower authorizes the making of such advances on its behalf and acknowledges that it will be obligated to repay any such advances to MARAD as if the same directly had been requested by Borrower. The amount of the MARAD Reserve shall be reduced immediately by the amount of any such Borrowing. 2.2 Letters of Credit. (a) Immediately upon the issuance of each Letter of Credit hereunder, each Bank shall be deemed to and hereby agrees to have irrevocably purchased from the Issuing Bank a participation in such Letter of Credit and any drawing thereunder in an amount equal to such Bank's pro rata share of the Revolving Credit Facility Commitment to the same extent and with the same effect as if such Bank had issued such Letter of Credit. Accordingly, each Bank shall, pursuant to the provisions of Section 2.10(b) hereof, remit to Agent, in immediately available funds, an amount that is in the same proportion to the amount drawn under the Letter of Credit as such Bank's share of the Revolving Credit Facility Commitment, plus interest on such amount, at the rate set forth in Section 2.10(b) hereof, payable from the date of such drawing to the date such Bank initiates payment of such amount to Agent. Borrower and Banks hereby agree that amounts paid by or on behalf of Banks under and pursuant to each Letter of Credit shall constitute Base Rate Loans made under Section 2.1(a). Each Bank's obligation to make the Base Rate Loans referred to in this Section 2.2 shall continue despite the occurrence of any Event of Default or Unmatured Event of Default or any inability of Borrower to require that such Bank fund its pro rata share of the Revolving Credit Facility Commitment, including any inability resulting from the operation of Sect.365(c)(2)of the federal Bankruptcy Code or otherwise. Borrower acknowledges and agrees that, anything herein to the contrary notwithstanding, in the event of a bankruptcy of Borrower, should Banks be precluded or restricted from making Loans to Borrower secured by the Collateral and entitled to all the benefits and protections of the Loan Documents, then, in the event of any draw under any Letter of Credit, the reimbursement claim of the Issuing Bank against Borrower for the amount paid by the Issuing Bank with respect to such draw shall be treated in all respects as if it were a Loan made by the Issuing Bank on the date that the Issuing Bank honored such draw (including for purposes of accruing interest), and, upon paying to the Issuing Bank such Bank's share of the amount paid by the Issuing Bank in connection with such draw, each Bank shall hold a corresponding participation interest in the Issuing Bank's reimbursement claim against Borrower. (b) Borrower shall pay a letter of credit fee to Agent for the account of the Banks, in an amount equal to (i) in the case of Commercial Letters of Credit, the then extant Applicable Commercial Letter of Credit Margin times the Stated Amount of each requested Commercial Letter of Credit, such letter of credit fee to be payable in advance at the time of the issuance of each such Commercial Letter of Credit, and (ii) in the case of Commercial Paper Letters of Credit and Standby Letters of Credit, the then extant Applicable LIBOR Rate Margin, on a per annum basis, times the Stated Amount of each requested Commercial Paper Letter of Credit or Standby Letter of Credit, such letter of credit fee to be payable quarterly in arrears on each Quarterly Payment Date. (c) Each Letter of Credit is to be issued only upon satisfaction of the following conditions: (i) Borrower shall be entitled under Section 2.1 to a Borrowing in an amount equal to or greater than the face amount of the Letter of Credit on the date of the issuance thereof; (ii) all conditions to Loans specified in Sections 3.1 and 3.2 hereof, with respect to Letters of Credit to be issued on the Closing Date, and in Section 3.3, with respect to all Letters of Credit, shall have been satisfied on the date of the issuance of each Letter of Credit; and (iii) Borrower shall have submitted an application and executed such other documents, instruments, and agreements as may be required by the Issuing Bank, all in form and substance reasonably satisfactory to such Issuing Bank. (d) Each Letter of Credit shall be administered by the Issuing Bank on behalf of all Banks. The letter of credit fees payable by Borrower for the issuance of Letters of Credit shall be allocated by Agent to Banks as follows: (1) Commercial Letters of Credit. (y) to the Issuing Bank, an administrative fee equal to .10 percentage points times the Stated Amount of the Commercial Letter of Credit, such fee to be payable at the time of issuance; and (z) to all Banks (including the Issuing Bank), the balance of the letter of credit fee payable with respect to such Commercial Letter of Credit, pro rata, based upon each Bank's proportionate share of the Revolving Credit Facility Commitment, such fee to be payable at the time of issuance. (2) Standby Letters of Credit and Commercial Paper Letters of Credit. (y) to the Issuing Bank, an administrative fee equal to .125 percentage points, per annum, times the Stated Amount of the Standby Letter of Credit or Commercial Paper Letter of Credit, such fee to be payable in arrears on each Quarterly Payment Date; and (z) to all Banks (including the Issuing Bank), the balance of the letter of credit fee payable with r e spect to such Standby Letter of Credit or Commercial Paper Letter of Credit, pro rata, based u p o n each Bank's proportionate share of the Revolving Credit Facility Commitment, such fee to be payable in arrears, on each Quarterly Payment Date. (e) If, for any reason, a Bank fails to pay its liability on a Letter of Credit in accordance with the provisions of this Section 2.2, then the Issuing Bank automatically shall be subrogated to the right of such defaulting Bank to repayment, in full, of the Base Rate Loan created by virtue of a drawing on a Letter of Credit prior to distribution of any repayments to the defaulting Bank. (f) Each Commercial Letter of Credit shall be issued for a term not to exceed one hundred eighty (180) days, each Commercial Paper Letter of Credit shall be issued for a term not to exceed one (1) year, and each Standby Letter of Credit shall be issued for a term not to exceed one (1) year, in each case as designated by Borrower when requesting such Letter of Credit. (g) Letters of Credit issued pursuant to this Section 2.2 shall have an expiration date not later than the Maturity Date. (h) SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, IN DETERMINING WHETHER TO PAY UNDER ANY LETTER OF CREDIT, THE ISSUING BANK SHALL BE RESPONSIBLE ONLY TO DETERMINE THAT THE DOCUMENTS AND CERTIFICATES REQUIRED TO BE DELIVERED UNDER THAT LETTER OF CREDIT HAVE BEEN DELIVERED AND THAT THEY COMPLY ON THEIR FACE WITH THE REQUIREMENTS OF THAT LETTER OF CREDIT. 2.3 Authorization and Issuance of Notes. Borrower has authorized the issuance of Notes in the aggregate principal amount of Two Hundred Million Dollars ($200,000,000). On the Closing Date, Borrower shall issue a Note, payable to the order of each Bank, substantially in the form of Exhibit N-1, with appropriate insertions. Each such Note shall be in an amount equal to such Bank's pro rata share of the Revolving Credit Facility Commitment in effect on the Closing Date. Borrower shall deliver each such Note to Agent for delivery to the appropriate Bank. The Notes delivered to the Banks shall evidence the aggregate outstanding principal balance of the Revolving Credit Facility Loans made, from time to time, to Borrower and the obligation of Borrower to repay the amount of any drawings made under Letters of Credit, together with interest accrued and unpaid thereon. Anything herein to the contrary notwithstanding, it is the express intent of the parties hereto to preserve the outstanding nature of all loans and letters of credit made or issued under the 1993 Credit Agreement and outstanding on the Closing Date immediately prior to the closing of the transactions contemplated hereby. To that end, as more specifically delineated in Section 3.2, all such outstanding loans and letters of credit shall be converted on the Closing Date to Loans and Letters of Credit hereunder as set forth in such Section 3.2, and shall not be deemed to have been repaid or cancelled and reloaned or reissued, but rather, at all times, continuously to have remained outstanding. To the extent that the shares of Banks hereunder differ from the shares of the "Banks" under the 1993 Credit Agreement, the claims of such old "Banks" that are being replaced, or whose shares are being reduced, shall be considered to have been assigned, without representation, warranty, or recourse by such old "Banks" to the Banks hereunder in such a manner as to achieve ratable outstandings hereunder immediately following the closing, and Agent and the Banks shall cooperate to effect such adjustments and transfers at closing among the Banks as may be necessary or appropriate to achieve such ratable outstandings immediately after such closing. 2.4 Rate Designation. Borrower shall designate each Borrowing requested by it as a Base Rate Borrowing or a LIBOR Rate Borrowing in the Notice of Borrowing given to Agent in accordance with Section 2.8 hereof. 2.5 Interest Rates; Payment of Principal and Interest. (a) (i) The obligation of Borrower to repay all of the Loans made under Revolving Credit Facility shall be evidenced by the Notes. (ii) All of the Notes shall be payable to the order of each Bank at Agent's San Francisco main branch located at 420 Montgomery Street, San Francisco, California 94163, or at such other office of Agent as may be designated, from time to time, by Agent, for the account of each Bank, not later than 9:00 a.m., California time, on the date of payment. Upon receipt by Agent of such payments as are made in compliance with the terms of this Section 2.5(a), payments made by Borrower shall be deemed made to each Bank and shall constitute satisfaction of Borrower's obligations to each Bank with respect to the Loans so repaid. Agent shall, on either the Domestic Business Day that is the day upon which Agent receives a payment from Borrower if Agent shall have received such payment from Borrower by 9:00 a.m., California time, on that day, or on the next Domestic Business Day following the Domestic Business Day on which Agent receives a payment from Borrower if such payment is received after 9:00 a.m., California time, initiate payment to each Bank of its pro rata share of the Loans repaid. If Agent shall initiate such payment to a Bank later than the date set forth in the immediately preceding sentence, then Agent shall pay to such Bank, in addition to its pro rata share of the Loans repaid, interest on such amount at the customary rate set by Agent for the correction of errors among banks for the first three (3) Domestic Business Days and, thereafter, at the Base Rate. (b) Each Base Rate Loan shall bear interest, upon the unpaid principal balance thereof from the date advanced or converted, at a fluctuating rate, per annum, equal to the Base Rate plus the Applicable Base Rate Margin. Interest due on the Base Rate Loans shall be due and payable, in arrears, commencing on the first Quarterly Payment Date following the Closing Date, and continuing thereafter on each Quarterly Payment Date up to and including the Quarterly Payment Date immediately preceding the Maturity Date, and on the Maturity Date. (c) Each LIBOR Rate Loan owed to a Bank shall bear interest, upon the unpaid principal balance thereof, from the date advanced or converted, at a rate, per annum, equal to the LIBOR Rate for such Bank plus the Applicable LIBOR Rate Margin. Interest due on the LIBOR Rate Loans shall be due and payable, in arrears, on each Interest Payment Date applicable to that LIBOR Rate Loan. Anything to the contrary contained in this Agreement notwithstanding, Borrower shall not have more than six (6) LIBOR Rate Borrowings outstanding at any one time. (d) The aggregate principal amount of all Revolving Credit Facility Loans outstanding as of the Maturity Date shall be due and payable on the Maturity Date. (e) Anything to the contrary contained in this Agreement notwithstanding, Borrower shall not be obligated to pay, and Banks shall not b e entitled to charge, collect, receive, reserve, or take interest ("interest" being defined as the aggregate of all charges that constitute interest under applicable law that are contracted for, charged, reserved, received, or paid) in excess of the maximum rate allowed by applicable law. During any period of time in which the interest rate specified herein exceeds such maximum rate, interest shall accrue and be payable at such maximum rate; provided, however, that, if the interest rate declines below such maximum rate, interest shall continue to accrue and be payable at such maximum rate (so long as there remains any unpaid principal with respect to the Loans) until the interest that has been paid hereunder and under the Notes equals the amount of interest that would have been paid if interest had at all times accrued and been payable at the interest rate specified in this Section 2.5 without being limited to the maximum rate specified in this Section 2.5. For purposes of this Section 2.5(e), the term "applicable law" shall mean that law in effect from time to time and applicable to the loan transaction between Borrower and Banks that lawfully permits the charging and collection of the highest permissible, lawful non-usurious rate of interest on such loan transaction and this Agreement, including laws of the State of California and, to the extent controlling, laws of the United States of America. It is intended that, in the event that, notwithstanding the parties' express choice of other law to be applicable to this Agreement, the laws of the State of Texas are included in determining applicable law, Chapter One ("Chapter One") of Title 79, Revised Civil Statutes of Texas, 1925, as amended (the "Texas Credit Code"), shall be included in any such determination, and that, for the purpose of applying Chapter One to this Agreement, the maximum interest rate shall be the "indicated rate ceiling" (as such term is used in Article 5069-1.04 of Chapter One) from time to time in effect. Any Bank may, from time to time, as to current and future balances, implement any other ceiling under Chapter One by notice to Borrower, if and to the extent permitted by Chapter One. The parties hereto expressly agree, pursuant to Article 5069-15.10(b) of Chapter Fifteen ("Chapter Fifteen") of the Texas Credit Code, that Chapter Fifteen shall not apply to this Agreement or to any Loan and that neither this Agreement nor any Loan shall be governed by or subject to the provisions of Chapter Fifteen in any manner whatsoever. (f) In the event that, as a result of the operation of any provision of this Agreement, Borrower repays a LIBOR Rate Loan prior to the expiration of the Interest Period applicable thereto, Borrower shall, concurrently with the repayment of any such Loan, pay any and all accrued and unpaid interest on the amount repaid. 2.6 Overdue Rates. Any payment of principal or (to the extent permitted by law and both before and after judgment) interest with respect to the Loans, or any fees, expenses, or other amounts not paid when due hereunder or declared due, whether at maturity, by acceleration, by lapse of time, or otherwise, shall thereafter bear interest, without affecting any of the other rights and remedies provided for herein or in the Notes, at a rate (the "Overdue Rate") equal to the lesser of: (a) (i) for all amounts not paid when due other than LIBOR Rate Loans, at the Base Rate plus the Applicable Base Rate Margin plus two (2) percentage points; and (ii) as to all LIBOR Rate Loans not paid when due, at the LIBOR Rate plus the Applicable LIBOR Rate Margin plus two (2) percentage points; and (b) the Highest Lawful Rate. 2.7 Computation of Interest and Fees. All computations of the Commitment Fee, computations of the letter of credit fees with respect to Letters of Credit, and computations of interest with respect to Base Rate Loans for any period shall be calculated on the basis of a year of three h u ndred sixty-five (365) or three hundred sixty-six (366) days, as applicable, for the actual number of days elapsed in such period. All c o mputations of interest with respect to LIBOR Rate Loans and all computations of interest due under Section 2.6 hereof, for any period shall, to the fullest extent permitted by law, be calculated on the basis of a year of three hundred sixty (360) days for the actual number of days elapsed in such period. Interest shall accrue from the first day of the making of a Loan to the date of repayment of such Loan in accordance with the provisions hereof; provided, however, that, if a Loan is repaid on the same day on which it is made, then one (1) day's interest shall be paid on that Loan. 2.8 Notice of Borrowing Requirements. (a) Each Base Rate Borrowing shall be made on a Domestic Business Day and each LIBOR Rate Borrowing shall be made on a LIBOR Business Day. (b) Each Borrowing (except a Borrowing pursuant to Section 2.1(c) which shall be made upon the written notice provided for therein but shall be subject to the timing requirement set forth in clause (i) and subsection (c) below) or Letter of Credit issuance shall be made upon written notice, by way of a Notice of Borrowing, in the form of Exhibit N-2, given by telex, telecopy, mail, or personal service, delivered to Agent at 420 Montgomery Street, San Francisco, California 94163, as follows: (i) For a Base Rate Borrowing, Agent shall be given notice on the day on which such Borrowing is to be made and such notice shall specify that a Base Rate Borrowing is requested and shall state the amount thereof (subject to the provisions of this Article 2); (ii) For a LIBOR Rate Borrowing, Agent shall be given notice at least three (3) LIBOR Business Days prior to the day on which such Borrowing is to be made and such notice shall specify that a LIBOR Rate Borrowing is requested and shall state the amount and proposed Interest Period thereof (subject to the provisions of this Article 2); (iii) For the issuance of a Letter of Credit, Agent and the Issuing Bank shall be given notice at least four (4) Domestic Business Days prior to the day on which such Letter of Credit is to be issued, or such shorter period of time as is acceptable to the Issuing Bank; provided, however, that any such notice period shall be sufficiently long as is necessary to satisfy the conditions set forth in Section 2.2, as applicable, with respect to such issuance. Such notice shall specify that a Letter of Credit issuance is requested and shall state the amount thereof (subject to the provisions of this Article 2). (c) If the notice required by clause (b) of this Section 2.8 shall have been received by Agent no later than 9:00 a.m., California time, on a Domestic Business Day or LIBOR Business Day, as applicable, such day shall be treated as the first Domestic Business Day or LIBOR Business Day, as applicable, of the required notice period. In any other event, such notice shall be treated as having been received immediately before 9:00 a.m., California time, of the next Domestic Business Day or LIBOR Business Day, as applicable. (d) In lieu of delivering the above-described Notice of Borrowing, Borrower, by one of its Responsible Officers or any other individual authorized to act on its behalf, may give Agent telephonic notice requesting a Borrowing to be disbursed pursuant to the terms of Section 2.21 hereof by the required time of any proposed Borrowing under this Section 2.8; provided, however, that such notice shall be confirmed in writing by delivery of a Notice of Borrowing to Agent on or before the proposed date of such Borrowing. Agent and Banks shall incur no liability to Borrower and Agent shall incur no liability to Banks in acting upon any telephonic notice referred to above which Agent believes in good faith to have been given by a Responsible Officer or other individual authorized to act on behalf of Borrower or for otherwise acting in good faith under this Section 2.8 and in making any Loans in accordance with this Agreement pursuant to any telephonic notice. Any Notice of Borrowing (or telephonic notice in lieu thereof) shall be irrevocable and Borrower shall be bound to make a Borrowing in accordance therewith. 2.9 Conversion or Continuation. (a) Subject to the provisions of Section 2.16, Borrower shall have the option to: (a) convert all or any part of its outstanding Loans equal to One Million Dollars ($1,000,000) and integral multiples of One Hundred Thousand Dollars ($100,000) in excess of such amount, to a Base Rate Loan; (b) convert all or any portion of its outstanding Loans equal to Five Million Dollars ($5,000,000), and integral multiples of One Million Dollars ($1,000,000) in excess of such amount, to a LIBOR Rate Loan; or (c) upon the expiration of any Interest Period applicable to a LIBOR Rate Loan, to continue all of such LIBOR Rate Loan as a LIBOR Rate Loan and the succeeding Interest Period of such continued Loan shall commence on the expiration date of the Interest Period previously applicable thereto; provided, however , that a LIBOR Rate Loan only may be converted into a Base Rate Loan or continued, as the case may be, on the expiration date of the Interest Period applicable thereto; provided further, however, that no outstanding Loan may be continued as, or be converted into, a LIBOR Rate Loan when any Event of Default has occurred and is continuing; provided further, however, that if Borrower fails to deliver the appropriate Notice of Conversion/Continuation or the telephonic notice in respect thereof before the expiration of the Interest Period of a LIBOR Rate Loan, such LIBOR Rate Loan automatically shall be converted to a Base Rate Loan. (b) Any provisions of the foregoing paragraph of this Section 2.9 to the contrary notwithstanding, Borrower may convert a LIBOR Rate Loan into a Base Rate Loan prior to the expiration date of the Interest Period applicable thereto upon payment to each Bank, pursuant to the provisions of Section 2.15 hereof, of all costs, expenses and losses incurred by any Bank as a result of the timing of such conversion. (c) B o r r o w e r shall deliver a Notice of Conversion/Continuation, in the form of Exhibit N-3, with respect to a conversion or continuation of one of its Loans to Agent no later than 9:00 a.m., California time, on the Domestic Business Day that is the proposed conversion date in the case of a conversion to a Base Rate Loan and at least t h r ee (3) LIBOR Business Days in advance of the proposed c o nversion/continuation date in the case of a conversion to, or a continuation of, a LIBOR Rate Loan. A Notice of Conversion/Continuation shall specify: (i) the proposed conversion/continuation date (which shall be a Domestic Business Day or a LIBOR Business Day, as applicable); (ii) the amount of the Loan to be converted/continued; (iii) the nature of the proposed conversion/continuation; and (iv) in the case of a conversion to, or continuation of, a LIBOR Rate Loan, the requested Interest Period. (d) In lieu of delivering the above-described Notice of Conversion/Continuation, Borrower, by any of its Responsible Officers or any other individual authorized to act on behalf of Borrower, may give Agent t e l e p h o nic notice by the required time of any proposed conversion/continuation under this Section 2.9; provided, however, that such notice shall be promptly confirmed in writing by delivery of a Notice of C o n v e rsion/Continuation to Agent on or before the proposed conversion/continuation date. Agent and Banks shall incur no liability to Borrower in acting upon any such telephonic notice that Agent believes in good faith to have been given by a Responsible Officer or other individual authorized to act on behalf of Borrower, or for otherwise acting in good faith under this Section 2.9 and in converting/continuing pursuant to any telephonic notice. Any Notice of Conversion/Continuation (or telephonic notice in lieu thereof) shall be irrevocable and Borrower shall be obligated to convert or continue in accordance therewith. 2.10 Loans by Banks. (a) Agent promptly shall notify each Bank of that Bank's pro rata portion of a Borrowing or Letter of Credit issuance requested pursuant to Section 2.8 hereof. Not later than 10:00 a.m., California time, on the date specified in such notice as the date on which the Borrowing so requested is to be made, each Bank, subject to the terms and conditions hereof, shall initiate a transfer of funds to make its pro rata portion of the Borrowing available in immediately available funds, to Agent at its San Francisco main branch located at 420 Montgomery Street, San Francisco, California 94163. (b) An Issuing Bank promptly shall notify each Bank of that Bank's pro rata portion of a drawing made under a Letter of Credit. Not later than 9:00 a.m., California time, on the date specified in such notice as the date on which such drawing is to be paid, each Bank, subject to the terms and conditions hereof, shall initiate a transfer of funds to make its pro rata portion of such drawing available, in immediately available funds, to Agent. In the event that Issuing Bank is unable to notify Banks in time sufficient to permit Banks to timely remit their portion of the drawing to Issuing Bank, then each Bank shall be required to initiate a transfer of funds to make payment to Agent of its pro rata portion of the drawing under the Letter of Credit, together with interest thereon accrued from the date of the drawing to the date on which such Bank initiates payment to Agent at the rate set forth in the following sentence, by no later than 9:00 a.m. California time, on the Domestic Business Day immediately following the date of receipt of the notice from Issuing Bank. In the event that any Bank fails to make any payment to Agent, as specified above, Issuing Bank shall be entitled to recover such amount on demand from such Bank together with interest thereon until paid at the customary rate set by such Bank for the correction of errors among banks for the first three (3) Domestic Business Days and, thereafter, at the Base Rate. (c) Each Bank's obligation to make any Loan pursuant hereto is several, and not joint or joint and several, and is not conditioned upon the performance by each, any, or all of the other Banks of their obligations to make Loans. The failure by any Bank to perform its obligation to make Loans will neither increase any other Bank's pro rata portion of the Revolving Credit Facility Commitment nor relieve any other Bank of its obligation to make Loans pursuant to its share of the Revolving Credit Facility Commitment. Agent shall notify Banks of the failure by any Bank (a "Defaulting Bank") to perform its obligation to make a Loan required to be made by such Defaulting Bank hereunder and any Bank (other than such Defaulting Bank) may, if it desires, assume, in such proportion as the Majority Banks (calculated without inclusion of the Defaulting Bank) may agree, the obligation of the Defaulting Bank or Banks to make Loans, but no Bank shall be obligated to do so. 2.11 Mandatory Repayment. (a) Subject to the provisions of Section 2.12, the Revolving Credit Facility Commitment shall terminate on the Maturity Date. (b) In the event that, at any time, the Revolving Credit Facility Usage exceeds the then extant amount of the Revolving Credit Facility Commitment, then, and in each such event, Borrower immediately shall repay the amount of such excess to Agent to be distributed to Banks based upon their pro rata share of the Revolving Credit Facility Commitment. 2.12 Voluntary Prepayments or Reductions of Revolving Credit Facility Commitment. (a) Subject to Section 2.15 hereof, Borrower shall have the right, at any time and from time to time, to prepay the Loans without penalty or premium. Borrower shall give Agent notice of any such prepayment with respect to Base Rate Loans on the date of prepayment and not less than three (3) LIBOR Business Days prior written notice of any such prepayment with respect to LIBOR Rate Loans. In each case, such notice shall specify the date on which such prepayment is to be made (which shall be a Domestic Business Day or LIBOR Business Day, as applicable), and the amount of such prepayment. Each such prepayment on account of Base Rate Loans shall be in an aggregate minimum amount of One Million Dollars ($1,000,000), and integral multiples of One Hundred Thousand Dollars ($100,000) in excess of such amount and shall include interest accrued on the amount prepaid to the date of payment. Each such prepayment on account of LIBOR Rate Loans shall be in an aggregate minimum amount of Five Million Dollars ($5,000,000), and integral multiples of One Million Dollars ($1,000,000) in excess of such amount and shall include interest accrued on the amount prepaid to the date of payment. (b) Borrower shall have the right at any time and from time to time to permanently reduce, in whole or in part, the unfunded portion of the Revolving Credit Facility Commitment. Borrower shall give Agent not less than five (5) Domestic Business Days prior written notice designating the date (which shall be a Domestic Business Day) of such reduction and the amount of such reduction. Each such reduction shall be effective on the date specified in Borrower's notice given in compliance hereunder. Each such reduction shall be in an aggregate minimum amount of Five Million Dollars ($5,000,000), and integral multiples of One Million Dollars ($1,000,000) in excess thereof, or, if less, the balance of the Revolving Credit Facility Commitment. Each such reduction shall not reduce any LIBOR Rate Borrowing to an amount that is less than Five Million Dollars ($5,000,000) but greater than zero. (c) Any reduction of the Revolving Credit Facility Commitment pursuant to this Section 2.12 shall be without premium or penalty (other than under Section 2.15 hereof and other than payment of any Commitment Fees accrued under Section 2.13 hereof). (d) Any reduction of the Revolving Credit Facility Commitment pursuant to this Section 2.12 shall reduce each Bank's pro rata share of the Revolving Credit Facility Commitment. 2.13 Commitment Fee. Borrower shall pay a fee (the "Commitment Fee") to Agent, to be distributed by Agent to each Bank based upon such Bank's pro rata share of the Revolving Credit Facility Commitment. The Commitment Fee shall be payable quarterly in arrears, commencing on December 31, 1995, continuing on the last day of each September, December, March, and June thereafter so long as the Revolving Credit Facility Commitment is outstanding, and on the date of final termination of the Revolving Credit Facility Commitment. The Commitment Fee that is due and payable on December 31, 1995, shall cover the period of time from the Closing Date to December 31, 1995. On or before the Closing Date, Borrower shall pay to Agent the Commitment Fee (as defined and payable under the 1993 Credit Agreement), covering the period of time from October 1, 1995 through the day prior to the Closing Date. The Commitment Fee shall be equal to the then extant Applicable Commitment Fee Percentage, per annum, times the average daily amount of the unfunded portion of the Revolving Credit Facility Commitment (decreased by the average daily amount of the Letter of Credit Usage during the applicable period) and shall be calculated, as set forth in Section 2.7 hereof, on the basis of a year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as applicable, for the actual number of days elapsed. 2.14 Agent's Fees. As and when agreed to in the Agent's Fee Letter, Borrower agrees to pay to Agent, for its own account, the Agent's Fees. 2.15 Increased Costs. If after the Closing Date, (a) the adoption of, or any change in, any applicable law, rule, or regulation, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Bank (or its Lending Office) with any request, guideline, or directive (irrespective of whether having the force of law) of any governmental authority (a "Regulatory Change") shall impose, modify, or deem applicable any reserve, special deposit, or similar requirement (including any such requirement imposed by the Federal Reserve Board, but excluding with respect to any LIBOR Rate Loan any such requirement included in the calculation of the LIBOR Rate) against Assets of, deposits with, or for the account of, or credit extended by, any Bank's Lending Office or shall impose on any Bank (or its Lending Office) or the inter-bank eurodollar market any other condition affecting its LIBOR Rate Loans or its obligation to make LIBOR Rate Loans, or (b) Borrower prepays or converts any LIBOR Rate Loan prior to the end of its applicable Interest Period, and the result of any of the foregoing is to increase the cost to such Bank (or its Lending Office) of making or maintaining any LIBOR Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Lending Office) under this Agreement with respect thereto, or results in any loss or expense (including any loss or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by such Bank to fund or maintain outstanding its pro rata share of the principal amount of the Loans, but not including any loss of profit) by an amount deemed by such Bank to be material, then, such Bank may, by written notice given to Borrower, require Borrower to pay to such Bank such additional amounts as shall compensate such Bank for such increased cost, reduction, loss, or expense for the ninety (90) day period preceding the date on which such notice is given and during each fiscal quarter thereafter. Any such request for compensation by a Bank under this Section 2.15 shall set forth the basis of calculation thereof and shall, in the absence of manifest error, be conclusive and binding for all purposes. In determining such amount, such Bank may use any reasonable averaging or attribution methods. 2.16 Illegality. If any Bank shall determine that it has become unlawful, as a result of any Regulatory Change, for such Bank to make, convert into, or maintain a LIBOR Rate Loan as contemplated by this Agreement, such Bank promptly shall give notice of such determination to Borrower (through the Agent) and, thereafter, (a) the obligation of such Bank to make, convert into, or maintain LIBOR Rate Loans shall be suspended until such Bank gives notice that the circumstances causing such suspension no longer exist, and (b) each of such Bank's outstanding LIBOR Rate Loans shall, if requested by such Bank, be converted into a Base Rate Loan not later than upon the expiration of the Interest Period related to such LIBOR Rate Loans, or, if earlier, on such date as may be required by the applicable Regulatory Change, as shall be specified in such request. Any such determination shall, in the absence of manifest error, be conclusive and binding for all purposes. 2.17 Taxes. (a) All payments made by Borrower in connection with this Agreement shall be made free and clear of, and without reduction for or on account of, any present or future income, stamp or other Taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any country (or by any political subdivision or taxing authority thereof or therein) on any of the Banks, excluding Taxes on, or measured by, or with respect to net income, alternative minimum taxable income under Code Section 55, dividend equivalent amount under Code Section 884, franchise, or capital stock imposed by (i) the United States of America or any political subdivision or taxing authority thereof or therein (including Puerto Rico), or (ii) the countries in which any Bank is organized or its Lending Office or principal executive office may be located or are conducting business or any political subdivision or taxing authority thereof or therein except any country or state or political subdivision thereof that imposes taxes on any Bank solely as a result of this Agreement or Borrower's or any of its Subsidiaries' presence in that country. If any such non-excluded Taxes are required to be deducted or withheld from any such payments to any Bank, the amounts of such payments shall be increased to the extent necessary in order that the amount of such payment to such Bank (after payment of all Taxes) shall equal the amount which would have been received by such Bank in the absence of such Taxes, or any such other amounts payable; provided, however, that in the event that payments to any Bank are required to be increased as a result of any non-excluded Taxes imposed by any country (excluding the United States), Borrower shall be entitled to substitute for such Bank any other bank or financial institution reasonably acceptable to the Majority Banks. Whenever any such non-excluded Taxes are payable by Borrower, as promptly as possible thereafter, Borrower shall send to Agent, for the account of such Bank, a certified copy of the original official receipt, if any, received by Borrower showing payment thereof. If Borrower fails to pay non-excluded Taxes when due to the appropriate taxing authority or fails to remit to Agent, for the account of Banks, the required receipts or other required documentary evidence, Borrower shall indemnify Banks for any incremental non-excluded Taxes that may become payable by Banks and all costs and expenses related thereto (including reasonable attorneys fees) as a result of any such failure. (b) Section 2.17(a) hereof to the contrary notwithstanding, in the event that a Foreign Bank becomes a signatory to this Agreement, Borrower shall withhold tax with respect to payments to such Foreign Bank in accordance with the United States federal income tax laws in effect and shall have no obligation to make payments to such Foreign Bank that are free and clear of such withheld amounts, unless such Foreign Bank promptly shall deliver to Agent and Agent delivers to Borrower duly executed certificates in duplicate to the effect that as of that date such Foreign Bank is entitled to receive all payments made hereunder without deduction or withholding of United States federal income tax: (i) pursuant to the terms of an applicable tax treaty in effect with the United States of America (in which case such certificates shall be accompanied by two executed copies of Form 1001 of the Internal Revenue Service),(ii) under Code Section 1441(c) (in which case such certificates shall be accompanied by two executed copies of Form 4224 of the Internal Revenue Service), or (iii) pursuant to an exemption certificate received from the Internal Revenue Service (in which case such certificates shall be accompanied by a copy of said exemption certificate). During the term of this Agreement, each Foreign Bank shall file such additional Forms 1001 or 4224 as the case may be, as may be required by law or reasonably requested by Borrower. Each Foreign Bank, upon becoming aware of the occurrence of any event requiring a change in its prior certificate, promptly shall deliver to Agent for delivery to Borrower duly executed certificates to the effect that (as the case may be): (y) such Foreign Bank is not capable of receiving future payments hereunder without deduction or withholding of United States federal income tax; or (z) such Foreign Bank is capable of receiving all payments hereunder without deduction or withholding of United States federal income tax, pursuant to a tax treaty of the United States, pursuant to Code Section 1441(c), or pursuant to an exemption certificate received from the Internal Revenue Service, a copy of which shall be attached to such certificate. In the event that the Internal Revenue Service notifies Borrower that Borrower improperly failed to withhold tax with respect to payments to such Foreign Bank: (aa) Borrower timely and fully shall pay such tax to the Internal Revenue Service and such Foreign Bank immediately, upon notice of such payment by Borrower, shall pay to Borrower an amount necessary in order that the amount of such payment to Borrower after payment of all Taxes with respect to such payment shall equal the amount that Borrower has paid to the Internal Revenue Service pursuant to this clause; and (bb) Borrower shall have no obligation to make payments to such Foreign Bank that are free and clear of such withheld amounts, until such Foreign Bank delivers to Agent for delivery to Borrower the duly executed certificates described in this subsection that entitle such Foreign Bank to receive all payments made hereunder without deduction or withholding of United States federal income tax. A n y t h i ng to the contrary contained in this clause (b) notwithstanding, to the extent that a Bank is unable to deliver a certificate or form required hereunder as a result of a change in applicable law, such inability shall not adversely affect such Bank's rights to reimbursement under clause (a) of this Section 2.17. (c) The Agent agrees with the Borrower that the Agent will u s e reasonable efforts to (i) solicit relevant federal income tax documentation (including Form 4224 or Form 1001 as appropriate) from each Bank necessary to allow the Agent properly to withhold and report federal income taxes on payments made hereunder, (ii) report to the Internal Revenue Service all reportable income paid hereunder by the Agent to any Bank that is not a domestic corporation (as such term is defined in Section 7701 of the Code) for federal income tax purposes on Form 1042, Form 1042S, or other appropriate form, (iii) deliver to each Bank that is not a domestic corporation (as such term is defined in Section 7701 of the Code) for federal income tax purposes a Form 1042S or other appropriate form by the filing due date, including any extensions thereof obtained by the Agent, of such form following any year in which payment is made hereunder by the Agent to such Bank, and (iv) upon request of the Borrower, deliver copies of all forms and documentation referred to in this sentence to the Borrower. 2.18 Lending Offices. The Loans made by each Bank may be made from and maintained in such offices of such Bank, or its Affiliates (each a "Lending Office") as such Bank may from time to time designate to Borrower and the Agent (irrespective of whether such office is specified on Schedule 11.3 hereto). A Bank shall not elect a Lending Office that, at the time of the making of such election, increases the amounts that would have been payable by Borrower to such Bank under this Agreement in the absence of such election. With respect to LIBOR Rate Loans made from and maintained at such Bank's foreign offices or Affiliates, the obligation of Borrower to repay such LIBOR Rate Loans shall nevertheless be to such Bank and shall, for all purposes of this Agreement (including for purposes of the definition of the term "Majority Banks") be deemed made, or maintained by it, for the account of such office or Affiliate. 2.19 Funding Sources. Nothing herein shall be deemed to obligate any Bank to obtain the funds to make any Loan hereunder in any particular place or manner and nothing herein shall be deemed to constitute a representation by any Bank that it has obtained or will obtain such funds in any particular place or manner. 2.20 Holidays. Any principal or interest in respect of a Loan that otherwise would become due on a day other than a Domestic Business Day, instead shall become due on the next succeeding Domestic Business Day and such adjustment shall be reflected in the computation of interest; provided, however, if any such extension shall cause a LIBOR Rate Loan to be due in the next calendar month, then such amount shall be due on the next preceding LIBOR Business Day. 2.21 Place of Borrowings. All Borrowings made hereunder shall be disbursed by credit to Borrower's deposit account with Agent maintained by Borrower at Agent's office at 420 Montgomery Street, San Francisco, California 94163, or as may otherwise be agreed to by Borrower and Agent. 2.22 Time and Place of Payments. (a) Borrower shall make each payment hereunder or on the Notes by making, or causing to be made, the amount thereof available to Agent in Dollars in immediately available funds at Agent's main branch office located at 420 Montgomery Street, San Francisco, California, 94163 not later than 9:00 a.m., California time, on the day of payment (except in the case of (i) compensation pursuant to Section 2.15 hereof, and (ii) interest paid in respect of a LIBOR Rate Borrowing as to which any Bank shall have requested conversion of a LIBOR Rate Loan to a Base Rate Loan in a principal amount equal to the principal amount thereof pursuant to Section 2.16 hereof, respectively). In the absence of timely receipt, such funds shall be deemed to have been paid by Borrower on the next succeeding Domestic Business Day. (b) Without limitation of any Bank's rights of setoff provided for and contemplated by Section 11.15 hereof or by law, Agent shall have the right to charge (i.e., debit) any account of Borrower maintained with Agent for the amount of any payment due hereunder or on the Notes by Borrower. 2.23 Increased Risk-Based Capital Cost. If any Bank determines that the cost (including any additional cost attributable to any reduction of a Bank's rate of return on its equity or Assets) to such Bank of maintaining its share of the Revolving Credit Facility Commitment is increased because of the adoption of, or any change in, any law or regulation (or increase in the capital reserve requirements imposed thereby) or any new or changed interpretation, directive, or request (irrespective of whether having the force of law), of any foreign or domestic court or governmental or monetary authority, with respect to risk-based capital requirements for binding loan commitments, such Bank may, by written notice given to Borrower, require Borrower to pay, on demand, an amount equal to such Bank's additional costs incurred during the ninety (90) days preceding the date on which such notice is given and during each fiscal quarter thereafter; provided, however, that in the event that payments to any Bank are required to be made hereunder as a result of such additional costs, Borrower shall be entitled to substitute for such Bank any other bank or financial institution reasonably acceptable to the Majority Banks. Each such Bank shall state in the notice required by this Section 2.23, in reasonable detail, the cause and amount of such additional cost. Within thirty (30) calendar days after receipt of such notice, Borrower may, at its option, elect to terminate that portion of the Revolving Credit Facility Commitment that is held by such Bank. 2.24 Survivability. Borrower's obligations under Sections 2.5, 2.6, 2.15, 2.17, and 2.23 hereof shall survive repayment of the Loans and termination of the Revolving Credit Facility Commitment hereunder. 2.25 Interest and Fees. On or before the Closing Date, Borrower shall pay to Agent any and all accrued and unpaid letter of credit fees and interest with respect to Loans (as defined and payable under the 1993 Credit Agreement), covering the period of time from October 1, 1995 through the day prior to the Closing Date. Such letter of credit fees and interest shall be calculated as set forth in Section 2.7 of the 1993 Credit Agreement. ARTICLE 3. CONDITIONS TO LOANS 3.1 Conditions Precedent to Initial Loans and Letters of Credit. The obligation of each Bank to make its initial Loan hereunder and of any Issuing Bank to issue the initial Letter of Credit hereunder (including without limitation the conversion of loans and letters of credit outstanding under the 1993 Credit Agreement as provided for in Section 3.2) is, in addition to the condition set forth in Section 3.3 hereof, subject to the fulfillment, to the satisfaction of Agent, of each of the following conditions on or before the Closing Date: (a) the Closing Date shall occur on or before November 30, 1995; (b) Borrower shall have executed and delivered to Agent this Agreement, together with all exhibits and schedules hereto, and, at least one (1) day prior to the Closing Date, the Disclosure Statement; (c) Borrower shall have completed, executed, and delivered the Notes to Agent; (d) Agent shall have received the written opinions, dated the Closing Date, of counsel to Borrower, in form and substance satisfactory to Agent and its counsel, and also shall have received such written opinions of local counsel to Agent and Banks as Agent shall reasonably require, all in form and substance satisfactory to Agent and its counsel; (e) Agent shall have received a certificate of corporate status with respect to Borrower, dated within five (5) days of the Closing Date, or confirmed by telex, if telex confirmation is available, by the Secretary of State of Louisiana, such certificate to be issued by the Secretary of State of Louisiana, which certificate shall indicate that Borrower is in good standing in such state; (f) Agent shall have received a certificate of corporate status with respect to Mojave, dated within five (5) days of the Closing Date, or confirmed by telex, if telex confirmation is available, by the Secretary of State of the state of its incorporation, such certificate to be issued by the Secretary of State (or other appropriate official) of such state and shall indicate that Mojave is in good standing in such state; (g) Agent shall have received certificates of corporate status indicating that Borrower is in good standing as a foreign corporation, dated within fifteen (15) days of the Closing Date, or confirmed by telex, if telex confirmation is available, such certificates to be issued by each Secretary of State (or other appropriate official) of the States of California, Colorado, Florida, Ohio, Tennessee, and Texas; (h) Agent shall have received certified copies of Borrower's and Mojave's articles of incorporation; (i) Agent shall have received copies of the by-laws of Borrower and Mojave, certified by their respective Secretaries or Assistant Secretaries; (j) Agent shall have received signature and incumbency certificates respecting the officers executing this Agreement, the Notes, and the Loan Documents; (k) A g ent shall have received an Officer's Compliance Certificate from Borrower, dated as of the Closing Date, duly executed by a Responsible Officer of Borrower, substantially in the form of Exhibit 3.1(k) attached hereto, certifying that neither an Event of Default nor an Unmatured E v ent of Default has occurred and is continuing and detailing the calculations by which Borrower has determined it is in compliance with the financial covenants contained herein; (l) Agent shall have received the duly executed originals of the Agent's Fee Letter and the Collateral Release Agreement and each of such Loan Documents shall be in full force and effect. By their execution and delivery of this Agreement, each of the Banks authorizes Agent to execute and deliver the Collateral Release Agreement on their behalf and agrees that Agent shall be entitled to execute such releases, terminations, or other documents and take such other actions as are reasonably requested by Borrower to effectuate the agreements set forth in the Collateral Release Agreement; (m) Borrower shall have executed and delivered to Agent such R e a l Property Collateral Documents and Personal Property Collateral Documents, in form and substance reasonably satisfactory to Agent and its counsel, as are necessary to grant or continue the grant to Agent, on behalf of Banks, a Lien upon all of the Collateral in which Borrower has an interest; (n) Mojave shall have executed and delivered to Agent such R e a l Property Collateral Documents and Personal Property Collateral Documents, in form and substance reasonably satisfactory to Agent and its counsel, as are necessary to grant or continue the grant to Agent, on behalf of Banks, a Lien upon all of the Collateral in which Mojave has an interest; (o) Agent shall have received the benefit of such title policies or commitments for title insurance as Agent may request from title c o m p anies satisfactory to Agent, in form and substance reasonably satisfactory to Agent; (p) Agent shall have received all of Borrower's original stock certificates representing all of the issued and outstanding capital stock of Mojave, and the stock powers, duly executed, relating thereto; (q) Agent shall have received a certificate from Borrower's Secretary or Assistant Secretary attesting to the resolutions of the Board of Directors authorizing the execution and delivery of this Agreement, the Notes, and the Loan Documents to be executed and delivered by Borrower, and authorizing officers to execute same; (r) Agent shall have received a certificate from a Secretary or Assistant Secretary of Mojave attesting to the resolutions of Mojave's board of directors authorizing the execution and delivery of the Loan Documents to the extent that Mojave is a party thereto, and authorizing officers to execute same; (s) Agent shall have received full payment of the Agent's Fees (to the extent payable on or before the Closing Date) and all of Agent's fees, costs, and expenses (including the fees and expenses of Agent's counsel, including allocated amounts for Agent's in-house counsel) incurred in connection with the preparation, negotiation, execution, and delivery of this Agreement, the Notes, and the Loan Documents; (t) the representations and warranties of Borrower set forth in Article 4 of this Agreement and in the Loan Documents shall be true and correct in all material respects as of the Closing Date; (u) Agent shall have received originals or copies of each of the documents referred to in clauses (b), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), (q), and (r) hereof in sufficient numbers so as to enable Agent to provide a copy thereof to each Bank; (v) the incurrence of the initial Loans under the Revolving Credit Facility, and the application of the proceeds thereof, shall not constitute a default under or breach of any term or condition of any Contractual Obligation of Borrower or any of its Subsidiaries; (w) no Material Adverse Change shall have occurred as a result of one or more acts or occurrences; (x) no injunction, writ, restraining order, or other order of any nature inconsistent with the making of the initial Loans or the issuance of the initial Letters of Credit hereunder, shall have been issued and remain in force by any governmental authority; and (y) all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, recorded, or filed and shall be in form and substance reasonably satisfactory to Agent and its counsel. 3.2 Conditions Concurrent to Initial Loans and Letters of Credit. The obligation of each Bank to make its initial Loan hereunder and of any Issuing Bank to issue the initial Letter of Credit hereunder is, in addition to the conditions set forth in Sections 3.1 and 3.3 hereof, subject to the fulfillment, to the satisfaction of Agent, of each of the following conditions concurrent: (a) all of the loans outstanding under the 1993 Credit Agreement shall be deemed Revolving Credit Facility Loans outstanding hereunder and Borrower shall be deemed to have submitted a timely request to Agent that Eighteen Million Dollars ($18,000,000) of such Revolving Credit Facility Loans bear interest at the LIBOR Rate plus the Applicable LIBOR Rate Margin for an Interest Period of one month and that the remaining Nine Million Five Hundred Thousand Dollars ($9,500,000) of such Revolving Credit Facility Loans bear interest at the Base Rate; and (b) the letters of credit issued under the 1993 Credit Agreement that are outstanding as of the Closing Date shall remain outstanding and shall be deemed to be Stand-By Letters of Credit issued under Article 2 of this Agreement. 3.3 Conditions Precedent to All Loans. The obligation of each Bank to make each Loan hereunder and of any Issuing Bank to issue any Letter of Credit hereunder is subject to the fulfillment, to the satisfaction of Agent, at or prior to the time of the making of such Loan or the issuance of such Letter of Credit, of each of the following further conditions: (a) the representations and warranties of Borrower and Mojave contained in this Agreement and the Loan Documents, to the extent that each is a party thereto, shall be true and correct in all material respects at and as of the date of such Loan, as though made on and as of such date (except to the extent that such representations and warranties expressly relate solely to an earlier date); (b) neither an Event of Default nor an Unmatured Event of Default shall have occurred and be continuing on the date of such Loan or Letter of Credit, nor shall either or both result from the making of such Loan or the issuance of such Letter of Credit; (c) no Material Adverse Change shall have occurred, as a result of one or more acts or occurrences; (d) Borrower shall have delivered to Agent a Notice of Borrowing pursuant to the terms of Section 2.8 hereof; and (e) No injunction, writ, restraining order, or other order of any nature preventing any Bank from funding any portion of the Loans or issuing a Letter of Credit shall have been issued and remain in force by any governmental authority. ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BORROWER In order to induce Agent and each of the Banks to enter into this Agreement, Borrower makes the following representations and warranties, which, except as set forth in the Disclosure Statement with a specific reference to the section of this Article 4 affected thereby, shall be true, correct, and complete in all material respects as of the Closing Date and at and as of the date of each Loan made or Letter of Credit issued thereafter, as though made on and as of the date of such Loan or Letter of Credit (except to the extent that such representations and warranties expressly relate solely to an earlier date), such representations and warranties to survive the execution and delivery of this Agreement and the Notes and the making of the Loans and the issuance of Letters of Credit: 4.1 Organization, Powers, Good Standing, and Subsidiaries. (a) Organization and Powers. Each of Borrower and Borrower's Subsidiaries is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own and operate its properties, and to carry on its business as now conducted and proposed to be conducted. Borrower has all requisite corporate power and authority to enter into this Agreement and the Loan Documents to which it is a party, to issue the Notes, and to carry out the transactions contemplated hereby and thereby. Mojave has all requisite corporate power and authority to enter into the Loan Documents to which they are parties, and to carry out their respective o b l igations contemplated thereby. Each of Borrower and Borrower's Subsidiaries possesses all franchises, certificates, licenses, permits, and other authorizations from governmental or regulatory authorities that are necessary in order to prevent the occurrence of a Material Adverse Effect and Borrower and its Subsidiaries are not in violation thereof in any material respect. (b) Good Standing. Each of Borrower and its Subsidiaries is in good standing in each state where the absence to be so qualified would have a Material Adverse Effect. (c) Subsidiaries. Borrower has no Subsidiaries other than those that are identified in the Disclosure Statement. The Disclosure Statement correctly sets forth the number of shares of each class of common and preferred stock authorized for each of Borrower's Subsidiaries, and the number outstanding and the percentage of the outstanding shares of each such class owned (directly or indirectly) by Borrower or one or more of such Subsidiaries. The capital stock of Borrower and each of its Subsidiaries is duly authorized, validly issued, and fully paid and nonassessable. Except for Investments permitted under Section 6.3, neither Borrower nor any of its Subsidiaries, individually or collectively, owns or holds, directly or indirectly, in the aggregate, any capital stock or equity security of, or any equity interest in any corporation or business, other than Borrower's Subsidiaries. 4.2 Authorization of Borrowing, etc. (a) Authorization of Borrowing. The execution, delivery, and performance by Borrower of this Agreement, the Loan Documents to which it is a party, and the Notes have been duly authorized by all necessary corporate action. (b) Authorization of Subsidiaries' Loan Documents. The execution, delivery, and performance by Mojave of the Loan Documents to which it is a party have been duly authorized by all necessary corporate action. (c) No Conflict - Borrower. The execution, delivery, and performance by Borrower of this Agreement, the Loan Documents to which it is a party, and the Notes do not and will not: (a) violate any provision of federal, state or local law or regulation (including Regulations G, T, U, and X of the Federal Reserve Board) applicable to Borrower, the articles of incorporation or bylaws (or other charter documents) of Borrower, or any order, judgment, or decree of any court or other agency of government binding on Borrower; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation or material lease of Borrower; (c) result in or require the creation or imposition of any Lien of any nature whatsoever upon any Assets of Borrower, other than Permitted Liens; or (d) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Borrower. (d) No Conflict - Mojave. The execution, delivery, and performance by Mojave of the Loan Documents to which it is a party do not and will not: (a) violate any provision of federal, state, or foreign law or regulation applicable to Mojave, the articles of incorporation or by-laws (or other charter documents) of Mojave, or any order, judgment, or decree of any court or other agency of government binding on Mojave; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation or material lease of Mojave; (c) result in or require the creation or imposition of any Lien of any nature whatsoever upon any of Mojave's properties or assets other than Permitted Liens; or (d) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Mojave. (e) Governmental Consents. Other than such as shall have previously been obtained, the execution, delivery, and performance by Borrower and Borrower's Subsidiaries of this Agreement, the Notes, and the Loan Documents, to the extent that each is a party thereto, do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any federal, state, foreign, or other governmental authority or regulatory body or other Person. (f) Binding Obligations. (i) This Agreement, the Notes, the Loan Documents, and all other documents contemplated hereby and thereby, when executed and delivered by Borrower will be the legally valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. (ii) T h e Loan Documents and all other documents contemplated hereby and thereby, when executed and delivered by Mojave, will be the legally valid and binding obligations of Mojave, to the extent that it is a party thereto, enforceable against it in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. (g) Lien Priority. Upon the proper filing of financing statements and recordation of fixture filings, mortgages, trust deeds, and other applicable Personal Property Collateral Documents and Real Property Collateral Documents with the appropriate filing or recording officers in e a ch of the necessary jurisdictions, and upon delivery of original instruments to Agent, as applicable, the Liens granted by Borrower and Mojave to Agent, on behalf of Banks, in their respective Assets pursuant to the Loan Documents will be validly created, perfected, and first priority Liens, subject only to Permitted Liens. 4.3 Financial Condition. Borrower has delivered to Agent its consolidated audited financial statements as of December 31, 1994, certified by Deloitte & Touche, independent certified accountants. All such statements were prepared in accordance with GAAP and fairly present the consolidated financial position of Borrower and its Subsidiaries as at the respective dates thereof, and the results of operations and changes in financial position of Borrower and its Subsidiaries for the period then ended. As of the Closing Date, neither Borrower nor any of its Subsidiaries has, out of the ordinary course of business, any Contingent Obligation, material liability for taxes, material long-term lease, or material forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto. 4.4 Changes. There has been no Material Adverse Change. 4.5 Title to Properties; Liens; Properties. Except as disclosed in Borrower's annual report on Form 10-K for its fiscal year ended December 31, 1994, or on its Form 10-Q for its fiscal quarter ended June 30, 1995, and except for the Permitted Liens, all of the Assets of Borrower and each of its Subsidiaries are free from all Liens of any nature whatsoever. Borrower and Mojave, taken as a whole, have good and indefeasible title to each and all of the material Assets reflected in Borrower's or Mojave's books and records as being owned by them. Borrower and Mojave, taken as a whole, have taken all action necessary to maintain such good and indefeasible title with respect to such Assets. 4.6 Litigation; Adverse Facts. There is no action, suit, proceeding, or arbitration (whether purportedly on behalf of Borrower or any of its Subsidiaries) at law or in equity or before or by any federal, state, municipal, or other governmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, pending or, to the knowledge of Borrower, threatened against or affecting Borrower or any of its Subsidiaries that would have a reasonable possibility of resulting in any Material Adverse Effect or reasonably may be expected to materially adversely affect Borrower's and its Subsidiaries' ability, taken as a whole, to perform its obligations hereunder, under the Notes, and the Loan Documents, and there is no basis known to Borrower for any such action, suit, or proceeding. Neither Borrower nor any Subsidiary of Borrower is: (a) in violation of any applicable law, rule, or regulation in a manner that has a Material Adverse Effect or could reasonably be expected to have a Material Adverse Effect; or (b) subject to or in default with respect to any final judgment, writ, injunction, decree of any court or federal, state, municipal, or other g o v ernmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, in a manner which could reasonably be expected to have a Material Adverse Effect. There is no action, suit, proceeding, or investigation pending or, to the knowledge of Borrower, threatened against Borrower or any Subsidiary of Borrower, that questions the validity or the enforceability of this Agreement or the Notes. 4.7 Payment of Taxes. All tax returns and reports of Borrower and its Subsidiaries (or all taxpayers with which Borrower or any of its Subsidiaries is or has been consolidated or combined) required to be filed by any of them have been timely filed, and all Taxes, assessments, fees, amounts required to be withheld and paid to a governmental agency or regulatory authority, and other governmental charges upon Borrower and its Subsidiaries, and upon their respective Assets, income, and franchises that are due and payable have been paid when due and payable, except to the extent that the failure to file returns and reports with respect to such Taxes, assessments, fees, and other governmental charges or the failure to pay the same would not be material to the condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, and except to the extent such Taxes, assessments, fees, and other governmental charges are being contested diligently and in good faith by appropriate proceedings with adequate reserves or other appropriate provision, if any, having been made therefor as required to be in conformity with GAAP. Borrower does not know of any proposed, asserted, or assessed tax deficiency against it or any of its Subsidiaries that would be material to the condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole. Neither Borrower, nor any of its Subsidiaries, is a party to, bound by, or obligated under any tax sharing or similar agreement with any Person that is not Borrower or one of its Subsidiaries and that is reasonably likely to result in a Material Adverse Effect. No Taxes, assessments, charges, or claims have become the subject of a filed federal tax Lien on any of Borrower's or Mojave's Assets. 4.8 Materially Adverse Agreements; Performance. (a) Agreements. Neither Borrower nor any of its Subsidiaries is a party to or is subject to any material agreement or instrument or charter or other internal restriction that has or reasonably could be expected to have a Material Adverse Effect. (b) P e r f o rmance. Neither Borrower nor any of its Subsidiaries is in default in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any of its Contractual Obligations, and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, would not have a Material Adverse Effect. 4.9 Governmental Regulation. Neither Borrower nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act (to the extent it would limit its ability to incur Debt for money borrowed), or the Investment Company Act of 1940, or to any United States federal or state statute or regulation limiting its ability to incur Debt for money borrowed. 4.10 Securities Activities. Borrower and its Subsidiaries are not engaged principally, or as one of their principal activities, in the business of extending, or arranging for the extension of, credit, for the purpose of " p urchasing" or "carrying" any margin stock (within the meaning of Regulations G, T, U, or X of the Federal Reserve Board) as now or from time to time in effect. No part of any Borrowing will be used by Borrower to purchase or carry any such margin stock, or to extend credit to others for the purpose of purchasing or carrying any such margin stock in violation of Regulations G, T, U, or X of the Federal Reserve Board. 4.11 Employee Benefit Plans. (a) Borrower and its ERISA Affiliates are in compliance in all material respects with all applicable provisions of ERISA and published i n t e r pretations thereunder with respect to all Pension Plans and Multiemployer Plans, the failure to comply with which would have a Material Adverse Effect. As of the Closing Date, with respect to each of their Pension Plans and Multiemployer Plans, Borrower and each of its ERISA Affiliates: (a) have fulfilled in all material respects their obligations under the minimum funding standards of ERISA; (b) have not incurred any material and past due liability to the PBGC; and (c) have not had asserted against them any penalty for failure to meet their minimum funding requirements under ERISA, and each Pension Plan and Multiemployer Plan is able to pay benefits thereunder when due under the Pension Plan documents. (b) No Termination Event has occurred or is reasonably expected to occur with respect to any Pension Plan administered by Borrower, any of its ERISA Affiliates, or any administrator designated by Borrower or any of its ERISA Affiliates which might result in any obligations or Contingent Obligations of Borrower or any of its ERISA Affiliates to the PBGC or any other Pension Plan, that reasonably would be expected to have a Material Adverse Effect. (c) Liabilities (irrespective of whether vested) under all Pension Plans (excluding unfunded deferred compensation agreements or other arrangements of similar nature not subject to ERISA and welfare plans not subject to the funding requirements of ERISA) that have Assets less than liabilities (irrespective of whether vested) that are administered by Borrower or any of its ERISA Affiliates or any administrator designated by Borrower or any of its ERISA Affiliates do not exceed the Assets thereunder by more than five percent (5%) of Consolidated Tangible Net Worth. (d) Neither Borrower nor any of its ERISA Affiliates has incurred or reasonably expects to incur any withdrawal liability under ERISA to any Multiemployer Plan which would have a Material Adverse Effect. (e) To the extent that any Pension Plan (that is a "welfare plan" under Section3(1)of ERISA)is insured, Borrower and its Subsidiaries do not have unpaid premiums in excess of Two Million Dollars ($2,000,000) that are required to be paid for all periods through and including the ClosingDate. To the extent that any Pension Plan (that is a "welfare plan" as defined above) is not or has not been funded with insurance, Borrower and its ERISA Affiliates do not have unmade contributions in excess of Five Million Dollars ($5,000,000) that are required to be paid for all periods through and including the Closing Date, and such Pension Plans, to the extent that their funding is based on actuarial principles, are based on reasonable and prudent assumptions that are actuarially sound. 4.12 Disclosure. As of the date hereof and as of the Closing Date, no representation or warranty of Borrower contained in this Agreement or any other document, certificate, or written statement furnished to Agent or Banks, or any of them, by or on behalf of Borrower with respect to the business, operations, Assets, business prospects, or condition (financial or otherwise) of Borrower or any of its Subsidiaries for use in connection with the transactions contemplated by this Agreement, contains any untrue statement of a material fact or omits to state a material fact (known to Borrower in the case of any document not furnished by it) necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. There is no fact known to Borrower (other than matters of a general economic nature) that has resulted in a Material Adverse Change that has not been disclosed herein or in any other documents, certificates, and statements furnished to Agent, Banks, or any of them, for use in connection with the transactions contemplated hereby. Borrower has furnished or, under the terms of this Agreement, is to furnish to Agent, on behalf of Banks, certain financial information concerning Borrower and its Subsidiaries, including estimates and projections of Borrower's and its Subsidiaries' results of operations and financial position for and as at the end of certain future periods. Such estimates, projections, valuations, and similar matters have been prepared by Borrower in good faith on a basis it believes to be reasonable. Other than as to projections, estimates, valuations, and similar matters (as to which the preceding sentence applies), and other than as to financial statements and other financial and accounting information (as to which Section 6.15 applies), there are no statements or conclusions contained in any document, certificate, or written statement that Borrower is to furnish under the terms of this Agreement, including without limitation the Disclosure Statement, to Agent, on behalf of Banks, that, when taken as a whole, in light of the circumstances under which they are or were made, to the knowledge and belief of Borrower at the time provided, are based on or include materially misleading information or fail to take into account material information regarding the matters covered therein. 4.13 Debt. Neither Borrower nor any of its Subsidiaries has any Debt outstanding on the date of this Agreement other than the Debt disclosed in the financial statements referred to in Section 4.3 hereof (other than Debt created under the 1993 Credit Agreement), set forth on the Disclosure Statement, or permitted by Section 6.1 hereof. 4.14 Trademarks, etc. Borrower and each of its Subsidiaries own, or hold licenses in, all trademarks, trade names, copyrights, patents, patent rights, and licenses which are necessary in all material respects to conduct their respective businesses and to operate their respective properties as now conducted and operated. The consummation of the transactions contemplated by this Agreement and the Loan Documents will not alter or impair any of such rights of Borrower or any of its Subsidiaries. Neither Borrower nor any of its Subsidiaries has been charged or is overtly being threatened to be charged with any infringement of, nor has any of them infringed on any unexpired trademark, trademark registration, trade name, patent, copyright, copyright registration, or other proprietary right of any Person, that could reasonably be expected to have a Material Adverse Effect. 4.15 E x i sting Defaults. Neither Borrower nor any of its Subsidiaries is in default under any material term of any mortgage, indenture, deed of trust, or any other agreement to which it is a party or by which it or any of the properties owned by it may be bound, the effect of which would be a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries is in violation of any law, ordinance, rule or regulation to which it or any of its properties is subject, the failure to comply with which would have a Material Adverse Effect. 4.16 Leases. Borrower and each of its Subsidiaries enjoy peaceful and undisturbed possession under all leases material to the business, operations and financial condition of Borrower and its Subsidiaries, taken as a whole, to which any of them is a party or under which any of them is operating. All of such leases are valid and subsisting and no default by Borrower or any of its Subsidiaries exists under any of them that reasonably could be expected to have a Material Adverse Effect. 4.17 Burdensome Agreements, etc. Borrower and its Subsidiaries, are not, individually or in combination, party to any unduly burdensome agreement or undertaking, or subject to any unduly burdensome court order, writ, injunction, or decree of any court or governmental instrumentality, domestic or foreign, which has a Material Adverse Effect. 4.18 Fire, Explosion, and Labor Disputes. Neither the business nor the properties or operations of Borrower or any of its Subsidiaries are currently affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether covered by insurance), which has a Material Adverse Effect. 4.19 Location of Assets and Chief Executive Offices. The chief executive offices of Borrower and Mojave are located at the addresses indicated on the Disclosure Statement. Except as otherwise permitted by Section 6.16, the Collateral (other than Collateral that has been delivered to the Agent) is located at any one of the locations of Borrower or Mojave identified on the Disclosure Statement. 4.20 Environmental Condition. (a) Except as specifically authorized by, or in compliance in all material respects with, law or pursuant to valid and effective permits or other appropriate forms of governmental approval, none of the present or previously-owned real property, or other Assets of Borrower or any of its Subsidiaries, has, to the best of Borrower's knowledge, ever been used by previous owners or operators in the disposal of or to generate, manufacture, produce, store, handle, treat, transfer, release, process, or transport any Hazardous Waste or Hazardous Substance, and Borrower and its Subsidiaries do not now and have not in the past used such real property, or other Assets of Borrower or any of its Subsidiaries, for the purpose of disposal of, generating, manufacturing, producing, storing, handling, treating, transferring, releasing, processing, or transporting any Hazardous Waste or Hazardous Substance, except as permitted by law and subject to the proviso to Section 5.9(a). (b) (i) To the best of Borrower's knowledge and belief after due inquiry, none of the present real property, or other Assets owned or operated by Borrower or any of its Subsidiaries, has been designated, listed, or identified in any manner by the EPA or any other federal, state, or local governmental agency charged with administering and enforcing an Environmental Protection Statute, pursuant to RCRA or CERCLA or any other Environmental Protection Statute, as a candidate for a Hazardous Waste or Hazardous Substance corrective action or Remedial Action. (ii) To the best of Borrower's knowledge and belief, based upon its reasonably available records, it has received no notice that any of the previously owned real property or other Assets of Borrower or any of its Subsidiaries has been so designated, listed, or identified. (c) Neither Borrower nor any of its Subsidiaries has received notice that it has been identified as a potentially responsible party, responsible party, or liable party at any site designated, listed, or identified as a candidate for a Hazardous Substance investigation or Remedial Action under CERCLA or any Environmental Protection Statute. (d) Neither Borrower nor any of its Subsidiaries has received notice of any Lien arising under or in connection with any Fund that attached to any revenues or to any real or personal property owned by Borrower or any of its Subsidiaries. (e) Neither Borrower nor any of its Subsidiaries have received, during the prior three (3) years, any summons, citation, notice, directive, letter, or other communication, in writing, from the EPA or any other federal, state, or local governmental agency or instrumentality, authorized pursuant to an Environmental Protection Statute, or from any other Person concerning any intentional or unintentional action or omission by Borrower or any of its Subsidiaries resulting in the releasing, spilling, l e aking, pumping, pouring, emitting, emptying, dumping, or otherwise disposing of Hazardous Waste or Hazardous Substance or any other pollutant into the Environment resulting in Damages thereto and that reasonably could be expected to have a Material Adverse Effect. (f) Subject to the proviso to Section 5.9(a), all activities and operations conducted by Borrower and its Subsidiaries are in compliance in all material respects with all Environmental Protection Statutes. To the best of Borrower's knowledge, neither Borrower nor any of its Subsidiaries has in the past conducted any operations or activities that were not in compliance with all Environmental Protection Statutes and that are reasonably likely to result in present or future liabilities to Borrower or its Subsidiaries under any Environmental Protection Statutes that reasonably could be expected to have a Material Adverse Effect. (g) None of the real property or other Assets owned by Borrower or its Subsidiaries is affected by any soil or groundwater c o n t a m ination, attributable to any Hazardous Substance, that the investigation and clean up of which reasonably could be expected to have a Material Adverse Effect. To the best of Borrower's knowledge, none of the real property previously owned by Borrower or its Subsidiaries is affected by any soil or groundwater contamination, attributable to any Hazardous Substance, that the investigation and clean up of which reasonably could be expected to have a Material Adverse Effect. 4.21 No Default. No Event of Default or Unmatured Event of Default has occurred. 4.22 Parties Intended to be Benefitted. All of the representations and warranties contained in this Article 4 are solely for the benefit of the Agent, the Banks, and any Person receiving an interest in the Loans or the Notes as permitted under Section 9.2 hereof, and there are no other Persons that are intended to be benefitted, in any way, hereby. ARTICLE 5. AFFIRMATIVE COVENANTS OF BORROWER Borrower covenants and agrees that, so long as any portion of the Revolving Credit Facility Commitment under this Agreement shall be in effect and until payment in full of the Loans and the Notes, and any other amounts due hereunder, and except as set forth in the Disclosure Statement with specific reference to the Section of this Article 5 affected thereby concerning matters which do not conform to the covenants of this Article 5, Borrower shall, and shall cause each of its Subsidiaries to, perform each and all of the following covenants applicable to it: 5.1 Accounting Records. Borrower shall, and shall cause each of its Subsidiaries to, maintain adequate books and records in accordance with sound business practices and GAAP, consistently applied. 5.2 Financial Statements and Notices. Borrower shall furnish Agent and each Bank: (a) as soon as practicable and, in any event, within fifty (50) days after the close of each of the first three (3) fiscal quarters of each fiscal year of Borrower: (i) a consolidated statement of stockholders' equity and a consolidated statement of cash flows of Borrower and each of its Subsidiaries for such quarterly period; (ii) consolidated and consolidating (based upon business segments) income statements of Borrower and its S u b sidiaries for such quarterly period; and (iii) consolidated and consolidating (based upon business segments) balance sheets of Borrower and its Subsidiaries as of the end of such quarterly period, each setting forth in comparative form, if applicable, the corresponding figures for the corresponding periods of the previous fiscal year, all in reasonable detail, and certified by the chief financial officer of Borrower to have been prepared in accordance with GAAP, consistently applied, subject to normal year-end audit adjustments; (b) as soon as practicable and, in any event, within ninety-five (95) days after the close of each fiscal year of Borrower, a copy of the annual audited report for such year for Borrower and its Subsidiaries, including therein: (i) a consolidated statement of stockholders' equity and a consolidated statement of cash flows of Borrower and its Subsidiaries for such fiscal year; (ii) consolidated and unaudited consolidating (based upon business segments) income statements of Borrower and its Subsidiaries for such fiscal year; and (iii) consolidated and unaudited consolidating (based upon business segments) balance sheets of Borrower and its Subsidiaries as of the end of such fiscal year, each setting forth in comparative form, if applicable, the corresponding figures for the previous year, all in reasonable detail; the consolidated income statement and balance sheet to be audited by independent, nationally recognized, certified public accountants, and certified, without a "going concern" qualification or other qualification or exception of similar gravity or any qualification arising out of the scope of the audit (but not arising out of changes in financial accounting standards), by such accountants to have been prepared in accordance with GAAP, consistently applied, together with a letter of such accounting firm to Agent, stating that its audit of the business of Borrower and its Subsidiaries was conducted by such accounting firm in accordance with generally accepted auditing standards; (c) c o ntemporaneously with each quarterly and year-end financial report required by the foregoing subsections (a) and (b), a certificate of the chief financial officer or treasurer of Borrower stating that he or she has individually reviewed the provisions of this Agreement, the Notes, and the Loan Documents, and that a review of the activities of Borrower and its Subsidiaries during such year or quarterly period, as the case may be, has been made by or under such individual's supervision, with a view to determining whether Borrower and its Subsidiaries have fulfilled all of their respective obligations under this Agreement, the Notes, and the Loan Documents, and that Borrower and its Subsidiaries have observed and performed each undertaking contained in this Agreement, the Notes, and the Loan Documents, to the extent that each is a party thereto, and Borrower and its Subsidiaries are not in default in the observance or performance of any of the provisions hereof or thereof, or if Borrower or any of its Subsidiaries shall be so in default, specifying all such defaults and events of which such individual may have knowledge or belief; (d) promptly after sending or making available or filing of the same, copies of all reports, proxy statements, and financial statements that Borrower or any of its Subsidiaries sends or makes available to the shareholders of Borrower and all regular and periodic reports and all filings pursuant to Sections 13 and 15(d) of the Exchange Act and registration statements that such Persons file with the SEC, and of all press releases and other statements made available generally by Borrower and its Subsidiaries to the public concerning material developments in their business or any condition or event that would be required to be disclosed in a current report filed by Borrower or its Subsidiaries with the SEC on Form 8-K (Items 1, 2, 3, 4, and 6 of such Form as in effect on the date hereof); (e) notice, as soon as possible and, in any event, within five (5) Domestic Business Days after any Responsible Officer has knowledge of: (i) the occurrence of any Event of Default or any Unmatured Event of Default; or (ii) any default or event of default (subject to any applicable notice or grace period) as defined in any evidence of Debt of Borrower or any of its Subsidiaries in excess of Two Million Dollars ($2,000,000) or under any agreement, indenture, or other instrument under which such Debt has been issued, irrespective of whether such Debt is accelerated or such default waived. In either event, Borrower shall also supply Banks with a statement from Borrower's chief financial officer or treasurer setting forth the details and the action which Borrower proposes to take with respect thereto; (f) as soon as possible and, in any event, within fifty (50) days after the end of each of the first three (3) quarterly accounting periods of Borrower in each fiscal year and within ninety-five (95) days after the end of each of Borrower's fiscal years, an Officer's Compliance Certificate with respect to Borrower; (g) upon the request of the Majority Banks, together with the delivery for any fiscal year of consolidated financial statements of Borrower and its Subsidiaries pursuant to clause (b) above, if the Majority Banks believe, in good faith, that there may be Hazardous Waste or Hazardous Substances present on any of the real property constituting a portion of the Collateral that would have a Material Adverse Effect, a written report by an expert of recognized standing evidencing a complete and thorough inspection of all such real property, including a geohydrological survey of soil or subsurface conditions as well as other tests to detect the presence, if any, of Hazardous Waste or Hazardous Substances; (h) prompt written notice of any condition or event which has resulted or reasonably may be expected to result in (i) a Material Adverse Effect; (ii) a breach of or noncompliance with any term, condition or covenant contained in this Agreement, the Notes, or the Loan Documents; (iii) a material breach of or noncompliance with any material term, condition, or covenant of any material contract to which Borrower or any of its Subsidiaries is a party or by which they or their properties may be bound; or (iv) a transfer, sale, or other disposition of Assets, an incurrence of Debt, or any other transaction permitted under Article 6 hereof only upon c o mpliance by Borrower and its Subsidiaries with the provisions of Section 5.11 hereof to effect and continue the transactions contemplated by this Agreement or the Loan Documents; (i) prompt written notice of any claims, proceedings, or disputes against, or to the knowledge or belief of Borrower threatened, or affecting Borrower or any of its Subsidiaries that, if adversely determined, would have a reasonable likelihood of having a Material Adverse Effect (without in any way limiting the foregoing, claims, proceedings, or disputes involving monetary amounts of Five Million Dollars ($5,000,000), or more, in excess of any insurance coverage therefor, shall be deemed to be material for purposes of this clause (i)), or any material labor controversy of which Borrower has knowledge resulting in or, in the reasonable judgment of the management of Borrower, that is reasonably likely, imminently, to result in a strike against Borrower or any of its Subsidiaries that would threaten to cease operations at any one or more of the Cement Plants, or any proposal of which Borrower has knowledge by any public authority to acquire any of the material Assets or business of Borrower or any of its Subsidiaries; (j) promptly, upon becoming aware of the occurrence of any of the following events, a written notice specifying the nature thereof, and, when known, any action taken or threatened by the Internal Revenue Service, D e p a r tment of Labor, PBGC, or other party with respect thereto: (i) Reportable Event; (ii) "prohibited transaction," as such term is defined in Sect.4975 of the Code, which prohibited transaction could subject Borrower or any member of the Controlled Group to a material civil penalty assessed pursuant to Sect.502(i)of ERISA or a material tax imposed by Section 4975 of the Code in connection with any of Borrower's or any of its ERISA Affiliates' Pension Plans or any trust created thereunder; (iii) failure to timely pay the required annual payment or the full amount of a required installment for any Pension Plan in any plan year by the due date as required under Sect.412 of the Code; (iv)the liability for any additional premium that must be paid under Section 4006(a)(3) of ERISA; or (v)any Lien on the Assets of any member of the Controlled Group under the Pension Protection Act; (k) promptly, copies of: (i) all notices received by Borrower or any member of the Controlled Group of the PBGC's (or a foreign country's) intent to terminate any of Borrower's or any of its ERISA Affiliates' Pension Plans or to have a trustee appointed to administer any of Borrower's or any of its ERISA Affiliates' Pension Plans, or of the PBCG's demand for payment of liability under Section 4062, 4063, or 4064 of ERISA; ii) at the request of Agent or any Bank, each annual report (IRS form 5500 series or similar series under the applicable laws of any foreign country and all accompanying schedules), the most recent actuarial reports, the most recent financial information concerning the financial status of each of Borrower's and its ERISA Affiliates' Pension Plans or Multiemployer Plans, and schedules showing the amounts contributed to each of Borrower's and any of its ERISA Affiliates' Pension Plans or Multiemployer Plans by or on behalf of Borrower or its ERISA Affiliates in which any of their personnel participate or from which such personnel may derive a benefit, and each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Borrower or any member of the Controlled Group with the Internal Revenue Service with respect to each Pension Plan; and (iii) all notices received by Borrower or any member of the Controlled Group concerning the imposition or amount of withdrawal liability pursuant to Sect.4202 of ERISA or similar liability under the laws of any foreign country; (iv)all notices required to be sent to employees for failure to make a required installment or other payment required to meet the minimum funding standard under Section 302 of ERISA; and (v) all notifications required to be made to the PBGC for failure to make a required installment or other payment under Section 412(n) of the Code; (l) promptly after the end of each fiscal year of Borrower, but in any event on or before ninety-five (95) days after the end of each such fiscal year, consolidating plan and financial forecasts, including a balance sheet, income statement, and cash flow projections covering proposed fundings, repayments, additional advances, investments, and other cash receipts and disbursements for the forthcoming year, as customarily prepared by the management of Borrower for internal use and any other similar reports customarily prepared by management of Borrower pursuant to any provisions of any instrument or documents relating to any Debt of Borrower or any of its Subsidiaries; (m) promptly upon becoming aware of any Person's seeking to obtain or threatening to seek to obtain a decree or order for relief with respect to Borrower or any of its Subsidiaries in an involuntary case under any applicable bankruptcy, insolvency, or other similar law now or hereafter in effect, a written notice thereof specifying what action Borrower or any such Subsidiary is taking or proposes to take with respect thereto; (n) promptly, copies of all material amendments to the articles of incorporation of Borrower; (o) contemporaneously with each year-end financial report required by subsection (b) above, a certificate signed by the chief financial officer or treasurer of Borrower separately identifying and describing all Contingent Obligations of Borrower and its Subsidiaries (other than those provided for under Section 6.4(b)); (p) as soon as practicable under the circumstances, written notice of any proposed Permitted Acquisition involving consideration of Ten Million Dollars ($10,000,000) or more; and (q) with reasonable promptness, such other information and data with respect to Borrower or any of its Subsidiaries as from time to time reasonably may be requested by any of the Banks. 5.3 Corporate Existence, etc. Except as permitted under Section 6.7 of this Agreement, Borrower shall, and shall cause Mojave to, at all times preserve and keep in full force and effect its and their corporate existence and any rights and franchises material to Borrower's businesses. 5.4 Payment of Taxes and Claims. Borrower shall, and shall cause e a ch of its Subsidiaries to pay all Taxes, assessments, and other governmental charges imposed upon them or any of their Assets or in respect of any of their businesses, incomes, or properties before any penalty or interest accrues thereon, and all claims (including claims for labor, services, materials, and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of their properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, however, that no such Tax, assessment, charge, or claim need be paid if the same is being contested in good faith by appropriate actions or proceedings promptly instituted and diligently conducted and if an adequate reserve or other appropriate provision, if any, shall have been made therefor as required in order to be in conformity with GAAP; provided further, however, that the foregoing shall not be deemed to have been breached with respect to Taxes, assessments, or other governmental charges imposed upon Borrower or its Subsidiaries or any of their Assets if, at the time of the imposition thereof, Borrower and its Subsidiaries are unaware of such Taxes, assessments, or other governmental charges and so long as, promptly after Borrower or its Subsidiaries, as applicable, have knowledge of the Tax, assessment, or other governmental charge, the same is either promptly paid or contested in conformity with the foregoing proviso; provided further, however, that the Borrower and its Subsidiaries shall not be required to pay claims that are not material in the aggregate. 5.5 Maintenance of Properties. Borrower shall, and shall cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition all of those Assets useful or necessary to its business or the business of its Subsidiaries or that are used in connection therewith or related thereto, except for Assets that, in the aggregate, are not material to the business or operations of Borrower and its Subsidiaries, taken as a whole. 5.6 Insurance. Borrower shall, and shall cause each of its Subsidiaries to, maintain or cause to be maintained, with insurers that are financially sound and reputable at the time of the issuance (or reissuance) of such insurance, insurance with respect to its properties and business and the properties and business of its Subsidiaries against loss or damage of the kinds customarily insured against by corporations of established reputation engaged in the same or similar businesses and similarly situated, of such types and in such amounts as are customarily carried under similar circumstances by such other corporations, and Borrower shall, from time to time, or as otherwise required by any of the Personal Property Collateral Documents or the Real Property Collateral Documents, deliver to Agent, as Agent or any Bank reasonably may request, copies of policies or certificates evidencing or describing all insurance then in effect, which certificates shall indicate Agent, on behalf of Banks, as an additional insured or as a loss-payee, as may be required by any of the Personal Property Collateral Documents. 5.7 Inspection. Borrower shall permit any Persons designated by Agent or any Bank to visit and inspect any of the properties of Borrower or any of its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances, and accounts with its and their officers and independent public accountants with respect to any matters concerning or relating to this Agreement, the Loan Documents, or the transactions contemplated herein or therein, all upon reasonable notice and as often as may be reasonably requested. All reasonable costs and expenses incurred by Agent in connection therewith shall be borne by Borrower. 5.8 Compliance with Laws, etc. Borrower shall, and shall cause its Subsidiaries to, exercise all due diligence in order to comply with the requirements of all applicable laws, rules, regulations, and orders of any governmental authority, noncompliance with which would have a Material Adverse Effect; provided, however, that this Section 5.8 shall not prevent Borrower or any of its Subsidiaries from, in good faith and with reasonable diligence, contesting the validity or application of any such laws or regulations by appropriate legal proceedings or actions and pending the outcome of such legal proceedings Borrower shall not be required to comply with such contested law or regulation so long as the failure to comply therewith reasonably could not be expected to have a Material Adverse Effect. 5.9 Environmental Compliance and Reporting. (a) Environmental Laws. Borrower shall, and shall cause each of its Subsidiaries to comply, in all material respects, with all applicable Environmental Protection Statutes other than any Environmental Protection Statute the noncompliance with which could not reasonably be expected to have a Material Adverse Effect; provided, however, that this Section 5.9 shall not prevent Borrower or any of its Subsidiaries from, in good faith and with reasonable diligence, contesting the validity or application of any such laws or regulations by appropriate legal proceedings and pending the outcome of such legal proceedings Borrower shall not be required to comply with such contested law or regulation so long as the failure to comply therewith reasonably could not be expected to have a Material Adverse Effect. (b) Indemnification. Borrower shall, pursuant to the terms of Section 10.2 hereof, indemnify, pay and hold Agent and each Bank harmless from and against any and all losses, costs (including reasonable attorneys fees and experts costs), claims, liabilities, injuries, expenses, and damages whatsoever incurred by Agent or such Bank (i) by reason of any violation of or noncompliance with any applicable Environmental Protection Statutes for which Borrower, or one of its Subsidiaries, as applicable, is liable or which is related to any real property owned, leased, or operated by Borrower or its Subsidiaries; (ii) by reason of the imposition of any Lien for the recovery of environmental cleanup or response costs related to any real property owned, leased, or operated by Borrower or its Subsidiaries; (iii) by reason of any soil or groundwater contamination, attributable to any Hazardous Substance, affecting any real property owned, leased, or operated by Borrower or any of its Subsidiaries; or (iv) by reason of any soil or groundwater contamination, attributable to any Hazardous Substance, affecting any real property in connection with which Borrower or any of its Subsidiaries is a potentially responsible party, responsible party, or liable party under any Environmental Protection Statute. (c) Remedial Action. Borrower shall, and shall cause each of its Subsidiaries to, promptly take any and all Remedial Actions required by any federal, state, or local governmental agency under any applicable Environmental Protection Statute; provided, however, that this Section 5.9 (c) shall not prevent Borrower and its Subsidiaries from in good faith contesting validity, application, or liability or negotiating remediation with regulatory agencies if appropriate reserves have been established to the extent required by GAAP. (d) Reporting. Borrower promptly shall advise Agent and each Bank in writing and in reasonable detail of any administrative or judicial proceeding subject to disclosure under 17 C.F.R. Section 229.103(5)(C) (1995). (e) Best Efforts To Avoid Contamination. Borrower and its Subsidiaries shall use their reasonable best efforts to avoid creating soil or groundwater contamination, attributable to any Hazardous Substance. If B o r rower reasonably and in good faith estimates that the cost of i n vestigating and cleaning up any soil or groundwater contamination attributable to any Hazardous Substance at any real property owned or operated by Borrower or any of its Subsidiaries (which occurs notwithstanding the previous sentence) reasonably could be expected to have a Material Adverse Effect, Borrower promptly shall advise Agent in writing and in reasonable detail of the contamination and estimated costs, and, upon request from Agent, promptly shall provide and continue to provide all technical e n v i r onmental reports and similar written evaluations relating to contamination at the site. 5.10 Compliance with ERISA. Borrower shall, and shall take all necessary actions to ensure that each of its ERISA Affiliates, to the extent that Borrower or any of its Subsidiaries have direct or indirect control or can direct or cause the direction of each of those ERISA Affiliates, take no action that would render the representations and warranties set forth in Section 4.11 of this Agreement inaccurate in any material respect. 5.11 Further Assurances. At any time as required under the terms of Section 5.2(h) and Article 6 hereof or at any time or from time to time upon the request of Agent or any Bank, Borrower shall execute and deliver, and shall cause Mojave to execute and deliver, such further documents and do such other acts and things as any Bank or Agent reasonably may request in order to effect fully the purpose of this Agreement, the Notes, and the Loan Documents and to provide for the full measure of collateral security contemplated under the Personal Property Collateral Documents and the Real Property Collateral Documents. In this regard, Borrower shall, or shall cause Mojave to, as promptly as possible (and in any event with ten (10) days after acquiring title thereto) deliver to Agent fully executed Real Property Collateral Documents, in form and substance reasonably satisfactory to Agent, together with title insurance policies and surveys, with respect to any parcel of real property that is integrally related to the use or operation of one of the Cement Plants (other than the Brooksville Plant) and that is acquired by Borrower or Mojave after the Closing Date. 5.12 Subordinated Debt. Borrower promptly shall provide to Agent all notices respecting the Subordinated Debt received by Borrower from any holder (or trustee, agent or representative of any holder) thereof respecting any material act, event, or omission, that are sent to Borrower pursuant to the provisions of the Subordinated Indenture. 5.13 Appraisals. Borrower shall permit Agent to cause to be conducted, at the expense of Borrower (a) upon the request of the Majority Banks (which must include Agent), an appraisal with respect to each parcel of real property of Borrower and Mojave that constitutes a part of the Collateral and (b) any additional appraisals that are required under 12 CFR Part 34. ARTICLE 6. NEGATIVE COVENANTS OF BORROWER Borrower covenants and agrees that, so long as any portion of the Revolving Credit Facility Commitment under this Agreement shall be in effect and until payment in full of the Loans and the Notes, and any other amounts due hereunder, and except as set forth in the Disclosure Statement with specific reference to the Section of this Article 6 affected thereby concerning matters that do not conform to the covenants of this Article 6, Borrower shall, and shall cause its Subsidiaries to, perform each and all of the following covenants applicable to it: 6.1 Debt. Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume, guarantee, or otherwise become, or remain, directly or indirectly, liable with respect to any Debt, except: (a) Debt evidenced by the Notes and this Agreement; (b) the Existing Subordinated Debt; (c) So long as at the time of the incurrence thereof no Event of Default or Unmatured Event of Default has occurred and is continuing and so long as no Event of Default or Unmatured Event of Default would result from the incurrence thereof, the Exchange Subordinated Debt; (d) Commercial paper in an aggregate amount not to exceed the Commercial Paper Letter of Credit Amount; provided, however, that to the extent Borrower issues and has outstanding any commercial paper that is not supported by Commercial Paper Letters of Credit, the Dollar amount of such commercial paper shall be reserved under the Revolving Credit Facility Commitment and shall be available for borrowing solely to repay such commercial paper; (e) Contingent Obligations permitted under Section 6.4 of this Agreement; (f) Debt resulting from Capitalized Leases; (g) Debt disclosed in the financial statements referred to in Section 4.3 hereof (other than Debt created under the 1993 Credit Agreement) or Debt set forth in the Disclosure Statement; (h) Debt owed to Borrower by its Subsidiaries to the extent permitted under Section 6.3 of this Agreement; (i) Debt owed by Borrower to any of its Subsidiaries; (j) Debt secured by Permitted Liens under clause (xi) of the definition of "Permitted Liens;" (k) Debt (including Acquired Indebtedness) not otherwise permitted under this Section 6.1 in an aggregate amount outstanding at any time less than or equal to Seventy-Five Million Dollars ($75,000,000); (l) Debt owing by any of Borrower's Subsidiaries to any of Borrower's Subsidiaries; and (m) Borrower or its Subsidiaries, as applicable, may become and remain liable with respect to refinancings, renewals, or extensions of the Debt permitted under clauses (b), (c), (f), (g), (j), (k), and (m) of this Section 6.1 so long as (i) the terms and conditions of such refinancings, renewals, or extensions do not materially impair the prospects of repayment of the Loans by Borrower, (ii) such refinancings, renewals, or extensions do not result in an increase in the aggregate principal amount of the Debt so refinanced, renewed, or extended; provided, however, that the foregoing shall not prohibit an increase in the aggregate principal amount of the Debt so refinanced, renewed, or extended to the extent of any required prepayment penalty or premium with respect thereto, (iii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Debt so refinanced, renewed, or extended, and (iv) to the e x tent that the Debt that is refinanced, renewed, or extended was subordinated in right of payment to the Debt owed to Agent and the Banks, then the subordination terms and conditions of the new Debt shall be at least as favorable to Agent and the Banks as those applicable to the refinanced, renewed, or extended Debt. For purposes of hereof, it shall be deemed to constitute a refinancing if (a) Borrower issues new subordinated Debt (the "New Subordinated Debt") in anticipation of prepaying Existing Subordinated Debt so long as the proceeds of the New Subordinated Debt are utilized to prepay Existing Subordinated Debt within a fifty (50) day period (the "Refinancing Period") from the date on which the New Subordinated Debt is first incurred, (b) proceeds received by Borrower from the issuance of the New Subordinated Debt are applied to the repayment of the Loans during the Refinancing Period and thereafter are borrowed hereunder in order to complete the prepayment of Existing Subordinated Debt within the Refinancing Period, or (c) proceeds received by Borrower from the issuance of the New Subordinated Debt are utilized to acquire Cash Equivalents that are thereafter liquidated in order to complete the prepayment of Existing Subordinated Debt within the Refinancing Period. 6.2 Liens. Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or permit to exist, directly or indirectly, any Lien on or with respect to any Asset of any kind of Borrower or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, except Permitted Liens. 6.3 Investments. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly make or own any Investment in any Person, except: (a) Borrower and each of its Subsidiaries may make and own Investments in Cash Equivalents; (b) Borrower and each of its Subsidiaries may maintain any Investment extant on the date hereof in any of Borrower's Subsidiaries or in any other Person as such Investments are set forth in the Disclosure Statement; (c) Borrower and its Subsidiaries may make and own loans and otherwise create Debt as permitted under Sections 6.1(l) and 6.1(i) hereof; (d) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing and so long as no Event of Default or Unmatured Event of Default would result therefrom, Borrower and its Subsidiaries may make and own Investments not otherwise permitted under this Section 6.3 to the extent that such Investments constitute Permitted Acquisitions; (e) Borrower and its Subsidiaries may make and own loans or advances to any of their officers or employees; (f) Borrower and each of its Subsidiaries may make and own Investments in any debt or equity instrument (x) that matures within two hundred seventy (270) days of the date of acquisition of the Investment and is issued by a Person that on the date of acquisition of the Investment has a commercial paper rating of P-1 by Moody's or A-1 by S&P, or better, or such instrument is irrevocably guaranteed or backed by an irrevocable letter of credit from the date of acquisition of the Investment through maturity by a Person having on the date of acquisition of the Investment a long-term debt rating of no less than Aa by Moody's or AA by S&P, or (y) matures within thirty (30) days of the date of the Investment and is issued by a Person that on the date of acquisition of the Investment has a commercial paper rating of no less than P-2 by Moody's or A-2 by S&P or such instrument is irrevocably guaranteed or backed by an irrevocable letter of credit from the date of acquisition of the Investment through maturity by a Person having on the date of acquisition of the Investment a long-term debt rating of no less than A by Moody's or A by S&P, or (z) with respect to Moore McCormack Insurance Bermuda, Ltd., only, which is consistent with past practices and in an aggregate amount not in excess of that required for collateral security and capitalization purposes for the conduct of its business; (g) Investments in respect of accounts receivable that have become delinquent, including the acceptance of securities of the account debtor obtained by Borrower or its Subsidiaries in connection with a plan of reorganization or workout of the indebtedness of such account debtor, together with the making of additional Investments in such account debtors so long as the maximum amount of additional Investments made in any one such account debtor under this clause (g) does not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000) and so long as the maximum amount of all such additional Investments in such account debtors under this clause (g) does not exceed Twenty Five Million Dollars ($25,000,000) in the aggregate; (h) Borrower may annually make and own loans, advances, or capital contributions to The Southdown Employee Benefit Trust in an amount a c t uarially determined as the amount necessary to provide for the satisfaction of Borrower's and its Subsidiaries' estimated health benefit claims; (i) Borrower may make and own loans to Moore-McCormack Transport, Inc., or its Affiliates, not otherwise permitted under this Section 6.3 in an aggregate amount not to exceed Three Million Dollars ($3,000,000) outstanding at any one time; and (j) Borrower may make and own loans to KCC not otherwise permitted under this Section 6.3 in an aggregate amount not to exceed Ten Million Dollars ($10,000,000) outstanding at any one time. 6.4 Contingent Obligations. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create or become or be liable with respect to any Contingent Obligation, except: (a) C o n tingent Obligations disclosed in the financial statements and related notes referred to in Section 4.3 of this Agreement or reflected in the Disclosure Statement and any refinancing, renewals or extensions of such Contingent Obligations on terms substantially similar to the original terms; (b) Contingent Obligations incurred in the ordinary course of business of Borrower and its Subsidiaries; (c) Contingent Obligations not otherwise permitted under this Section 6.4 in an aggregate amount not to exceed Fifteen Million Dollars ($15,000,000) outstanding at any one time; and (d) Mojave may become and remain liable under the Mojave Guaranty. 6.5 Preferred Stock. Borrower shall not, and shall not permit any of its Subsidiaries to, create, issue, or suffer to exist any Preferred Stock other than Permitted Preferred Stock; provided, however, that Borrower shall be entitled to issue or assume Prohibited Preferred Stock or acquire a Person that previously has issued Preferred Stock that would not have been Permitted Preferred Stock if Borrower could have incurred Debt in an amount equal to the amount of such Preferred Stock and so long as, thereafter, such Preferred Stock is treated, for all purposes hereunder, as if it were Debt. 6.6 Financial Covenants. (a) Leverage Ratio. Borrower shall not permit, on the final day of any fiscal quarter ending on or after the Closing Date, its Leverage Ratio, calculated based upon the four (4) immediately preceding fiscal quarters, including the quarter then ended, to be greater than the correlative amounts indicated below: Period Ratio Closing Date through 3.00:1.00 March 31, 1999 June 30, 1999 through 2.75:1.00 December 31, 1999 March 31, 2000 through 2.50:1.00 the Maturity Date (b) Consolidated Tangible Net Worth. Borrower shall not permit, as of the Closing Date, its Consolidated Tangible Net Worth to be less than Two Hundred Twenty Million Dollars ($220,000,000). Thereafter, as of the last date of each fiscal quarter of Borrower beginning with Borrower's fiscal quarter ended December 31, 1995, Borrower's minimum Consolidated Tangible Net Worth requirement shall be the amount applicable to Borrower's immediately preceding fiscal quarter (or in the case of such determination on December 31, 1995, Two Hundred Twenty Million Dollars ($220,000,000))(i) increased, as of the last day of each of its second and fourth fiscal quarters, by an amount equal to (y) one hundred percent (100%) of Consolidated Net Income (solely to the extent that, for any such six-month period, such number is a positive number) for such fiscal quarter and the immediately preceding fiscal quarter; minus (z) the aggregate Dollar amount of dividends paid or accrued (without duplication of an accrual taken in any fiscal quarter prior to the immediately preceding fiscal quarter) by Borrower on account of its Capital Stock during such fiscal quarter or the immediately preceding fiscal quarter, and (ii) decreased, as of the last day of each of its fiscal quarters, by an amount equal to the aggregate Dollar amount of Permitted Junior Payments paid or accrued, without duplication of an accrual taken in a prior fiscal quarter, by Borrower on account of its Capital Stock during such fiscal quarter. (c) Minimum Current Ratio. Borrower shall not permit, on the last day of any fiscal quarter, the ratio of: (i) Consolidated Current Assets to (ii) Consolidated Current Liabilities (excluding the current portion of Funded Debt to the extent included in Consolidated Current Liabilities) to be less than 1.25:1.00. (d) Free Cash Flow Ratio. Borrower shall not permit, on the final day of any fiscal quarter ending after the Closing Date, its Free Cash Flow Ratio, calculated based upon the four (4) immediately preceding fiscal quarters, including the quarter then ended, to be less than the correlative amounts indicated below: Period Ratio Closing Date through 1.30:1.00 December 31, 1995 March 31, 1996 through 1.30:1.00 December 31, 1996 March 31, 1997 through 1.10:1.00 the Maturity Date 6.7 Restriction on Fundamental Changes. Borrower shall not, and shall not permit Mojave to, change its name, enter into any merger or consolidation, enter into any reorganization or recapitalization of its Debt in connection with a troubled debt restructuring, or liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its Assets, whether now owned or hereafter acquired, and Borrower shall not, and shall not permit its Subsidiaries, to acquire by purchase or otherwise all or substantially all of the business, Assets of, or stock or other evidence of beneficial ownership of, any Person, except: (a) any Specified Subsidiary may be merged or consolidated with or into Borrower or any Specified Subsidiary or be liquidated, wound up, or dissolved, or all or any part of its business, property, or assets may be conveyed, sold, assigned, leased, transferred, or otherwise disposed of, in one transaction or a series of transactions, to Borrower or any Specified S u b sidiary; provided, however, that in the case of its merger or consolidation, Borrower shall give prior written notice to Agent thereof and cause any such Specified Subsidiary to comply with Section 5.11 hereof to effect and continue the transactions contemplated by this Agreement and the Loan Documents; (b) Borrower and its Subsidiaries may make any Investment permitted under Section 6.3 of this Agreement; (c) Borrower and its Subsidiaries may sell or otherwise dispose of Assets in accordance with the provisions of Section 6.9 of this Agreement; (d) upon thirty (30) days prior written notice to Agent, Borrower or Mojave may change its name; (e) upon ten (10) days prior written notice to Agent, (i) any of the Specified Subsidiaries may merge with and into any of the other Specified Subsidiaries, and (ii) any of Borrower's Subsidiaries, other than S p e cified Subsidiaries, may merge with and into any of Borrower's Subsidiaries, other than Specified Subsidiaries; and (f) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing and so long as no Event of Default or Unmatured Event of Default would result therefrom, Borrower and its Subsidiaries may make and own Permitted Acquisitions. 6.8 Sales and Lease-Backs. Borrower shall not, and shall not permit any of its Subsidiaries to become or remain liable, directly or indirectly, as lessee or as guarantor or other surety with respect to any lease, whether an Operating or Capitalized Lease, of any property (whether real, personal, or mixed real and personal) whether now owned or hereafter acquired: (a) which Borrower or any of its Subsidiaries has sold or transferred or is to sell or transfer to any other Person, or (b) which Borrower or any of its Subsidiaries intends to use for substantially the same purpose as any other property that has been or is to be sold or transferred by Borrower or any such Subsidiary to any Person in connection with such lease, unless such sale or transfer is permitted pursuant to Section 6.9 hereof or unless effected in compliance with the provisions of Section 5.11 hereof to effect and continue the transactions contemplated by this Agreement and the Loan Documents. 6.9 Sale of Assets. Borrower shall not, and shall not permit Mojave to, sell, assign, transfer, convey, or otherwise dispose of: (a) the Collateral; (b) the Brooksville Plant; (c) any other Asset the absence of which would have had a material impact upon the cash flow projections that were provided to the Banks in connection with the consummation of this Agreement; or (d) their accounts, general intangibles for the payment of money, or other rights to payment of money, except that this provision shall not preclude the sale of accounts as part of a sale of the business out of which they arose, an assignment of accounts that is for the purpose of collection only, a transfer of a right to payment under a contract to an assignee that is also to do the performance under the contract, a transfer of a single account to an assignee in whole or partial satisfaction of a pre- existing indebtedness or any sale, discount or other disposition to Borrower. Anything contained herein to the contrary notwithstanding, the foregoing shall not prohibit: (i) the sale or other disposition by any of Borrower's Subsidiaries of Assets to Borrower; (ii) the sale or other disposition by any of Borrower's Subsidiaries of Assets to any of Borrower's Subsidiaries, in each case, upon prior written notice by Borrower to Agent of same and compliance to the extent applicable, at the request of Agent, with Section 5.11 to effect and continue the transactions contemplated by this Agreement or the Loan Documents; (iii) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing and so long as no Event of Default or Unmatured Event of Default would result therefrom, the consummation of a Permitted Acquisition; and (iv) the sale or other disposition of obsolete or worn out equipment in the ordinary course of business, the sale or other disposition of equipment in connection with the replacement thereof, or the sale or other disposition of equipment, general intangibles, or real estate, to the extent such equipment, general intangibles, or real estate is no longer integral to the operation of any one or more Cement Plants. Upon receipt of a written request from Borrower or any of its Subsidiaries with respect to any sale or other disposition permitted under this Section 6.9, Agent shall execute and deliver all agreements and documents as reasonably may be requested to effect a release of the Liens held by Agent, on behalf of Banks, upon the assets or properties that are the subject of such sale or other disposition permitted under this Section 6.9. 6.10 Transactions with Shareholders and Affiliates. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease, or exchange of any property or the rendering of any service) with any holder of five percent (5%) or more of any class of equity securities of Borrower or with any Affiliate of Borrower on terms that are less favorable to Borrower or any of its Subsidiaries, as the case may be, than those terms which might be obtained at the time from Persons who are not such a holder or Affiliate, or if such transaction is not one that could be obtained from such other Person, on terms that are not negotiated in good faith on an arm's length basis. 6.11 Conduct of Business. Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business if, as a result thereof, the business of Borrower and its Subsidiaries, taken as a whole, would not be substantially the same as that conducted on the Closing Date. For purposes of this Section 6.11 and for purposes of the definition of Permitted Acquisitions, the business of the manufacture and distribution of building products shall be deemed to be within the types of businesses conducted by Borrower and its Subsidiaries on the Closing Date. 6.12 Amendments or Waivers of Certain Documents. Borrower shall not, and shall not permit any of its Subsidiaries to, agree to any amendment to, or waive any of its rights with respect to the terms and provisions regarding interest rates, principal or interest payment amounts, total principal amounts, subordination provisions, events of default, or similar terms and provisions (including applicable definitions) of the Debt, and related indentures or agreements, referred to in subsections 6.1(b) or (c) of this Agreement; provided, however, Borrower may agree to an amendment of such Debt, and the related indentures or agreements, that extends the maturity date of such Debt. 6.13 Use of Proceeds. Borrower shall not use the proceeds of the Loans for any purpose other than for its general corporate purposes consistent with the terms of this Agreement. 6.14 ERISA. Borrower shall not, and shall not permit any member of the Controlled Group to: (a) engage in any transaction that it knows or has reason to know could subject it or any member of the Controlled Group to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code or any penalty, tax, or other form of financial obligation under the laws of any foreign country, that would be material to Borrower and its Subsidiaries, taken as a whole; or (b) permit the present value of all benefits on a termination basis (irrespective of whether vested) under all Pension Plans (excluding unfunded deferred compensation agreements or other arrangements of similar nature not subject to ERISA and welfare plans not subject to funding requirements of ERISA), with Assets less than benefits (irrespective of whether vested) to exceed the current value of the Assets of such Pension Plans allocable to such benefits by an aggregate amount for the Controlled Group taken together of more than the greater of five percent (5%) of Consolidated Tangible Net Worth; or (c) fail to make any payments to any Multiemployer Plan that Borrower or any of its ERISA Affiliates may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto, that would have a Material Adverse Effect; or (d) voluntarily terminate any one or more of their Pension Plans, if such termination would result in the imposition of liens on Borrower or any member of the Controlled Group under Sect.4068 of ERISA or the applicable laws of any foreign country, in an amount that when aggregated with all such prior liens imposed from previous Pension Plan terminations (voluntary or involuntary) would have a Material Adverse Effect; or (e) fail to make required contributions to any Pension Plan subject to Sect.412(n) of the Code that with the passage of time reasonably could result in a lien upon the Assets of Borrower or any member of its Controlled Group, that would have a Material Adverse Effect; or (f) except as required by law, adopt an amendment to any Pension Plan (i) the effect of which is to increase the current liability under that Plan for the plan year, and (ii) where the funded current liability percentage for that plan year is less than sixty percent (60%), after taking into account the effect of such an amendment. As used in this Section 6.14, the term "accrued benefit" has the meaning specified in Sect.3(23) of ERISA and the term "current value" has the meaning specified in Sect.3(26)of ERISA; and the terms "current liability" and "funded current liability percentage" have the meaning specified in Sect.401(a)(29)(E) of the Code. 6.15 Misrepresentations. Borrower shall not, nor shall it permit any of its Subsidiaries to furnish Agent or any Bank any certificate or other document that, to its or its Subsidiaries' knowledge, contains any untrue statement of material fact or that omits to state a material fact necessary to make it not misleading in light of the circumstances under which it was furnished. 6.16 Change in Location of Chief Executive Offices and Assets. Borrower shall not, nor shall it permit Mojave to, relocate their respective chief executive offices without first giving Agent thirty (30) days prior written notice of any proposed relocation. Borrower shall not, nor shall it permit Mojave to, move any of their respective Collateral (except Collateral delivered to the Agent) to a location other than any one of their respective locations identified in the Disclosure Statement without first giving Agent fifteen (15) calendar days prior written notice of any such proposed relocation; provided, however, that Borrower and Mojave shall not be considered to be in violation of this sentence to the extent that Collateral having an aggregate value of no more than Five Hundred Thousand Dollars ($500,000) is located at a location other than those identified in the Disclosure Statement. To the extent that Borrower or Mojave, as applicable, timely comply with the notice provisions set forth in this Section 6.16, and timely comply with the provisions of Section 5.11 of this Agreement and the comparable provisions of the Loan Documents (to the extent that each is a party thereto), the Disclosure Statement automatically shall be deemed to be amended to include such new locations or to reflect a change in the location of their chief executive offices, as applicable. 6.17 Restrictive Agreements. Borrower shall not, and will not permit any of its Subsidiaries to, enter into any agreement that restricts the ability of such Subsidiary to make payments to Borrower by way of dividends, advances, reimbursements, or otherwise, other than (a) customary restrictions contained in purchase and sale agreements with respect to the sale of Assets or Capital Stock that relate to such Assets or Capital Stock for the period from and after the date of the execution and delivery of such purchase and sale agreement until the date of the closing thereunder, and (b) restrictions on Subsidiaries not wholly-owned by Borrower that are acquired or created after the Closing Date. 6.18 Margin Regulation. No portion of the proceeds of any of the Loans shall be used by Borrower in any manner that might cause the Borrowing, the application of such proceeds, or the transactions contemplated by this Agreement to violate Regulations G, T, U, or X of the Federal Reserve Board or any other regulation of such board or to violate the Exchange Act. 6.19 Subordinated Debt, Preferred Stock, and Borrower Common Stock. Borrower shall not, and shall not cause or permit any of its Subsidiaries to: (a) other than Permitted Junior Payments, pay, prepay, or set aside funds for the payment or prepayment of the principal of any Subordinated Debt, other than in connection with a permitted refinancing thereof; (b) pay any amount with respect to any Subordinated Debt in violation of the terms of the subordination provisions thereof; (c) other than Permitted Junior Payments, redeem, repurchase, or otherwise retire for value any Subordinated Debt, other than in connection with a permitted refinancing thereof; or (d) other than Permitted Junior Payments, redeem, repurchase, or otherwise retire for value, or set aside funds for the redemption, repurchase, or other retirement for value of any of its Preferred Stock or the Borrower Common Stock. 6.20 Hedge Agreements. Borrower shall not, and shall not permit any of its Subsidiaries to, become or remain liable with respect to any Hedge Agreement unless such Hedge Agreement meets the following criteria: (a) (i) if such Hedge Agreement relates to interest rates, s u c h Hedge Agreement hedges actual outstanding Debt (or an amount approximating such actual outstanding Debt) of Borrower or one of its Subsidiaries, and (ii) if such Hedge Agreement relates to commodities or foreign currency, such Hedge Agreement is not speculative in nature and is entered into in connection with the conduct of Borrower's or any of its Subsidiaries' business; and (b) the pricing and spread under such Hedge Agreement is on market terms. 6.21 Dividends. Borrower shall not and shall not permit any of its Subsidiaries to make or declare, directly or indirectly, any dividend (in cash, return of capital, or any other form of Assets) or distribution on account of any shares or interest of any class of Borrower's or its Subsidiaries' Capital Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash, Assets, or obligations; provided, however, that the foregoing shall not restrict the ability of: (a) Borrower's Subsidiaries to make any dividend or other distribution; (b) Borrower to make any dividend or other distribution to its shareholders consisting of shares of Borrower Common Stock or warrants or other rights to acquire Borrower Common Stock; (c) Borrower to make any dividend or other distribution to the holders of Borrower Common Stock of shares of Series C Preferred Stock pursuant to the terms and conditions of Borrower's Restated Articles of Incorporation, as amended; (d) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing and so long as no Event of Default or Unmatured Event of Default would result therefrom, the payment by Borrower of any cash dividend that constitutes a regularly scheduled dividend payment (and not a redemption or partial redemption) with respect to Borrower's Permitted Preferred Stock and any Prohibited Preferred Stock to the extent that it is acquired or outstanding pursuant to the proviso to Section 6.5 hereof; and (e) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing and so long as no Event of Default or Unmatured Event of Default would result therefrom, Borrower may declare and pay dividends with respect to the Borrower Common Stock; provided, however, that if no Event of Default or Unmatured Event of Default had occurred and was continuing on the date that Borrower declares any such dividend (or any dividend pursuant to Section 6.21(d)) Borrower shall be entitled to pay such dividend (or any dividend pursuant to Section 6.21(d)) notwithstanding the occurrence and continuation of an Event of Default or Unmatured Event of Default (other than an Event of Default or Unmatured Event of Default under Section 7.1(a) hereof) as of the date such payment is to be made; and (f) Borrower may make Permitted Junior Payments. ARTICLE 7. EVENTS OF DEFAULT 7.1 Events of Default. The occurrence of any one or more of the following events, acts, or occurrences shall constitute an event of default (an "Event of Default") hereunder: (a) Failure to Make Payments When Due. (i) B o rrower shall fail to pay any amount owing hereunder or under any of the Notes with respect to the principal of any Loans when such amount is due, whether at stated maturity, as a result of a mandatory prepayment requirement, by acceleration, by notice of prepayment, or otherwise; or (ii) Borrower shall fail to pay, within five (5) days of the date when due, any amount owing hereunder or under any of the Notes with respect to interest on any of the Loans or with respect to the Commitment Fee; or (iii) Borrower shall fail to pay, within ten (10) days of the date when due, any other amounts (including fees, costs, and expenses payable to Agent or the Banks) payable in connection herewith; or (b) Default in Other Agreements. (i) Borrower or any of its Subsidiaries shall default (as principal or guarantor or other surety) in the payment when due (subject to any applicable notice or grace period), whether at stated maturity or otherwise, of any monetary obligation on (howsoever designated) any Debt, whether such Debt now exists or shall hereafter be created; provided, however, that no default under this clause (i) shall occur or result from a default in the payment of any monetary obligation on any Debt of, or Debt guaranteed by, Borrower or any of its Subsidiaries that, when added to the amount of all other such Debt in default, does not exceed Ten Million Dollars ($10,000,000); or (ii) An event of default, as defined in any agreement, mortgage, indenture, instrument, or other agreement relating thereto under which there may be issued, or by which there may be secured or evidenced, any Debt of, or Debt guaranteed by, Borrower or any of its Subsidiaries, whether such Debt now exists or shall hereafter be created, shall occur and Borrower or such Subsidiary shall permit such Debt to become or be declared due prior to its stated maturity or due date; provided, however, that no default under this clause (ii) shall occur or result from a default in any Debt of, or Debt guaranteed by, Borrower or any of its Subsidiaries which, when added to the amount of all other such Debt in default, does not exceed Ten Million Dollars ($10,000,000); or (iii) A d e f ault by Borrower or any of its Subsidiaries in the payment of money under any Hedge Agreement to which Borrower or any of its Subsidiaries are parties, whether such Hedge Agreement now exists or shall hereafter be created; provided, however, that no default under this clause (iii) shall occur or result from a payment default in a Hedge Agreement of Borrower or any of its Subsidiaries the net obligations under which, when added to the aggregate amount of all net obligations under other Hedge Agreements as to which Borrower or its Subsidiaries have defaulted in the payment of monetary obligations, and based upon a reasonable estimation of the net obligations under each of such Hedge Agreements, do not exceed Ten Million Dollars ($10,000,000); or (c) Breach of Certain Covenants. Borrower or any of its Subsidiaries shall fail to perform or comply with any covenant, term, or condition contained in Sections 5.2(e)(i) or 5.12, or Article 6 of this Agreement; or (d) Breach of Warranty. Except to the extent qualified by the Disclosure Statement, any financial statement, representation, warranty, or certification made or furnished by Borrower or any of its Subsidiaries under this Agreement or in any statement, document, letter, or other writing or instrument furnished or delivered to any Bank or to Agent pursuant to or in connection with this Agreement or as an inducement to Agent or any Bank to enter into this Agreement, shall, at any time, prove to have been materially false, incorrect, or incomplete when made, effective, or reaffirmed, as the case may be; provided, however, if a Loan Document applicable to the Collateral or Lien affected by such occurrence provides Borrower or its Subsidiary, as the case may be, the right to correct or remedy the same, which occurrence is capable of being corrected or remedied, and Borrower or its Subsidiary, as the case may be, diligently prosecutes such correction or remedy, then the same shall not be deemed to be an Event of Default hereunder so long as such occurrence could not reasonably be expected to have a Material Adverse Effect; or (e) Other Defaults Under Agreement. Borrower shall default in the performance of or compliance with any term contained in this Agreement other than those referred to above in Sections 7.1(a), (c), or (d), and such default shall not have been remedied or waived within ten (10) Domestic Business Days after the earlier of: (i) receipt of notice from Agent to Borrower of such default; or (ii) the date upon which any Responsible Officer has knowledge of such default; or (f) Default Under Loan Documents, etc. Borrower or any of its Subsidiaries shall fail to observe or perform any term, covenant, condition, agreement, or obligation to be observed or performed by it or them as applicable, under the Loan Documents, to the extent that each is a party thereto, and (i) such failure arises out of the granting by Borrower or any of its Subsidiaries of a Lien or the imposition of a Lien upon any of the material Assets of Borrower or any of its Subsidiaries in favor of any Person, except for Permitted Liens; or (ii) such failure arises out of any other act or failure to act of Borrower or any of its Subsidiaries which act materially adversely affects any Lien granted in favor of Banks by Borrower or any of its Subsidiaries; provided, however, that the failure to comply with any further assurance provisions contained in the Loan Documents shall, per se, be deemed to materially adversely affect such Liens; or (iii) such failure arises other than under circumstances set forth in clauses (i) and (ii) above and continues for ten (10) Domestic Business Days after notice to Borrower of such failure from Agent; or (iv) such failure arises other than under circumstances set forth in clauses (i) and (ii) above and continues for fifteen (15) Domestic Business Days after Agent is notified of such failure by Borrower or its Subsidiary; provided further, however, the provisions of clauses (iii) and (iv) above notwithstanding, if, under the applicable Loan Document, Borrower or any of its Subsidiaries has the right to cure such failure and such failure is capable of being cured, and Borrower or its Subsidiary, as the case may be, commences and diligently prosecutes such cure as required by the terms of such Loan Document, then such failure shall not be deemed to be an Event of Default hereunder so long as such failure could not reasonably be expected to have a Material Adverse Effect; or (g) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) An involuntary case seeking the liquidation or reorganization of Borrower or any of its Material Subsidiaries under Chapter 7 or Chapter 11, respectively, of the federal Bankruptcy Code or any similar proceeding shall be commenced against Borrower or any of its Material Subsidiaries under any other applicable law and any of the following events occur: (v) Borrower or any of its Material Subsidiaries, as applicable, consents to the institution of the involuntary case; (w) the petition commencing the involuntary case is not timely controverted; (x) the petition commencing the involuntary case is not dismissed within sixty (60) days of its filing; provided, however, that, during the pendency of such period, the Banks shall be relieved of the Revolving Credit Facility Commitment; (y) an interim trustee is appointed to take possession of all or a substantial portion of the property or to operate all or any substantial portion of the business of Borrower or any of its Material Subsidiaries; or (z) an order for relief shall have been issued or entered therein; or (ii) A decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, custodian, trustee, or other officer having similar powers of Borrower or any of its Material Subsidiaries to take possession of all or a substantial portion of the property or to operate all or a substantial portion of the business of Borrower or any of its Material Subsidiaries shall have been entered and, within thirty (30) days from the date of entry, is not vacated, discharged, or bonded against, or any similar relief shall be granted against Borrower or any of its Material Subsidiaries under any applicable federal or state law and, within thirty (30) days from the date of entry, is not vacated, discharged, or bonded against; provided, however, that, during the pendency of such period, the Banks shall be relieved of the Revolving Credit Facility Commitment; or (h) Voluntary Bankruptcy; Appointment of Receiver, etc. Borrower or any of its Material Subsidiaries shall institute a voluntary case seeking liquidation or reorganization under Chapter 7 or Chapter 11, respectively, of the federal Bankruptcy Code; or Borrower or any of its Material Subsidiaries shall file a petition, answer, or complaint or shall otherwise institute any similar proceeding under any other applicable law, or shall consent thereto; or Borrower or any of its Material Subsidiaries shall consent to the conversion of an involuntary case to a voluntary case; or Borrower or any of its Material Subsidiaries shall consent or acquiesce to the appointment of a receiver, liquidator, sequestrator, custodian, trustee, or other officer with similar powers to take possession of all or a substantial portion of the property or to operate all or a substantial portion of the business of Borrower or any of its Material Subsidiaries; or Borrower or any of its Material Subsidiaries shall make a general assignment for the benefit of creditors; or the board of directors of Borrower or any of its Material Subsidiaries (or any committee thereof) adopts any resolution or otherwise authorizes action to approve any of the foregoing; or (i) Judgments and Attachments. (i) Borrower or any of its Subsidiaries shall suffer any money judgment, writ, or warrant of attachment, or similar process involving payment of money in an amount in excess of Seven Million Five Hundred Thousand Dollars ($7,500,000) and shall not discharge, vacate, bond, or stay the same within a period of nineteen (19) days or, in any event, within ten (10) days of the date of any proposed sale thereunder; or (ii) A judgment creditor shall obtain possession of Assets of Borrower or any of its Subsidiaries having a value in excess of Seven Million Five Hundred Thousand Dollars ($7,500,000) by any means, including levy, distraint, replevin, or self-help; or (j) Dissolution. Any order, judgment, or decree shall be entered decreeing the dissolution or division of Borrower or any of its Subsidiaries, as the case may be, and such order shall remain undischarged or unstayed for a period in excess of thirty (30) days; or (k) ERISA Liabilities. (i) Any Reportable Event (or similar occurrence under the applicable laws of a foreign country) occurs that reasonably can be expected to result in a liability by Borrower, or any of its ERISA Affiliates, to the PBGC (or foreign regulatory authority), that reasonably would be expected to have a Material Adverse Effect, and that Majority Banks determine, in good faith, constitutes grounds for the termination of any Pension Plan by the PBGC (or foreign regulatory authority) or for the appointment of a trustee to administer any Pension Plan; or (ii) Any Pension Plan maintained by Borrower, or any of its ERISA Affiliates, shall be terminated or a trustee appointed by an appropriate United States district court, or pursuant to the applicable law of a foreign country, to administer any Pension Plan, or the PBGC shall institute proceedings to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan if, as of the date thereof, Borrower's, or any of its ERISA Affiliates' liability or the aggregate liability of Borrower, or its ERISA Affiliates (after giving effect to the tax consequences thereof) for unfunded vested benefits under the Pension Plans exceed the then current value of Assets accumulated in such Pension Plans by more than five percent (5%) of Consolidated Tangible Net Worth (or in the case of a termination involving Borrower, or any of its ERISA Affiliates as a Substantial Employer (within the meaning of ERISA), the withdrawing employer's proportionate share of such excess shall exceed such amount); or (iii) Failure to make full payment (including all required installments) when due of all amounts which, under the provisions of any Pension Plan or applicable law, Borrower, or any of its ERISA Affiliates, is required to pay as contributions thereto, that would have a Material Adverse Effect; or (iv) Borrower, or any of its ERISA Affiliates creates any accumulated funding deficiency as defined by ERISA, irrespective of whether waived, with respect to any Pension Plan, that would have a Material Adverse Effect; or (v) Borrower, or any of its ERISA Affiliates, as an employer under a Multiemployer Plan, shall have made a complete or partial withdrawal from such Multiemployer Plan and the plan sponsor of such Multiemployer Plan shall have notified such withdrawing employer that such employer has incurred a withdrawal liability in an annual amount exceeding Seven Million Five Hundred Thousand Dollars ($7,500,000) or the aggregate amount of such withdrawal liabilities for Borrower and its ERISA Affiliates together exceeds Seven Million Five Hundred Thousand Dollars ($7,500,000); or (vi) Any Lien on the Assets of Borrower, or any of its Subsidiaries, under the Pension Protection Act shall exceed Seven Million Five Hundred Thousand Dollars ($7,500,000); or (l) Termination of Loan Documents. Any of the Loan Documents shall cease to be in full force and effect for any reason other than: (i) any act or omission of Agent with respect to the filing or recordation of any of such documents or other action necessary for the perfection of Liens in favor of Agent on behalf of the Banks; or (ii) a release or termination thereof upon the full payment and satisfaction of the Debt due hereunder and under the Notes to Banks; or (iii) upon the written consent of the Majority Banks; or (m) Subordination Default. The subordination provisions with respect to the Subordinated Debt, at any time after the execution and delivery thereof and for any reason other than satisfaction in full of all Debt incurred hereunder and under the Notes, cease to be in full force and effect or are declared to be null and void; or any holder of twenty-five percent (25%) or more of an issue thereof denies that it has any further liability or obligation, including with respect to any future Loans by Banks, under such Subordinated Debt or gives notice to such effect; provided, however, neither an Unmatured Event of Default nor an Event of Default shall be deemed to have occurred or be continuing under this Section 7.1(m) by reason of any such denial or notice if: (a) Borrower promptly obtains an opinion of counsel, from a law firm reasonably acceptable to the Majority Banks, addressed to Agent, on behalf of Banks, to the effect that any such denial or notice is not founded upon any reasonable basis at law; and (b) Borrower immediately takes all action necessary to obtain appropriate declaratory and injunctive relief with respect to such denial or notice in order to preserve the full force and effect of such subordination provisions; or (n) Change of Control. A Change of Control shall have occurred. 7.2 Remedies. Upon the occurrence of an Event of Default: (i) If such Event of Default (x) arises under Section 7.1(b) as a result of a default under the Subordinated Indenture and the Existing Subordinated Debt is declared due prior to its stated maturity as a result of such default or (y) arises and is continuing under Sections 7.1(g) or (h), then the unpaid principal amount of and any accrued interest on the Loans automatically shall become immediately due and payable, without presentment, demand, protest, notice, or other requirements of any kind, all of which are hereby expressly waived by Borrower and the obligation of any Bank to make any Loan hereunder or issue any Letter of Credit hereunder shall thereupon terminate; and (ii) In the case of any other Event of Default which is continuing, the Majority Banks may request Agent to and Agent thereupon shall, by written notice to Borrower, declare all of the Loans to be and the same shall forthwith become, due and payable, together with any and all accrued interest thereon, and the obligation of Banks to make any Loan hereunder or issue any Letter of Credit hereunder shall thereupon terminate. T h e foregoing notwithstanding, if, at any time after acceleration of the maturity of any Note, Borrower shall pay all arrears of interest and all payments on account of principal which shall have become due other than by acceleration (with interest on principal at the rate specified herein) and all Events of Default and Unmatured Events of Default (other than nonpayment of principal and accrued interest under the Notes, due and payable solely by virtue of acceleration) have been remedied or waived pursuant to Section 11.1 of this Agreement, then the Majority Banks, by written notice to Borrower, may rescind and annul the acceleration and its consequences; provided, however, that such action shall not affect any subsequent Event of Default or Unmatured Event of Default or impair any right consequent thereon. Upon acceleration, Agent, upon the request of the Majority Banks, without notice to or demand upon Borrower, which are expressly waived by Borrower, may proceed to protect, exercise, and enforce their rights and remedies hereunder and under the Notes, or the Loan Documents and any other rights and remedies as are provided by law or equity. The Majority Banks may determine, in their sole discretion, the order and manner in which each Bank's rights and remedies are to be exercised, and all payments received by Agent or Banks, or any one or more of them, shall be applied as follows (regardless of how each Bank may treat the payments for the purpose of its own accounting): first, to all costs and expenses (including reasonable attorneys fees, costs of maintaining, preserving, or disposing of any of the real, personal, or mixed collateral and costs of settlement) incurred by Agent, or Banks, or any of them, in enforcing any Debt of, or in collecting any payments due from, Borrower hereunder or under the Notes or under the Loan Documents by reason of such Event of Default; second, to all fees due and owing to Banks or Agent, third, to accrued interest on the Loans; fourth, to principal amounts outstanding under the Loans; fifth, to Agent, on behalf of Banks, to be held as cash collateral, in an amount equal to the Letter of Credit Usage in order to secure the obligations of Borrower with respect to such Letters of Credit; sixth, pro rata, to any other Debt of Borrower owing to Agent or Banks, or any of them; and seventh, any remainder to Borrower. ARTICLE 8. THE AGENT AND THE BANKS 8.1 Appointment and Powers of Agent. Each Bank hereby irrevocably designates and appoints Agent as its agent hereunder and hereby authorizes Agent to execute and deliver or accept, on behalf of each of the Banks, the Loan Documents and any other documents, instruments, and agreements related thereto or hereto and to take such action on its behalf and to exercise such rights, remedies, powers, and privileges hereunder as are specifically authorized to be exercised by Agent by the terms hereof, together with such rights, remedies, powers, and privileges as are reasonably incidental thereto. Agent may execute any of its respective duties as agent hereunder by or through agents or employees and shall be entitled to retain counsel and to act in reasonable reliance upon the advice of such counsel concerning all matters pertaining to the agencies hereby created and its duties hereunder, and Agent shall not be liable for any action taken or omitted to be taken in accordance with the advice of counsel selected by it. Except as required by the specific terms of this Agreement, Agent shall have no duty to exercise any right, power, remedy, or privilege granted to it hereby, or to ascertain whether any Event of Default or Unmatured Event of Default has occurred and is continuing or otherwise to inquire into the performance or observance on the part of Borrower of any term, covenant, condition, or agreement on its part to be performed or observed, or to take any affirmative action hereunder, unless requested or directed to do so by the Majority Banks or all Banks, as provided herein, and shall not, without the requisite prior approval as provided in Section 11.1 hereof, consent to any departure by Borrower from the terms hereof, waive any default on the part of Borrower hereunder or amend, modify, supplement, or terminate, or agree to any surrender of, this Agreement, the Notes, or the Loan Documents. Agent has and shall have the same rights and powers under this Agreement, the Notes, and the Loan Documents with respect to its pro rata share of the Revolving Credit Facility Commitment, Loans, and Letters of Credit hereunder as each other Bank and may exercise the same as though it were not the agent; and the terms "Bank" or "Banks" include Wells Fargo, or any successor agent, in its individual capacity hereunder. Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with Borrower, or any of Borrower's Subsidiaries or Affiliates, as if it were not the agent hereunder and without any duty to account therefor to Banks. Neither Agent, nor any of its directors, officers, agents, or employees shall be liable for any action taken or omitted to be taken by them hereunder or in connection herewith, except for their own gross negligence or willful misconduct; nor shall Agent be responsible to any Person for the representations, warranties, or other statements made by any other Person or for the due execution or delivery, validity, effectiveness, genuineness, value, sufficiency, or enforceability against Borrower and Mojave of this Agreement, the Notes, the Loan Documents, or any other document furnished pursuant thereto or in connection herewith. Each Bank hereby agrees, in the ratio that such Bank's pro rata share of the Revolving Credit Facility Commitment bears to the total of the Revolving Credit Facility Commitment, to indemnify, defend, and hold Agent harmless, as agent hereunder, from and against any and all losses, liabilities (including attorneys fees and expenses) incurred or suffered by Agent in such capacity as a result of any action taken or omitted to be taken by Agent in such capacity, or otherwise incurred or suffered by, made upon, or assessed against Agent in such capacity; provided, however, that no Bank shall be liable for any portion of any such losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, damages, costs, or expenses resulting from or attributable to gross negligence or willful misconduct on the part of Agent or its directors, officers, employees or agents. Without limiting the generality of the foregoing and subject to the proviso above, each Bank hereby agrees, in the ratio aforesaid, to reimburse Agent promptly following its demand for any out-of-pocket expenses (including attorneys fees and expenses) incurred by Agent hereunder and not reimbursed to Agent by Borrower. Each Bank's obligations under this paragraph shall survive the termination of this Agreement and the discharge of Borrower's obligations hereunder. 8.2 Nature of Duties; Independent Credit Investigation. Agent shall have no duties or responsibilities except those expressly set forth in this Agreement. The duties of Agent shall be mechanical and administrative in nature and shall include a duty to distribute copies of this Agreement and the Loan Documents to each Bank promptly after the Closing Date; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Bank; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein. Each Bank expressly acknowledges: (a) that Agent has not made any representations or warranties to it and that no act by Agent hereafter taken, including any review of the affairs of Borrower, shall be deemed to constitute any representation or warranty by Agent to any Bank; (b) that it has made and will make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of Borrower in connection with this Agreement; and (c) that Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Bank with any credit or other information except as provided herein, whether coming into its possession before the making of any Loans hereunder or at any time or times thereafter. 8.3 Actions in Discretion of Agent; Instructions from Banks. Agent agrees, upon the written request of the Majority Banks or all Banks, as applicable, to take any action of the type specified as being within Agent's rights, powers, or discretion herein. In the absence of a request by the Majority Banks or all Banks, as applicable, Agent shall have authority, in its sole discretion, to take or not to take any such action, unless this Agreement specifically requires the consent of the Majority Banks or all Banks, as applicable. Any action taken or failure to act pursuant to such instructions or discretion shall be binding on all Banks and on all holders of Notes. No Bank shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder in accordance with the instructions of the Majority Banks or all Banks, as applicable, or in the absence of such instructions, in the absolute discretion of Agent, subject to the provisions of Section 8.1. 8.4 Exculpatory Provisions. Agent shall be under no obligation to any Bank to ascertain the existence or possible existence of any Event of Default or Unmatured Event of Default unless a required payment by Borrower to Agent has not been made or unless Agent has received notice from a Bank or Borrower stating that such notice is a "Notice of Default." In the event that such a payment default occurs or that Agent receives such a notice of the occurrence of an Event of Default or Unmatured Event of Default, Agent shall give prompt notice thereof to Banks. Agent shall (subject to Section 11.1 hereof) take such action with respect to such Event of Default or Unmatured Event of Default as shall be directed by the Majority Banks; provided, however, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default or Unmatured Event of Default as it shall deem advisable and in the best interests of Banks. 8.5 Reliance by Agent. Agent shall be entitled to rely upon any communication, instrument, paper, writing, telegram, telex, or teletype m e ssage, resolution, notice, consent, certificate, letter, cablegram, statement, order, other document, conversation by telephone, or otherwise, believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons. Agent shall be fully justified in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by Banks (in the ratio provided in Section 8.1) against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such actions. 8.6 Excess Payments. If any Bank or other holder of a Note shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of principal or interest on any Note or payment of Commitment Fee in excess of its pro rata share of payments and other recoveries obtained by all Banks or holders of Notes, such Bank or other holder shall purchase from the other Banks or holders such participations in the Notes held by them as shall be necessary to cause such purchasing Bank or holder to share the excess payment or other recovery ratably with each of the other Banks or holders; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Bank or holder, the purchase shall be rescinded and the purchase price restored to such Bank or other holder to the extent of such recovery, but without interest. Borrower agrees that any Bank or holder so purchasing a participation from another Bank or holder pursuant to this Section 8.6 may, to the fullest extent permitted by law, exercise all o f its rights of payment (including setoff) with respect to such participation as fully as if such Bank or holder were the direct creditor of Borrower in the amount of such participation. 8.7 Obligations Several. The obligations of Banks hereunder are several, and neither any Bank nor Agent shall be responsible for the obligation of any other Person hereunder, nor will the failure of any Bank to perform any of its obligations hereunder relieve Agent or any other Bank from the performance of its respective obligations hereunder. Nothing contained in this Agreement, and no action taken by Banks or Agent pursuant hereto or in connection herewith or pursuant to or in connection with the Notes, or the Loan Documents shall be deemed to constitute Banks, together or with Agent, a partnership, association, joint venture, or other entity. 8.8 Resignation by Agent. Agent may resign its agency at any time by giving at least thirty (30) days prior written notice of its intention to do so to each Bank and to Borrower. Such resignation shall become effective upon the earlier of: (a) the appointment by the Majority Banks of a successor Agent (which successor Agent shall be a Bank and shall be reasonably acceptable to Borrower), or (b) the effective date set forth in Agent's notice of resignation. After any resigning Agent's resignation hereunder as Agent, the provisions of this Article 8 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent hereunder. Upon such appointment, the term "Agent" shall for all purposes of this Agreement thereafter mean such successor. 8.9 Collateral for Benefit of the Banks; Application of Funds. Agent and, to the extent any Bank receives the same, Banks shall hold all Liens upon the Collateral, and any and all proceeds realized therefrom, for the pro rata benefit of Banks in accordance with each Bank's pro rata share of the Revolving Credit Facility Commitment. While any Loans or Letters of Credit are outstanding hereunder or any portion of the Revolving Credit Facility Commitment exists under the terms of this Agreement, should any Bank receive (whether by voluntary payment for the Loans, realization upon the Collateral, exercise of offset or banker's lien, counter-claim, cross-action, or otherwise) any sums from Borrower received on account of principal, interest, or other amount owed under this Agreement, any guarantor of the Loans, or any Subsidiary of Borrower, the sums so obtained shall be received for the benefit of Banks in accordance with each Bank's pro rata share of the Revolving Credit Facility Commitment. If any right of offset is exercised by any Bank, the entire amount of such offset shall be applied to the Loans made pursuant to this Agreement until paid in full, prior to application to any other Debt of Borrower, any guarantor of the Loans or any Subsidiary of Borrower owing to such Bank. ARTICLE 9. BANKS' REPRESENTATIONS 9.1 Investment Representation. Each Bank hereby represents that it will acquire its Notes for its own account, for investment, and not with a view to the distribution or sale of any such Note; provided, however, that the disposition of any Note held by such Bank shall at all times be within such Bank's exclusive control subject to Section 9.2 hereof. Each Bank's acquisition of any Note shall constitute its reaffirmation of the foregoing representation as of the date of such acquisition. 9.2 Participation in Notes; Compliance with Law. The provisions of Section 9.1 hereof to the contrary notwithstanding, each Bank shall have the right at any time and from time to time to do either or both of the following without notice to any Person: (a) furnish one or more purchasers or potential purchasers of all or any portion of the Loans or the Notes or of a participation interest therein, with any and all information concerning Borrower or its Subsidiaries that has been supplied by Borrower to Agent or any Bank or obtained by other means by Agent or any Bank; or (b) to sell, a s sign, pledge, hypothecate, syndicate, transfer, negotiate or grant participations in all or any portion of such Bank's interests in the Loans or the Notes in accordance with the terms and conditions of Section 11.5 hereof. 9.3 Confidentiality. Each Bank agrees that material, non-public information regarding Borrower, its Subsidiaries, operations, Assets, and existing and contemplated business plans shall be treated by such Bank in a confidential manner, and shall not be disclosed by it to entities or Persons who are not parties to this Agreement, except: (a) to counsel for and other advisors, accountants, and auditors to such Bank; (b) as may be required by statute, decision, or judicial or administrative order, rule, or regulation; (c) as may be agreed to in advance by Borrower; (d) as to any such information that is or becomes generally available to the public; and (e) in connection with any assignment, prospective assignment, sale, prospective sale, participation or prospective participation, or pledge or prospective pledge of a Bank's interests hereunder, provided that any such assignee, p r o s pective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to take its interest hereunder subject to the terms hereof, including those of this Section 9.3, or shall have entered into a confidentiality agreement with Borrower or for the benefit of Borrower substantiality upon the terms of this Section 9.3. ARTICLE 10. EXPENSES AND INDEMNITIES 10.1 E x p e n ses. Irrespective of whether the transactions contemplated hereby are consummated, Borrower agrees to pay on demand: (a) all of Agent's actual and reasonable out-of-pocket costs and expenses of preparation of this Agreement, the Notes, the Loan Documents, and all other agreements, instruments, and documents contemplated hereby and thereby; (b) the cost of delivering the Notes to Banks pursuant to the provisions of this Agreement; (c) the reasonable fees, expenses, and disbursements of counsel (including in-house counsel to Agent) to Agent in connection with the negotiation, preparation, printing, reproduction, execution, delivery, and administration of this Agreement, the Notes, the Loan Documents, and all other agreements, instruments, and documents contemplated hereby and thereby, and any amendments and waivers hereto or thereto; (d) filing, recording, publication, search, and title fees paid or incurred by or on behalf of Agent or Banks in connection with the transactions contemplated by this Agreement, the Notes, and the Loan Documents; (e) the reasonable costs and expenses i n curred by Agent, on behalf of Banks, in connection with audits, inspections, and appraisals contemplated by this Agreement, the Notes, and the Loan Documents; (f) all other actual and reasonable out-of-pocket expenses incurred by Agent in connection with the negotiation, preparation, and execution of this Agreement, the Notes, the Loan Documents, and all other agreements, instruments, and documents contemplated hereby and thereby, and the making of the Loans and the issuance of the Letters of Credit hereunder; and (g) all costs and expenses (including reasonable attorneys fees (including reasonable allocated costs of in-house counsel of Banks) and costs of settlement) incurred by Agent and each Bank in enforcing or collecting any Debt of Borrower or defending the Loan Documents (including attorneys fees and expenses incurred in connection with a "workout," a "restructuring," or any bankruptcy or insolvency proceeding concerning Borrower or any of its Subsidiaries), irrespective of whether suit is brought. 10.2 Indemnity. In addition to the payment of expenses pursuant to S e c t ion 10.1 hereof, and irrespective of whether the transactions contemplated hereby are consummated, Borrower agrees to indemnify, exonerate, defend, pay, and hold harmless Banks, Agent, and any holder of any interest in the Notes, and the officers, directors, employees, and agents of and counsel to Banks, Agent, and such holders (collectively the "Indemnitees" and individually as "Indemnitee") from and against any and all liabilities, o b l igations, losses, damages, penalties, actions, causes of action, judgments, suits, claims, costs, expenses, and disbursements of any kind or nature whatsoever (including, the reasonable fees and disbursements of counsel (including, the allocated costs of in-house counsel to Agent) for such Indemnitees in connection with any investigation, administrative, or judicial proceeding, whether such Indemnitee shall be designated a party thereto), that may be imposed on, incurred by, or asserted against such Indemnitee, in any manner relating to or arising out of the Revolving Credit Facility Commitment, the use or intended use of the proceeds of the Loans or Letters of Credit, or the consummation of the transactions contemplated by this Agreement, including any matter relating to or arising out of the filing or recordation of any of the Loan Documents which filing or recordation is done based upon information supplied by Borrower to Agent and its counsel (the "Indemnified Liabilities"); provided, however, that Borrower shall have no obligation hereunder with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of any such Indemnitee. Each Indemnitee will promptly notify Borrower of each event of which it has knowledge which may give rise to a claim under the indemnification provisions of this Section 10.2. If any investigative, judicial, or administrative proceeding arising from any of the foregoing is brought against any Indemnitee indemnified or intended to be indemnified pursuant to this Section 10.2, Borrower, to the extent and in the manner directed by the Indemnitee or intended Indemnitee, will resist and defend such action, suit, or proceeding or cause the same to be resisted and defended by counsel designated by Borrower (which counsel shall be reasonably satisfactory to the Indemnitee or intended Indemnitee). Each Indemnitee will use its best efforts to cooperate in the defense of any such action, writ, or proceeding. To the extent that the undertaking to indemnify, pay, and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, Borrower shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law. The obligations of Borrower under this Section 10.2 shall survive the termination of this Agreement and the discharge of Borrower's other obligations hereunder. ARTICLE 11. MISCELLANEOUS 11.1 M o difications in Writing. No amendment, modification, supplement, termination, or waiver of or to, or consent to any departure from, any provision of this Agreement, the Notes, or the Loan Documents shall in any event be effective unless the same shall be in writing and signed by or on behalf of the Majority Banks (or Agent acting upon the written instructions of the Majority Banks) and Borrower (or any of its Subsidiaries to the extent a party to an affected Loan Document), to the extent a party thereto; provided, however, that no amendment, modification, supplement, termination, waiver, or consent, as the case may be, that has the effect of: (a) reducing the rate or amount, or extending the stated maturity or due date, of any sum payable by Borrower hereunder or under any of the Notes or Loan Documents, including any Commitment Fee, Letter of Credit fee, or any payment or prepayment of principal or interest; or (b) increasing the amount, or extending the stated expiration or termination date, of any Bank's portion of the Revolving Credit Facility Commitment hereunder; or (c) releasing all or a material portion of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Loans hereunder; or (d) changing this Section 11.1 or Section 11.5 hereof or the definitions of the terms "Revolving Credit Facility Commitment," or "Majority Banks," shall be effective unless the same shall be signed by or on behalf of all Banks; provided further, however, that no such amendment, modification, supplement, termination, waiver, or consent, as the case may be, that has the effect of changing any provision of this Agreement requiring the consent of Agent or some specified percentage of Banks shall be effective unless the same shall be signed by or on behalf of Agent or such specified percentage of Banks, as the case may be; provided further, however, that no such amendment, modification, supplement, termination, waiver, or consent, as the case may be, that has the effect of (aa) increasing the duties or obligations of Agent or an Issuing Bank hereunder; or (bb) increasing the standard of care or performance required on the part of the Agent or an Issuing Bank hereunder; or (cc) reducing or eliminating the indemnities or immunities to which Agent or an Issuing Bank is entitled hereunder (including any amendment or modification of this Section 11.1), shall be effective unless the same shall be signed by or on behalf of Agent or an Issuing Bank, as applicable. Any waiver of any provision of this Agreement, the Notes, or the Loan Documents, and any consent to any departure by Borrower or any of its Subsidiaries from the terms of any provisions of this Agreement, the Notes, or the Loan Documents shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances. Any amendment, modification, supplement, termination, waiver, or consent effected in accordance with this Section 11.1 shall be binding upon each holder of a Note and Borrower (or any of its Subsidiaries to the extent a party to an affected Loan Document). 11.2 Waivers; Failure or Delay. No failure or delay on the part of Banks, Agent, or any holder of any Note in the exercise of any power, right, remedy, or privilege under this Agreement, the Notes, or the Loan Documents shall impair such power, right, remedy, or privilege or shall operate as a waiver thereof; nor shall any single or partial exercise of any such power, right, or privilege preclude any other or further exercise of any other power, right, or privilege. The waiver of any such right, power, or remedy with respect to particular facts and circumstances shall not be deemed to be a waiver with respect to other facts and circumstances. The remedies provided for under this Agreement, in the Notes, and in the Loan Documents are cumulative and are not exclusive of any remedies that may be available to Agent or any Bank at law, in equity, or otherwise. 11.3 Notices, etc. Except to the extent provided in Sections 2.8 and 2.9 hereof, all notices, demands, instructions, and other communications required or permitted to be given to or made upon any party hereto shall be in writing and (except for financial statements and other information to be furnished pursuant hereto (but not inclusive of any notices required to be provided pursuant hereto) that may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, or by prepaid telex, TWX, telecopy, or telegram (with messenger delivery specified) and shall be deemed to be given for purposes of this Agreement on the day that such writing is received by the Person to whom it is to be sent pursuant to the provisions of this Agreement. Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.3, notices, demands, instructions, and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telex, TWX, or telecopier numbers) indicated on Schedule 11.3 attached hereto. 11.4 Confirmations. Borrower and each holder of a Note agree that, upon written request received from time to time by one from another, each will confirm to the other in writing (with a copy of each such confirmation sent to the Agent) the aggregate unpaid principal amount of the Loans or Letters of Credit then outstanding under any Note. Each holder of a Note agrees that, upon written request received from time to time by it from Borrower, to make any Note held by it (including any schedule attached thereto) available for reasonable inspection by Borrower at the office of such holder. 11.5 Benefit of Agreement. (a) This Agreement and any amendments hereto shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns and no other Person is intended to be a beneficiary hereof; provided, however, that Borrower may not assign or transfer any interest hereunder without the prior written consent of all Banks and, provided further, that, although any Bank may grant participations in its rights hereunder, (i) such Bank shall remain a "Bank" for all purposes hereunder and the participant shall not constitute a "Bank" hereunder, (ii) any such grant of a participation shall not require Borrower to file a registration statement with the SEC or qualify the Loans or the Notes under the blue sky laws of any state, (iii) such Bank, together with its Affiliates, shall continue at all times to hold beneficial interests in Loans and such Bank's portion of the Revolving Credit Facility Commitment having an aggregate principal amount of not less than an amount equal to: (y) twenty percent (20%) (or such lesser percentage as may be approved by Borrower and Agent) multiplied by (z) that Bank's pro rata share of the Revolving Credit Facility Commitment in effect at the time it first acquired its interests hereunder; provided, however, that such Bank's obligation shall be proportionately reduced to the extent that Borrower elects to reduce the Revolving Credit Facility Commitment pursuant to Section 2.12 hereof, (iv) no Bank shall grant any participation (other than to an Affiliate of such Bank) under which the participant shall have rights to approve any amendment to or waiver of this Agreement or of any other agreement, instrument, or document executed in connection herewith, except to the extent such amendment to or waiver of this Agreement or of any other agreement, instrument, or document executed in connection herewith would (aa) extend the final maturity date of the Loans hereunder in which such participant is participating; (bb) reduce the interest rate applicable to Loans hereunder in which such participant is participating; (cc) release all or a material portion of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Loans hereunder in which such participant is participating; (dd) postpone the payment of interest or the Commitment Fee or Letter of Credit Fee or reduce the amount of the Commitment Fee or Letter of Credit fee payable to such participant; (ee) change the amount or due dates of scheduled principal repayments or prepayments; and (v) no Bank shall grant any participation (other than to an Affiliate of such Bank) unless either (xx) such participation is in an amount equal to or greater than Ten Million Dollars ($10,000,000), or (yy) the provisions of clause (iv) of this Section 11.5 to the contrary notwithstanding, such participation is granted upon terms under which the participant shall have no rights to approve any amendment or waiver of any provision hereof or of any other agreement, instrument, or document executed in connection herewith. In the case of any participation, the participant shall not have any rights under this Agreement or any of the other documents entered into in connection herewith (the participant's rights against such Bank in respect of such participation to be those set forth in the agreement executed by such Bank in favor of the participant relating thereto) and all amounts payable to any Bank hereunder shall be determined as if such Bank had not sold such participation. (b) The foregoing notwithstanding and subject to paragraph (d) of this Section 11.5, any Bank may assign a portion of its rights and obligations hereunder to (i) one or more Banks upon the consent of Borrower, which consent will not be unreasonably withheld, or (ii) with the prior written consent of Borrower and Agent, which consent will not be unreasonably withheld, to one or more commercial banks, insurance companies, savings and loan associations, savings banks, other financial institutions, pension fund, or mutual fund, each of which assignees shall become a party to this Agreement as a "Bank" after the Closing Date by the execution and delivery of an Assignment and Assumption Agreement with the assigning Bank, Borrower, and Agent; provided, however, that (v) each such assignment shall be an amount of not less than Ten Million Dollars ($10,000,000) and shall be for a pro-rated portion of the Revolving Credit Facility Commitment, (w) Agent shall have received an assignment processing fee of $3,000 payable by such assignee, (x) any such assignment shall not require Borrower to file a registration statement with the SEC or qualify the Loans or the Notes under the blue sky laws of any state, (y) at such time Schedule R-2 shall be modified to reflect the pro rata share of the Revolving Credit Facility Commitment of such new Bank and of the pre-existing Banks, and (z) new Notes will be issued, against delivery of the Notes being replaced thereby, to such new Bank and to the assigning Bank in conformity with the requirements of Article 2 to the extent needed to reflect their revised pro rata share of the Revolving Credit Facility Commitment. To the extent of any assignment pursuant to this Section 11.5, the assigning Bank shall be relieved of its obligations hereunder with respect to its assigned portion of the Revolving Credit Facility Commitment. (c) In the event that the Federal Deposit Insurance Corporation or its successor assumes control of any Bank, as receiver, Borrower shall be permitted to select a financial institution to assume the Revolving Credit Facility Commitment of such Bank, subject to the approval of Agent, which approval shall not be unreasonably withheld. (d) In addition to the assignments and participations permitted under subsections (a) and (b) of this Section 11.5, any Bank may assign, as collateral or otherwise, any of its rights (including rights to payments of principal of or interest on the Notes) under any Loan Document to any Federal Reserve Bank without notice to or consent of the Borrower or the Agent; provided, however, that no such assignment under this subsection (d) shall release the assigning Bank from its obligations hereunder. 11.6 Availability of Funds. Unless Agent shall have been notified by a Bank prior to the date upon which any Loan is to be made that such Bank does not intend to make available to Agent such Bank's portion of such Loan, Agent may assume that such Bank has made or will make such proceeds available to Agent on such date and Agent may, in reliance upon such assumption (but shall not be required to), make available to Borrower a corresponding amount. If such corresponding amount is not in fact made available to Agent by such Bank, Agent shall be entitled to recover such amount on demand from such Bank (or, if such Bank fails to pay such amount forthwith upon such demand, from Borrower) together with interest thereon from such Bank in respect of each day during the period commencing on the date such amount was made available to such Borrower and ending on the date Agent recovers such amount, at a rate, per annum, equal to the customary rate set by Agent for the correction of errors among banks for the first three (3) Domestic Business Days and, thereafter, the applicable interest rate in respect of such Loan. The provisions of this Section 11.6 are solely for the benefit of Agent and Banks and their successors and assigns and are not intended to benefit Borrower, its Subsidiaries, its successors and assigns, or any other Person. 11.7 Headings. Article and Section headings used in this Agreement and the table of contents preceding this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any purpose or affect the construction of this Agreement. 11.8 Execution in Counterparts; Telefacsimile Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto. Delivery of an executed counterpart of the signature pages of this Agreement by telecopier shall be equally effective as delivery of a manually executed counterpart. Any party delivering an executed counterpart of the signature pages of this Agreement by telecopier shall thereafter also promptly deliver a manually executed counterpart , but the failure to deliver such manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. 11.9 GOVERNING LAW. EXCEPT AS SPECIFICALLY SET FORTH IN ANY LOAN DOCUMENT: (A) THIS AGREEMENT, THE NOTES, AND THE LOAN DOCUMENTS SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF CALIFORNIA; AND (B) THE VALIDITY OF THIS AGREEMENT, THE NOTES, AND THE LOAN DOCUMENTS, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEABILITY THEREOF, AND THE RIGHTS OF THE PARTIES THERETO WITH RESPECT TO ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION THEREWITH, SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. 11.10 JURISDICTION AND VENUE. TO THE EXTENT PERMITTED BY LAW, THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT, THE NOTES, OR THE LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER, BANKS, AND AGENT, TO THE EXTENT THEY MAY LEGALLY DO SO, WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.10 AND STIPULATE THAT THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF RELATED TO THIS AGREEMENT, THE NOTES, OR THE LOAN DOCUMENTS. TO THE EXTENT PERMITTED BY LAW, SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST BORROWER MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SCHEDULE 11.3 HERETO. TO THE EXTENT IT MAY LEGALLY DO SO, BORROWER AGREES THAT ANY FINAL JUDGMENT RENDERED AGAINST IT IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AS TO THE SUBJECT OF SUCH FINAL JUDGMENT AND MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER PROVIDED BY LAW. 11.11 WAIVER OF TRIAL BY JURY. BORROWER, BANKS, AND AGENT, TO THE EXTENT THEY MAY LEGALLY DO SO, EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, THE NOTES, OR THE LOAN DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTES, THE LOAN DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, BORROWER, BANKS, AND AGENT AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.11 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO THE WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY. 11.12 Severability of Provisions. Any provision of this Agreement that is illegal, invalid, prohibited, or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity, prohibition, or unenforceability without invalidating or impairing the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 11.13 Changes in Accounting Principles. (a) If any changes in accounting principles from those used in the preparation of the financial statements referred to in this Agreement are hereafter occasioned by the promulgation of rules, regulations, pronouncements, or opinions of, or required by, the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions), or there shall occur any change in Borrower's or any of its Subsidiaries' fiscal or tax years and, as a result of any such changes, there shall result a change in the method of calculating any of the financial covenants, negative covenants, standards, or other terms or conditions found in this Agreement, or (b) if Borrower, for reasonable business purposes, shall desire to change such accounting principles or the application thereof (which change shall be consistent with accounting principles then in effect pursuant to rules, regulations, pronouncements, or opinions of the Financial Accounting Standards Board or the American Institute of Certified Public Accountants) and such desired change would result in a change in the method of calculating any of the financial covenants, negative covenants, standards, or other terms and conditions found in this Agreement, then the parties hereto agree to enter into negotiations in order to amend such provisions and the definition of "GAAP" set forth in Section 1.1 so as to equitably reflect such changes with the desired result that the criteria for evaluating the financial condition of Borrower and its Subsidiaries shall be the same after such changes as if such changes had not been made. 11.14 Survival of Agreements, Representations and Warranties. All agreements, representations, and warranties made herein shall survive the execution and delivery of this Agreement, the making of the Loans hereunder, and the execution and delivery of the Notes. 11.15 Setoff. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuation of any Event of Default, each Bank and each holder or transferee of any Note or any Person with any interest in any Note is hereby authorized by Borrower at any time or from time to time, without notice to Borrower or to any other Person, any such notice being hereby expressly waived, to offset and to appropriate and to apply any and all deposits (general or special, time or demand, including indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other indebtedness at any time held or owing by that Bank or that subsequent holder to or for the credit or the account of Borrower against and on account of the Debt of Borrower to that Bank or that subsequent holder under this Agreement and the Notes, including all claims of any nature of description arising out of or connected with this Agreement, the Notes, or the Loan Documents, irrespective of whether that Bank or that subsequent holder shall have made any demand under this Agreement; provided, however, that Banks and the holder or transferee of any Note or any Person with any interest in any Note expressly agree to refrain from exercising such rights unless authorized to do so in writing by the Majority Banks. After the exercise by any Bank or any holder or transferee of any Note or any Person with any interest in any Note of any right of offset against deposit accounts of Borrower maintained with that Bank or that subsequent holder, that Bank or that subsequent holder shall give Borrower written notice thereof, but without liability for the failure to do so, and no such failure of notice shall affect the validity of such offset. 11.16 Independence of Covenants. All covenants under this Agreement shall each be given independent effect so that if a particular action or condition is not permitted by any such covenant, the fact that it would be permitted by another covenant, by an exception thereto, or would otherwise be within the limitations thereof, shall not avoid the occurrence of an Event of Default or Unmatured Event of Default if such action is taken or condition exists. 11.17 Complete Agreement. This Agreement, together with the exhibits and schedules to this Agreement, the Disclosure Statement, the Notes, and the Loan Documents is intended by the parties as a final expression of their agreement and is intended as a complete statement of the terms and conditions of their agreement, reflects the entire understanding of the parties with respect to the transactions contemplated hereby, and shall not be contradicted or qualified by any other agreement, oral or written. The foregoing and anything else contained in this Agreement, the Notes, or the Loan Documents to the contrary notwithstanding, any term or provision of the 1993 Credit Agreement that, by the terms thereof, is intended to survive the termination of the 1993 Credit Agreement shall continue in full force and effect. 11.18 Revival and Reinstatement of Obligations. If the incurrence or payment of any amount due hereunder or under the Notes or the Loan Documents by Borrower or any of its Subsidiaries or the transfer by Borrower or any such Subsidiaries to Agent, on behalf of Banks, of any Assets of Borrower or such Subsidiaries, as applicable, should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, and other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if Agent or the Banks are required to repay or restore, in whole or in part, any such Voidable Transfer, or elect to do so upon the reasonable advice of their counsel, then, as to any such Voidable Transfer, or the amount thereof that Agent or the Banks, as applicable, are required or elect to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of Agent and the Banks related thereto, the liability of Borrower or such Subsidiary automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer never had been made. 11.19 Ancillary Documents. Any and all references in the Ancillary Documents to the "Facility A Commitment" hereby are deemed to mean and refer to the Revolving Credit Facility Commitment as defined herein. Furthermore, as set forth in Section 4 of the Security Agreement and Section 4 of the Mojave Security Agreement, various amounts pertaining to adjustment of and payments under insurance and reductions in the Revolving Credit Facility Commitment have been increased from the amounts set forth in the security documents in effect in connection with the 1993 Credit Agreement. The corresponding amounts set forth in any insurance provisions in any other Ancillary Document or any other document are hereby deemed to be similarly increased to be the same as the amounts set forth in Section 4 of the Security Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first hereinabove set forth. SOUTHDOWN, INC., a Louisiana corporation By____________________________ Title:______________________ WELLS FARGO BANK, N.A., a national banking association, in its individual capacity and as Agent By____________________________ Title:______________________ SOCIETE GENERALE, SOUTHWEST AGENCY By____________________________ Title:______________________ CREDIT SUISSE By____________________________ Title:______________________ By____________________________ Title:______________________ CAISSE NATIONALE DE CREDIT AGRICOLE By____________________________ Title:______________________ BANQUE PARIBAS By____________________________ Title:______________________ By____________________________ Title:______________________ CIBC INC. By____________________________ Title:______________________ THE BANK OF NOVA SCOTIA By____________________________ Title:______________________ THE FIRST NATIONAL BANK OF BOSTON By____________________________ Title:______________________ NOTICE INFORMATION Southdown, Inc.: Southdown, Inc. 1200 Smith Street, Suite 2400 Houston, Texas 77002 Attn: Mr. James L. Persky Executive Vice President- Finance and Chief Financial Officer Telephone: (713) 650-6200 Facsimile: (713) 653-8010 and with a separate notice to: Southdown, Inc. 1200 Smith Street, Suite 2400 Houston, Texas 77002 Attn: Treasurer Telephone: (713) 650-6200 Facsimile: (713) 653-6950 With a copy of notices Bracewell & Patterson, L.L.P. to Southdown, Inc. to: 2900 South Tower Pennzoil Place 711 Louisiana Street Houston, Texas 77002 Attn: William J. Hayes, Esq. Telephone: (713) 221-1333 Facsimile: (713) 221-1212 Agent: Wells Fargo Bank, N.A. 420 Montgomery Street, 9th Floor San Francisco, California 94163 Attn: Ms. Teresa Croce Telephone: (415) 396-3629 Facsimile: (415) 989-4319 With a copy of notices Wells Fargo Corporate Services, to Agent to: Inc. 500 North Akard, Suite 3535 Dallas, Texas 75201 Attn: Mr. Kirk M. Scoggins Vice President Telephone: (214) 740-2886 Facsimile: (214) 740-2815 With a copy of notices Brobeck, Phleger & Harrison to Agent to: 550 South Hope Street, Suite 2100 Los Angeles, California 90071 Attn: John Francis Hilson, Esq. Telephone: (213) 489-4060 Facsimile: (213) 239-1324 Societe Generale, Societe Generale, Southwest Agency Southwest Agency: Trammell Crow Center 2001 Ross Avenue Suite 4800 Dallas, Texas 75201 Attn: Ms. Tequlla English Telephone: (214) 979-2767 Facsimile: (214) 754-0171 (214) 979-1104 and with a separate notice to: Societe Generale, Southwest Agency 1111 Bagby Street, Suite 2020 Houston, Texas 77002 Attn: Mr. Richard A. Gould Vice President Telephone: (713) 650-1777 Facsimile: (713) 650-0824 Banque Paribas: Banque Paribas 1200 Smith Street, Suite 3100 Houston, Texas 77002 Attn: Mr. Scott Clingan Telephone: (713) 659-4811 Facsimile: (713) 659-5234 The First National Bank The First National Bank of Boston of Boston: Environmental Services Division 100 Federal Street Mail Stop 01-08-05 Boston, Massachusetts 02110 Attn: Mr. Arthur J. Oberheim Telephone: (617) 434-1956 Facsimile: (617) 434-2160 CIBC, Inc.: Canadian Imperial Bank of Commerce, Inc. 2 Houston Center, Suite 1200 909 Fannin Street Houston, Texas 77010 Attn: Mr. David Balderach Telephone: (713) 658-8400 Facsimile: (713) 658-9922 and with a separate notice to: Canadian Imperial Bank of Commerce, Inc. 2 Paces West 2727 Paces Ferry Road, Suite 1200 Atlanta, Georgia 30339 Attn: Ms. Joan Moseley Telephone: (404) 319-4828 Facsimile: (404) 319-4950 Caisse Nationale de Caisse Nationale de Credit Agricole Credit Agricole: 55 East Monroe Street Chicago, Illinois 60603 Attn: Ms. Karen McClung Telephone: (312) 917-7469 Facsimile: (312) 372-4421 and with a separate notice to: Caisse Nationale de Credit Agricole 600 Travis Street Suite 2340 Houston, Texas 77002 Attn: Mr. Kenneth Coulter Telephone: (713) 223-7000 Facsimile: (713) 223-7029 Credit Suisse Credit Suisse 633 West Fifth Street, 64th Fl. Los Angeles, California 90017 Attn: Ms. Rita Asa Telephone: (213) 955-8284 Facsimile: (713) 955-8245 and with a separate notice to: Credit Suisse 1100 Louisiana, Suite 4750 Houston, Texas 77002 Attn: Mr. Donald Herrick Telephone: (713) 751-0300 Facsimile: (713) 751-0702 The Bank of Nova Scotia The Bank of Nova Scotia Atlanta Agency 600 Peachtree Street N.E. Suite 4700 Atlanta, Georgia 30308 Attn: Ms. Lauren Bianchi Telephone: (404) 877-1500 Facsimile: (404) 888-8998 and with a separate notice to: The Bank of Nova Scotia Houston Representative Office 1100 Louisiana, Suite 3000 Houston, Texas 77002 Attn: Ms. Rosine Matthews Telephone: (713) 752-0900 Facsimile: (713) 752-2425 TABLE OF CONTENTS RECITALS 1 ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS 2 1.1 Definitions 2 1.2 Construction 34 1.3 Accounting Terms 35 1.4 Disclosure Statement, Exhibits, Schedules 35 ARTICLE 2. AMOUNT AND TERMS OF LOANS 35 2.1 Revolving Credit Facility 35 (a) Revolving Credit Facility Loans 35 (b) Revolving Credit Facility Letters of Credit 36 (c) MARAD 36 2.2 Letters of Credit 37 2.3 Authorization and Issuance of Notes 39 2.4 Rate Designation 40 2.5 Interest Rates; Payment of Principal and Interest 40 2.6 Overdue Rates 42 2.7 Computation of Interest and Fees 43 2.8 Notice of Borrowing Requirements 43 2.9 Conversion or Continuation 44 2.10 Loans by Banks 45 2.11 Mandatory Repayment 46 2.12 Voluntary Prepayments or Reductions of Revolving Credit Facility Commitment 47 2.13 Commitment Fee 47 2.14 Agent's Fees 48 2.15 Increased Costs 48 2.16 Illegality 49 2.17 Taxes 49 2.18 Lending Offices 51 2.19 Funding Sources 51 2.20 Holidays 52 2.21 Place of Borrowings 52 2.22 Time and Place of Payments 52 2.23 Increased Risk-Based Capital Cost 52 2.24 Survivability 53 2.25 Interest and Fees 53 ARTICLE 3. CONDITIONS TO LOANS 53 3.1 Conditions Precedent to Initial Loans and Letters of Credit 53 3.2 Conditions Concurrent to Initial Loans and Letters of Credit 56 3.3 Conditions Precedent to All Loans 57 ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BORROWER 57 4.1 Organization, Powers, Good Standing, and Subsidiaries 58 (a) Organization and Powers 58 (b) Good Standing 58 (c) Subsidiaries 58 4.2 Authorization of Borrowing, etc. 58 (a) Authorization of Borrowing 58 (b) Authorization of Subsidiaries' Loan Documents 59 (c) No Conflict - Borrower 59 (d) No Conflict - Mojave 59 (e) Governmental Consents 59 (f) Binding Obligations 59 (g) Lien Priority 60 4.3 Financial Condition 60 4.4 Changes 60 4.5 Title to Properties; Liens; Properties 60 4.6 Litigation; Adverse Facts 61 4.7 Payment of Taxes 61 4.8 Materially Adverse Agreements; Performance 62 (a) Agreements 62 (b) Performance 62 4.9 Governmental Regulation 62 4.10 Securities Activities 62 4.11 Employee Benefit Plans 62 4.12 Disclosure 63 4.13 Debt 64 4.14 Trademarks, etc. 64 4.15 Existing Defaults 64 4.16 Leases 65 4.17 Burdensome Agreements, etc. 65 4.18 Fire, Explosion, and Labor Disputes 65 4.19 Location of Assets and Chief Executive Offices 65 4.20 Environmental Condition 65 4.21 No Default 67 4.22 Parties Intended to be Benefitted 67 ARTICLE 5. AFFIRMATIVE COVENANTS OF BORROWER 67 5.1 Accounting Records 67 5.2 Financial Statements and Notices 67 5.3 Corporate Existence, etc. 71 5.4 Payment of Taxes and Claims 72 5.5 Maintenance of Properties 72 5.6 Insurance 72 5.7 Inspection 73 5.8 Compliance with Laws, etc. 73 5.9 Environmental Compliance and Reporting 73 (a) Environmental Laws 73 (b) Indemnification 73 (c) Remedial Action 74 (d) Reporting 74 (e) Best Efforts To Avoid Contamination 74 5.10 Compliance with ERISA 74 5.11 Further Assurances 75 5.12 Subordinated Debt 75 5.13 Appraisals 75 ARTICLE 6. NEGATIVE COVENANTS OF BORROWER 75 6.1 Debt 76 6.2 Liens 77 6.3 Investments 77 6.4 Contingent Obligations 79 6.5 Preferred Stock 79 6.6 Financial Covenants 80 (a) Leverage Ratio 80 (b) Consolidated Tangible Net Worth 80 (c) Minimum Current Ratio 80 (d) Free Cash Flow Ratio 81 6.7 Restriction on Fundamental Changes 81 6.8 Sales and Lease-Backs 82 6.9 Sale of Assets 82 6.10 Transactions with Shareholders and Affiliates 83 6.11 Conduct of Business 84 6.12 Amendments or Waivers of Certain Documents 84 6.13 Use of Proceeds 84 6.14 ERISA 84 6.15 Misrepresentations 85 6.16 Change in Location of Chief Executive Offices and Assets 85 6.17 Restrictive Agreements 86 6.18 Margin Regulation 86 6.19 Subordinated Debt, Preferred Stock, and Borrower Common Stock 86 6.20 Hedge Agreements 86 6.21 Dividends 87 ARTICLE 7. EVENTS OF DEFAULT 88 7.1 Events of Default 88 (a) Failure to Make Payments When Due 88 (b) Default in Other Agreements 88 (c) Breach of Certain Covenants 89 (d) Breach of Warranty 89 (e) Other Defaults Under Agreement 90 (f) Default Under Loan Documents, etc. 90 (g) Involuntary Bankruptcy; Appointment of Receiver, etc. 90 (h) Voluntary Bankruptcy; Appointment of Receiver, etc. 91 (i) Judgments and Attachments 92 (j) Dissolution 92 (k) ERISA Liabilities 92 (l) Termination of Loan Documents 93 (m) Subordination Default 93 (n) Change of Control 94 7.2 Remedies 94 ARTICLE 8. THE AGENT AND THE BANKS 95 8.1 Appointment and Powers of Agent 95 8.2 Nature of Duties; Independent Credit Investigation 96 8.3 Actions in Discretion of Agent; Instructions from Banks 97 8.4 Exculpatory Provisions 97 8.5 Reliance by Agent 98 8.6 Excess Payments 98 8.7 Obligations Several 98 8.8 Resignation by Agent 98 8.9 Collateral for Benefit of the Banks; Application of Funds 99 ARTICLE 9. BANKS' REPRESENTATIONS 99 9.1 Investment Representation 99 9.2 Participation in Notes; Compliance with Law 99 9.3 Confidentiality 100 ARTICLE 10. EXPENSES AND INDEMNITIES 100 10.1 Expenses 100 10.2 Indemnity 101 ARTICLE 11. MISCELLANEOUS 102 11.1 Modifications in Writing 102 11.2 Waivers; Failure or Delay 103 11.3 Notices, etc 103 11.4 Confirmations 103 11.5 Benefit of Agreement 103 11.6 Availability of Funds 105 11.7 Headings 106 11.8 Execution in Counterparts 106 11.9 GOVERNING LAW 106 11.10 JURISDICTION AND VENUE 106 11.11 WAIVER OF TRIAL BY JURY 107 11.12 Severability of Provisions 108 11.13 Changes in Accounting Principles 108 11.14 Survival of Agreements, Representations and Warranties 108 11.15 Setoff 108 11.16 Independence of Covenants 109 11.17 Complete Agreement 109 11.18 Revival and Reinstatement of Obligations 109 11.19 Ancillary Documents 110 EXHIBITS AND SCHEDULES Exhibit A-1 Form of Assignment and Assumption Agreement Exhibit C-1 Form of Collateral Release Agreement Exhibit M-1 Form of Mojave Guaranty Exhibit M-2 Form of Mojave Security Agreement Exhibit N-1 Form of Note Exhibit N-2 Form of Notice of Borrowing Exhibit N-3 Form of Notice of Conversion/Continuation Exhibit S-1 Form of Security Agreement Exhibit S-2 Form of Stock Pledge Exhibit 3.1(k) Form of Officer's Compliance Certificate --------------------------------------------- Schedule L-1 Letters of Credit outstanding on the Closing Date Schedule R-2 Revolving Credit Facility Commitment Schedule S-1 Specified Subsidiaries Schedule 11.3 Notice Information EX-99 5 Exhibit 99.2 INDEX Article 1 Recognition 1 Article 2 Management 1 Article 3 Union Security, Union Activities/Meetings 2 Article 4 Grievance Procedure 4 Article 5 Equal Employment Opportunity 5 Article 6 Holidays 5 Article 7 Vacations 6 Article 8 Paid Leave 8 Article 9 Seniority 10 Article 10 Hours of Work and Overtime Pay 12 Article 11 Wages 14 Article 12 Working Conditions 14 Article 13 Strikes and Lockouts 17 Article 14 Legislation 17 Article 15 Past Practice 17 Article 16 Scope of Agreement 17 Article 17 Union Cooperation 18 Article 18 Term of Agreement 18 Appendix A Wage Schedule 20 Appendix B Health and Welfare; Pension; Company Provided Benefits; Gainsharing 21 AGREEMENT THIS AGREEMENT, made and entered into this 21st day of June, 1995, by and between SOUTHWESTERN PORTLAND CEMENT COMPANY, hereinafter known as the "Company" and the INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL UNION NO 9, hereinafter known as the "Union". This Agreement shall pertain only to employees of the Lyons Plant, Lyons, Colorado, who are in the bargaining unit hereinafter described in the Recognition Clause. Whenever the masculine pronoun is used in this Agreement it shall include the feminine gender unless the context clearly indicates otherwise. ARTICLE 1 - RECOGNITION The Company recognizes the Union pursuant to the certification of the National Labor Relations Board No. 27-RC-3693, dated October 7, 1969, as the exclusive bargaining representative for all employees covered by the Direction of Election, dated August 28, 1969, as to wages, hours, and conditions of employment. The term "employee" as used in this Agreement shall include all hourly paid production and maintenance employees employed at the Company's plant and quarry in Lyons, Colorado, but excluding, chemists, computer/instrumentation specialists, office, clerical employees, order clerks, purchasing clerks, salesmen, guards, professional employees, and supervisors as defined in the Act. ARTICLE 2 - MANAGEMENT Section 1. The Union agrees and acknowledges that the Company has the unlimited right to hire, determine standards of fitness for work, to test employees for the presence of drugs and alcohol and to take appropriate disciplinary action in the event of positive test results, discipline or discharge, layoff, promote, demote, or temporarily assign employees within the bargaining unit. The Union further recognizes the Company's unlimited right to determine the amount of overtime to be worked; to create, modify, combine or discontinue job classifications; to determine and change the size and nature of the workforce, to hire temporary employees as may be determined necessary, (however, the Company will not use temporary employees when bargaining unit employees are on layoff unless mutually agreed to between the Company and the Union), determine job duties, quality and workmanship standards, hours of work and other conditions of employment; to make, change and enforce (after posting) work rules and safety standards, to promote safety, efficiency, order, and protection of Company property and operations. The right to manage the business, to distribute work with outside contractors or sub-contractors; however, work performed by such outside contractors or subcontractors shall not result in the layoff of any bargaining unit employee(s). The right to determine the type of work to be performed, the job content, the location of work, the schedules of production, the schedule of working hours, the methods and the processes and means of production are also the exclusive rights of the Company. Section 2. The above list of specific Company Rights shall not be considered restrictive or a waiver of any other rights the Company has not listed and has not specifically surrendered in this Agreement; regardless of whether such rights have been exercised in the past. Section 3. The Union recognizes the Company's exclusive right to determine partial or permanent discontinuance or shutdown of operations. The Company's only obligation when exercising this right is to bargain with the Union over the effects of that decision, and give notice in accordance with applicable Federal Law. Section 4. Supervisory personnel will not routinely perform work on any hourly rated job in the bargaining unit except in the following types of situations: a. In emergencies. b. In the instruction of employees. c. When the regular employee has not reported for work when scheduled. d. In the performance of work when production difficulties are encountered on the job; this is not meant to replace or displace hourly employees. e. Where such work is incident to the inspection of equipment or checking of operating efficiency. (Not to replace or displace hourly employees.) f. In experimental work which requires special techniques and knowledge. g. While learning the operations. (Not to replace or displace hourly employees.) h. In studying or testing equipment. ARTICLE 3 - UNION SECURITY, UNION ACTIVITIES/MEETINGS Section 1. Union Security. Each of the Company's production and maintenance employees in the unit, as defined in Article One hereof, shall, as a condition of employment be or become a member of the Union not later than the ninety-first (91st) day following the effective date of this Agreement, or not later than the ninety-first (91st) day following the beginning of his employment, whichever is later. Each such production and maintenance employee shall, as a condition of continued employment, remain a member of the Union in good standing. Upon receipt of a written notice from the Union that an employee has not acquired membership in the Union, or has not maintained his membership in good standing therein as provided for in this section, the Company shall discharge such employee. "Good Standing" for the purpose of this Agreement is interpreted to mean the payment or tendering of initiation fees and periodic Union dues. CHECKOFF. The Company will make payroll deductions of Union dues, assessments and initiation fees when so authorized by an order signed by the employee in a form which meets applicable Federal and State laws. The Union shall inform the company of the amount of such deductions and provide instructions as to whom the deductions shall be paid. The Union agrees to indemnify the Company and hold it harmless against any suits, claims or liabilities that shall arise by reason of any action taken or not taken by the Company under this provision. Section 2. The Company will meet with a Union Grievance Committee designated by its employees for the purpose of discussing grievances. The Union Grievance Committee shall consist of not more than one (1) member in addition to the Job Steward. The Union will notify the Company of the name of the Grievance Committee member. Meetings between the Grievance Committee and the Company will be held at a time mutually satisfactory to the parties and will be so arranged as not to interfere with plant operation. Section 3. The Union may select an employee actively employed to serve as Job Steward. The name of the Job Steward shall be furnished promptly, in writing, to the Plant Manager. a. The Job Steward, or any Union official, in the course of carrying out his Union responsibilities shall not: (1) be permitted to perform any Union activities or duties on Company time unless expressly so authorized by the Plant Manager or his designee (2) stop the Company's work for any reason (3) tell any workman or employee to slow down or that he cannot work, should not work, or ought to leave work b. Infraction of any one or more of the rules set forth in this Section 3 shall be cause for immediate dismissal of the Job Steward or any Union official, without any prior notice. In the event of the discharge by the Company of a Job Steward, or any Union official, the Company shall notify the Union of the reason for the discharge. Section 4. The Union Business Representative, with the Plant Manager's or his designee approval, may be permitted to visit non- restricted areas of the plant to discuss urgent grievance issues; however, such grievance issues shall have first been brought to the attention of the Company in accord with the grievance provisions of Article 4. It is further understood that the business of the Union Business Representative shall not, in any manner, interfere with the Company's business or plant operations. ARTICLE 4 - GRIEVANCE PROCEDURE Section 1. Should differences arise between the Company and the Union, or an individual employed by the Company, as to the meaning and application of the provisions of this Agreement, an earnest effort shall be made by the parties to settle such differences promptly and in the following manner: STEP I. The complaint, within seven (7) calendar days of its occurrence, or the occurrence of the matter out of which the complaint arises, may be taken up by the employee involved, with or without Union representation, with his Team Leader. The employee shall state the specific article(s) and paragraph(s) of the Contract that is alleged to have been violated in order for the grievance to be considered and processed. STEP II. If no satisfactory settlement is reached in Step I, the matter shall be reduced to writing and presented to the Plant Manager or his delegate within five (5) days from the date of the meeting with the Team Leader. At the time of presentation, or within fifteen (15) days, the Plant Manager or his delegate will meet with the Grievance Committee to hear and discuss the grievance. The Company shall answer the grievance in writing within five (5) days after said meeting. The employee shall state the specific article(s) and paragraph(s) of the Contract that is alleged to have been violated in order for the grievance to be considered and processed. STEP III. If no agreement is reached in Step II, the Committee may, within five (5) days of the receipt of the above answer, refer the matter to higher officials of the Company and the Union who may attend such a meeting. Upon request by the Union a meeting will be held within thirty (30) days of such request. The Company shall answer the grievance within five (5) days after said meeting. STEP IV. Any grievance not settled in Step III above may be referred to the Dispute Resolution Panel. This panel will consist of one (1) official of the Union, one (1) official of the Corporate Human Resources Department, and one (1) individual mutually agreed upon by these two (2) officials. Notice to refer a grievance to the Dispute Resolution Panel shall be given in writing within fifteen (15) days after being notified of the decision rendered in Step III or the matter will be considered closed. Only one (1) grievance may be submitted to or be under review by the Dispute Resolution Panel at any one time, unless by prior mutual written consent of the parties. The Dispute Resolution Panel shall have no power to add to or subtract from or change, modify or amend any of the provisions of this Agreement. The decision rendered by the Dispute Resolution Panel will be final and binding upon the Union, the Company, the grievant, and all employees covered by this Agreement. The Dispute Resolution Panel shall interpret and apply the terms of this Agreement. Disputes shall be settled by majority vote. The actual vote cast by each party shall not be revealed. It is expressly agreed that the Dispute Resolution Panel shall not have the authority to decide any matter involving the exercise of the right reserved to management under this Agreement. The expenses incident to the services of the third party, including the cost of the meeting room, etc. shall be shared equally by the Company and the Union. Section 2. Except for Section 1, Step I, the time limits referred to in this Article exclude Saturdays, Sundays and holidays. Section 3. Any grievance not presented or appealed within the time limits provided, unless mutually agreed to extend the time, shall be considered settled on the basis of the decision which was not appealed and shall be final and binding on the parties involved. Section 4. Grievances presented in any of the regular steps set forth and not answered within the time specified or as the same may be extended by mutual agreement shall be considered appealed to the next step of the grievance procedure. Section 5. Any grievance growing out of a discharge or suspension must be submitted in writing by the aggrieved employee directly to the Union and from the Union to the Director of Human Resources or Plant Manager within forty-eight (48) hours of the discharge or suspension or it will not be recognized and the action taken shall be final. ARTICLE 5 - EQUAL EMPLOYMENT OPPORTUNITY The Union and the Company will comply with all applicable Federal, State and Local Laws, including the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA), and all lawful regulations, rules, directives and orders with regard to the recruitment, registration, selection, classification and referral of applicants for active employment without discrimination because of race, color, national origin, creed or religion, age, sex, handicap, military service, disabled veterans, and veterans of the Vietnam era, as required by applicable law. ARTICLE 6 - HOLIDAYS Section 1. The following days shall be considered holidays under this Agreement: New Year's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Day after Thanksgiving, Christmas Eve Day, Christmas Day and one "floating holiday." Section 2. Employees, who after completing their probationary period, do not work on the holidays specified herein shall receive, as holiday pay, eight (8) hours' pay at their regular straight-time rate provided they meet all of the following conditions: a. The employee shall have worked his last scheduled working day prior to and his next scheduled working day after such holiday unless excused therefrom by the Plant Manager or his designee on account of sickness, accident, death in the family, or other excused absence. b. In no event shall a holiday be paid for unless an employee has also worked during the thirty (30) day period immediately preceding or immediately following the holiday. Section 3. If any of the foregoing holidays fall on Sunday, the following Monday shall be observed as the holiday. If any of the foregoing holidays fall on Saturday, the Friday prior thereto shall be observed as a holiday. Section 4. Employees who are scheduled to report on a holiday, but failing to report for and perform such work (unless excused by the Company) shall not be entitled to any holiday pay. Section 5. If an employee does not work a regularly scheduled workday because of a holiday, that day shall be considered as a day worked for overtime purposes. Section 6. The "floating" holiday may be taken at the employee's convenience anytime between January lst and December 31st of each year, provided the Company is given at least fifteen (15) days notice prior to the day the employee desires to celebrate such holiday. "Floating" holidays will be granted at times most desired by employees so far as practical, however, the right to allotment of "floating" holidays is exclusively reserved by Management in order to insure the orderly operation of the plant. Employees upon completion of their probationary period will be granted the "floating" holiday provided they work six (6) months during their first year of service. a. A floating holiday shall not be taken on any other holiday. b. A floating holiday may be taken on Sunday providing the only cost to the Company is eight (8) hours times the employee's regular s t r a i ght time hourly rate of his permanently assigned classification. c. Seniority preference shall be utilized in the scheduling of floating holidays. d. T h e scheduling of vacation time off shall supersede the scheduling of floating holiday time off. ARTICLE 7 - VACATIONS Section 1. The Company shall grant vacations as follows: a. An employee who has completed one (1) but less than five (5) years of seniority shall receive two (2) weeks vacation with pay each calendar year. b. An employee who has completed five (5) but less than twelve (12) years of seniority shall receive three (3) weeks vacation with pay each calendar year. c. An employee who has completed twelve (12) or more years of seniority shall receive four (4) weeks vacation with pay each calendar year. Changes made during 1995 negotiations covering vacation eligibility and vacation pay in Sections 1, 2, and 4 of this Article will become effective January 1, 1996. Section 2. Vacation pay shall be at the employee's regular straight time rate exclusive of shift differential. The number of hours paid will be the total of all hours worked the previous calendar year divided by 52 weeks minus the number of vacation weeks taken and any full weeks the employee is absent from work due to disability or other approved leave. Such hours paid will not be less than forty (40) or more than forty eight (48). Section 3. Employees shall be eligible for their full appropriate vacation rights if they have reached their vacation anniversary date and have worked 1200 hours or more during their vacation anniversary year. Employees who have reached their vacation anniversary date, but have worked less than 1200 hours during their vacation anniversary year, shall have their vacation computed at the rate of one-twelfth (1/12) for each one hundred straight time (100) hours worked. An employee shall be considered as having worked, for the purposes of vacation eligibility, on the basis of an eight (8) hour day and forty (40) hour week during absence from work because of illness or injury for a period not to exceed fifty (50) workdays, 400 hours. Section 4. An employee who has completed at least one (1) year of service, is qualified for a vacation under Section 3 of this Article 7, and who is laid off or terminated shall receive pay for all vacation earned which has not been taken at the time of termination in accordance with the following schedule: a. An employee who has completed one (1) but less than five (5) years of seniority shall receive six and two thirds (6 2/3) hours vacation time for each month completed in the current calendar year. b. An employee who has completed five (5) but less than twelve (12) years of seniority shall receive ten (10) hours vacation time for each month completed in the current calendar year. c. An employee who has completed twelve (12) or more years of seniority shall receive thirteen and one third (13 1/3) hours vacation time for each month completed in the current calendar year. Section 5. In the event that a shutdown period is not designated by the Company, vacations shall, insofar as practicable, be granted at times most desired by the employee; however, the final right to schedule vacation is reserved exclusively to the Company in order to insure the orderly and efficient operation of the plant. Vacation requests must be made by January 31 each year. Where requested vacation schedules conflict, a senior employee may exercise his seniority preference on a one-time basis; however, such seniority cannot be exercised after January 31 of any calendar vacation year. Vacation periods not scheduled prior to February 1, may be assigned by the Company. Vacations shall include (without pay) regular days off prior, and subsequent to, the paid days of the vacation periods. Section 6. a. Employees entitled to vacations shall be permitted to take such vacations in separate periods of not less than five (5) consecutive workdays each. b. One (1) week of vacation can be used one day at a time provided: (1) The employee makes a request at least seventy two (72) hours in advance; and (2) The request is granted by the Plant manager or his designee. (3) Employee may use the above said vacation to cover a day of sickness upon informing his or her supervisor or designee as soon as possible, prior to the start of his or her scheduled shift. Section 7. After conclusion of one (1) year's continuous service employees shall be entitled to two (2) weeks vacation. On the anniversary date of the first year a prorated amount to adjust the anniversary date to coincide with a calendar year will be added to the two (2) weeks vacation. With the beginning of the third year and each year thereafter an employee will receive their vacation accrual on January 1 of each year. Pro rata vacation days will be calculated on the basis of six and two- thirds (6 2/3) hours earned for each month remaining in the current calendar year. ARTICLE 8 - PAID LEAVE Section 1. Jury Duty. Employees, having seniority (not probationary), who are called for jury duty and serve as jurors on regularly scheduled workdays, shall be paid the difference between the amount received for such service and their straight time hourly rate, exclusive of shift differential, up to eight (8) hours per day (10 hours per day for employees working 10 hour shifts) or forty (40) hours maximum per week. a. To be eligible for payment, an employee called for jury service must furnish the Company with evidence of attendance from a court official stating the date(s) jury service was performed, amount of payment received and the time of day excused from the court. b. When excused by the court at a time that would allow an employee to work four (4) hours or more of his normal shift, or is excused without being seated, the employee shall return to work. Should the employee fail to return to work, he shall forfeit any jury make-up pay that may be otherwise due him under the terms of this Article. In such case if an employee does not return to work he shall be charged with an incident under the Absenteeism and Tardiness Control program. c. An employee is limited to fifteen (15) days jury makeup in any one (1) calendar year. d. In no event will payment be made for any jury duty pay, as set forth above, for duty performed by an employee on a holiday, vacation, layoff, accident and sickness benefit, workman's compensation, or who is not otherwise working. Section 2. Military Reserve Summer Camp Make-up Pay a. An employee with one (1) year of seniority who is in the Reserve of any branch of the military service of the United States and who is required to attend summer encampment as part of his obligation shall be paid the difference between the amount received for such summer encampment and his regular pay for time lost not exceeding eighty (80) hours in any calendar year. b. The employee shall present a copy of his military orders and pay voucher to the personnel department for purposes of calculating any make-up pay due. c. A "Military Leave Request" form is available at the Personnel Office and is to be completed by the employee at least ten (10) days prior to his leave. Section 3. Bereavement Leave a. An employee who has completed his probationary period, shall upon notification of the death of his spouse, son or daughter, stepson or stepdaughter, father or mother, stepfather or stepmother, sister or brother, half-sister or half-brother, mother-in-law or father-in-law, sister-in-law or brother-in-law, son-in-law or daughter-in-law, grandparents, spouse's grandparents and grandchildren, be granted up to a three (3) day leave of absence (up to four (4) consecutive days off if the employee is required to travel beyond a radius of five hundred (500) miles), upon request, and will be paid for up to a maximum of three (3) scheduled shifts (or four (4) scheduled shifts)(or such fewer shifts as the employee may be absent) which fall within a three (3) consecutive (or four (4) consecutive) calendar day period beginning within three (3) days of the date of the death or the service. Payment for such time lost shall be on the basis of eight (8) hours pay per day (10 hours for employees scheduled to work 10 hour shifts, but not to exceed 24 hours pay or 32 hours pay for travel beyond 500 miles) at the employee's regular straight time hourly rate, excluding shift differential. b. In no event will the payment of bereavement leave pay be duplicated with holiday pay, vacation pay, workman's compensation, or accident and sickness insurance payments; nor, will employees on layoff or those not otherwise working be paid funeral leave pay. c. A "Request for Bereavement Leave" form will be furnished by the Personnel Office and is to be completed by the employee prior to receipt of funeral pay. The employee must provide documentation indicating relationship if requested, and must attend the funeral or service to be eligible for pay. ARTICLE 9 - SENIORITY Section 1. Seniority as used in this Agreement shall be deemed to consist of length of continuous service within the Bargaining Unit and with the Company from the date of last hire. The Company may, at its discretion, utilize any hourly employee to fill a temporary salaried or management position on a temporary basis at any time without the employee suffering loss of seniority or benefits under this Agreement. However, if the employee becomes permanently salaried, he will have no bidding or bumping rights back to the Bargaining Unit. A n e m ployee in the Bargaining Unit who is promoted to a supervisory/management salaried position and who is subsequently returned by management to the Bargaining Unit, will return to an entry level or vacant position and have his Bargaining Unit seniority rights reinstated. Section 2. New employees shall be regarded as probationary for the first ninety (90) calendar days. They shall not acquire seniority until completion of their probationary period. The probationary period will be extended by any absence during this period and the attainment of seniority postponed by a period equal to such absence. There shall be no responsibility on the part of the Company for the reemployment of probationary employees laid off or discharged during the probationary period. Section 3. The principle of seniority shall be recognized for the purpose of layoff and rehiring, in that after giving due consideration to the requirements of the job, the knowledge, training, ability and physical fitness of the employees, and where these qualifications are equal, seniority shall apply. Section 4. Whenever a vacancy is determined to be filled by the Company, it shall be posted for five (5) calendar days to allow any employee to make application in writing for the job on a form supplied by the Company. Bids will be acceptable to the Company in cases of employees who are absent. The following factors shall apply in the awarding of all jobs: a. Experience, individual skill and ability, and efficient service related to the qualifications of the job. Employees who have received two (2) or more written disciplinary actions in the twelve (12) months prior to bidding the job are not entitled to consideration for advancement. Employees who have received a disciplinary suspension are not entitled to consideration for advancement for a period of one (1) year from the date that the disciplinary suspension ends. b. Seniority. c. When qualifications of a. are equal, b. shall apply. d. If an employee disqualifies himself or is disqualified by the Company within thirty (30) days or less, the employee will be returned to his former classification and rating, and the next bidder be given consideration. Management reserves the right not to consider bids submitted by employees attempting to "bid down" in job skills or classification for temporary job positions. Any such senior employee who is denied consideration for a temporary bid under this paragraph will not be penalized for future bidding purposes for experience he would have otherwise gained on such bid had he been the successful bidder. When a job cannot be filled in the above manner because of the bidder's failing to have the necessary qualifications, the Company may fill the job from any source. Section 5. A temporary job need not be posted unless it is expected to last sixty (60) calendar days or longer. Any temporary job that lasts one hundred eighty (180) days must be rebid. The Company may require applicants to be tested for any job. This section has no application to our current practice of hiring temporary employees. Section 6. E x perience gained as a result of assignment by management outside the bidding process will not be counted as a determining factor in filling vacancies which are posted for bid. Section 7. An employee who is absent and/or does not perform work in his regular bid job position for a period of six (6) months may be removed from such position at the sole discretion of the Company. Said employee shall be placed on layoff if the Company determines there is no job available. Section 8. No employee may make application for a job at an equal or lower rate if he has successfully made application for and been placed in another job within the preceding year. Section 9. An employee's seniority shall be considered broken and all rights under this Agreement shall be terminated when the employee: a. Quits. b. Is terminated. c. Fails to return to work within three (3) calendar days after being recalled. Notification of recall shall be made by certified mail to the employee's last named address shown on the Company's records. The day the notice is mailed shall not be included in computing the three (3) day period under this paragraph. d. Is absent for two (2) consecutive days without reporting off work or does not have the permission of the Company to be off work. Any employee absenting himself from work must notify his foreman immediately (insofar as is practical in the opinion of the Company) of this fact or he will be considered in violation of this Section and as having voluntarily quit. e. Is absent due either to layoff or disability or both which shall continue for a period equal to his length of continuous service with the Company at the time of such layoff or disability, but in no event in excess of eighteen (18) months. f. Fails to return to work immediately upon expiration of a Company approved leave of absence. ARTICLE 10 - HOURS OF WORK AND OVERTIME PAY Section 1. Nothing in this Agreement shall be construed as a guarantee or limitation of the number of hours to be worked per day, per week, or for any other period of time, except as may be specifically provided herein. Section 2. The normal workday shall be eight (8) hours or ten (10) hours in any 24 hour period. The work week shall start at 12:01 a.m. Monday. Section 3. The schedules and starting times of employees shall be determined solely by the Company and may be changed as deemed necessary. An employee's annual work schedule shall be posted in his department and any weekly changes in this schedule (1) which are not posted forty-eight (48) hours or more prior to the start of the changed work schedule, or, (2) requires the employee to report back to work on the changed work schedule without the employee having ten (10) hours rest (from his last punch out to the next punch in), the first eight (8) hours (8 hour shift) or ten (10) hours (10 hour shift) of the changed workshift shall be paid for at one and one-half (1 1/2) times the employee's regular straight time hourly rate. Schedule changes made at the specific request of and for the personal convenience of an employee or employees may be allowed, providing no overtime or premium pay is involved. Section 4. It is recognized that overtime work is necessary and essential in the Company's operation. The Company has the right to schedule employees on overtime or call in as necessary, and employees have the responsibility to work overtime as requested. However, after an employee has worked twelve (12) continuous hours in a workday, he/she shall n o t be required to perform additional work, except for emergency situations. An employee may request relief from assigned overtime by advising his foreman of his request not later than twenty-four (24) hours prior to the start of the overtime assignment. The granting of overtime relief is contingent on the foreman being able to secure a satisfactory substitute for such overtime work. Overtime is defined as any hours any employee has worked which are in excess of forty (40) hours in a work week or in excess of 8 hours in a work day for employees scheduled a normal 8 hour day or in excess of 10 hours in a work day for employees scheduled to work a normal 10 hour work day. All overtime work, as set forth above in this Section will be paid at one and one-half (1 1/2) times the employee's regular straight time hourly rate unless otherwise specified in this Agreement. Two times (2x) the employee's regular rate shall be paid for all hours worked in excess of 12 hours in a work day. Section 5. Employees who report to work at their scheduled times without being notified not to report shall be given four (4) hours pay, or if assigned to work shall be paid for all hours worked at their regular straight-time rate: however, this provision shall not apply if the lack of work is due to unplanned events or causes beyond the control of the Company. Section 6. Call in. An employee reporting to work in response to being called to work outside his regularly scheduled hours, after he has left the job and the Company premises, will be guaranteed four hours at one and one half times the base hourly rate. The call in provision shall not apply, however, if the employee reports unfit for work, leaves work at his own request, or leaves work without permission from a supervisor. It is understood that if any employee is called in to work, they may be required to perform any duties in connection with breakdowns or emergency situations in addition to the duties for which they were called in. An employee, so called out or in, within five (5) hours of his regularly scheduled shift who commences work on his regularly scheduled shift shall be compensated at his regular straight time hourly rate for that shift. An employee, so called out or in, in excess of five (5) hours of his regular scheduled shift who commences work on his regularly scheduled shift shall be compensated at his regular straight time hourly rate for that shift up until he has worked the same amount of hours in his regularly scheduled shift from the time he was called out. At that point the company may elect to continue to have the employee work for any portion of the balance of his regularly scheduled shift at the rate of one and one-half (1 1/2) times or send the employee home and pay him straight time for the balance of his regularly scheduled shift. Any hours paid at a premium rate will not be used in the computation of overtime. Section 7. a. Each employee regularly scheduled to work on the night and afternoon shifts shall be paid a premium of seventy five cents ($.75) for each hour worked on such regularly assigned shifts. b. For the purpose of this Section, the night shift shall include work regularly scheduled to commence between 11:00 p.m. and 2:00 a.m. The day shift shall include work regularly scheduled to commence between 6:00 a.m. and 10:00 a.m. The afternoon shift shall include work regularly scheduled to commence between 3:00 p.m. and 6:00 p.m. Section 8. All pyramiding and duplication of overtime and/or premiums is specifically prohibited. Section 9. Overtime in each classification shall be distributed equally, insofar as is practicable, among employees qualified to perform the work involved. Section 10. Any employee required to work on Sunday shall be paid at one and one half (1 1/2) times the employees regular straight time rate. Section 11. Any employee required to perform work on a holiday shall be paid at one and one-half (1 1/2) times the employee's regular straight time rate, in addition to the eight (8) hours of straight time pay for the holiday itself. ARTICLE 11 - WAGES Section 1. Wage rates shall be in accordance with the Wage Schedule shown in Appendix A to this Agreement. Section 2. An employee required to perform work in a higher rated classification shall receive the higher rate for those hours actually worked in such classification in increments of fifteen (15) minutes. Section 3. I n t h e event that the employer combines job classifications, the hourly wage paid for the new classification shall be the higher of the wage rates of the combined classifications. Section 4. No employee required to perform work at a lower rated classification shall experience a reduction in hourly wage. ARTICLE 12 - WORKING CONDITIONS Section 1. The Company and the Union agree that job safety is of utmost importance. Every effort shall be made to provide a safe work environment. Section 2. Should the Company require an employee to wear foot protection, the Company will reimburse the employee up to $70.00 for the purchase of safety shoes acceptable to the Company. The liability of the Company with regard to safety shoes will be limited to not more than two (2) pairs in one year. New employees will receive a $70.00 shoe allowance in the first payroll check after they have completed probation. Section 3. The Company will furnish prescription ground safety g l a sses to Bargaining Unit employees, including the cost of the prescription at an eye care provider acceptable to the Company. Glasses will not be replaced more frequently than one (1) per year, unless damaged or broken during the performance of duties. Section 4. A J o int Safety and Health Committee shall be established consisting of four (4) members who will be appointed by the Company. At least two (2) members of the Committee shall be hourly employees. A designated alternate shall be appointed for each committee member. In the event that a member is absent from a meeting of the Committee, his alternate may attend and when in attendance shall exercise the duties of the member. The Plant Manager or his designee will be the fifth (5th) member and act as Chairman of the Committee. a. The Joint Committee shall meet as necessary for the purpose of jointly considering inspections, investigations, reviewing health and safety issues and making constructive recommendations with respect thereto; including, but not limited to the implementation o f corrective measures to eliminate unhealthy and unsafe conditions and practices, and to improve existing health and safety conditions and practices. All matters considered and handled by the Committee shall be reduced to writing, and minutes of all meetings of the Committee shall be made and maintained. All time spent in connection with the work of the Committee representative, including all time spent in pre or post inspection conferences and walk-around time spent in relation to Federal and State inspection and investigations as provided for above, shall be compensated at the employee's regular straight-time hourly wage rate. Any time spent during the hours the employee is scheduled to work shall count toward the calculation of any penalty or premium pay section of this Agreement including, but not limited to overtime. Any time spent outside the hours the employee is scheduled to work shall not count toward the calculation of any penalty or premium pay section of this Agreement. No time spent outside of the hours the employee is scheduled to work shall be compensated at a rate greater than one (1) times the employee's straight-time hourly wage rate. Section 5. Each employee is required to comply with all safety rules, with the Company's safety and fire regulations, to use safety devices and equipment furnished by the Company, and to report to his supervisor any unsafe condition or practice which may come to his attention. All injuries must be promptly reported to the employee's supervisor. Section 6. Physical Examinations The welfare and safety of an employee (and, in many cases, the welfare and safety of fellow employees and members of the public whom they serve or with whom they may come in contact directly or indirectly), depends upon the employee being physically and mentally fit for the work in which he is engaged and free of infectious and contagious diseases. The Company may require an employee to submit to a physical or psychiatric examination whenever in its judgment it deems such examination to be advisable in the protection of the health and physical well-being of the employee or of fellow employees or members of the public. Such examinations shall be made by qualified doctors selected and paid by the Company. If the employee does not agree with the findings or recommendations of such doctor, he may, w i t h in ten (10) days after being notified of such findings or recommendations, be examined at his own expense by a doctor of his own choice. If the two doctors fail to agree, a third examination may be had by a doctor mutually agreed upon by the employee's doctor and the doctor selected by the Company and the majority opinion of these doctors will govern, and is not subject to the grievance procedure. The fees and expenses of the third doctor will be shared equally by the Employee and the Company. After full consideration of the findings and recommendations of the doctors and other relevant factors, the Company will make such changes (if any) in his job status that are appropriate and necessary under the circumstances. Section 7. Return to Work After Illness or Injury Prior to returning to work, an employee who has been off work more than five (5) days due to any illness or injury will be required to obtain a written release from a licensed practicing physician stating that he is capable of returning to work. The physician's release shall include the following information: a. Nature of illness or injury b. Brief history of illness (if relevant) c. Period of disability d. Period of treatment e. Progress while under treatment f. Statement of recovery releasing the employee to return to his normal duties without limitations; or a conditional release stating limitations in detail and giving the date that he may resume his normal duties without restrictions. The physician's release will be submitted to the Human Resources Department. The employee will not be allowed to return to work until the physician's release has been reviewed and approved by the Management of the Company. The Company will endeavor to process physician's releases expeditiously so as to minimize time lost from work by such returning employees. Additional examinations by a physician of the Company's choice may be required before approving the employee's return to work. Such additional physical examinations required and prescribed by the Company and made by a physician of the Company's choice will be paid for by the Company. If the employee does not agree with the Company's determination, he may, within ten (10) days after being notified, request an examination by a doctor to be mutually agreed upon by the employee's doctor and a doctor selected by the Company. The majority opinion of these doctors will govern, and is not subject to the grievance procedure. The fees and expenses of the third doctor will be shared equally by the Employee and the Company. Section 8. Return to Work After Layoff An employee who has been on layoff for more than thirty (30) days, will be required to pass a physical examination prescribed by the Management of the Company before returning to work. Such physical examination will be paid for by the Company. Failing the physical will terminate employment if reasonable accommodations cannot be provided. The purpose of the physical examination is to insure that the person can perform the essential functions of the job classification to which the employee is normally assigned. Section 9. The Company and Union agree to cooperate in attempting to work out problems as to the effective utilization of employees who may become incapacitated based on competent medical opinion. Such employee who cannot perform the duties of his/her regular job, may exercise his/her plant seniority to move to any position within the Bargaining Unit that he/she would be capable of performing within a thirty (30) day training period. The Company's decision based on competent medical opinion regarding the employee's incapacitation will be final and binding. Employees displaced by the foregoing procedure will be allowed to go to jobs which they can immediately perform the duties. Section 10. The Company and the Union agree that all employees may be tested for substance abuse pursuant to the Southwestern Portland Cement Company's Substance Abuse Control Program, which is incorporated by reference into this Agreement. ARTICLE 13 - STRIKES AND LOCKOUTS The Union agrees that there shall be no picketing or strikes by the Union, or by its members, of any kind or degree whatsoever, or walkout, suspension of work, slowdowns, limiting of production, or any other interference or stoppage, total or partial, of the Company's operations for any reason whatsoever, such reasons including, but not limited to, unfair labor practices by the Company or any other Employer. It is further agreed that neither the Union nor its members shall engage in the above prohibited conduct in support of picketing, strikes or any labor dispute actions engaged in by any other organization or person. In addition to any other recourse or remedy available to the Company for violation of the terms of this Article by the Union and/or any Union member, the Company may discharge or otherwise discipline any employee who authorizes, causes, engages in, sanctions, recognizes, or assists in any violation of this Article. The Company will not engage in any lockouts during the term of this Agreement. ARTICLE 14 - LEGISLATION In the event laws are passed which conflict with any provisions of this Agreement, or any provision or provisions of this Agreement shall be declared void in whole or in part, or shall be declared not to affect any employee or employees by law or final decision by competent authority, then such provisions or parts thereof shall be eliminated herefrom and the m a tter covered by such eliminated provisions may be reopened for negotiation, but the remaining provisions of the Agreement shall remain in full force and effect. ARTICLE 15 - PAST PRACTICE All previous side letters, and ad hoc agreements and informal understandings or past practices are hereby revoked, withdrawn and canceled and none shall survive the execution of this contract and no provision shall have any force or effect whatsoever either as past practice, special written agreement, oral agreement, informal understanding or otherwise unless expressly contained herein. ARTICLE 16 - SCOPE OF AGREEMENT This Labor Agreement and the health and welfare issues listed herein contain all the obligations and restrictions imposed upon each of the parties during the term of this Agreement. It is the intent of the parties that this document has settled all issues between them and all collective bargaining obligations for the term of the Agreement and that no change shall be made in this Agreement prior to the expiration thereof except by mutual written consent, as required by law or as may be provided for within this document. Mutual consent, on the part of the Union, shall require that the change be approved by majority vote of the members of the Bargaining Unit casting votes. ARTICLE 17 - UNION COOPERATION Section 1. The Union agrees that it will cooperate with the Company in all matters of industrial relations including carrying out Equal Employment Opportunity obligations and will support the Company's efforts to assure a fair day's work on the part of its members and that is will actively strive to eliminate absenteeism and other practices which restrict production. It further agrees that its members will abide by the rules of the Company in its effort to prevent accidents, to eliminate waste in production, conserve materials and supplies, improve the quality of workmanship, and strengthen good will between the Company and its employees. Section 2. The Union agrees that it will use its best efforts to assist the Company in enhancing the competitiveness of the Company, and augmenting or increasing revenue generation. For example, the Union will support, through community involvement and proactive measures, the efforts of the Company to obtain permits and/or other necessary certifications to utilize alternative fuels. Section 3. The parties hereto intend by this Agreement to provide a stabilized and mutually beneficial relationship between them and to insure the production of quality products on schedule and at competitive costs during the life of this Agreement. The Company and the Union will also establish an active Employee Participation Program to facilitate ideas and develop and implement programs to improve the overall operations and enhance employee involvement. ARTICLE 18 - TERM OF AGREEMENT After ratification by the members of the Local Union No. 9, this Agreement shall become effective and remain in force and effect and be binding upon the parties hereto from June 21, 1995, to and including June 20, 2000, and it shall continue to be in full force and effect thereafter from year to year until either party on or before April 20, of any year, beginning with the year 2000, gives written notice to the other party of its desire or intention either to alter and modify or terminate the same. If such notice is given, the parties hereto shall begin negotiations not later than fifty (50) days prior to June 20 in such year. IN WITNESS WHEREOF, this Agreement between the parties, has been executed by their duly authorized representatives on this 21st day of June, 1995. SOUTHWESTERN PORTLAND CEMENT COMPANY Bernard M. Reuland John W. Lohr Norris P. Widener Randal L. Wiley Phyllis E. Patrick INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL NO. 9 Jerry E. Dout Larry R. Snyder Wayne W. Dikeman Michael L. London Jerry L. Smart Donald E. Sellars Gary L. Moore Michael E. Price APPENDIX A Wage Schedule
June 21, 1995 June June 21, June 21, 1996 21,1997 1998 1999 Laborer $9.45 $750.00 $9.69 $9.80 $10.04 Production Assistant $10.05 Bonus $10.30 $10.55 $10.81 Plant/Prod Generalist $12.53 $12.84 $13.09 $13.42 Production Utility $13.60 $13.94 $14.19 $14.54 Storeroom Attendant $13.60 $13.94 $14.19 $14.54 Oiler Mech Helper $14.03 $14.38 $14.63 $15.00 General Maintenance B $14.03 $14.38 $14.63 $15.00 Electrician B $14.10 $14.45 $14.70 $15.07 Plant Oiler $14.25 $14.61 $14.86 $15.23 Bulk Loader $14.47 $14.83 $15.18 $15.56 Prod Loader Operator $14.47 $14.83 $15.18 $15.56 Control Analyst $14.47 $14.83 $15.18 $15.56 Quarry Equipment Util $14.85 $15.22 $15.67 $16.06 Driller/Blaster $14.85 $15.22 $15.67 $16.06 Plant Utility $14.85 $15.22 $15.67 $16.06 Lubrication Inspect $15.30 $15.68 $16.13 $16.53 Quarry Utility $15.69 $16.08 $16.63 $17.05 General Maint A $15.93 $16.33 $16.88 $17.30 Mechanic/Mobile Equip $16.00 $16.40 $16.95 $17.37 Machinist $16.19 $16.59 $17.19 $17.62 Electrican A $16.24 $16.65 $17.25 $17.68 Electrical/Instrument $16.54 $16.95 $17.60 $18.04 Relief Console Operator $16.35 $16.76 $17.41 $17.85 Console Operator $16.64 $17.06 $17.76 $18.20 /TABLE APPENDIX B Section 1. Health and Welfare. On a voluntary participation basis, the Company will provide Health and Welfare Coverage for active employees identical to the Southdown, Inc., Plan for Salaried employees as the coverage and eligibility are outlined in the SPD and all amendments thereto during the life of this Agreement. For those selecting to participate, the monthly cost of employee and eligible dependent coverage for the term of this Agreement will be as follows: Employee only: $30.00 Employee and Children: $50.00 Employee and Spouse: $60.00 Employee and Family: $70.00 During the term of this Agreement the Company will provide e m ployees with participation in the Southdown Inc. Post Retirement Medical Insurance Plan, including all amendments and modifications to said Plan during the life of this Agreement on the same basis as the benefits and eligibility requirements are provided to Southdown, Inc.'s salaried employees. The Union and each employee covered by this Agreement will be provided a copy of the Health and Welfare Plan. a. Life Insurance. The Company will provide life insurance coverage at no cost to the employee. An employee's life insurance is an amount equal to twice (2X) his/her base hourly rate multiplied by 2,080 hours. Adjustments for life insurance due to wage changes are made once per year at the beginning of the year. b. Accidental Death and Dismemberment. The Company will provide accidental death and dismemberment benefit at no cost to the employee. An employee's accidental death and dismemberment benefit is an amount equal to twice (2X) his/her base hourly rate multiplied by 2,080 hours. Adjustments for accidental death and dismemberment benefit due to wage changes are made once per year at the beginning of the year. c. Disability Income Weekly Benefits - $250.00 Section 2. - Pension. The Company will contribute ninety cents ($.90) for hours worked and for all vacation hours paid effective June 21, 1995. The Company will contribute ninety-five cents ($0.95) for hours worked and for all vacation hours paid effective June 21, 1996. The Company will contribute one dollar ($1.00) for hours worked and for all vacation hours paid effective June 21, 1999. Section 3. - Company Provided Benefits a. Southdown Inc. Retirement Savings Plan {401(k)}. On a voluntary participation basis, the Company will provide the Southdown, Inc. Retirement Savings Plan and all amendments thereto during the life of this Agreement on the same basis the Plan is provided to all other Southdown Inc. employees. b. Long Term Disability. On a voluntary participation b a sis, the Company will provide the long term disability insurance, and all amendments thereto during the life of this Agreement on the same basis the long term disability insurance is provided to all other Southdown Inc. employees. Section 4. Gainsharing The parties recognize the desirability of compensating employees directly for performance. It is therefore agreed that during the term of this Agreement, the Company will institute a gainsharing program which will provide for the opportunity for employees to receive a gainsharing payment up to ten percent (10%) of their gross earnings. The gainsharing program will be based upon the achievement of goals established to reduce the cost of manufacturing. EX-99 6 Exhibit 99.3 Transit Mixed Concrete Company APRIL 2, 1994 - APRIL 1, 1997 AGREEMENT between EMPLOYERS IN THE ROCK PRODUCTS AND READY MIXED CONCRETE INDUSTRIES OF SOUTHERN CALIFORNIA Signatory hereto as separate parties hereinafter referred to as "the EMPLOYER" and TEAMSTERS LOCAL UNIONS 420, 495, 692 and 986C of the INTERNATIONAL BROTHERHOOD OF TEAMSTERS hereinafter referred to as the "UNION" or as the "applicable LOCAL UNION" ARTICLE I RECOGNITION - UNION SHOP Section l. Recognition of the Union: The Employer recognizes the Union as the exclusive representative for the purpose of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment for all employees in the bargaining unit, consisting of those classifications set forth in Article IV, Section l. and excluding all employees, technical and professional employees, guards, watchmen and supervisors as defined in the National Labor Relations Act as amended. As used in this Agreement, the term "employee" refers only to the employees in the bargaining unit unless the context clearly requires a broader interpretation. Section 2. Union Membership: As a condition of continued employment, all employees covered by this Agreement shall, on the thirty-first (31st) day after employment, or thirty-one (31) days after the effective date of this Article, whichever is later, become and remain members of the Union in good standing. Section 3. Checkoff of Supplemental Dues: The Employer shall deduct from the paycheck due each pay day supplemental dues in the amount of three cents ($.03) per hour for each hour worked or paid for each employee who is actively employed in the bargaining unit at the end of the pay period covered by such paycheck and who has given the Employer a voluntarily written assignment of authorization hereafter executed by him on an agreed form. Such authorization shall be irrevocable for a period of one (1) year from the date the Local Union chooses to implement such supplemental dues (as set forth in the following paragraph) and shall renew automatically from year to year thereafter unless the employee, by written notice served upon the Employer and the appropriate Local Union at least sixty (60) days and not more than seventy-five (75) days before the periodic renewal date of this authorization, revokes such authorization. Such supplemental dues shall be implemented at the option of the Local Union signatory hereto. Local Unions intending to implement such supplemental dues shall provide the Employer with sixty (60) days' written notice in advance of such implementation, but in no event shall such be implemented prior to November l, 1977. Amounts deducted from individual employee's paychecks will be transmitted by the Employer to the Union no later than the twentieth (20th) day of the month next following the month in which such dues were deducted, together with a list of the names of the employees for whom deductions were made. The Employer shall have no responsibility for the application of the amounts transmitted. The Union(s) shall indemnify and hold the Employer harmless against any and all forms of liability, including costs and expenses that arise out of or by any reason of any action taken by the Employer in accordance with this Section. Section 4. Terminations: The Employer will terminate the employment of any employee covered by this Agreement upon written demand of the Union in the event that such employee shall fail to comply with Section 2. of this Article; provided that membership in the Union was available to the employee on the same terms and conditions generally applicable to other members, and that membership was not denied or terminated for reasons other than the failure of the employee to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring and retaining membership. Such employee shall not be re-employed by the Employer until the employee has paid or tendered to the Union any such initiation fee, reinstatement fees or dues accrued to date of termination. The Union will advise the Employer by telephone and confirm in writing that the employee has tendered the required fees or dues and is entitled to reinstatement to employment. Such reinstatement must be accomplished within two (2) calendar weeks for the time the employee was removed from the job; otherwise the employee will not be entitled to reinstatement to employment. Section 5. Notice of New Hires and Terminations: Within fifteen (15) working days after the hire of any new employee, the Employer shall notify the appropriate Local Union in writing of the newly hired employee's name and address, their date of hire, their location of employment, their job classification and rate of pay and their known Union affiliation, if any. The appropriate Local Union having jurisdiction shall be notified in writing of all terminations. Whenever an employee is transferred from the jurisdiction of one Local Union to another for a period of time expected to last thirty (30) days or more (permanent transfer), the Employer will promptly notify the Local Union which has jurisdiction in the area to which he is being transferred. On a temporary transfer, expected to last less than thirty (30) days, no notice need be given, and such employee shall be bound by the terms and conditions of the Agreement which is in effect at his base plant or yard. If the time is extended on a temporary transfer, at the end of thirty (30) days the Employer will notify the appropriate Local Union, and such employee shall be treated as a permanent transfer. The Local Union shall promptly acknowledge each such notice by signed receipt. The Employer agrees to advise the Union of its requirements in respect to new employees to be hired within the bargaining unit and will give the Union equal opportunity to furnish applicants. The Employer shall choose between any nominees of the Union and any other applicants based upon their respective qualifications. It is expressly understood, however, that the Employer shall be the sole judge as to the competency of all applicants and may reject any job applicant referred by the Union. Section 6. Dual Employment: Employer agrees not to employ, nor continue in his employ, individuals who are regularly employed by any other employer, except vacation relief and emergencies. Section 7. Equal Opportunity Employment: The Employer and the Union recognize that they are required by law not to discriminate against any person with regard to employment or Union membership because of his race, religion, color, sex, age, national origin, or ancestry, handicap or Viet Nam era veteran status and hereby declare their acceptance and support of such laws. This shall apply to hiring, placement, upgrading, transfer or demotion, recruitment, advertising, or solicitation for employment, training during employment, rates of pay or other forms of compensation, selection for training, including apprenticeship, layoff or termination, application for and admission to Union membership. Section 8. Gender and Number: In this Agreement one gender shall be deemed to include the other gender or the neuter gender and the singular number includes the plural unless the context clearly indicates otherwise. Section 9. Labor-Management Cooperation: The parties hereby agree to monthly meetings (with participation on an industry wide basis) to discuss problems in the industry and methods to obtain work for union signatory companies. ARTICLE II WORK STOPPAGES Section l. Strikes - Lockouts: For the period of this Agreement neither the Union nor its members will cause or take part in any strike, and the Employer will not engage in any lockout, and the Union and its officers shall do all in their power to prevent strikes. Section 2. Jurisdictional Disputes: Any jurisdictional problem arising between the Local Unions, parties to this Labor Agreement, shall be settled between them without work stoppage or other hindrance of the Employer's operations. ARTICLE III HOURS AND WORK Section l. Shifts: A. For washers, greasers, tiremen and gas station operators and/or fuelers, the day shift shall start between the hours of 5:01 A.M. and 11:00 A.M.; the swing shift shall start between the hours of 11:01 A.M. and 5:00 P.M.; the graveyard shift shall start between the hours of 5:01 P.M.and 5:00 A.M. The above starting times shall also apply to automotive repairmen, where applicable. B. For all truck driver classifications, the day shift shall start between the hours of 4:00 A.M.and 9:59 A.M.; the swing shift shall start between the hours of l0:00 A.M. and 5:59 P.M.; the graveyard shift shall start between the hours of 6:00 P.M.and 3:59 A.M. C. The above shift hours do not apply to cement train truck drivers. Shift hours for these drivers are: day shift shall start between the hours of 12:00 midnight and 10:00 A.M.; night shift shall start between the hours of 10:01 A.M. and 11:59 P.M. D. The Employer will designate starting time and location of shifts. Note: For shift premiums, see Article IV, Section 4. Section 2. No Split Shifts: No driver shall work a split shift. The time will be computed as continuous from the time of reporting for work unless relieved from duty, lunch period excepted, not more than one-half (1/2) hour lunch period being excepted. Section 3. Lunch Periods: An employee's lunch period shall start within the fifth (5th) hour after he starts work. No lunch period shall be deducted unless the employee has been relieved from duty for a lunch period of thirty (30) consecutive minutes. Section 4. Drivers Garage: Drivers assigned regular work will start and finish from the same garage, except as provided in Article IV, Section 5. Section 5. Rest Period: An employee shall be given a rest period of not less than eight (8) hours between the time he has completed his previous shift and the commencement of a straight time shift. If said employee is not afforded this rest period, he shall be paid the applicable overtime rate after his call back time. ARTICLE IV WAGES, ETC. Section l. Classifications and Rates: No employee shall be employed for any lower wage than this Agreement calls for. Any wages paid other than hourly rates are a violation of this Agreement. The hourly wage rates for all employees covered by this Agreement shall be as shown on Appendix "B" of this Agreement. When a working Shop Foreman is appointed by the Employer, he shall receive seventy five cents ($.75) per hour over the highest classification rate, including shift differential, over which he has supervision. The decision to utilize the position of working Shop Foreman is entirely at the discretion of the Employer, including who shall be given such an assignment, if and when a person is to be removed from such an assignment, and if the person will be replaced. The above provisions shall not be subject to the grievance and arbitration procedure. In the event that wage controls are re-imposed by an agency of the Federal Government during the term of this Agreement and a portion of the negotiated increases are allowed during the period of the wage freeze, that portion shall become effective as of the date that such increases are legal. Any part of the above wage package that is not allowable under any wage controls will be deemed to be owing and shall become effective the same day it becomes legal to put into effect and, further, shall be due and owing in subsequent Agreements if not put into effect during the term of the Agreement. It is understood and agreed, however, that there will be no retroactivity prior to the date that such increases become legal. Section 2. New Classifications: In the event the Employer acquires new equipment not reasonably falling within one of the classifications set forth in Section l. of this Article IV, the Employer shall establish a new classification and rate and shall promptly notify the applicable Local Union thereof. After work has been performed therein for thirty (30) days and if the Union then claims that the rate for such new classification does not bear a reasonable relationship to the other rates, such claim may be made the subject of a grievance by the Union. Section 3. Special Setups: Whenever special setups are created on or adjacent to large projects for the purpose of batching or transit mix, etc., where an agreement with the contractors on said project carries a higher wage scale than provided herein, the higher wage scale and subsistence applicable to Teamsters prevailing on the project shall apply. Further, the Employer agrees to pay the difference between the Industry Group Insurance, the Industry Holiday and Vacation costs and the Industry Pension contributions and those Health and Welfare, Vacation-Holiday and Pension contributions applicable to Teamsters prevailing on such project, which amount shall be added to the wage scale and paid to the individual employee. The highest applicable rate shall be paid for the entire day. Section 4. Shift Premiums: The premium above the day rate for all classifications (except drivers of cement trains) for the swing and graveyard shifts as defined in Article III, Section l(A) and (B) shall be twenty-five cents ($.25) per hour for the swing shift and thirty cents ($.30) per hour for the graveyard shift. The premium for working the night shift for drivers of cement trains as defined in Article III, Section l shall be twenty-five cents ($.25). Section 5. Subsistence Pay: When an employee is required to remain overnight in performing work away from his permanent plant, yard, or shop, he will be reimbursed for reasonable expenses. Section 6. Travel Time/Pay, Meeting Pay, and Physical Examinations: A. When more than one (l) shift is required on continuous pours requiring changing shift away from the yard, traveling time at the applicable rate shall be paid drivers going to and from points of operation. Transportation to and from the job shall be furnished by the Employer. B. Employees who are required to attend any meeting shall be paid a minimum of one (1) hour at the employee's normal straight time hourly rate of pay, or the actual time spent in such meetings, whichever is greater. This pay is to cover both travel time and meeting time. The Employer will pay the cost of all physical examinations that are required by the Employer, or whenever the Employer requires the employee to obtain treatment and/or to visit a specific physician, clinic, or facility. The Employer will also pay for all substance abuse examinations or testing, except for that portion only associated with the CDL bi-annual physical examination or the random testing accompanying a second-chance rehabilitation program. In all instances where the Employer is obligated to compensate employees for their physical examinations, the compensation will be one (1) hour at the employee's straight time hourly rate of pay unless additional compensation is approved by management via a phone call from the medical facility. Section 7. Delays: No time shall be deducted from drivers' wages caused by delay in loading, unloading, or any equipment that is broken down away from the yard, unless drivers are actually relieved from duty. Section 8. Fines: The Employer will pay all fines and assume all responsibility, including court appearances on behalf of the driver, resulting from overloading when same has been done under the order of the Employer, or any of its agents authorized to issue such order, or fines levied on the basis of defective equipment. Section 9. Transfers: When drivers are used for purposes other than driving, they shall not be reduced in pay below the truck driver's rate for the class of equipment they are assigned to; provided this shall not apply on any day where, by the preceding day, the driver is notified he will be assigned to non-driving duties. Whenever an employee performs work in more than one classification during the day, he shall be paid at the rate of the higher classification for the entire time worked during that day. Section l0. Pay Days: The regular pay days shall be every other Thursday. Section 11. Pay When Injured: If an employee suffers an on-the-job injury during work which disables the employee from continuing to work, the employee shall receive a minimum of four (4) hours pay or the actual time worked, whichever is greater. If any provision of California laws provide for more than the above minimum (or actual time worked), then the employee will be paid as per the law. Section l2. Uniforms: If the Employer requires employees to wear uniforms, the cost and maintenance of such uniforms shall be paid by the Employer. Section l3. Pay for Training and Break-In (New Hire) Pay Rates: A. Employees hired prior to May 23, 1994 will continue through the new hire progression rates and time provisions as contained in the 1990-1994 Agreement. Employees hired on or after May 23, 1994 will be subject to employment at hourly rates that are four dollars ($4.00) less, three dollars ($3.00) less, two dollars ($2.00) less, and one dollar ($1.00) less than the full normal hourly rates in Appendix "A" for time periods of twelve (12) months each. Employees hired on or after May 23, 1994 will not be given any industry experience credit unless the employee is a rehire by the same Employer and was employed by that Employer on or after April 1, 1990. In such instances the employee will be paid at the same progression or skill level as when the employee ceased his prior employment. In the event an employee covered by this Section is granted a leave of absence which exceeds thirty (30) consecutive days, those days in excess of thirty (30) will not be counted toward the eight (8) or twelve (12) month requirements in the period applicable to the employee at such time. Employees who were hired prior to May 23, 1994 pursuant to the pay for training and break-in progression in the prior agreement will continue to be paid pursuant to that progression schedule. Accordingly such employees shall receive $3.00 below classification rate for their first eight months of employment; $2.00 below classification rate for their second eight months of employment; and $1.00 below classification rate for their third eight months of employment. B. Material Hauling drivers hired after May 22, 1994 will be paid as follows: 5-23-94 4-1-95 4-1-96 $12.00 $12.25 $12.50 All current employees (those hired prior to May 23, 1994) involved in material hauling will be paid at the 9 yard and over mixer hourly wage rates, however, the Employer has the right to request that the employee be involved in ready mix operations (in order to effectively utilize the lower new hire rates for competitive reasons), anyone refusing such work will be kept in material hauling at one dollar ($1.00) less than the 9 yard and over mixer hourly wage rate. Special cases involving disability or inability will be handled by the Labor-Management Committee and is subject to arbitration. Any employee has the right to bump back to material hauling to avoid a layoff and maintain their 9 yard and over mixer hourly wage rate. C. When an employee is called upon to break-in or train another employee as driver, he shall receive twenty- five cents ($.25) per hour above his regular hourly rate. D. It is understood that the Employer reserves the right to pay employees rates higher than those required by the Collective Bargaining Agreement. Section l4. Overloading: It shall not be cause for discharge or disciplinary action for an employee to refuse to drive any highway equipment that is declared overloaded by a licensed weighmaster, for refusing to drive a vehicle which has been knowingly loaded to exceed the legal highway weight limits of the California Vehicle Code, or to refuse to drive any equipment that has been declared unsafe by a qualified mechanic or inspector. If as the result of such a refusal no other work is available, the driver is still to be paid the minimum work guarantees as provided in Article VI. The refusal to drive equipment determined to be properly loaded and/or in safe operating condition as described above shall be just cause for disciplinary action, including discharge. Section l5. Tool Insurance: Employees in the classification of Automotive Repairman and Greasers shall be covered by tool insurance. Coverage shall be restricted to the following: Two Hundred dollars ($200.00) deductible: Seven Thousand dollars ($7,000.00) maximum reimbursement (limited to tools which are required by the Employer) per employee, per loss which resulted from proven forced entry of employee's tool box or theft of entire tool box. It is the employee's responsibility to provide a current inventory of tools subject to periodic check by the Employer. Each employee must advise the Employer whenever he removes part or all of his tools from the Employer's premises and must advise the Employer when they are returned. The plan may be insured or self-funded at the Employer's option. The submission of a false claim or misrepresentation of tools lost will be grounds for discharge under the dishonesty provisions of Article IX. ARTICLE V OVERTIME PAY Section l. Time and One-Half: Time and one-half the straight time rate shall be paid for all work performed: A. In excess of ten (10) hours in any one day, or B. In excess of forty (40) hours in any work week, whichever is greater, and C. On Saturdays, and D. On Holidays. Section 2. Double Time: Except for emergency work and breakdown which shall be paid for at time and one-half, double the straight time rate shall be paid for all work performed on Sundays. Section 3. Pyramiding: There shall be no pyramiding of overtime; overtime will not be paid under more than one of the above classes of overtime for the same hours worked. For purposes of subparagraph (B) herein, the work week shall be deemed to begin on Monday. Section 4. Overtime Calculations for Vacation and Holidays: Paid holidays shall be counted as hours worked in the computation of overtime under Section 1. Regularly scheduled vacations of an entire work week, Monday through Sunday, will also be counted as hours worked in the computation of overtime under Section 1. Vacations consisting of less than an entire workweek, Monday through Sunday, shall not be counted as hours worked in the computation of overtime under Section 1. ARTICLE VI REPORTING ALLOWANCES Section l. Reporting Pay and Daily Work/Pay Guarantees: A minimum of two (2) hours shall be allowed whenever employees are ordered to report to work and no work is available upon reporting to work, unless the reason is as listed in Section 2 of this Article. If any work is performed then the employee shall receive a minimum of four (4) hours pay or work or the actual time worked, whichever is greater. Section 2. Exceptions to the Daily Guarantee: An employee shall receive pay hereunder only for hours actually worked if he refuses to do other work, or if the Employer is unable to furnish work because of inclement weather, mechanical breakdown, (other than of the employee's own truck) or other conditions beyond his control or other conditions beyond the Employer's control. Section 3. Subterfuge: The Employer will not use these sections as a subterfuge to reduce hours or to abuse the seniority provisions of Article X. ARTICLE VII PAID HOLIDAYS Section l. Holidays Paid: All eligible employees shall receive eight (8) hours pay at their straight time rate set forth in Section l and (where applicable) Section 4 or Article IV of the following holidays not worked: New Year's Day Memorial Day Fourth of July Labor Day President`s Day Thanksgiving Day The Day After Thanksgiving Christmas Day Holiday pay for Memorial Day, Labor Day, President's Day and the day after Thanksgiving will be suspended for the period May 23, 1994 through March 31, 1997. Thereafter the above listed four (4) holidays will be restored to full application subject to negotiation. During this period the provisions of Article V, Section 1, "Time and One-Half" will be in effect for all eight (8) of the holidays listed in Article VII, Section 1. When any of these holidays falls on a Sunday, the day designated by the Governor of the State of California shall apply, in such cases, as the holiday. (As to a holiday occurring during vacation, see Article VIII, Section l.). Section 2. Eligibility: Each employee who has been on the payroll of the Employer for a period of six (6) months or more shall be eligible for holiday pay, provided that: A. He works his full scheduled shift on the working day immediately before and following such holiday unless (1) his absence is caused by illness (2) his absence is excused by the Employer, or (3) he is laid off on either of such days by the Employer, and B. He performs some work on any of the five (5) working days immediately before or the five (5) working days immediately after such holiday, unless he is a driver who has been laid off due to a breakdown of his truck or unless he is on a paid vacation to which he is entitled under Article VIII hereof, and C. He did not refuse to work on such holiday, if requested. ARTICLE VIII VACATIONS Section l. Vacations Allowed: Each employee who has completed one (1) year's continuous service in the employ of the Employer and has worked a minimum of 1,200 hours during the preceding year, shall be entitled to a paid vacation equal to forty (40) hours straight time pay at the rates set forth in Section l., and (where applicable), Section 4. of Article IV, hereof. Each employee who, under such circumstances, has completed two (2) years continuous service shall receive a paid vacation of eighty (80) hours straight time pay. Each employee who, under such circumstances, has completed eight (8) years continuous service shall receive a paid vacation of one hundred twenty (120) hours straight time pay. Each employee who, under such circumstances, has completed fifteen (15) years continuous service shall receive a paid vacation of one hundred sixty (160) hours straight time pay. For the period of May 23, 1994 through March 31, 1997, this fourth (4th) week shall be suspended. Thereafter the fourth (4th) week of vacation will be restored subject to negotiation. Employees who have worked twelve hundred (1200) hours or more from their anniversary date prior to May 22, 1994 shall receive the paid vacation to which they were entitled under the prior agreement. This paid vacation will be at the rates as set forth in the prior agreement. An employee who is laid off for lack of work in excess of two (2) consecutive weeks during his first year of employment and is recalled shall become eligible for his vacation when he has worked beyond his first year of employment the number of days equal to the number of days he was on layoff, provided that he has then worked a minimum of 1,200 hours. (This will not affect his anniversary of hire eligibility date for subsequent vacations). When one of the holidays specified in Article VII occurs during an employee's paid vacation, the Employer shall pay the employee an extra day's pay. Section 2. Scheduling: Vacations shall be taken between June lst and September 30th at times designated by the Employer unless otherwise mutually agreed between the Employer and the employee. Employee requests for vacation time outside of the vacation period described above shall not be unreasonably denied. When choice of vacation date is practical without interfering with operations, the more senior employees shall have first choice. Section 3. Payment: Vacation pay will be paid to an employee before he takes his vacation if a request is made by the employee at a reasonable length of time before his vacation commences. Vacation pay shall be paid by separate check. Section 4. Pro Rata Vacation Pay: Employees who, after employment of not less than one (1) year, are discharged, quit, laid off indefinitely, or with the consent of the Employer, are allowed to take their vacation prior to their anniversary of hire eligibility date, shall receive at the time of separation (or early vacation) pro-rata vacation pay for the period of service from the last anniversary date of hire to date of termination (or early vacation), that is, one-twelfth (1/12th) of his vacation pay, (40, 80, 120, or 160 hours as determined above) for each full month worked from his last anniversary date. Employees who are so laid off and are then recalled, and employees who so take an early vacation, shall have the amount of vacation pay received under this Section offset against any vacation pay they may thereafter become entitled to under this Article. Employees with at least one (l) year of continuous service who, during any vacation year, fail to work the required 1,200 hours, shall be paid pro rata his vacation pay (40, 80, 120, or 160 hours as determined above) equal to the ratio of the hours actually worked during the vacation year to 1,200 hours. ARTICLE IX DISCHARGES Section l. Discharges and Discipline: An employee may be discharged or disciplined for incompetency, inefficiency, insubordination or any other good cause. No employee shall be discharged or discriminated against because of his membership in the Union or union activities, including his refusal to cross a primary picket line approved by the Union. The Union shall have the right to investigate the discharge of any non-probationary employee and may protest through the grievance and arbitration procedure any discharge believed by the Union to be unjustified. Any such protest shall be presented to the Employer in writing within ten (l0) working days after such discharge and a postmark or mail by certified mail within the ten (10) days will be accepted as satisfaction of this requirement. In the event the discharge is submitted to the grievance procedure and the discharge is not found to be in accordance with the provisions of the Article, such non-probationary employee may be reinstated, with restoration of full seniority and other rights and/or may be granted loss of pay. The Employer shall not discipline and/or discharge an employee, unless such an action is imposed within ten (10) working days after the date of the incident or within ten (10) days after the date the Employer should have known. Disciplinary actions taken after the ten (10) day period will be considered as invalid. Section 2. Warning Notices: Except for discharges for dishonesty, being under the influence of alcohol or illegal drugs (including selling and/or the transportation of illegal drugs) while in the service of the Employer, reckless driving resulting in a serious accident (as defined under DOT rules), the carrying of unauthorized passengers, insubordination, proven unprovoked assault on anyone including fellow employees, customers, or supervisors; or gross negligence, an employee shall not be discharged or subject to layoff/suspension unless the employee has had one (1) previous written warning notice (with a copy having been sent to the appropriate Local Union). The fact that the employee nor the Union has not protested or grieved the warning notice at the time of issuance shall not constitute an agreement or admission of the validity of the alleged offense. Warning notices shall be effective for a period of time not to exceed twelve (12) months from the date of issuance. ARTICLE X SENIORITY Section l. Acquisition and Loss: Seniority rights, once established, start from the date of employment by the Employer within the bargaining unit; provided, however, employees will have no seniority rights until after a probationary period of sixty (60) days of continuous employment or sixty (60) working days accumulative within a period of six (6) consecutive months, whichever occurs first. Seniority shall be terminated upon: A. resignation of an employee B. retirement C. discharge D. failure to notify his Employer within forty-eight (48) hours of his intention to return to work within five (5) working days after delivery of notice to his last known address, or E. if the employee performs no work for the Employer within the bargaining unit for a period of six (6) months; except if such failure to perform work is because of absence as a result of sickness or accident, such period shall be twelve (12) months; provided however, that if an employee is re-employed upon recovery from such illness or accident lasting longer than twelve (12) months, his former seniority shall be restored. An employee recalled, at the option of the Employer, from layoff of over six (6) months, except as provided above, shall have the seniority which such employee acquired prior to layoff restored, provided such recall occurs within twelve (12) months of the date of his layoff. Employees laid off, as hereinafter provided, and who have been enrolled in the Training and Upgrading Program under the provisions of Article XVIII within twenty (20) days after his layoff shall be eligible for recall, as provided in paragraph (C), Section 2. hereof, in his new classification upon presentation to the Employer of evidence of satisfactory completion of such retraining, and if recalled by the Employer within one (l) year after his layoff his seniority shall be restored. Section 2. Layoff, Recall and Exercise of Seniority Rights: A. Layoffs shall be classified as: (1) Indefinite Layoff - an indefinite layoff is a reduction of the working forces in the bargaining unit where the Employer reasonably anticipates at the time of such reduction that the affected employees will not be recalled to work for at least twenty (20) consecutive regular working days. Employees laid off indefinitely must be immediately notified, in writing, by the Employer, and such employees must exercise immediate seniority rights in the manner provided hereafter. Employees who fail to exercise such rights shall be terminated, subject to recall as provided for in Section 2(C) below. (2) Short Term Layoff - A short term layoff is any layoff other than an indefinite layoff. An employee on short term layoff may not exercise seniority rights until his layoff has actually continued for three (3) consecutive regularly scheduled working days (not including days of work lost due to actual days of inclement weather or breakdown of production equipment) at which time the employee will exercise such seniority rights in the manner provided hereafter. Such employee must exercise his seniority rights prior to the Company dispatch time on the seventh working day following his three (3) day qualification. Days lost due to inclement weather shall be counted toward the seven (7) days. Employees who fail to exercise such rights within the ten (10)days shall become Extra Board Drivers at their base location for not to exceed an additional ten (10) working days. Employees who have not exercised their seniority rights by the initial ten (10) days shall be deemed to have been indefinitely laid off as per paragraph 2(A) above, on the twentieth (20th) day. B. Seniority Rights: Employees laid off under Section 2(A) (l) and (2) shall exercise seniority rights upon the affected junior employee(s) in accordance with the timing set forth therein and in sequence such that the employee(s) shall fill the first available job for which he is qualified in order of progression, as set forth in Paragraph 2(B) (l) through 2(B) (4),below. It shall be understood and agreed that employees exercising seniority rights or displacing junior employees shall be qualified and capable of performing the work in all classifications into which they are moving. It shall be understood and agreed that the nearest yard or plant to an employee's base yard or plant shall be determined by map measurement or air line distance. Extra Board Drivers employed by the Employer may, in the course of their work, drive more than one type of equipment, but must be assigned to one of the groupings listed in Section 3, hereafter, and to a location based upon their primary work assignment. Extra Board Drivers shall only have seniority rights as set forth in paragraph 2(A) (1), above and such rights shall be exercised as provided for in paragraph 2(B) (2). In the event of multiple layoffs occurring on the same date, the Employer shall consider each individual to be laid off separately and in the order of seniority starting with the junior employee to be laid off and progressing through the most senior employee to be laid off. Individuals affected shall be afforded their seniority rights as provided in subparagraphs (1), (2), (5) and (6), paragraph (B),Section 2, of this Article. (1) Driving Personnel Laid Off - Exercise of Seniority: (a) First, in his grouping at his base yard or plant on his shift to displace the junior driving employee with a piece of equipment. (b) Second, in his classification, at his base yard or plant, on his shift, to displace the junior driving employee with a piece of equipment. (c) Third, (i) In his classification, at his base yard or plant, on another shift, to displace the junior driving employee with a piece of equipment, or (ii) In another classification, at his base yard or plant, on his shift, to displace the junior driving employee with a piece of equipment, or (iii) In another classification, at his base yard or plant, on another shift to displace the junior driving employee with a piece of equipment, or. (iv) At his base yard or plant, to displace the junior extra board driver, provided, however, in any event seniority shall prevail, or (v) by-pass the Third Step. (d) Fourth, in his classification, at the nearest yard or plant, to displace the junior driving employee with a piece of equipment. (e) Fifth, in another classification, at the nearest yard or plant, to displace the junior driving employee with a piece of equipment. (f) Sixth, to displace the junior driving employee with a piece of equipment in the bargaining unit. (g) Seventh, to displace the junior driving employee in the bargaining unit. (h) Eighth, to displace the junior employee in the bargaining unit. (2) Driving Personnel Displaced by Employees Laid Off Exercise of Seniority: (a) First, in his classification at his base yard or plant on his shift, to displace the junior driving employee with a piece of equipment. (b) Second, (i) In his classification, at his base yard or plant, on another shift, to displace the junior driving employee with a piece of equipment, or (ii) In another classification, at his base yard or plant, on his shift, to displace the junior driving employee with a piece of equipment, or (iii) In another classification, at his base yard or plant, on another shift, to displace the junior driving employee with a piece of equipment, or (iv) At his base yard or plant, to dis- place the junior extra board driver provided, however, in any event, seniority shall prevail, or (v) By-pass Second Step. (c) Third, in his classification at the nearest yard or plant, to displace the junior driving employee with a piece of equipment. (d) Fourth, in another classification at the nearest yard or plant, to displace the junior driving employee with a piece of equipment. (e) Fifth, to displace the junior driving employee with a piece of equipment in the bargaining unit. (f) Sixth, to displace the junior driving employee with a job in the bargaining unit. (g) Seventh, to displace the junior employee with a job in the bargaining unit. (3) Driving Bid Restoration: In the event a laid off or displaced driver, in the exercise of his seniority rights under paragraph 2(B)(1) or (2), above, accepts other equipment at his base plant or yard, such equipment after a period of sixty (60) days shall become permanent and his bid rights, as provided for in Section 4 shall be restored. If the driver is relocated to another yard or plant, in the exercise of his seniority rights, such assignment to yard or plant and equipment after a period of sixty (60) days shall become permanent and his bid rights, as provided for in Section 4, shall be restored. In any event, if the driver`s original equipment becomes available in the sixty (60) day period referred to above, the driver shall be restored to his original equipment. If the driver is entitled to a new and/or used equipment bid, he may utilize such bid during the sixty (60) day period. If the opening bid upon is t either his original plant or new plant, his bid will be considered in the First Step of Section 4(B). If he successfully bids on equipment at the new location, he shall not be entitled to have his bid restored as provided in the paragraph above, and such equipment shall become his permanent equipment. (4) For the purpose of this Seniority Article, the word "groupings" shall be those groupings listed in Section 3 and the word "classification" shall mean the job titles listed below: Driving Classifications: (a) Drivers of Water Trucks (i) Under 2,000 gallons (ii) 2,000 to 4,000 gallons (iii) 4,000 gallons and over (b) Drivers of Plant and Pit Trucks (i) 12 tons and under (ii) Over 12 tons to 20 tons, inclusive (iii) Over 20 tons to 50 tons, inclusive (iv) 50 tons and over (c) Drivers of Dump Trucks (i) Two Axle (ii) Three Axle (d) Drivers of Semis Under 14 Tons (e) Drivers of Truck-Trailer Transfers (f) Drivers of Truck-Trailer Bottom Dumps (g) Drivers of Truck-Trailer (pups) (h) Drivers of Semis Over 14 Tons (i) Drivers of Cement Trucks (j) Drivers of Mixer Trucks (i) Under 9 Cubic Yards (ii) 9 Cubic Yards and Over (k) Drivers of Flats (i) Under 5 Tons (ii) 5 Tons and Over (l) Drivers of Flat Truck-Trailers and Semis (m) Mobile Sweeper Drivers (licensed for highway use) (n) Bulk Fuel Tank Truck Drivers (5) Non-Driving Personnel Laid Off - Exercise of Seniority: (a) First, in his classification, at his base yard or plant, on his shift, (b) Second, in his classification, at his base yard or plant, on another shift, (c) Third, in another classification, at his base yard or plant, (d) Fourth, in his classification, at the nearest yard or plant, (e) Fifth, in another classification, at the nearest yard or plant, (f) Sixth, to displace the junior employee in the bargaining unit. (6) Non-Driving Personnel Displaced by Employees Laid Off - Exercise of Seniority: (a) First, in his classification, at his base yard or plant, on another shift, (b) Second, in another classification, at his base yard or plant, (c) Third, in his classification, at the nearest yard or plant, (d) Fourth, in another classification, at the nearest yard or plant, (e) Fifth, to displace the junior employee in the bargaining unit laid off or displaced. (7) Non-Driving Bid Restoration: In the event a laid off or displaced employee, in the exercise of his seniority, rights under paragraph 2(B) (5) or 2(B) (6), above, accepts another job at his base plant, yard or shop, such job shall become his permanent assignment and his bid rights as provided for in Section 4, shall be restored. If the employee is relocated to another yard, plant or shop, in the exercise of his seniority rights under paragraph 2(B) (5) or 2(B) (6), above such assignment shall become permanent and his bid rights shall be restored. (8) For the purpose of this Seniority Article, the word "classification" shall mean the job titles listed below: Non-Driving Classifications: (a) Drivers of Mobile Service Trucks (b) Warehousepersons (c) Automotive Repairpersons (d) Batch Plant Operators (manual) (e) Bunkerperson (f) Gas Station Operators and/or Fuelers (g) Loaders (h) Washers (i) Greasers (j) Tirepersons (k) Chippers (C) Recall (1) Prior to effecting a recall of employees who have been laid off in order to fill job vacancies, the Employer shall post the job vacancies and award the job(s) to the bidder(s), if any, as provided in Section 4. (2) In the event no bids are received and jobs awarded as provided in (1) above, the Employer shall recall the most senior employee(s) on layoff who have retained recall rights in accordance with Section l. and who are qualified and capable of per- forming the work. (D) Equipment Transfers The Employer may transfer equipment from one yard or plant to another yard or plant to meet its business requirements. The employee whose equip- ment is so transferred may elect to transfer with his equipment, in which case his seniority will remain intact in all respects. If the employee elects not to transfer with his equipment, he must exercise his seniority rights as though he had been indefinitely laid off as provided in paragraphs 2(A)(1) and 2(B)(1) of this Article. Section 3. Dispatch Procedure: (A) For the purpose of this dispatching procedure, the drivers will be classified by the type of their assigned equipment in the following groupings at each yard or plant: (1) Mixers, under 9 cubic yards (2) Mixers, 9 cubic yards and over (3) Flat Trucks (4) Bottom Dump Trains or Bottom Dump Semis (5) Truck & Trailer Transfer Dumps (6) End Dump, Single Trucks or End Dump Semis or End Dump Truck and Pup (7) Plant Trucks, l2 tons and under (8) Plant Trucks, l2 to 20 tons, inclusive (9) Plant Trucks, 20 to 50 tons, inclusive (l0) Plant Trucks, 50 tons and over (11) Pit Trucks (12) Cement Trains (13) Water Trucks (14) Bulk Fuel Tank Trucks (B) The Employer will determine the number of trucks necessary to take care of the work load each day. (C) After such determination has been made, the Employer shall dispatch that number of senior drivers in seniority order in each of the groupings in sub-section (A), above, equal to the number of trucks to be used unless the use of certain equipment is not reasonably practicable, or unless it is necessary to use certain equipment to maintain adequate service to the job or customer on that day. (D) When two (2) or more shifts are working, in accordance with Article III, Section l, drivers will be dispatched in accordance with the dispatching procedure as set forth in Section 3 of this Article, paragraphs (A),(B) and on a shift basis. (E) Once the Employer has determined its equipment needs for the following day and has determined the order of dispatch as provided above, it is not required to change the initial dispatch because of any change in circumstances occurring after the initial determination. When an employee is not on the initial dispatch for his regular shift, he shall not be required to work that shift if he is not called for work prior to 9:00 A.M. and shall not be considered "unavailable for work" on that day. However, the Employer will honor written requests of employees for later billing times whenever practicable. (F) Drivers whose assigned equipment is shopped shall be temporarily assigned in seniority order to vacant or unassigned equipment in the same grouping which the Employer plans to operate when such equipment is located at the driver's base plant or yard, and such drivers shall be dispatched in seniority order. During the time his equipment is shopped, any days he is not so assigned shall be counted as consecutive days for the purpose of Section 2(A) (2). In the event there is no vacant equipment in the driver's assigned grouping, but the driver is qualified and capable of performing the work in another grouping, and the Employer plans to operate vacant or unassigned equipment in that grouping at the driver's base yard or plant, the driver of such shopped equipment shall be temporarily assigned to such vacant equipment and will be dispatched after all permanently assigned drivers in that grouping have been dispatched. All days worked in such different groupings shall be counted as consecutive days for the purposes of Section 2(A) (2). Such drivers will be returned to their regularly assigned equipment when such shopped equipment is returned to service. Drivers who cannot be temporarily assigned to vacant equipment may exercise their seniority rights as provided in Section 2(A) (2) and 2(B) (1) of this Article. Except for equipment vacancies caused by Leaves of Absence under Article XVII and Vacations of one (l) week or longer, assignment of drivers and dispatching of such drivers as set forth in this paragraph shall be on a day-to-day basis. (G) If the Employer maintains an Extra Board, he shall dispatch his senior qualified Extra Board Drivers on needed equipment which the Employer knows, at the time of preparing the dispatch, will be vacant for the day in question, after the application of paragraph (F) above. (H) After manning vacant or unassigned equipment which the Employer plans to operate, first, under the provisions of paragraph (F) above, and second, under the provisions of paragraph (G), above, unbilled drivers in seniority order, shall be assigned to operate such equipment and such drivers shall not have the right to refuse such assignment. Effective April 16, 1984, the Employer agrees to pay such drivers mileage at the rate of twenty-five cents ($.25) per mile from his base plant or yard to the plant or yard where such vacant or unassigned equipment is located, provided the distance between such plants is greater than ten (10) miles, measured as provided in Article XX. (I) By mutual written agreement between the Company and all the affected employees at a given location, yard or plant, a system of work sharing by the employees may be initiated. Any such agreement must contain, among other items, an exact description of how the work will be shared, the maximum length of time it is to be in effect, a provision for cancellation by anyone involved upon a specified notice period, and be signed by all parties to it. (J) The parties agree that the Employer covered by the Agreement do not intent to use employees covered by Article IV, Section l3(A) in such a manner as to deprive more senior employees of straight time and overtime assignments. Section 4. Assignment of Equipment and Jobs: (A) Equipment and Driving Jobs: When new equipment is purchased or existing equipment becomes permanently vacant (expected to last for twenty(20) or more consecutive regular working days) and the Employer intends to operate such equipment, the Employer shall promptly post bid applications for such equipment at all yards or plants for a period of four (4) consecutive regular working days and those employees at such yards or plants who wish may bid for assignment to such equipment, except that no employee shall be entitled to bid upon new equipment more often than once every twenty-four (24) months or more often than once every six (6) months on used equipment, except as provided for in Section 2(B), or in the event the employee's equipment has been removed from the fleet, in which case his bid rights shall be restored. Equipment which is vacant due to Leaves of Absence shall not be posted for bid as provided herein, but will be assigned under the provisions of Section 3(F). (B) The bids by employees for new or permanently vacant equipment (as described in paragraph (A), above) shall be evaluated by the Employer and the equipment awarded according to the following priorities: (1) First, in seniority order to drivers at all yards and plants and who are in the same classification as the equipment bid upon. (2) Second, if no bids are received and equipment awarded in the first priority, in seniority order to drivers at all yards and plants and who are in other driving classifications, providing such drivers are qualified and capable of performing the work. (3) Third, if no bids are received and equipment awarded by the first and second priorities in seniority order to non-driving employees at all yards and plants, provided such employees are qualified and capable of performing the work. (C) Equipment used for swing and graveyard shifts will not be subject to bid. However, such shifts shall be bid as jobs and shall constitute a used equipment bid. For this purpose, it is hereby agreed that a night shift job is considered to be a job "with a piece of equipment". Further the Extra Board is considered simply a job and is one "without a piece of equipment". (D) For the purpose of this bidding procedure, no morthan onene (1) employee shall be permanently assigned to a specific piece of equipment in a specific grouping. (E) Non-Driving Jobs When new non-driving jobs are created or existing non- driving jobs become permanently vacant, the Employer shall promptly post bid applications for such jobs at all yards, plants or shops and those employees who wish to may bid for assignment to such jobs. An employee hired as a Greaser or Tireman, or who has successfully bid into either classification, will not be entitled to bid into another classification, (non-driving or driving) for a period of twelve (12)months from the date of hire or date of assignment of such classification. (F) The bids by employees for new or permanently vacant non-driving jobs (as described in paragraph (E), above) shall be evaluated by the Employer and the jobs awarded as follows: (1) First, in order of seniority, employees who are permanently assigned to non-driving jobs, and who are qualified and capable of performing the work and who are assigned to the plant, yard, or shop where the vacancy exists. (2) Second, in the event no bids are received or jobs awarded as provided for in the first step above, in seniority order employees who are regularly assigned to the same classification at other yards, plants or shops. (3) Third, should no bids be received or jobs awarded under the first or second steps above, in order of seniority employees who are assigned to other non- driving classifications and who are qualified and capable of performing the work, and who are assigned to other yards, plants or shops. (4) Fourth, in the event no bids are received or jobs awarded as provided in the first through third steps above, in order of seniority all driving personnel assigned to the yard, plant or shop where the vacancy exists. (5) Fifth, in the event no bids are received or jobs awarded as provided in the first through fourth steps above, in seniority order to drivers at all other yards, plants, or shops. Section 5. Seniority Lists: On the first workday of each calendar quarter, the Employer shall post at each yard, shop or plant current seniority lists by driver groupings at each yard, shop or plant and a seniority list for all non-driver jobs at such yard, shop or plant and shall furnish copies of such lists to the appropriate Local Union. Section 6. Notice of Shopping of Equipment: The Employer will make every reasonable effort to give an employee advance notice of the shopping of his assigned equipment. Section 7. Military Service: All basic rights of employees in military service will be preserved in accordance with Federal law. Upon request, an employee will be granted a leave of absence without pay in addition to vacation to fulfill his military obligations. ARTICLE XI GRIEVANCE PROCEDURE Section l. Grievance Steps: Grievances shall be taken up and processed in the following manner: (A) STEP ONE: Any employee having a grievance may first take his grievance up with his foreman, shop steward, or Union Representative. On request of the Union Representative, the Employer shall produce the payroll records that bear upon the grievance for examination by the Union Representative. In any event, an attempt to settle the grievance with an Employer representative shall be made prior to proceeding to Step Two of this grievance procedure. (B) STEP TWO: If the grievance is not settled in Step One within two (2) working days, within five (5)working days thereafter it shall be presented in writing by the Union Representative to the Employer's Industrial Relations Representative in an attempt to resolve the grievance; provided, however, that grievances may be initiated by the Union directly in this STEP TWO. (C) STEP THREE: If the grievance is not settled within two (2) working days, within ten (10) working days thereafter it shall be: (1) scheduled and presented in writing, at the next meeting of the Joint Grievance Committee as provided for in this STEP THREE; or (2) at the insistence of the Employer or the Union, by-pass STEP THREE and proceed directly to arbitration as provided for in STEP FOUR below; provided, however, that the election to by-pass STEP THREE (Joint Grievance Committee), shall be promptly made and communicated to the other party at the conclusion of STEP TWO. A Joint Grievance Committee of an equal number of representatives of the Southern California Rock Products and Ready Mixed Concrete employers and the Union will meet within thirty (30) working days thereafter to settle the grievance. This Committee is authorized to adopt written rules of procedure by mutual agreement and such rules of procedure shall be binding upon all signatories to this Agreement. If a decision is reached by this Committee, it shall be final and binding upon all parties involved. D. STEP FOUR: If the grievance is not settled within thirty (30) working days in STEP THREE from the time it was presented in writing to the Joint Grievance Committee; or if the grievance has proceeded directly to STEP FOUR from STEP TWO, either the Employer or the Union may, within ten (10) working days, request in writing that the issue be arbitrated, provided that it involves a question of interpretation or application of this Agreement. The Committee specified in STEP TWO shall appoint an arbitrator agreeable to both. If they are unable to agree within ten (10) working days upon an arbitrator, either party may, within ten (10) working days thereafter, request the Federal Mediation and Conciliation Service and/or the American Arbitration association to submit a list of Arbitrators consisting of any odd number, not less than five (5). From such list the arbitrator shall be selected by each party alternately striking off names; the choice of which party shall make the strike offikeoff shall be determined by lot. The decision of the arbitrator shall be final and binding on both parprovided, howeverowever, that the power and authority of the arbitrator shall be limited to the question presented to him, and he shall have no power to add to or subtract from or modify any terms of this Agreement or any Agreements made supplementary thereto; nor to establish or change any wage scale or classification, except as provided under Article IV, Sections 2 and 6(B), but shall refer any such cases back to the parties without decision. Grievances arising under Article I, Section 7, are not arbitrable because of remedies provided by law. Section 2. Arbitrators Fees: In order to encourage the settlement of grievances in the early steps of the grievance procedure and in order to discourage frivolous or improper use of the arbitration process, the fees and expenses of the arbitration shall be paid by the losing party. If there is any question as to who the losing party is, or if a case is referred back to the parties without decision, or if there are decisions against more than one of the parties to the arbitration, the arbitrator is authorized and requested to determine who shall pay the fees and may in such case order a sharing of such fees. In such event, the decision of the arbitrator on this issue shall be final and binding. Section 3. Time Limit: All grievances not described in Article IX (Discharges and Discipline) will be barred for all purposes if not presented to the Employer in writing in Step Two within fifteen (15 working days after the date of the occurrence giving rise to the grievance. Section 4. Business Agent Visitation: The Business Representatives of the Union shall have access to the job during working hours for the purpose of performing his duties and he shall advise the Employer or his representative of his presence on the job and shall not unreasonably interfere with the work of any worker. Section 5. Shop Stewards: Selection as a steward shall not change the full-time productive status of an employee. The steward shall not be discriminated against in any manner by the Employer or his Agent because of his activities in presenting any adjustment of grievances or disputes. The steward shall be given a reasonable length of time during his working hours to perform his activities as a steward when such activities cannot be conducted on non-working time. Section 6. Bulletin Boards: At all locations at which truck drivers are based, official Union bulletins may be posted on the Company bulletin boards. ARTICLE XII JURISDICTION OF LOCAL UNIONS Section l. Geographic Areas: The Union agrees to furnish the Employers with a map and description clearly defining the geographical areas of the respective Local Unions parties to this Agreement. Section 2. Assignment of Work: Nothing contained in this Agreement shall restrict or prevent the Employer from assigning work or duties to employees covered by this Agreement within the classifications listed in Article IV, Section l, hereof, without regard to the Local Union of which the employee is a member. ARTICLE XIII BARGAINING Section l. Interpretation of Agreement: Questions concerning interpretation or application of this Agreement may arise from time to time and in the interest of preventing misunderstandings, an equal number but not less than three (3) each from the Employer's representative and the Union Negotiating Committee shall promptly meet at the request of either in an attempt to resolve such question, but in any event within thirty (30) days, unless otherwise mutually extended. Section 2. Bargaining During Term: Notwithstanding the provisions of Article I, Section l or Section l of this Article XIII, each party hereto expressly waives any obligation or duty presently or hereafter imposed by law on the other party, and acknowledges and recognizes that no obligation or duty exists under this Agreement to bargain collectively or negotiate with the other party over or pertaining to wages, hours, pensions, paid holidays, insurance, sick leave, severance pay, or any terms or conditions of employment or retirement or any other matters or subjects whatsoever during the term of this Agreement. ARTICLE XIV GROUP INSURANCE PLAN Section l. Regular Employees: For the purpose of this Article XIV, a regular employee for whom the Employer is required to make monthly contributions is an employee within the bargaining unit, as described in Article I, Section 1, hereof, except as noted under Sections 2 and 11 below. The Employer shall make monthly contributions on behalf of all regular employees who were on the payroll of the Employer for forty (40) hours in the preceding month. Employees who are on paid Vacation and holidays for a portion of the month will have those hours counted toward the forty (40) hour requirement for the payment of medical contributions. Section 2. Vacation Relief: It is understood and agreed that vacation relief help hired will not be entitled to group insurance coverage. The Notice of Hire shall clearly state that the employee, in such case, is hired for vacation relief purposes. For the purpose of this Section, the term "vacation relief help" means an employee hired specifically as such on or after April 1 of any year and terminated on or before October 31 of the same year. An employee hired and/or terminated between November 1 and March 31 shall not be considered "vacation relief help". Vacation relief employees who perform work after October 31 and who worked for forty (40) hours or more in the preceding October shall have a medical contribution paid on their behalf pursuant to Section 11. Section 3. Dates of Contributions: The first contribution of a new employee shall be due on the first day of the month next following thirty (30) days of employment. One (1) additional premium will be paid for employees who leave work because of layoff due to a reduction in force. Section 4. Contribution Rates and Benefits: The programs and provisions of the previous contract will continue for the period of April 1, 1994 until the following changes are effective: A) Basic Hospital and Medical coverages for employees and eligible dependents under Teamsters Miscellaneous Security Trust Plan E, including dependent Vision coverage and Retiree Medical Plan E coverage. B) Vision care for dependents under Plan E. C) Dental benefits for employees and eligible dependents under the Teamsters Joint Council No. 42 Welfare Trust. D) Prescription Drug benefits for employees and eligible dependents under the Teamsters Joint Council No. 42 Welfare Trust. E) Hospital and medical coverage for retired employees whose retirement effective dates are on and after July 1, 1979 and their eligible dependents, under Teamsters Miscellaneous Security Fund, Plan E. Section 5. Program Costs: All costs of the programs described above, including administration, shall be borne by the Employer contributions, except as provided in Section 8. Section 6. Due Dates: Monthly contributions required under this Article XIV shall be due on the first (1st) day of the calendar month and shall be paid no later than the tenth (10th) of the same month. Section 7. Trust Documents: The Employers and the Union agree to execute the necessary Trust Documents required by the Trustees of such Trusts as a condition of participation in the Trust referred to in Section 4 above. Section 8. Maintenance of Benefits: It is the intention of the parties hereto that the benefits described in this Article shall be maintained throughout the term of this Agreement. All costs of the programs described above, including administration, shall be borne and paid by the Employer, subject to the following limitations: The Employer agrees to pay up to the maximum amount set forth below to provide such benefits:. Maximum Contribution Amount Misc E and JC 42 Take Care Effective 4-1-94 1990-1994 Amt. Effective 6-1-94 1990-1994 Amt. -$15.50 (LTD) $253.00 Effective 5-23-94 $431.00 Effective 10-1-94 $450.00 $266.00 Effective 10-1-95 $475.00 $283.00 Effective 10-1-96 $500.00 $303.00 Should the above maximum amounts be inadequate to maintain all of the benefits described in Section 4., above, any additional amount required by the Trusts shall be borne by the employees through monthly payroll deductions, withheld from the employee's first paycheck of the applicable calendar month the amount necessary, when combined with the Employers' maximum contribution. Such additional amount shall be deducted from the payroll earnings of the employee only for such months as the inadequacy occurs. Section 9. Retirees Prior to August 1, 1979: The parties hereto agree that the Employer shall cease contributing to the Southern California Rock Products and Ready Mixed Concrete Industries Welfare Benefits Plan ("Rock Plan") and that the Rock Plan shall be merged into the Teamsters Miscellaneous Security Fund Plan E ("Plan E"). Plan E shall thereby assume all assets and liabilities of the Rock Plan and the Rock Plan shall terminate. Section 10. Legislation: If a universal health care plan program is enacted by Congress the effect of which is to require additional payroll costs to the Employer and/or costs to the employees, or if a change in the current plan is required by the new law, the parties shall meet to resolve, in a mutually satisfactory manner, any problems resulting therefrom. The parties also agree that in the event of any change in the plan, the Trustees of the current medical program will be given sixty (60) days notice. Section 11. Medical Program for Employees Hired after May 22, 1994: Any employee hired after May 22, 1994 will not be provided with group insurance pursuant to the provisions set forth above for the term of this Agreement. Instead, any newly hired employee will be provided with the Take Care Select Plus medical program for the first four (4) years of their employment. Entitlement to said medical benefits shall be the same as entitlement for all other employees as set forth in this Article XIV. It is the intention of the parties hereto that the benefits described in this Section shall be maintained throughout the term of this Agreement. Premiums for such benefits are determined from time to time by the Board of Trustees. Each Employer agrees to pay up to the maximum amount set forth below as the premium to provide such benefits: Effective May 23, 1994, $253.00 per month; effective October 1, 1994, $266.00 per month; effective October 1, 1995, $283.00 per month; and effective October 1, 1996, $303.00 per month. ARTICLE XV PENSION The Employer will make contributions to the Western Conference of Teamsters Pension Trust Fund (hereinafter to be referred to as the Plan) for the benefit of employees within the bargaining unit. This Employer shall continue contributions to such Trust in accordance with its terms for all hours worked or paid for, as provided in Appendix A. The parties agree that because the Trustees of the Fund will rely on the execution of this Agreement to not reduce benefits to retiring employees as indicated above, this Section shall not be modified, terminated or rescinded by the parties, directly or indirectly, without the express written consent of the Trustees. The Employer and the Union agree to execute the necessary Trust documents required by the Trustees of the Western Conference of Teamsters Pension Trust as a condition of participation in such Trust. In the event that Federal or State legislation requires a revision of the Plan which results in a higher contribution rate to meet such requirements, it is agreed that the increased contribution rate will come out of the wage package. For the period April 2, 1994 through July 31, 1994, the Employer will continue to contribute pension contributions to the Western Conference of Teamsters Pension Trust Fund ("WCTPTF") in the same amount as contributed under the previous Collective Bargaining Agreement for all hours compensated whether worked or paid for. Accordingly, Employers who participated in the Enhanced Early Retirement, PEER/84, shall pay contributions of Three Dollars and Fourteen-Cents ($3.14) per hour for the period April 2, 1994 through July 31, 1994. Employers who did not participate in PEER/84 shall pay contributions of Two Dollars and Ninety-Five Cents ($2.95) per hour for the period April 2, 1994 through July 31, 1994. Effective January 1, 1994 there shall be a yearly maximum of two thousand and seventy-six (2076) hours per year (January 1 through December 31). Effective August 1, 1994 the contribution to the WCTPTF for all Employers shall be increased to a total contribution of Three Dollars and Forty-Four Cents ($3.44) per hour so as to provide for the Program for Enhanced Early Retirement, "PEER/80". Accordingly, those Employers previously paying Two Dollars and Ninety-Five Cents ($2.95) per hour will increase their hourly contribution by Forty-Nine Cents ($.49). Those Employers previously participating in PEER/84 shall increase the amount of their hourly contribution to the WCTPTF by Thirty Cents ($.30). The contributions required to provide for the Program for Enhanced Early Retirement (PEER/80) will not be taken in consideration for benefit accrual purposes under the Plan. The additional contribution for PEER must at all times be sixteen and one-half percent (16.5%) of the basic contribution and cannot be decreased or discontinued at any time. The Pension contribution shall be made to the appropriate administrative office designated by the WCTPTF in accordance with Trust rules, computed monthly and paid not later than the tenth (10th) of the following month. ARTICLE XVI SAFETY AND WORKING CONDITIONS Where special protective clothing and other devices (other than safety shoes) are required to be worn or used, the same shall be furnished at the expense of the Employer. Further, each affected Employer will provide for operative air conditioners in all cement trains when present equipment is replaced or new equipment is purchased. ARTICLE XVII LEAVES OF ABSENCES Leaves of absence without pay may be granted by the Employer to any employee for any reasonable cause, including illness or injury. Application for leave of absence must be made in writing to the representative of the Employer designated by him for such purpose and be approved in writing by such Employer's representative. Generally, such leave of absence will be for a period of not more than thirty (30) days, but may be extended for a reasonable cause for additional periods of thirty (30) days up to a maximum of ninety (90) days, upon written request of the employee, by mutual agreement between the Employer and the Union. Any employee who, while on leave of absence, obtains employment with another employer without having obtained prior permission to do so from the Employer and the Union shall be subject to immediate discharge. ARTICLE XVIII TRAINING AND UPGRADING FUND The parties have established a Teamsters Rock Products and Ready Mixed Concrete Industries Training and Upgrading Fund and Trust. The Employer agrees to continue to pay the following sums per hour for all hours worked or paid into this Training and Upgrading Fund: Effective April 1, 1994 through May 22, 1994 the sum of twenty- seven cents ($.27) per hour. Effective May 23, 1994 through March 31, 1995 the sum of twenty- cents ($.20) per hour. Effective April 1, 1995 and thereafter for the duration of this Agreement, the hourly contribution amount may be increased as determined by the Fund's Trustees to a maximum of twenty-five cents ($.25) per hour. The monies paid into this Fund are to be used for the training and/or upgrading (including apprenticeship, if applicable) of the skills of present employees and applicants for employment pursuant to that certain Trust Agreement referred to as the Teamsters - Rock Products and Ready Mixed Concrete Industries Training and Upgrading Fund and Trust. ARTICLE XIX JOB PROTECTION It is the intent of the parties to this Agreement to protect the work performed by employees in the bargaining unit. The Employer recognizes that it is important and desirable to utilize its own equipment and drivers to the greatest extent possible prior to using sub-haulers and/or non-Company trucks. The Union recognizes that under certain conditions, such as those dictated by customer demands, equipment requirements, daily dispatch determinations, materials to be hauled and similar factors, that sub-haulers and/or non-Company trucks are necessary and have been so utilized throughout the Industry for many years. The Employer in accordance with the above, must, however, determine the number, type and location of its working equipment in conformity with its business requirements. The Employer further must be able to determine, in keeping with sound business practices, the extent to which it will replace equipment which is too costly to operate, obsolete or damaged. Under these conditions, the Employer agrees that sub-haulers and/or non-Company trucks will not be utilized as a subterfuge to defeat the protection of the bargaining unit work. In keeping with the above, the Union recognizes that the Employer will utilize such sub-haulers and/or non-Company trucks as required by location and classification only after all the available Company trucks at such locations and in similar classifications have been initially dispatched. The parties hereto specifically agree that industry practices for the period of the 1990-1994 contract will prevail in the application of this Article. ARTICLE XX USE OF PERSONAL VEHICLES When an employee is required to use their own personal vehicle to report to other than their base location, they shall be allowed twenty-five cents ($.25) per road mile round trip from their established base to their reporting location, provided the new location is further from the employee`s residence than the employee's base location. Least senior employees in the required classification groupings will not have the right to refuse such dispatch. ARTICLE XXI PERIOD OF AGREEMENT This Agreement shall become effective April 2, 1994, and shall remain in full force and effect to and including April l, 1997, and shall remain in full force and effect from year to year thereafter, unless either party hereto has given written notice to the other of their desire to have the same changed, modified, or terminated; such notice must be given at least sixty (60) days prior to April 1st of 1997 or a later year. If such notice is not given, this Agreement is to stand as renewed for the following year. If such notice is given, the Agreement terminates at midnight of the immediately following April lst. In addition the Employer agrees to enter into bargaining talks for wage and benefit increases in this Agreement, if and when the Union produces evidence of a signed Labor Agreement between the Teamsters Union and Robertson's Ready Mix. ARTICLE XXII MANAGEMENT'S RIGHTS CLAUSE The Union acknowledges that all rights and prerogatives of management which the Employer had prior to the execution of this Agreement are retained solely and exclusively by the Employer, without limitation, except as specifically modified by the express terms of this Agreement. ARTICLE XXIII DRUG AND ALCOHOL SCREENING The parties recognize the problems which drug/alcohol abuse have created in the Construction Industry and the need to develop drug abuse prevention programs. Accordingly, the parties agree that in order to enhance the safety of the workplace and to maintain a drug-free work environment, the Employer may require applicants or employees to undergo drug screening. The parties agree that if a screening program is implemented by the Employer, the following items have been agreed upon by Labor and Management: 1) It is understood that the use, possession, transfer, or sale of illegal drugs, narcotics, or other unlawful substance is absolutely prohibited while employees are performing work under the applicable Agreement. 2) All applicants will undergo a drug screen at the direction of the Employer. 3) Applicants not passing the drug screen will not be placed on the Employer's payroll or receive any compensation. Employees not passing the drug screen will be removed from the Employer's payroll. The Employer agrees to pay the cost for administering the drug screen. 4) The Employer may require that an employee be tested for drugs where the Employer has reasonable cause to believe that the employee is impaired from performing his/her job. Observation should be made by at least two (2) persons, one of whom may be a Union employee. In the absence of a second person, the Employer may send the employee to be tested if the Union is notified immediately of the incident. This provision shall be applied in a non-discriminatory manner. For employees who refuse to take a test where the prerequisites set forth in this paragraph have been met, there will be a "non-rebuttable" presumption that the test result would have been positive for an unlawful substance. 5) An Employer may require that an employee who contributed to an accident be tested for drugs/alcohol. 6) There will be no random drug testing by the signatory Employer, except as mandated by State/Federal regulations. 7) No prescription drug shall be used by anyone other than the person for whom the prescription is written. It is understood that the unsafe use of prescribed medication, or where the use of prescribed medication impairs the employee's ability to perform work, is a basis for removal. 8) A sufficient amount of sample shall be taken to allow for an initial test and a confirmation test. The initial test will be an Enzyme Multiplied Immunoassay Technique (EMIT). In the event a question or positive result arises from the initial test, a confirmation test must be utilized before action can be taken against the employee or applicant. The confirmation test will be by Gas Chromatography - Mass Spectrometry (GC/MS). The cutoff levels for both the initial test and confirmation test will be those established by the National Institute of Drug Abuse. Confirmed positive samples will be retained by the testing laboratory in secured long term frozen storage for a minimum of one (1) year. Handling and transportation of each sample must be documented through strict chain of custody procedures. 9) Any dispute which arises under this drug policy shall be submitted to the grievance and arbitration procedure set forth in the applicable Agreement. 10) In the event an individual Employer is required, as a condition of contract award, to abide by the terms and conditions of an owner's drug policy, the Employer will notify the Union in writing prior to implementing such policy. 11) The establishment or operation of this policy shall not curtail any right of an employee found in any rule or regulation. Should any part of this policy be found unlawful by a court of competent jurisdiction or a public agency having jurisdiction over the parties, the remaining portions of the policy shall be unaffected and the parties shall enter negotiations to replace the affected provision. Nor shall this language alter, replace, or supersede any company policy which may be in place at the time of ratification unless deemed unlawful as described in the preceding sentence. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 27th day of October, 1994. FOR THE UNION: FOR THE EMPLOYER: Teamsters Building Material and Transit Mixed Concrete Dump Truck Drivers Local Union No. 420 By: Richard D. Martino By: Secretary-Treasurer Title: Teamsters Local Union 986 ________________________________ By: Michael J. Riley Secretary-Treasurer Teamsters Automotive Workers Local Union No. 495 _______________________________ By: Robert M. Lennox Secretary-Treasurer General Truck Drivers, Chauffeurs, and Helpers Local Union No. 692 _______________________________ By: Paul R. Jones Secretary-Treasurer ADDENDUM NO. I LETTER OF UNDERSTANDING During the course of the 1982 negotiations there were discussion relative to processing of grievances under Article XI, Section l. Instances were cited by the Employers of grievances which were filed and not discussed with them in Step l. The parties hereby reaffirm that in the interest of the orderly and prompt settlement of grievances, they should be discussed in Step l between the Union and the Employer. The Unions signatory hereto agree that a good faith effort will be made to discuss all grievances in Step l with the Employer. APPENDIX A BENEFIT OR ITEM Effective 4-2-94 8-1-94 Pension - Article XV: Western Conference $2.95* $3.44** *Continuation of current rates in effect on April 1, 1994 through July 31, 1994 (some Employers participate in the PEER '84 program at an hourly rate of $3.14 per hour, and they will have hourly rates nineteen cents ($.19) per hour less than the hourly rates shown herein from April 1, 1994 through July 31, 1994 after which their hourly rates will be as contained in Appendix "B". **This provides for the "PEER 80" program at a basic rate of $2.95 x 16.5% = $3.44 total TRAINING AND UPGRADING 4-1-94 6-1-94 4-1-95 HOURLY RATES: $ .27 $.20 up to max of $.25 as determined by Fund Trustees HEALTH AND WELFARE If Plan G is currently in effect it will continue as per the 1990-1994 Agreement through 6-30-94, thereafter the following benefits will prevail: 4-1-94 6-1-94 7-1-94 10-1-94 10-1-95 10-1-96 Med Plan E $303.00 $303.00 $303.00 $313.00 Dependent Vision $ 3.00 $ 3.00 $ 3.00 $ 3.00 Dental $ 31.50 $ 31.50 $ 31.50 $ 31.50 Pres. Drugs $ 28.70 $ 32.00 $ 32.00 $ 32.00 Retiree Plan E $ 61.00 $ 61.00 $ 61.00 $ 61.00 LTD $ 15.50 Discontinued as of 6-1-94 Retiree Industry Plan $ 24.00 $ 24.00 Plan transferred to Miscellaneous Trust as of 7-1-74 Totals: $466.70 $454.50 $430.50 $450.00 $475.00 $500.00 "APPENDIX B" CLASSIFICATIONS WAGE RATES 4-2-94 5-23-94 4-1-95 4-1-96 Drivers of Water Trucks Under 2,000 Gallons $17.15 $14.95 $15.20 $15.45 2,000 to 4,000 Gallons 17.25 15.05 15.30 15.55 4,000 Gallons and Over 17.30 15.10 15.35 15.60 Drivers of Plant and Pit Trucks under 12 tons 17.15 14.95 15.20 15.45 12 tons to 20 tons 17.25 15.05 15.30 15.55 20 tons to 50 tons 17.30 15.10 15.35 15.60 50 tons and over 17.35 15.15 15.40 15.65 Drivers of 2-Axle Dump Trucks 17.10 14.90 15.15 15.40 Drivers of 3-Axle Dump Trucks 17.15 14.95 15.20 15.45 Drivers of Semis Under 14 Tons 17.20 15.00 15.25 15.50 Drivers of Truck-Trailer and Semis 17.25 15.05 15.30 15.55 Drivers of Cement Trains 17.25 15.05 15.30 15.55 Drivers of Mixer Trucks Under 9 Cubic Yards 17.85 15.65 15.90 16.15 9 Cubic Yards and Over 17.95 15.75 16.00 16.25 Drivers of Flats Under 5 Tons 17.10 14.90 15.15 15.40 Drivers of Flats Over 5 Tons 17.20 15.00 15.25 15.50 Drivers of Flats Truck-Trailers & Semis 17.30 15.10 15.35 15.60 **Drivers of Mobile Service Trucks 17.35 15.15 15.40 15.65 Mobile Sweeper Drivers (licensed for highway use) 17.35 15.15 15.40 15.65 Drivers of Bulk Fuel Trucks 17.35 15.15 15.40 15.65 Warehousepersons 17.05 14.85 15.10 15.35 Automotive Repairpersons 20.95 18.75 19.00 19.25 Batch Plant Operators (manual) 18.05 15.85 16.10 15.45 Bunkerperson 17.05 14.85 15.10 15.35 Gas Station Operators and/or Fuelers 17.05 14.85 15.10 15.35 Loaders 17.10 14.90 15.00 15.25 Washers 17.10 14.90 15.00 15.25 Greasers 17.20 15.00 15.25 15.50 ***Tirepersons 17.20 15.00 15.25 15.50 Chippers 17.30 15.10 15.35 15.60 **A Mobile Service Truck is defined as a vehicle equipped with portable powered lubrications equipment. ***On any day in which a Tireperson spends a majority of their time working on 1400 or larger tire sizes, they shall receive five cents ($.05) per hour premium for the entire day. The rates described above for the period April 2, 1994 through July 31, 1994 are correct for all Employers who did not participate in the PEER/84 Program. All Employers who did participate in the PEER/84 Program for the period April 2, 1994 through July 31, 1994 shall pay their employees Nineteen Cents ($.19) per hour less than the rates described above. EXHIBIT I TEAMSTERS LOCAL UNIONS' JURISDICTIONAL BOUNDARIES LOCAL 420 Northern Boundary: Six miles into mountains from Foothill Boulevard from Eastern Boundary (described below) to Balboa Boulevard and Highway 5 straight west across mountains to Ventura County line. Western Boundary: Ventura County line. Southern Boundary: North side of Compton Boulevard from the coastline to the Orange County line east to Main Street in Corona. Eastern Boundary: All Orange County, Main Street in Corona in straight line north along Milliken Avenue north to the mountains. LOCAL 495 Northern Boundary: South side of Rosecrans Avenue from the coastline east to the Orange County line. Southern and Western Boundaries: The coastline south of Rosecrans Avenue south to the Southern Boundary of Orange County (including Catalina Island). Eastern Boundary: Northern and Eastern boundaries of Orange County LOCAL 692 Northern Boundary: East on Compton Boulevard, to Woodruff, then North to Rosecrans and East to the Orange County line. (Note: From Atlantic to Locoweed, Compton Boulevard is called Somerset.) Southern and Western Boundaries: The coastline south of Compton Boulevard South to Northern boundary of Orange County (including Catalina Island). Eastern Boundary: Orange County line: LOCAL 986 Southern Boundary: North side of the mountains west to the same Northern Boundary as Locals 63 and 420 and east to San Bernardino County line. Western Boundary: Ventura County line, north of Northern boundary for Local 420 to Gorman. Northern Boundary: From Gorman cut across northeasterly between Tehachapi and Mojave, including Johannesburg and Trona. Eastern Boundary: Nevada State line south to San Bernardino County line. Roughly, the jurisdictional boundaries include the Eastern one-third of Kern County and all of Inyo and Mono Counties. TABLE OF CONTENTS ARTICLE SUBJECT PAGE ARTICLE I Recognition, Union Shop 2 ARTICLE II Work Stoppages 5 ARTICLE III Hours and Work 5 ARTICLE IV Wages 6 ARTICLE V Overtime Pay 12 ARTICLE VI Reporting Allowances 12 ARTICLE VII Paid Holidays 13 ARTICLE VIII Vacations 14 ARTICLE IX Discharges 16 ARTICLE X Seniority 17 ARTICLE XI Grievance Procedure 30 ARTICLE XII Jurisdiction of Local Unions 33 ARTICLE XIII Bargaining 34 ARTICLE XIV Group Insurance Plan 34 ARTICLE XV Pension 37 ARTICLE XVI Safety and Working Conditions 39 ARTICLE XVII Leaves of Absences 39 ARTICLE XVIII Training and Upgrading Fund 39 ARTICLE XIX Job Protection 40 ARTICLE XX Use of Personal Vehicles 41 ARTICLE XXI Period of Agreement 41 ARTICLE XXII Management's Rights Clause 41 ARTICLE XXIII Drug and Alcohol Screening 42 ADDENDUM #1 Letter of Understanding 45 APPENDIX A Fringe Benefits 46 APPENDIX B Wages 48 EXHIBIT I Local Union Jurisdictional Boundaries 50 -----END PRIVACY-ENHANCED MESSAGE-----