<PAGE> 1
Page 1 of 19 Pages
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1998 Commission File Number 0-663
------------- -----
OGLEBAY NORTON COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-0158970
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Superior Avenue Cleveland, Ohio 44114-2598
----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 861-3300
---------------
None
---------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
Shares of Common Stock outstanding at July 31, 1998: 4,766,396
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<PAGE> 2
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
INDEX
PAGE NUMBER
-----------
PART I. FINANCIAL INFORMATION
------------------------------
Condensed Consolidated Balance
Sheet - June 30, 1998 (Unaudited) and
December 31, 1997 3
Condensed Consolidated Statement of
Operations (Unaudited) - Three Months
Ended June 30, 1998 and 1997 and Six
Months Ended June 30, 1998 and 1997 4
Condensed Consolidated Statement of
Cash Flows (Unaudited) - Six Months
Ended June 30, 1998 and 1997 5
Notes to Condensed Consolidated Financial
Statements 6-8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-16
PART II. OTHER INFORMATION 17-19
---------------------------
<PAGE> 3
PART I. ITEM 1. FINANCIAL INFORMATION
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
June 30 December 31
1998 1997
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 20,574,000 $ 29,885,922
Accounts receivable, less reserve for doubtful accounts
(1998-$964,027; 1997-$723,000) 46,096,754 22,292,432
Inventories
Raw materials and finished products 14,605,716 1,210,940
Operating supplies 7,978,496 3,382,764
------------ ------------
22,584,212 4,593,704
Deferred income taxes 3,050,091 3,050,091
Prepaid insurance and other expenses 11,143,062 1,300,715
Discontinued operations -0- 15,571,082
------------ ------------
TOTAL CURRENT ASSETS 103,448,119 76,693,946
PROPERTIES, EQUIPMENT AND MINERAL RESERVES 608,952,951 304,958,566
Less allowances for depreciation,
depletion and amortization 209,524,501 154,022,177
------------ ------------
399,428,450 150,936,389
EXCESS OF COST OVER NET ASSETS
OF BUSINESSES ACQUIRED 42,917,715 5,337,459
PREPAID PENSION COSTS 27,725,157 25,361,290
OTHER ASSETS 19,425,509 5,123,246
------------ ------------
$592,944,950 $263,452,330
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30 December 31
1998 1997
------------ ------------
CURRENT LIABILITIES
Current portion of long-term debt $ 15,113,573 $ 8,722,545
Accounts payable 13,612,933 6,875,498
Payrolls and other accrued compensation 6,299,103 7,547,241
Accrued expenses 18,460,878 12,514,672
Income taxes 4,068,336 2,277,749
------------ ------------
TOTAL CURRENT LIABILITIES 57,554,823 37,937,705
LONG-TERM DEBT, less current portion 301,520,396 36,942,130
POSTRETIREMENT BENEFITS OBLIGATIONS 27,818,621 24,341,252
OTHER LONG-TERM LIABILITIES 26,075,040 25,404,891
DEFERRED INCOME TAXES 57,911,074 21,109,949
STOCKHOLDERS' EQUITY
Preferred stock, without par value,
authorized 5,000,000 shares;
none issued -0- -0-
Common stock, par value $1 per share,
authorized 10,000,000 shares;
issued 7,253,332 shares 7,253,332 7,253,332
Additional capital 7,268,732 6,288,822
Retained earnings 141,951,779 138,628,719
------------ ------------
156,473,843 152,170,873
Treasury stock, at cost - 2,488,536
and 2,501,152 shares at respective dates (33,932,397) (33,739,795)
Unallocated Employee Stock Ownership
Plan shares (476,450) (714,675)
------------ ------------
122,064,996 117,716,403
------------ ------------
$592,944,950 $263,452,330
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 4
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Net sales $ 32,117,985 $ 13,157,077 $ 43,317,952 $ 24,655,220
Operating revenues 31,608,226 30,419,379 34,716,063 31,706,509
------------ ------------ ------------ ------------
63,726,211 43,576,456 78,034,015 56,361,729
COSTS AND EXPENSES
Cost of goods sold 20,840,446 7,960,492 28,180,793 14,946,330
Operating expenses 20,686,340 22,088,879 22,444,730 22,883,974
Depreciation, depletion and amortization 5,426,130 2,685,808 6,387,471 3,462,184
General, administrative and
selling expenses 5,142,737 3,382,405 8,937,429 6,703,586
------------ ------------ ------------ ------------
52,095,653 36,117,584 65,950,423 47,996,074
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 11,630,558 7,458,872 12,083,592 8,365,655
Gain on sale of assets 28,836 30,600 44,436 793,034
Interest, dividends and other income 250,025 1,159,497 727,622 1,728,688
Other expense (558,595) (711,839) (1,044,434) (1,375,760)
Interest expense (3,666,629) (648,992) (4,447,235) (1,193,443)
------------ ------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 7,684,195 7,288,138 7,363,981 8,318,174
Income taxes 2,235,000 2,103,973 2,135,000 2,382,219
------------ ------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS 5,449,195 5,184,165 5,228,981 5,935,955
Discontinued operations -0- (75,555) -0- 25,499
------------ ------------ ------------ ------------
NET INCOME $ 5,449,195 $ 5,108,610 $ 5,228,981 $ 5,961,454
============ ============ ============ ============
Income per share of common stock - basic:
Continuing operations $ 1.14 $ 1.08 $ 1.09 $ 1.23
Discontinued operations -0- (.02) -0- .01
------------ ------------ ------------ ------------
NET INCOME PER SHARE - BASIC $ 1.14 $ 1.06 $ 1.09 $ 1.24
============ ============ ============ ============
Income per share of common stock - assuming dilution:
Continuing operations $ 1.13 $ 1.07 $ 1.08 $ 1.22
Discontinued operations -0- (.01) -0- .01
------------ ------------ ------------ ------------
NET INCOME PER SHARE - ASSUMING DILUTION $ 1.13 $ 1.06 $ 1.08 $ 1.23
============ ============ ============ ============
DIVIDENDS PER SHARE OF COMMON STOCK $ .20 $ .175 $ .40 $ .35
============ ============ ============ ============
Average number of shares of common stock
outstanding - basic 4,775,194 4,799,660 4,776,639 4,808,476
Average number of shares of common stock
outstanding - assuming dilution 4,809,959 4,832,215 4,819,655 4,837,322
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 5
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------------------
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,228,981 $ 5,961,454
Adjustments to reconcile net income to
net cash used for operating activities:
Depreciation, depletion and amortization 6,387,471 3,462,185
Deferred income taxes 152,239 460,000
Gain on sale of assets (44,436) (793,034)
Prepaid pension costs and other assets (2,182,971) (1,809,354)
Deferred vessel maintenance costs (4,817,837) (5,503,482)
(Increase) decrease in accounts receivable (5,482,472) 808,950
(Increase) decrease in inventories (910,426) 18,860
Decrease in accounts payable (2,176,898) (1,854,972)
Decrease in payrolls and other accrued compensation (2,344,767) (2,194,548)
Increase (decrease) in accrued expenses 48,286 (328,932)
Increase (decrease) in income taxes 1,019,090 (368,945)
Operating activities of discontinued operations - net -0- 738,076
Other operating activities (232,418) (513,211)
------------- -------------
NET CASH USED FOR OPERATING ACTIVITIES (5,356,158) (1,916,953)
INVESTING ACTIVITIES
Capital expenditures (7,391,580) (20,906,123)
Proceeds from sale of assets 73,300 1,209,925
Acquisition of businesses (224,535,999) (1,600,000)
Proceeds from the sale of discontinued operations 6,934,297 -0-
Investing activities of discontinued operations - net -0- (980,294)
------------- -------------
NET CASH USED FOR INVESTING ACTIVITIES (224,919,982) (22,276,492)
FINANCING ACTIVITIES
Additional long-term debt 242,000,000 15,000,000
Payments on long-term debt (21,055,637) (4,238,225)
Financing costs (5,914,488) -0-
Payments of dividends (1,905,921) (1,682,651)
Purchases of treasury stock (560,868) (1,356,670)
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 212,563,086 7,722,454
------------- -------------
Decrease in cash and cash equivalents (17,713,054) (16,470,991)
CASH AND CASH EQUIVALENTS, JANUARY 1 38,287,054 21,850,282
------------- -------------
CASH AND CASH EQUIVALENTS, JUNE 30 $ 20,574,000 $ 5,379,291
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 6
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and,
therefore, do not include all information and notes to the condensed
consolidated financial statements necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. Management of the Registrant,
however, believes that all adjustments considered necessary for a fair
presentation of the results of operations for such period have been made.
The accompanying condensed consolidated financial statements have been
reclassified to report separately the operating results of the Registrant's
discontinued Engineered Materials business segment for the three and six
month periods ending June 30, 1997. Additionally, certain amounts in the
prior year have been reclassified to conform with the 1998 condensed
consolidated financial statement presentation. For further information,
refer to the consolidated financial statements and notes thereto included
in the Registrant's 1997 Annual Report on Form 10-K.
2. Operating results are not necessarily indicative of the results to be
expected for the year, due to the seasonal nature of certain aspects of the
Registrant's business. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the Registrant's consolidated financial statements. Actual
results could differ from those estimates and assumptions.
3. On March 9, 1998, the Registrant's Industrial Sands segment acquired 100%
of the outstanding shares of Colorado Silica Sands, Inc. ("Colorado
Silica") for $4,523,000 in cash and a note payable of $1,337,000. The
addition of this operation is not expected to have a material impact on the
results of operations of the Registrant.
On April 28, 1998, Oglebay Norton Limestone Company, a wholly-owned
subsidiary of the Registrant, purchased the Port Inland, Michigan
limestone operations ("Port Inland") of Minerals Technologies Inc. for
$34,300,000. The acquisition included inventories, land, mineral reserves,
equipment and other tangible property used in the business of mining,
processing, marketing and distributing limestone, chemical limestone and
construction aggregate to the iron and steel, chemical, environmental,
agricultural and construction industries. The purchase was financed using
a bank revolving credit facility in place at the time of the acquisition,
On May 22, Oglebay Norton Acquisition Company Limited, an indirect
wholly-owned subsidiary of the Registrant, acquired all the outstanding
common shares of Global Stone Corporation ("Global Stone"), a publicly
traded Canadian company. Global Stone, which has eight operations in the
United States and Canada, is engaged in the mining, production and
marketing of lime, chemical limestone and construction aggregates used in
a variety of manufacturing processes and industries, including iron and
steel, pulp and paper, chemical, environmental, agricultural and
construction. The total purchase price of $226,000,000, including
$54,000,000 of net debt, was financed through borrowings under a three
year, $215,000,000 bank revolving credit facility ("Senior Credit
Facility") and a private placement of $100,000,000 in ten year senior
subordinated debt ("Senior Subordinated Facility"). The new borrowings
replaced the Registrant's existing revolving credit facility and term
loan borrowings, which were retired using the proceeds from the Senior
Credit Facility. The Registrant incurred $5,914,000 in financing costs
associated with the Senior Credit Facility and Senior Subordinated
Facility. The financing costs, which are included within Other Assets as
of June 30, 1998, are being amortized over the terms of the respective
agreements.
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<PAGE> 7
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The above acquisitions have been recorded applying the purchase method of
accounting and the purchase price allocations are preliminary. Upon final
determination, the purchase prices will be allocated based on the fair value of
the assets acquired and liabilities assumed.
The following unaudited pro forma information presents a summary of
consolidated results of operations for the Registrant and the acquisitions of
Global Stone and Port Inland for the six month periods ending June 30, 1998 and
1997 as if the acquisitions had occurred on January 1, 1997. The pro forma
adjustments give effect to the acquisitions under the purchase method of
accounting and (i) the amortization of goodwill, (ii) the amortization of the
write-up of mineral reserves to fair market value, (iii) the interest expense on
debt incurred to fund the acquisitions and (iv) the related income tax effects.
This unaudited pro forma information (i) assumes that the Registrant incurred
all acquisition related debt as of January 1, 1997, (ii) includes operating
results for periods of time prior to the Registrant's ownership for certain
business segments and (iii) does not take into consideration any expense
reductions or the expected future benefits from Global Stone's significant
capital expenditures made prior to its acquisition by the Registrant.
Additionally, the unaudited pro forma information does not reflect any other
events that may occur in the future.
<TABLE>
<CAPTION>
June 30,
1998 1997
----------------------
(In thousands, except earnings per share data)
<S> <C> <C>
Revenues $126,065 $119,480
Net income 1,732 2,483
Earnings per share-basic $0.36 $0.52
Earnings per share-assuming dilution $0.36 $0.51
Operating margin $ 27,479 $ 23,070
Operating margin percentage 21.8% 19.3%
<FN>
(Operating margin, or EBITDA, is defined as income before (i)
income taxes, (ii) interest, (iii) depreciation, amortization
and depletion and (iv) non-recurring gains and other income.
Operating margin is not a measure of performance under
generally accepted accounting principles ("GAAP"). Operating
margin should not be considered as a substitute for net income
or other income or cash flow data prepared in accordance with
GAAP or as a measure of profitability or liquidity. The
Registrant's definition of operating margin may not be
comparable to that of other companies.)
</TABLE>
During the first half of 1997, the Registrant recorded a gain from the sale
of marketable securities of $656,000 and other income of $804,000 from the
receipt of insurance proceeds. The net income impact of non-recurring gains and
other income recognized during the first half of 1997 was $1,272,000, or $0.26
per share. Excluding these non-recurring items, net income and earnings per
share would have been (in thousands, except earnings per share data):
<TABLE>
<CAPTION>
June 30, 1997
-------------
<S> <C>
Net income $ 1,211
Earnings per share-basic $0.26
Earnings per share-assuming dilution $0.25
</TABLE>
-7-
<PAGE> 8
4. On May 15, 1998, the Registrant sold the assets of its Engineered
Materials metallurgical treatment operations for $14,573,000, which
included a cash payment of $3,650,000 and notes receivable of $10,923,000.
The notes receivable will be paid over a four year period, beginning in
1999 with a final payment of $2,400,000 in June 2003. As of June 30,
1998, $6,292,000 relating to these notes is included within Other Assets.
The Engineered Materials segment was classified as a discontinued
operation at December 31, 1997.
5. In the first quarter of 1998, the Registrant adopted Statement of Financial
Accounting Standard (SFAS) No. 130, "Reporting Comprehensive Income".
Comprehensive income generally represents all changes in stockholders'
equity except those resulting from investments or contributions by
stockholders. There were no significant items of other comprehensive
income as of, or for the six month periods ended June 30, 1998 and 1997.
In the first quarter of 1998, the Registrant also adopted Statement of
Financial Accounting Standard (SFAS) No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits". SFAS No 132 revises employers'
disclosures about pension and other postretirement benefit plans. It does
not change the measurement or recognition of those plans, and accordingly,
does not have any effect on the Registrant's financial position or results
of operations.
The Registrant will adopt, as required, Statement of Financial Accounting
Standard (SFAS) No. 131, "Disclosure about Segments of an Enterprise and
Related Information" at the end of 1998. SFAS No. 131 requires the
Registrant to provide information about operating segments in annual
financial statements and requires selected information about operating
segments in interim financial reports. It also requires certain related
disclosures about products and services, geographic areas and major
customers. Segment information is not required to be reported in interim
financial statements during 1998.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting
and reporting standards for derivative instruments and hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair
value. The Registrant will adopt SFAS No. 133 on January 1, 2000, as
required. Adoption of the new Standard is not expected to have a
significant impact on the results of operations or financial position of
the Registrant.
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<PAGE> 9
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. The calculation of net income per share-basic and net income per share-
assuming dilution follows (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
-------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income per share-basic:
---------------------------
Net income $5,449 $5,109 $5,229 $5,961
Average number of
shares outstanding 4,775 4,800 4,777 4,808
====== ====== ====== ======
Net income per share $ 1.14 $ 1.06 $ 1.09 $ 1.24
====== ====== ====== ======
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
-------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
Net income per share-assuming dilution:
--------------------------------------
Net income $5,449 $5,109 $5,229 $5,961
Average number of shares
outstanding 4,775 4,800 4,777 4,808
Dilutive effect of stock plans 35 32 43 29
------ ------ ------ ------
Adjusted average number of
shares outstanding 4,810 4,832 4,820 4,837
====== ====== ====== ======
Net income per share $ 1.13 $ 1.06 $ 1.08 $ 1.23
====== ====== ====== ======
</TABLE>
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<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
and Results of Operations may contain statements concerning certain trends and
other forward-looking information, within the meaning of certain safe harbor
provisions of the federal securities laws. Such forward-looking statements are
subject to uncertainties and factors relating to the Registrant's operations and
business environment, all of which are difficult to predict and many of which
are beyond the control of the Registrant. The Registrant believes that the
following factors, among others, could affect its future performance and cause
actual results to differ materially from those expressed or implied by
forward-looking statements made by or on behalf of the Registrant: (1)
unfavorable weather conditions; (2) fluctuations in oil prices; (3) changes in
the demand for the Registrant's products or services due to changes in
technology; (4) vessel service availability; (5) changes in United States
cabotage laws; (6) labor unrest; (7) the loss or bankruptcy of major customers;
and (8) year 2000 software conversion failures of vendors, suppliers and
customers.
Due to the seasonal nature of certain aspects of the
Registrant's business, the operating results and cash flows for the first half
of the year are not necessarily indicative of the results to be expected for the
full year.
FINANCIAL CONDITION
-------------------
During the first half of 1998, the Registrant acquired the
assets and liabilities of Global Stone, Port Inland and Colorado Silica, through
business combinations accounted for using the purchase method of accounting. The
combined purchase prices of these acquisitions totaled $266,160,000. During the
same period of 1997, the Registrant acquired certain assets of a sand screening
plant in California and a supplier of blending sand and organic mixes in Ohio
for a combined purchase price of $3,400,000.
The Registrant's operating activities used cash of $5,356,000
in the first half of 1998 compared to $1,917,000 for the same period of 1997, an
increase of $3,439,000. The increase is principally due to the acquisitions of
Global Stone and Port Inland, as described in the accompanying Notes to
Condensed Consolidated Financial Statements, and the related increase in
accounts receivable from the respective dates of acquisition through June 30,
1998. Operating results of the Registrant's business segments are discussed in
more detail under "RESULTS OF OPERATIONS."
Expenditures for property and equipment, including vessel
inspection costs, amounted to $7,392,000 through the first six months of 1998
compared with $20,906,000 for the same period in 1997. During the first six
months of 1998 the Registrant's Marine Transportation segment expended
$3,562,000 related to vessel inspection costs and various equipment additions on
the vessel fleet, while the Industrial Sands segment expended $2,569,000
primarily on plant expansion projects at its Brady, Texas and Orange County,
California operations. During the first six months of 1997, the Registrant's
Marine Transportation segment purchased two vessels for $17,000,000 and expended
$3,160,000 for vessel inspection costs and improvements.
In the first half of 1998, the Registrant received payments
totaling $6,934,000 related to the sale of its discontinued Engineered
Materials Metallurgical treatments business, as more fully discussed in the
Notes to Condensed Consolidated Financial Statements. There were no such
receipts during the first six months of 1997.
-10-
<PAGE> 11
FINANCIAL CONDITION (CONTINUED)
The Registrant made long-term debt payments of $21,056,000
during the first six months of 1998 compared with $4,238,000 during the same
period of 1997. During the first half of 1998, the Registrant borrowed
$222,750,000, at variable interest rates between 8.2% and 9.3%, to finance the
Global Stone and Port Inland acquisitions. In June 1997, the Registrant borrowed
$15,000,000, at a variable interest rate of 6.19%, against its Revolving Credit
facility for the acquisition of two Marine Transportation vessels. In addition,
the Registrant assumed $3,400,000 (fixed interest rate of 7.375%) of Title XI
Ship Financing Bonds associated with these vessels, of which $2,064,000 was
called and retired in June 1997 at a nominal cost.
The Registrant declared dividends of $0.40 per share during
the first half of 1998 compared with $0.35 per share during the first half of
1997. Dividends paid were $1,906,000 for the first half of 1998 compared with
$1,683,000 for the same period of 1997. The Registrant purchased on the open
market, and placed in treasury, 14,666 shares of its Common Stock for $561,000
in the first half of 1998 and 63,482 shares for $1,357,000 in the first half of
1997.
Anticipated cash flows from operations and current financial
resources are expected to meet the Registrant's needs during the remainder of
1998. All financing alternatives are under constant review to determine their
ability to provide sufficient funding at the least possible cost.
RESULTS OF OPERATIONS
---------------------
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO
SIX MONTHS ENDED JUNE 30, 1997
The Registrant's income from operations increased $3,718,000,
or 44.4%, to $12,084,000 on revenues of $78,034,000 for the first six months of
1998, compared with $8,366,000 on revenues of $56,362,000 for the same period of
1997. Net income was $5,229,000 ($1.08 per share - assuming dilution) for the
first half of 1998 compared with $5,961,000 ($1.23 per share - assuming
dilution) for the first half of 1997. The increases in income from operations
and revenues for the first six months of 1998 are attributable to the
acquisitions of Global Stone, Port Inland and Colorado Silica and strong
operating results of the Registrant's Marine Transportation segment. The decline
in net income is primarily due to the fact that in the first half of 1997 the
Registrant recorded a gain from the sale of marketable securities of $656,000
and other income of $804,000 from the receipt of insurance proceeds. The net
income impact of non-recurring gains and other income recognized during the
first half of 1997 was $1,272,000, or $0.26 per share, assuming dilution.
Operating results of the Registrant's business segments for
the six months ended June 30, 1998 and 1997 are discussed below. It is the
policy of the Registrant to allocate a portion of corporate general and
administrative expenses to its business segments. Corporate general and
administrative expenses for the first six months of 1997 that were previously
allocated to discontinued operations have been reallocated to the remaining
business segments.
-11-
<PAGE> 12
RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO
SIX MONTHS ENDED JUNE 30, 1997
Net Sales and Operating Revenues
- --------------------------------
Marine Transportation: Operating revenues for the Registrant's
Marine Transportation segment increased by $3,010,000, or 9.5%, to $34,716,000
for the first six months of 1998, compared with $31,707,000 for the same period
in 1997. The increase can be attributed to strong customer demand and good
operating conditions on the Great Lakes. The mild winter provided an early start
to the sailing season and the weather conditions favorably impacted sailing days
and operating activities. Sailing days increased 7.2% to 1,190 during the first
six months of 1998 compared with 1,110 during the first six months of 1997.
Additionally, tonnage levels increased 6.3% to 8,592,000 for the first half of
1998 compared with 8,082,000 for the same period in 1997. Operations at the
segment's Cleveland Bulk Terminal, which commenced operations in April 1997,
also contributed modestly to the improvement in operating revenues, accounting
for $453,000 of the increase when comparing the first half of 1998 with the
first half of 1997.
Industrial Sands: Net sales for the Registrant's Industrial
Sands segment decreased by $478,000, or 2.0%, to $24,177,000 for the first half
of 1998, compared with $24,655,000 for the same period of 1997. The decline in
net sales is attributable to a 9.8% decrease in shipments, from 878,000 for the
first six months of 1997 to 792,000 for the first six months of 1998. The
decreases in tonnage and net sales are related to softness in oil prices and oil
field demand, negatively impacting the demand for frac sands provided by the
segment's Brady, Texas operations, where tonnage levels and average selling
prices decreased 26.2% and 5.8%, respectively. The acquisition of the Colorado
Silica operations during March 1998 and the strong performance of the segment's
Orange County, California operations tempered the overall decrease in net sales.
Although tonnage levels at the Orange County operations declined 11.8% when
compared with the same period of 1997, a favorable shift in product mix resulted
in an increase in net sales of 28.3% compared with the prior year.
Lime and Limestone: Net sales for the Registrant's Lime and
Limestone segment include the operations of Port Inland and Global Stone as of
their respective purchase dates of April 28, 1998 and May 22, 1998 and totaled
$19,141,000 through June 30, 1998.
Cost of Goods Sold and Operating Expenses
- -----------------------------------------
Marine Transportation: Operating expenses for the Marine
Transportation segment totaled $22,445,000 for the first half of 1998, compared
with $22,884,000 for the same period in 1997, a decrease of $439,000, or 1.9%.
Operating expenses as a percentage of operating revenues improved to 64.7%
during the first half of 1998 compared with 72.2% for the first half of 1997,
principally due to lower fuel costs, favorable operating conditions and
increased efficiencies within the segment's fleet dispatch operations.
-12-
<PAGE> 13
RESULTS OF OPERATIONS (CONTINUED)
---------------------------------
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO
SIX MONTHS ENDED JUNE 30, 1997
Industrial Sands: Cost of goods sold for the Industrial Sands
segment increased $500,000, or 3.3%, to $15,455,000 for the first half of 1998
from $14,955,000 for the same period in 1997. The increase in cost of goods sold
was primarily attributable to the acquisition of the Colorado Silica operations
and the strong operations and volumes at the segment's Orange County operations.
The increase in cost of goods sold at these locations was partially offset by a
decrease in cost of goods sold at the segment's other locations, as a result of
the decreased volumes, particularly at the segment's Brady, Texas operations.
Cost of goods sold as a percentage of net sales increased to 63.9% for the first
six months of 1998 compared with 60.7% for the first six months of 1997, as a
result of the overall decrease in volumes.
Lime and Limestone: Cost of goods sold for the Lime and
Limestone segment totaled $12,666,000, or 66.2% of net sales, for the six months
ended June 30, 1998.
Depreciation, Depletion and Amortization
- ----------------------------------------
Depreciation, depletion and amortization expense increased by
$2,925,000, or 84.5%, to $6,387,000 for the first half of 1998 compared with
$3,462,000 for the same period of 1997. Of this increase, $2,622,000 relates to
the acquisitions of Global Stone and Port Inland and the Industrial Sands
acquisitions of Colorado Silica and Kurtz Sports Turf (May 22, 1997). The
balance of the increase is principally due to additional depreciation recognized
by the Registrant's Marine Transportation segment as a result of the purchase
of two vessels in June 1997 and the nature and timing of vessel inspection
costs incurred prior to the 1998 sailing season.
General, Administrative and Selling Expenses
- --------------------------------------------
As a result of the acquisitions described in the accompanying
Notes to Condensed Consolidated Financial Statements, total general,
administrative and selling expenses increased $2,233,000, or 33.3%, to
$8,937,000 for the first six months of 1998 compared with $6,704,000 for the
same period of 1997. As a percentage of total revenues, general, administrative
and selling expenses remained comparable at approximately 12%.
Income From Operations
- ----------------------
Marine Transportation: Due to the favorable operating
conditions previously described, income from operations for the Registrant's
Marine Transportation segment increased $3,055,000, to $7,983,000 for the first
half of 1998 compared with $4,928,000 for the first half of 1997.
Industrial Sands: Income from operations for the Industrial
Sands segment declined $1,698,000 to $4,204,000 for the first six months of 1998
compared with $5,902,000 for the same period of 1997. The decline was
principally the result of reduced oil field demand for frac sand supplied by the
segment's Brady, Texas operations.
Lime and Limestone: The acquisitions of Port Inland and Global
Stone contributed $2,517,000 to income from operations during the six month
period ended June 30, 1998.
-13-
<PAGE> 14
RESULTS OF OPERATIONS (CONTINUED)
---------------------------------
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO
SIX MONTHS ENDED JUNE 30, 1997
Corporate and Other: Certain general and administrative
expenses are not allocated to the business segments. Accordingly, Corporate and
Other operations recognized a loss from operations of $2,620,000 and $2,464,000
for the six month periods ended June 30, 1998 and 1997, respectively.
Other
- -----
During the first half of 1997, the Registrant recognized gains
of $793,000 from asset sales, primarily on the sales of current marketable
securities. There were no significant gains on the sale of assets in the first
half of 1998. Interest, dividends and other income decreased $1,001,000, or
57.9%, during the first half of 1998, as the comparable period in the prior year
included insurance proceeds received. Interest expense for the first half of
1998 increased to $4,447,000, compared with $1,193,000 for the same period of
1997. The increase in interest expense is principally the result of increased
debt levels and the amortization of financing costs incurred to acquire Global
Stone and Port Inland.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1997
The Registrant's income from operations increased $4,172,000,
or 55.9%, to $11,631,000 on revenues of $63,726,000 for the three months ended
June 30, 1998, compared with $7,459,000 on revenues of $43,576,000 for the same
period of 1997. Net income was $5,449,000 ($1.13 per share - assuming dilution)
for the three months ended June 30, 1998 compared with $5,109,000 ($1.06 per
share - assuming dilution) for the three months ended June 30, 1997. The
increases in income from operations and revenues for the three months ended June
30, 1998 can be attributed to the acquisitions of Global Stone and Port Inland
and strong operating results of the Registrant's Marine Transportation segment.
While both income from operations and revenues improved substantially from the
same period in the prior year, the marginal increase in net income is the result
of increased interest expense incurred in connection with the Global Stone
acquisition.
Operating results of the Registrant's business segments for
the three months ended June 30, 1998 and 1997 are discussed below. The comments
set forth above in the six months comparisons of 1998 with 1997 generally apply,
except as noted, when comparing the second quarter to the same period in 1997.
Net Sales and Operating Revenues
- --------------------------------
Marine Transportation: Operating revenues for the Registrant's
Marine Transportation segment increased by $1,189,000, or 3.9%, to $31,608,000
for the second quarter of 1998 compared with $30,419,000 for the same period of
1997. As a result of the favorable weather conditions, sailing days for the
second quarter of 1998 increased 3.1% to 1,090 when compared with the second
quarter of 1997. Tonnage hauled of 7,500,000 during the second quarter of 1998
was comparable to the tonnage hauled during the second quarter of 1997.
-14-
<PAGE> 15
RESULTS OF OPERATIONS (CONTINUED)
---------------------------------
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1997
Industrial Sands: Net sales for the Registrant's Industrial
Sands segment decreased by $180,000, or 1.4%, to $12,977,000 for the second
quarter of 1998, compared with $13,157,000 for the same period of 1997. The
decline in net sales is attributable to an 11.0% decrease in shipments, from
474,000 tons for the second quarter of 1997 to 422,000 tons for the second
quarter of 1998. During the second quarter of 1998 tonnage levels at the
segment's Brady, Texas operations decreased 74,000 tons, or 32.7%, and average
selling prices decreased 2.2% from the same quarter of the prior year
principally due to softness in oil prices and oil field demand. The
overall decrease in net sales was partially offset by the addition of the
Colorado Silica operations and the strong performance of the segment's Orange
County operations.
Lime and Limestone: Net sales for the Registrant's Lime and
Limestone segment include the operations of Port Inland and Global Stone as of
their respective purchase dates of April 28, 1998 and May 22, 1998 and totaled
$19,141,000 for the second quarter of 1998.
Cost of Goods Sold and Operating Expenses
- -----------------------------------------
Marine Transportation: Operating expenses for the Marine
Transportation segment totaled $20,686,000 for the three months ended June 30,
1998, compared with $22,089,000 for the same period in 1997, a decrease of
$1,403,000, or 6.4%. As a result of the improved operating conditions, operating
expenses as a percentage of operating revenues improved to 65.4% during the
second quarter of 1998 compared with 72.6% for the second quarter of 1997.
Industrial Sands: Cost of goods sold for the Industrial Sands
segment increased $187,000, or 2.3%, to $8,146,000 for the second quarter of
1998 from $7,959,000 for the same period in 1997. As a result of the overall
decrease in volumes, cost of goods sold as a percentage of net sales increased
to 62.8% for the second quarter of 1998 compared with 60.5% for the same period
of 1997.
Lime and Limestone: Cost of goods sold for the Lime and
Limestone segment totaled $12,666,000, or 66.2% of net sales, for the second
quarter of 1998.
Depreciation, Depletion and Amortization
- ----------------------------------------
Depreciation, depletion and amortization expense more than
doubled to a level of $5,426,000 for the second quarter of 1998 compared with
$2,686,000 for the same period of 1997. Of this increase, $2,488,000 relates to
the acquisitions of Global Stone, Port Inland and Colorado Silica. The balance
of the increase is principally due to additional depreciation recognized by the
Registrant's Marine Transportation as a result of the purchase of the two
vessels in June 1997 and the nature and timing of vessel inspection costs
incurred prior to the 1998 sailing season.
General, Administrative and Selling Expenses
- --------------------------------------------
As a result of the acquisitions previously described, total
general, administrative and selling expenses increased $1,760,000, or 52.0%, to
$5,142,000 for second quarter of 1998 compared with $3,382,000 for the same
period of 1997. As a percentage of total revenues, general, administrative and
selling expenses remained comparable at approximately 8%.
-15-
<PAGE> 16
RESULTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1997
Income From Operations
- ----------------------
Marine Transportation: Due to the favorable operating
conditions described previously, income from operations for the Registrant's
Marine Transportation segment increased $2,301,000, to $7,723,000 for the second
quarter of 1998 compared with $5,422,000 for the second quarter of 1997.
Industrial Sands: Income from operations for the Industrial
Sands segment declined $656,000 to $2,630,000 for the second quarter of 1998
compared with $3,286,000 for the same period of 1997.
Lime and Limestone: The acquisitions of Port Inland and Global
Stone contributed $2,517,000 to income from operations for the second quarter of
1998.
Corporate and Other: Certain general and administrative
expenses are not allocated to the business segments. Accordingly, Corporate and
Other operations recognized a loss from operations of $1,239,000 and $1,249,000
for the three month periods ended June 30, 1998 and 1997, respectively.
Other
- -----
Interest, dividends and other income decreased $909,000, or
78.4% during the second quarter of 1998, as the comparable period in 1997
included insurance proceeds received. Interest expense for the second quarter of
1998 increased $3,018,000 to $3,667,000 in the second quarter of 1998 compared
with $649,000 for the same period of 1997. The increase in interest expense is
principally the result of increased debt levels related to the Global Stone and
Port Inland acquisitions.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not applicable.
-16-
<PAGE> 17
PART II. OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
On June 26, the United States Supreme Court denied the Registrant's
Petition for a Writ of Certiorari in Oglebay Norton Company v. Lois E. Jensen,
et al., and the matter will now proceed to retrial on the issue of damages. As
explained in the Registrant's 1997 Annual Report on Form 10-K, the Registrant
does not believe that a decision in favor of the plaintiffs would have a
material adverse effect upon its financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
On July 29,1998 the Registrant held its Annual Meeting of Stockholders,
during which three proposals were considered and decided favorably.
Proposal I asked the stockholders to approve the Director Fee Deferral
Plan enabling non-employee Directors to defer some or all of the fees earned by
them for services as a Director of the Registrant.
Proposal II asked the stockholders to approve the Performance Option
Agreement with Mr. John N. Lauer, who was appointed President and Chief
Executive Officer of the Registrant on December 17, 1997.
Proposal III related to the election of three directors to a three-year
term expiring in 2001. The directors nominated were Malvin E. Bank, William G.
Bares and John D. Weil.
Set forth below is the final tabulation of voting for each proposal.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Proposal/Director Shares in Favor Shares Abstained Shares Against Broker Shares Not
Voted
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Director Fee Deferral Plan 3,645,528 17,692 98,286 868,533
Performance Options 3,370,556 27,715 363,235 868,533
Mr. Bank 3,806,207 321,541 -0- 502,691
Mr. Bares 3,810,943 316,805 -0- 502,691
Mr. Weil 3,811,055 316,693 -0- 502,691
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Directors continuing in office after the meeting are Brent D. Baird, James T.
Bartlett, Albert C. Bersticker, R. Thomas Green, Jr., Ralph D. Ketchum, John N.
Lauer, and William G. Pryor.
-17-
<PAGE> 18
ITEM 5. OTHER MATTERS
- ------- -------------
On July 29, 1998, the Board of Directors of the Registrant unanimously
elected John N. Lauer to the position of Chairman of the Board. Mr. Lauer is
also the President and Chief Executive Officer of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
10.1 Form of Change-In-Control Incorporated by Reference from
Agreements with Executive Exhibit 10(d)(3) in the
Officers and Key Employees Registrant's Annual Report on
Form 10-K for the fiscal year
ended December 31, 1996.
Schedule filed herewith as
Exhibit 10.1
- ----------------------------------------------------------------------------------------------
10.2 Credit Agreement dated as Filed herewith as Exhibit 10.2
of May 15, 1998 among Oglebay
Norton Company, as Borrower,
various financial institutions,
as Banks, and KeyBank National
Association, as agent
- ----------------------------------------------------------------------------------------------
10.3 Senior Subordinated Increasing Filed herewith as Exhibit 10.3
Rate Notes
Note Purchase Agreement dated
as of May 15, 1998 among Oglebay
Norton Company, and The Guarantors
Party Hereto and CIBC Oppenheimer
Corp., as Purchaser
- ----------------------------------------------------------------------------------------------
10.4 Separation Agreement and Release Filed herewith as Exhibit 10.4
between the Company and Paul V.
Gorman
- ----------------------------------------------------------------------------------------------
27 Financial Data Schedule
- ----------------------------------------------------------------------------------------------
99 Two Press Releases dated July 29, Filed herewith as Exhibit 99
1998
- ----------------------------------------------------------------------------------------------
</TABLE>
(b) On June 5, 1998, the Registrant filed a Current Report on Form 8-K, under
item 2, to report Oglebay Norton Acquisition Company Limited's acquisition
of all of the outstanding shares of Global Stone Corporation. On August 3,
1998, the Registrant amended the Form 8-K to file the financial statements
and pro forma financial information required by items 7(a) and 7(b) of Form
8-K.
-18-
<PAGE> 19
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.
OGLEBAY NORTON COMPANY
DATE: August 14, 1998 By: /s/ David H. Kelsey
-------------------------------
David H. Kelsey
Vice President and
Chief Financial Officer
-19-
<PAGE> 1
Exhibit 10.1
Schedule of Participants
In Change-In-Control Agreements
The form of Change-In-Control Agreement was filed as Exhibit 10(d)(3) to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1996 and
is incorporated herein by reference. All Change-In-Control Agreements are
identical except for the identity of the participants and dates of execution.
Participants:
Michael F. Biehl
Jeffrey S. Gray
Mark P. Juszli
David H. Kelsey
John N. Lauer
Kenneth P. Pavlich
Stuart H. Theis
Rochelle F. Walk
<PAGE> 1
Exhibit 10.2
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of May 15, 1998
among
OGLEBAY NORTON COMPANY,
as Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as Banks,
and
KEYBANK NATIONAL ASSOCIATION,
as Agent
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS..........................................................................................1
ARTICLE II. AMOUNT AND TERMS OF CREDIT...........................................................................15
SECTION 2.1. AMOUNT AND NATURE OF CREDIT...........................................................15
SECTION 2.2. CONDITIONS TO LOANS AND LETTERS OF CREDIT.............................................19
SECTION 2.3. PAYMENT ON NOTES, ETC. ..............................................................20
SECTION 2.4. PREPAYMENT............................................................................21
SECTION 2.5. COMMITMENT AND OTHER FEES; REDUCTION
OF COMMITMENT................................................................22
SECTION 2.6. COMPUTATION OF INTEREST AND FEES; DEFAULT
RATE.........................................................................22
SECTION 2.7. MANDATORY PAYMENT.....................................................................23
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS;
CAPITAL ADEQUACY........................................................................................23
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. ...............................................23
SECTION 3.2. TAX LAW, ETC. .......................................................................24
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR
INTEREST RATE UNASCERTAINABLE................................................25
SECTION 3.4. INDEMNITY.............................................................................25
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS
UNLAWFUL.....................................................................25
SECTION 3.6. FUNDING...............................................................................25
SECTION 3.7. CAPITAL ADEQUACY......................................................................26
ARTICLE IV. CONDITIONS PRECEDENT...............................................................................26
SECTION 4.1. CONDITIONS PRECEDENT TO CLOSING.......................................................26
SECTION 4.2. CONDITIONS SUBSEQUENT TO CLOSING DATE.................................................30
ARTICLE V. COVENANTS...........................................................................................30
SECTION 5.1. INSURANCE.............................................................................30
SECTION 5.2. MONEY OBLIGATIONS.....................................................................31
SECTION 5.3. FINANCIAL STATEMENTS..................................................................31
SECTION 5.4. FINANCIAL RECORDS.....................................................................32
SECTION 5.5. FRANCHISES............................................................................32
SECTION 5.6. ERISA COMPLIANCE......................................................................32
SECTION 5.7. FINANCIAL COVENANTS...................................................................33
SECTION 5.8. BORROWING.............................................................................34
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 5.9. LIENS.................................................................................34
SECTION 5.10. REGULATIONS U and X...................................................................35
SECTION 5.11. INVESTMENTS AND LOANS.................................................................35
SECTION 5.12. MERGER AND SALE OF ASSETS.............................................................36
SECTION 5.13. ACQUISITIONS..........................................................................36
SECTION 5.14. HOLDING COMPANY REORGANIZATION........................................................37
SECTION 5.15. NOTICE................................................................................37
SECTION 5.16. ENVIRONMENTAL COMPLIANCE..............................................................38
SECTION 5.17. AFFILIATE TRANSACTIONS................................................................38
SECTION 5.18. USE OF PROCEEDS.......................................................................38
SECTION 5.19. CAPITAL EXPENDITURES..................................................................38
SECTION 5.20. CORPORATE NAMES.......................................................................39
SECTION 5.21. CAPITAL DISTRIBUTIONS.................................................................39
SECTION 5.22. SUBSIDIARIES CREATED, ACQUIRED OR HELD
SUBSEQUENT TO CLOSING DATE...................................................39
SECTION 5.23. SYNDICATION OF CREDIT.................................................................39
SECTION 5.24. OTHER COVENANTS.......................................................................39
ARTICLE VI. REPRESENTATIONS AND WARRANTIES.....................................................................39
SECTION 6.1. CORPORATE EXISTENCE; FOREIGN QUALIFICATION;
SUBSIDIARIES.................................................................40
SECTION 6.2. CORPORATE AUTHORITY...................................................................40
SECTION 6.3. COMPLIANCE WITH LAWS..................................................................40
SECTION 6.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS.............................................41
SECTION 6.5. LOCATION..............................................................................41
SECTION 6.6. DOCUMENTED VESSELS....................................................................41
SECTION 6.7. TITLE TO ASSETS.......................................................................41
SECTION 6.8. LIENS AND SECURITY INTERESTS..........................................................41
SECTION 6.9. TAX RETURNS...........................................................................41
SECTION 6.10. ENVIRONMENTAL LAWS....................................................................42
SECTION 6.11. CONTINUED BUSINESS....................................................................42
SECTION 6.12. EMPLOYEE BENEFITS PLANS...............................................................42
SECTION 6.13. CONSENTS OR APPROVALS.................................................................43
SECTION 6.14. SOLVENCY..............................................................................43
SECTION 6.15. FINANCIAL STATEMENTS..................................................................43
SECTION 6.16. REGULATIONS...........................................................................43
SECTION 6.17. MATERIAL AGREEMENTS...................................................................44
SECTION 6.18. INTELLECTUAL PROPERTY.................................................................44
SECTION 6.19. INSURANCE.............................................................................44
SECTION 6.20. ACCURATE AND COMPLETE STATEMENTS......................................................44
SECTION 6.21. YEAR 2000 COMPLIANCE..................................................................44
SECTION 6.22. DEFAULTS..............................................................................44
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VII. EVENTS OF DEFAULT.................................................................................45
SECTION 7.1. PAYMENTS..............................................................................45
SECTION 7.2. SPECIAL COVENANTS.....................................................................45
SECTION 7.3. OTHER COVENANTS.......................................................................45
SECTION 7.4. REPRESENTATIONS AND WARRANTIES........................................................45
SECTION 7.5. CROSS DEFAULT.........................................................................45
SECTION 7.6. ERISA DEFAULT.........................................................................45
SECTION 7.7. CHANGE IN CONTROL.....................................................................45
SECTION 7.8. MONEY JUDGMENT........................................................................45
SECTION 7.9. MATERIAL ADVERSE CHANGE...............................................................46
SECTION 7.10. VALIDITY OF LOAN DOCUMENTS............................................................46
SECTION 7.11. SOLVENCY..............................................................................46
ARTICLE VIII. REMEDIES UPON DEFAULT............................................................................46
SECTION 8.1. OPTIONAL DEFAULTS.....................................................................46
SECTION 8.2. AUTOMATIC DEFAULTS....................................................................47
SECTION 8.3. LETTERS OF CREDIT.....................................................................47
SECTION 8.4. OFFSETS...............................................................................47
SECTION 8.5. EQUALIZATION PROVISION................................................................47
ARTICLE IX. THE AGENT..........................................................................................48
SECTION 9.1. APPOINTMENT AND AUTHORIZATION.........................................................48
SECTION 9.2. NOTE HOLDERS..........................................................................48
SECTION 9.3. CONSULTATION WITH COUNSEL.............................................................48
SECTION 9.4. DOCUMENTS.............................................................................48
SECTION 9.5. AGENT AND AFFILIATES..................................................................49
SECTION 9.6. KNOWLEDGE OF DEFAULT..................................................................49
SECTION 9.7. ACTION BY AGENT.......................................................................49
SECTION 9.8. NOTICES, DEFAULT, ETC.................................................................49
SECTION 9.9. INDEMNIFICATION OF AGENT..............................................................49
SECTION 9.10. SUCCESSOR AGENT.......................................................................49
ARTICLE X. MISCELLANEOUS.......................................................................................50
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION......................................................50
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES........................................................50
SECTION 10.3. AMENDMENTS, CONSENTS..................................................................50
SECTION 10.4. NOTICES...............................................................................51
SECTION 10.5. COSTS, EXPENSES AND TAXES.............................................................51
SECTION 10.6. INDEMNIFICATION.......................................................................51
SECTION 10.7. OBLIGATIONS SEVERAL; NO FIDUCIARY
OBLIGATIONS..................................................................52
SECTION 10.8. EXECUTION IN COUNTERPARTS.............................................................52
SECTION 10.9. BINDING EFFECT; BORROWER'S ASSIGNMENT.................................................52
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 10.10. BANK ASSIGNMENTS/PARTICIPATIONS................................................................52
SECTION 10.11. SEVERABILITY OF PROVISIONS; CAPTIONS..................................................55
SECTION 10.12. INVESTMENT PURPOSE....................................................................55
SECTION 10.13. ENTIRE AGREEMENT......................................................................55
SECTION 10.14. GOVERNING LAW; SUBMISSION TO JURISDICTION.............................................55
SECTION 10.15. LEGAL REPRESENTATION OF PARTIES.......................................................55
SECTION 10.16. JURY TRIAL WAIVER.....................................................................56
SCHEDULE 1.....................................................................................57
SCHEDULE 2 - MORTGAGED REAL PROPERTY...........................................................58
SCHEDULE 3 - PLEDGORS...................................................................................59
EXHIBIT A - REVOLVING CREDIT NOTE.......................................................................60
EXHIBIT B - SWING LINE NOTE.............................................................................62
EXHIBIT C - NOTICE OF LOAN..............................................................................64
EXHIBIT D - COMPLIANCE CERTIFICATE......................................................................66
EXHIBIT E - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT................................................67
EXHIBIT F - FORM OF GUARANTY OF PAYMENT OF DEBT.........................................................72
EXHIBIT G - FORM OF SECURITY AGREEMENT.................................................................73
EXHIBIT H - FORM OF COLLATERAL ASSIGNMENT AND SECURITY
AGREEMENT.....................................................................................74
EXHIBIT I - FORM OF COLLATERAL ASSIGNMENT OF LICENSES
AND PERMITS.............................................................................................75
EXHIBIT J - FORM OF ASSUMPTION AGREEMENT................................................................76
EXHIBIT K - FORM OF PLEDGE AGREEMENT....................................................................77
</TABLE>
iv
<PAGE> 6
This CREDIT AGREEMENT (as it may from time to time be amended, restated
or otherwise modified, this "Agreement") is made effective as of the 15th day of
May, 1998, among OGLEBAY NORTON COMPANY, a Delaware corporation, 1100 Superior
Avenue, Cleveland, Ohio 44114 ("Borrower"), the banking institutions named in
SCHEDULE 1 attached hereto and made a part hereof (collectively, "Banks", and
individually, "Bank") and KEYBANK NATIONAL ASSOCIATION, 127 Public Square,
Cleveland, Ohio 44114-1306, as Agent for the Banks under this Agreement
("Agent").
WITNESSETH:
WHEREAS, Borrower and the Banks desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrower upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of any Person, or any
business or division of any Person, (b) the acquisition of in excess of fifty
percent (50%) of the stock (or other equity interest) of any Person, or (c) the
acquisition of another Person (other than a Company) by a merger or
consolidation or any other combination with such Person.
"Adjusted Prime Rate" shall mean a rate per annum equal to the greater
of (a) the Prime Rate or (b) one-half of one percent (1/2%) in excess of the
Federal Funds Effective Rate. Any change in the Adjusted Prime Rate shall be
effective immediately from and after such change in the Adjusted Prime Rate.
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Bank in respect of the Debt, if such payment results in that
Bank having less than its pro rata share of the Debt then outstanding, than was
the case immediately before such payment.
"Agent Fee Letter" shall mean the Agent Fee Letter from Agent to
Borrower, dated as of the Closing Date.
"Applicable Commitment Fee Rate" shall mean:
(a) for the period from the Closing Date through November 15, 1998,
fifty (50) basis points; and
<PAGE> 7
(b) commencing with the financial statements for the fiscal quarter
ending September 30, 1998, the number of basis points set forth in the following
matrix, based upon the result of the computation of the Leverage Ratio for the
most recently completed fiscal quarter, shall be used to establish the number of
basis points that will go into effect on November 16, 1998 and thereafter:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
APPLICABLE
LEVERAGE RATIO COMMITMENT FEE RATE
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 4.00 to 1.00 50.00 basis points
- -----------------------------------------------------------------------------------------------------------
Greater than or equal to 3.75 to 1.00 but less than 4.00 to 1.00 37.50 basis points
- ------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.50 to 1.00 but less than 3.75 to 1.00 30.00 basis points
- ------------------------------------------------------------------------------------------------------------
Less than 3.50 to 1.00 25.00 basis points
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Changes to the Applicable Commitment Fee Rate shall be effective on the first
day of the month following the date upon which Agent received, or, if earlier,
should have received, pursuant to Section 5.3 hereof, the financial statements
of the Companies. The above matrix does not modify or waive, in any respect, the
requirements of Section 5.7 hereof, the rights of the Banks to charge the
Default Rate, or the rights and remedies of the Banks pursuant to Articles VII
and VIII hereof.
"Applicable Margin" shall mean:
(a) for the period from the Closing Date through November 15, 1998, (i)
two hundred fifty (250) basis points for LIBOR Loans, and (ii) twenty-five (25)
basis points for Prime Rate Loans, and
(b) commencing with the financial statements for the fiscal quarter
ending September 30, 1998, the number of basis points (depending upon whether
Loans are LIBOR Loans or Prime Rate Loans) set forth in the following matrix,
based upon the result of the computation of the Leverage Ratio for the most
recently completed fiscal quarter, shall be used to establish the number of
basis points that will go into effect on November 16, 1998 and thereafter:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
APPLICABLE MARGIN APPLICABLE MARGIN
LEVERAGE RATIO FOR LIBOR LOANS FOR PRIME RATE
LOANS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than or equal to 4.25 to 1.00 250 basis points 25 basis points
- -----------------------------------------------------------------------------------------------------------------
Greater than or equal to 4.00 to 1.00 but 225 basis points 0 basis points
less than 4.25 to 1.00
- -----------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.75 to 1.00 but 200 basis points 0 basis points
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 8
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
less than 4.00 to 1.00
- -----------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.50 to 1.00 but 175 basis points 0 basis points
less than 3.75 to 1.00
- -----------------------------------------------------------------------------------------------------------------
Less than 3.50 to 1.00 150 basis points 0 basis points
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Changes to the Applicable Margin shall be effective on the first day of the
month following the date upon which Agent received, or, if earlier, should have
received, pursuant to Section 5.3 hereof, the financial statements of the
Companies. The above matrix does not modify or waive, in any respect, the
requirements of Section 5.7 hereof, the rights of the Banks to charge the
Default Rate, or the rights and remedies of Agent and the Banks pursuant to
Articles VII and VIII hereof.
"Assignment Agreement" shall mean an Assignment and Acceptance
Agreement in the form of EXHIBIT E hereto.
"Assumption Agreement" shall mean an Assumption Agreement in the form
of EXHIBIT J hereto.
"Business Day" shall mean a day of the year on which banks are not
required or authorized to close in Cleveland, Ohio, and, if the applicable
Business Day relates to any LIBOR Loan, on which dealings are carried on in the
London interbank eurodollar market.
"Canadian Amalgamation" shall mean all of the following:
(a) Global Stone Ingersoll Ltd. may reincorporate as a Canada
federal corporation;
(b) Global Stone Ingersoll Ltd. may create a new Subsidiary
(hereinafter "New Global Stone") organized as a Canada federal
corporation;
(c) Global Stone Corporation may merge into Oglebay Norton
Acquisition;
(d) Oglebay Norton Acquisition may merge into Global Stone
Ingersoll Ltd.;
(e) Global Stone Ingersoll Ltd. may merge into New Global
Stone; and
(f) the Global Reorganization may occur.
"Canadian Second Stage Transaction" shall mean a Second Stage
Transaction as such term is described in the Offer Documents.
"Capital Distribution" shall mean, with respect to any Company, a
payment made, liability incurred or other consideration given for the purchase,
acquisition, redemption or retirement of any
3
<PAGE> 9
capital stock of such Company or as a dividend, return of capital or other
distribution (other than any stock dividend or stock split payable only in
capital stock of the Company in question) in respect of any Company's capital
stock.
"Change in Control" shall mean (a) the acquisition of, or, if earlier,
the shareholder or director approval of the acquisition of, ownership or voting
control, directly or indirectly, beneficially or of record, on or after the
Closing Date, by any Person or group (within the meaning of Rule 13d-3 of the
SEC under the Securities Exchange Act of 1934, as then in effect), of shares
representing more than fifty percent (50%) of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of Borrower; or
(b) the occupation of a majority of the seats (other than vacant seats) on the
board of directors of Borrower by Persons who were neither (i) nominated by the
board of directors of Borrower nor (ii) appointed by directors so nominated;
provided, however, that the consummation of the Holding Company Reorganization
pursuant to Section 5.14 hereof shall not constitute a "Change in Control".
"Closing Date" shall mean the effective date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.
"Collateral Assignment and Security Agreement" shall mean a Collateral
Assignment and Security Agreement, in the form of the attached EXHIBIT H,
executed and delivered on or after the Closing Date by a Pledgor, wherein such
Pledgor has granted to Agent, for the benefit of the Banks, a security interest
in and an assignment of all intellectual property owned by such Pledgor, as the
same may be from time to time amended, restated or otherwise modified.
"Collateral Assignment of Licenses and Permits" shall mean a Collateral
Assignment of Licenses and Permits, in the form of the attached EXHIBIT I,
executed and delivered on or after the Closing Date by a Pledgor, wherein such
Pledgor has granted to Agent, for the benefit of the Banks, a security interest
in and assignment of all of such Pledgor's rights and interest in and to all
material licenses and permits, as the same may be from time to time amended,
restated or otherwise modified.
"Commitment" shall mean the obligation hereunder of the Banks, during
the Commitment Period, to extend credit pursuant to the Revolving Credit
Commitments up to the Total Commitment Amount.
"Commitment Percentage" shall mean, for each Bank, the percentage set
forth opposite such Bank's name under the column headed "Commitment Percentage"
as set forth on SCHEDULE 1 hereof.
"Commitment Period" shall mean the period from the Closing Date to May
15, 2001, or such earlier date on which the Commitment shall have been
terminated pursuant to Article VIII hereof.
"Company" shall mean Borrower or a Subsidiary.
4
<PAGE> 10
"Companies" shall mean Borrower and all Subsidiaries.
"Compliance Certificate" shall mean a certificate, substantially in the
form of the attached EXHIBIT D.
"Computer System" shall mean a computer system and all related
peripherals, including, but not limited to, hardware, software, devices and
systems.
"Consolidated" shall mean the resultant consolidation of the financial
statements of Borrower and its Subsidiaries in accordance with GAAP, including
principles of consolidation consistent with those applied in preparation of the
consolidated financial statements referred to in Section 6.15 hereof.
"Consolidated Capital Expenditures" shall mean, for any period, the
amount of capital expenditures as determined on a Consolidated basis and in
accordance with GAAP.
"Consolidated Depreciation and Amortization Charges" shall mean, for
any period, the Depreciation and Amortization Charges of Borrower for such
period, as determined on a Consolidated basis and in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, on a Consolidated
basis and in accordance with GAAP, Consolidated Net Earnings for such period
plus the aggregate amounts deducted in determining such Consolidated Net
Earnings in respect of (a) income taxes, (b) Consolidated Interest Expense, and
(c) Consolidated Depreciation and Amortization Charges.
"Consolidated Fixed Charges" shall mean, for any period, on a
Consolidated basis and in accordance with GAAP, the aggregate of (a) cash
interest expense (including, without limitation, the "imputed interest" portion
of capital leases), (b) actual cash expenditures for taxes, (c) cash principal
payments on long-term Funded Indebtedness maturing within twelve (12) months of
the date in question, and (d) actual cash expenditures relating to Capital
Distributions.
"Consolidated Interest Expense" shall mean, for any period, the
Consolidated interest expense of Borrower for such period, determined in
accordance with GAAP.
"Consolidated Net Earnings" shall mean, for any period, the Net
Earnings of Borrower for such period, determined on a Consolidated basis and in
accordance with GAAP.
"Consolidated Net Worth" shall mean, at any date, the Consolidated
stockholders' equity of Borrower, determined as of such date in accordance with
GAAP.
"Consolidated Pro-Forma Capital Expenditures" shall mean the sum of (a)
Consolidated Capital Expenditures, plus (b)(i) without duplication, the amount
of capital expenditures of Companies acquired by Borrower and its Subsidiaries
during the most recently completed four (4) fiscal quarters to the extent that
such capital expenditures of Companies acquired are confirmed by
5
<PAGE> 11
audited financial or other information satisfactory to Agent, minus (ii) capital
expenditures of Companies disposed of by Borrower and its Subsidiaries during
the most recently completed four (4) fiscal quarters.
"Consolidated Pro-Forma Cash Flow" shall mean, for any period, (a)
Consolidated Pro-Forma EBITDA minus (b) Consolidated Pro-Forma Capital
Expenditures, as determined in accordance with GAAP.
"Consolidated Pro-Forma EBITDA" shall mean the sum of (a) Consolidated
EBITDA, plus (b) the Global Stone Charges, if applicable, plus (c)(i) without
duplication, the EBITDA of Companies acquired by Borrower and its Subsidiaries
during the most recently completed four (4) fiscal quarters to the extent that
such EBITDA of Companies acquired is confirmed by audited financial or other
information satisfactory to Agent, minus (ii) EBITDA of Companies disposed of by
Borrower and its Subsidiaries during the most recently completed four (4) fiscal
quarters.
"Consolidated Pro-Forma Fixed Charges" shall mean the sum of (a)
Consolidated Fixed Charges, plus (b)(i) without duplication, the amount of Fixed
Charges of Companies acquired by Borrower and its Subsidiaries during the most
recently completed four (4) fiscal quarters to the extent that the Fixed Charges
of Companies acquired are confirmed by audited financial or other information
satisfactory to Agent, minus (ii) Fixed Charges of Companies disposed of by
Borrower and its Subsidiaries during the most recently completed four (4) fiscal
quarters.
"Consolidated Pro-Forma Interest Expense" shall mean the sum of (a)
Consolidated Interest Expense, plus (b)(i) without duplication, the interest
expense of Companies acquired by Borrower and its Subsidiaries during the most
recently completed four (4) fiscal quarters to the extent that such interest
expense of Companies acquired is confirmed by audited financial or other
information satisfactory to Agent, minus (ii) interest expense of Companies
disposed of by Borrower and its Subsidiaries during the most recently completed
four (4) fiscal quarters.
"Consolidated Pro-Forma Net Earnings" shall mean the sum of (a)
Consolidated Net Earnings, plus (b)(i) without duplication, the Net Earnings of
Companies acquired by Borrower and its Subsidiaries during the most recently
completed four (4) fiscal quarters to the extent that such net earnings of such
Companies acquired is confirmed by audited financial or other information
satisfactory to Agent, minus (ii) net earnings of Companies disposed of by
Borrower and its Subsidiaries during the most recently completed four (4) fiscal
quarters.
"Consolidated Pro-Forma Pre-Tax Earnings" shall mean, for any period,
(a)(i) Consolidated Net Earnings, plus (ii) Consolidated income taxes; plus
(b)(i) without duplication, the following number as calculated for all Companies
acquired by Borrower and its Subsidiaries during the most recently completed
four (4) fiscal quarters to the extent that such number for such Companies
acquired is confirmed by audited financial or other information satisfactory to
Agent: (A) net earnings, minus (B) any nonrecurring non-cash gains or losses,
plus (C) income taxes; minus (ii) the following number as calculated for all
Companies disposed of by Borrower and its Subsidiaries during the most recently
completed four (4) fiscal quarters: (A) net earnings, minus (B) any
6
<PAGE> 12
nonrecurring non-cash gains or losses, plus (C) income taxes; all as determined
in accordance with GAAP.
"Controlled Group" shall mean a Company and each Person required to be
aggregated with a Company under Code Sections 414(b), (c), (m) or (o).
"Debt" shall mean, collectively, (a) all Indebtedness incurred by
Borrower to Agent or the Banks pursuant to this Agreement and includes the
principal of and interest on all Notes; (b) each extension, renewal or
refinancing thereof in whole or in part; (c) the commitment and other fees,
including any prepayment fee, payable hereunder; and (d) all Related Expenses.
"Default Rate" shall mean a rate per annum equal to two percent (2%) in
excess of the Prime Rate from time to time in effect.
"Depreciation and Amortization Charges" shall mean, for any period, in
accordance with GAAP, the aggregate of all such charges for fixed assets,
leasehold improvements and general intangibles (specifically including goodwill)
of a Person for such period.
"Derived LIBOR Rate" shall mean a rate per annum equal to the sum of
the Applicable Margin plus the LIBOR Rate.
"Derived Prime Rate" shall mean a rate per annum equal to the sum of
the Applicable Margin plus the Adjusted Prime Rate.
"Documented Vessel" shall mean any one of the ships owned by a Company
as set forth on SCHEDULE 6.6 hereto.
"Dollar" and the sign "$" shall mean lawful money of the United States.
"EBITDA" shall mean, for any period, in accordance with GAAP, net
earnings for such period plus the aggregate amounts deducted in determining such
net earnings in respect of (a) income taxes, (b) interest expense, and (c)
Depreciation and Amortization Charges.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, policies, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States or, if applicable, Canada, or by any state, province,
territory or municipality thereof or by any court, agency, instrumentality,
regulatory authority or commission of any of the foregoing concerning air
quality, soil quality, water quality, wetlands, solid waste or the protection of
public health, human health, safety or the environment or the Release of any
Hazardous Substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated pursuant thereto.
7
<PAGE> 13
"ERISA Event" shall mean: (a) the existence of any condition or event
with respect to a Plan which presents a risk of the imposition of an excise tax
or any other liability on a Company or of the imposition of a Lien on the assets
of a Company, (b) a Controlled Group member has engaged in a non-exempt
"prohibited transaction" (as defined under ERISA Section 406 or Code Section
4975) or a breach of a fiduciary duty under ERISA which could result in
liability to a Company, (c) a Controlled Group member has applied for a waiver
from the minimum funding requirements of Code Section 412 or ERISA Section 302
or a Controlled Group member is required to provide security under Code Section
401(a)(29) or ERISA Section 307, (d) a Reportable Event has occurred with
respect to any Pension Plan as to which notice is required to be provided to the
PBGC, (e) a Controlled Group member has withdrawn from a Multiemployer Plan in a
"complete withdrawal" or a "partial withdrawal" (as such terms are defined in
ERISA Sections 4203 and 4205, respectively), (f) a Multiemployer Plan is in or
is likely to be in reorganization under ERISA Section 4241, (g) a Plan (and any
related trust) which is intended to be qualified under Code Sections 401 and 501
fails to be so qualified or any "cash or deferred arrangement" under any such
Plan fails to meet the requirements of Code Section 401(k), (h) the PBGC takes
any steps to terminate a Pension Plan or appoint a trustee to administer a
Pension Plan, or a Controlled Group member takes steps to terminate a Pension
Plan, (i) a Controlled Group member or a Plan fails to satisfy any requirements
of law applicable to a Plan, (j) a claim, action, suit, audit or investigation
is pending or threatened with respect to a Plan, other than a routine claim for
benefits, or (k) a Controlled Group member incurs or is expected to incur any
liability for post-retirement benefits under any Welfare Plan, other than as
required by ERISA Section 601, ET. SEQ. or Code Section 4980B.
"Eurocurrency Reserve Percentage" shall mean, for any Interest Period
in respect of any LIBOR Loan, as of any date of determination, the aggregate of
the then stated maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, applicable to such
Interest Period (if more than one such percentage is applicable, the daily
average of such percentages for those days in such Interest Period during which
any such percentage shall be so applicable) by the Board of Governors of the
Federal Reserve System, any successor thereto, or any other banking authority,
domestic or foreign, to which a Bank may be subject in respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Federal Reserve Board) or in respect of any other category of liabilities
including deposits by reference to which the interest rate on LIBOR Loans is
determined or any category of extension of credit or other assets that include
the LIBOR Loans. For purposes hereof, such reserve requirements shall include,
without limitation, those imposed under Regulation D of the Federal Reserve
Board and the LIBOR Loans shall be deemed to constitute Eurocurrency Liabilities
subject to such reserve requirements without benefit of credits for proration,
exceptions or offsets which may be available from time to time to any Bank under
said Regulation D.
"Event of Default" shall mean an event or condition that constitutes an
event of default as defined in Article VII hereof.
"Federal Funds Effective Rate" shall mean, for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of
1%)) announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on
8
<PAGE> 14
overnight federal funds transactions arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the Closing Date.
"Financial Officer" shall mean any of the following officers: chief
executive officer, president, chief financial officer, treasurer or vice
president of finance.
"Fixed Charges" shall mean, for any period, in accordance with GAAP,
the aggregate of (a) cash interest expense (including, without limitation, the
"imputed interest" portion of capital leases), (b) actual cash expenditures for
taxes, (c) cash principal payments on long-term funded indebtedness maturing
within twelve (12) months of the date in question, and (d) actual cash
expenditures relating to Capital Distributions.
"Foreign Entity" shall mean a Company that is not organized under the
laws of state of the United States.
"Fronting Bank" shall mean, as to any Letter of Credit transaction
hereunder, Agent as issuer of the Letter of Credit, or, in the event that Agent
is unable to issue a Letter of Credit, such other Bank as shall agree to issue
the Letter of Credit in its own name but on behalf of the Banks hereunder.
"Funded Indebtedness" shall mean, on a Consolidated basis, Indebtedness
for borrowed money, including, but not limited to, current, long-term and
Subordinated Indebtedness, if any; provided, however, that reimbursement
obligations under letters of credit or banker's acceptances up to an aggregate
amount of Three Million Dollars ($3,000,000) shall not be deemed to constitute
Funded Indebtedness.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Borrower, and, if applicable, shall
mean generally accepted accounting principles from time to time approved by the
Canadian Institute of Chartered Accountants, or any successor institute, as of
the date on which such calculation is made or required to be made in accordance
with generally accepted accounting principles.
"Global Control Date" shall mean the date, after the Global Stone
Acquisition, upon which Oglebay Norton Acquisition shall own ninety percent
(90%) of the Global Stone Shares.
"Global Domestic Subsidiary" shall mean a Subsidiary of Global Stone
that is organized under the laws of a state of the United States.
"Global Reorganization" shall mean the transfer of direct ownership of
all Global Domestic Subsidiaries to one or more Oglebay Domestic Subsidiaries.
9
<PAGE> 15
"Global Stone" shall mean Global Stone Corporation, a Canada
corporation, and its successors and assigns.
"Global Stone Acquisition" shall mean the acquisition by Oglebay Norton
Acquisition of at least sixty-six and two thirds percent (66 2/3%) of the
outstanding voting shares of Global Stone, pursuant to the terms and conditions
of the Offer Documents.
"Global Stone Charges" shall mean the nonrecurring charges associated
with the tender offer by Carmeuse S.A. to purchase all of the shares of Global
Stone and the Global Stone Acquisition, including, but not limited to, all costs
and expenses related thereto, to be taken (in accordance with GAAP) by Borrower
on or prior to Borrower's fiscal quarter ending June 30, 1998.
"Global Stone Pledgor" shall mean a Pledgor that, prior to the Global
Stone Acquisition, was a Global Domestic Subsidiary.
"Global Stone Shares" shall mean the "Global Stone Shares" as defined
in the Offer Documents.
"Global Stone Trust Indenture" shall mean the Trust Indenture between
Global Stone and Montreal Trust Company of Canada, as trustee, dated as of
February 15, 1995.
"Guarantor" shall mean a Person which pledges its credit or property in
any manner for the payment or other performance of the indebtedness, contract or
other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or Person
which agrees conditionally or otherwise to make any purchase, loan or investment
in order thereby to enable another to prevent or correct a default of any kind.
"Guaranty of Payment" shall mean a Guaranty of Payment of the Debt, in
the form of the attached EXHIBIT F, executed and delivered on or after the
Closing Date by a Pledgor, as the same may be from time to time amended,
restated or otherwise modified.
"Hazardous Substance" shall mean any hazardous, toxic or dangerous
pollutant, contaminant, substance or waste or any such pollutant, contaminant,
substance or waste that is defined or listed under any Environmental Law or that
is otherwise regulated or prohibited or subject to investigation or remediation
under any Environmental Law because of its hazardous, toxic, dangerous or
injurious properties, including, without limitation: (i) any "hazardous
substance" as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended;
(ii) any "hazardous waste" as now or hereafter defined under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690l et seq., as amended; (iii)
hydrocarbons and/or petroleum products or fractions thereof, natural gas,
natural gas liquids, liquefied natural gas and synthetic gas usable for fuel;
(iv) asbestos containing material; (v) flammable explosives; (vi)
polychlorinated biphenyls; (vii) radioactive materials; and (viii) any substance
for which special handling or notification is required for its collection,
storage, treatment, use or disposal.
10
<PAGE> 16
"Hedge Agreement" shall mean any hedge agreement, interest rate swap,
cap, collar or floor agreement, or other interest rate management device entered
into by Borrower with any financial institution.
"Holding Company" shall mean Oglebay Norton Holding Company, an Ohio
corporation, and its successors and assigns.
"Holding Company Reorganization" shall have the meaning set forth in
Section 5.14 hereof.
"Indebtedness" shall mean, for any Company (excluding in all cases
trade payables and accrued expenses payable in the ordinary course of business
by any Company), (a) all obligations to repay borrowed money, direct or
indirect, incurred, assumed, or guaranteed, (b) all obligations for the deferred
purchase price of capital assets, (c) all obligations under conditional sales or
other title retention agreements, (d) all reimbursement obligations (contingent
or otherwise) under any letter of credit or banker's acceptance, (e) all lease
obligations capitalized on the books of such Company in accordance with GAAP,
and (f) any other transaction (including forward sale or purchase agreements)
having the commercial effect of a borrowing of money entered into by such
Company to finance its operations or capital requirements.
"Interest Adjustment Date" shall mean the last day of each Interest
Period.
"Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the date such LIBOR Loan is made and ending on the last day
of such period, as selected by Borrower pursuant to the provisions hereof and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of such period, as selected
by Borrower pursuant to the provisions hereof. The duration of each Interest
Period for any LIBOR Loan shall be one (1) month, two (2) months, three (3)
months, or six (6) months, in each case as Borrower may select upon notice, as
set forth in Section 2.2 hereof, provided that: (a) if Borrower fails to so
select the duration of any Interest Period, Borrower shall be deemed to have
converted such LIBOR Loan to a Prime Rate Loan at the end of the then current
Interest Period; and (b) Borrower may not select any Interest Period for a LIBOR
Loan which ends after any date when principal is due on such LIBOR Loan.
"Interest Rate Protection" shall mean, with respect to Indebtedness of
a Company, that either (a) such Company has obtained a fixed rate of interest on
such Indebtedness, or (b) such Company has entered into a Hedge Agreement or
Hedge Agreements, upon terms and conditions satisfactory to Agent.
"Letter of Credit" shall mean any commercial documentary letter of
credit or any standby letter of credit which shall be issued by a Fronting Bank
for the benefit of Borrower or a Pledgor, including amendments thereto, if any,
and shall have an expiration date no later than the earlier of (a) one (1) year
after its date of issuance, or (b) fifteen (15) days prior to the last day of
the Commitment Period.
11
<PAGE> 17
"Letter of Credit Commitment" shall mean the commitment of Agent (or a
Fronting Bank), on behalf of the Banks, to issue Letters of Credit in an
aggregate outstanding face amount of up to Fifteen Million Dollars
($15,000,000), during the Commitment Period, on the terms and conditions set
forth in Section 2.1C hereof.
"Leverage Ratio" shall mean, at any time, the ratio for the Companies
of Total Funded Indebtedness to Consolidated Pro-Forma EBITDA for the most
recently completed four (4) fiscal quarters.
"LIBOR Loan" shall mean a Loan described in Section 2.1 hereof on which
Borrower shall pay interest at a rate based on the LIBOR Rate.
"LIBOR Rate" shall mean, for any Interest Period with respect to a
LIBOR Loan, the quotient (rounded upwards, if necessary, to the nearest one
sixteenth of one percent (1/16th of 1%)) of: (a) the per annum rate of interest,
determined by Agent in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) as of approximately 11:00 A.M.
(London time) two (2) Business Days prior to the beginning of such Interest
Period pertaining to such LIBOR Loan, as provided by Telerate Service,
Bloomberg's or Reuters (or any other similar company or service that provides
rate quotations comparable to those currently provided by such companies) as the
rate in the London interbank market for dollar deposits in immediately available
funds with a maturity comparable to such Interest Period, DIVIDED BY (b) a
number equal to 1.00 MINUS the Eurocurrency Reserve Percentage. In the event
that such rate quotation is not available for any reason, then the rate (for
purposes of clause (a) hereof) shall be the rate, determined by Agent as of
approximately 11:00 A.M. (London time) two (2) Business Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, to be the
average (rounded upwards, if necessary, to the nearest one sixteenth of one
percent (1/16th of 1%)) of the per annum rates at which dollar deposits in
immediately available funds in an amount comparable to such LIBOR Loan and with
a maturity comparable to such Interest Period are offered to the prime banks by
leading banks in the London interbank market. The LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Percentage.
"Lien" shall mean any mortgage, security interest, lien, charge,
encumbrance on, pledge or deposit of, or conditional sale or other title
retention agreement with respect to any property (real or personal) or asset.
"Loan" or "Loans" shall mean the credit granted to Borrower by the
Banks in accordance with Section 2.1A or B hereof.
"Loan Documents" shall mean this Agreement, each of the Notes, each of
the Guaranties of Payment, each Security Document, each Subordination Agreement,
if any, all documentation relating to each Letter of Credit and any other
documents relating to any of the foregoing, as any of the foregoing may from
time to time be amended, restated or otherwise modified or replaced.
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"Majority Banks" shall mean the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Total Commitment Amount, or, if there is any
borrowing hereunder, the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the aggregate amount at the time outstanding under the Notes (other
than the Swing Line Notes).
"Moody's" shall mean Moody's Investors Service, Inc., or any successor
to such company.
"Mortgage" shall mean a Mortgage, Deed of Trust or other instrument, in
form and substance reasonably satisfactory to Agent, executed by a Company on or
after the Closing Date, with respect to a Mortgaged Real Property, as the same
may from time to time be amended, restated or otherwise modified.
"Mortgaged Real Property" shall mean any one of the parcels of real
property owned or leased by a Company as set forth on SCHEDULE 2 hereto, in each
case together with all improvements and buildings thereon and all appurtenances,
easements or other rights belonging thereto.
"Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.
"NCB Ship Mortgage" shall mean the First Preferred Fleet Mortgage dated
as of July 14, 1997, executed by Borrower in favor of National City Bank, as
amended and as may from time to time be further amended, restated or otherwise
modified, with respect to the Wolverine and the David Z. Norton.
"Negotiated Rate" shall mean a fixed rate of interest per annum quoted
to Borrower by Agent based upon Agent's cost of funds, and agreed to by
Borrower.
"Net Earnings" shall mean, for any period, the net income (loss) for
such period, determined in accordance with GAAP.
"New Global Stone" shall mean that term as defined in subpart (b) of
the definition of Canadian Amalgamation set forth above.
"Note" shall mean any Revolving Credit Note, the Swing Line Note, any
Canadian Revolving Note, the Canadian Swing Line Note or any other note
delivered pursuant to this Agreement.
"Notice of Loan" shall mean a Notice of Loan in the form of the
attached EXHIBIT C.
"Obligor" shall mean (a) a Person whose credit or any of whose property
is pledged to the payment of the Debt and includes, without limitation, any
Guarantor, and (b) any signatory to a Related Writing.
"Offer Documents" shall mean the offer to purchase for cash all of the
common shares of Global Stone by Oglebay Norton Acquisition and the take-over
bid circular, and all other documents
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filed in connection with the foregoing, filed by Oglebay Norton Acquisition on
April 24, 1998 with the applicable Securities Authorities and all agreements,
instruments and documents executed pursuant thereto or in connection therewith,
as any of the foregoing may from time to time be amended, restated or otherwise
modified.
"Oglebay Domestic Subsidiary" shall mean a Subsidiary of Borrower that
is organized under the laws of a state of the United States.
"Oglebay Pledgor" shall mean a Pledgor that, prior to the Global Stone
Acquisition, was a Subsidiary of Borrower.
"Oglebay Norton Acquisition" shall mean Oglebay Norton Acquisition
Limited, a corporation organized under the Canada Business Corporation Act, as
amended, and its successors and assigns.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.
"Pension Plan" shall mean a Plan that is a "pension plan" (within the
meaning of ERISA Section 3(2)).
"Permitted Investment" shall mean any of the following:
(a) direct obligations of or obligations guaranteed by the
United States or the Canadian government;
(b) obligations issued or guaranteed by an agency or
instrumentality of the United States or obligations of the Federal
National Mortgage Association, the Student Loan Marketing Association,
the Federal home Loan Banks or the Federal Farm Credit Bank;
(c) bankers' acceptances drawn on and accepted by banks (which
may include Agent or any Bank), and certificates of deposit or
commercial paper of banks (which may include Agent or any Bank), with a
combined capital and surplus aggregating at least One Hundred Million
Dollars ($100,000,000) and, if such acceptances are drawn on, or such
certificates of deposits or commercial paper are issued by any bank
other than the Banks, the unsecured deposits or securities of such bank
shall be, at the time of acquisition, rated within one (1) of the two
(2) highest rating categories assigned by either Rating Agency;
(d) interest-bearing demand or time deposits or certificates
of deposit of a bank (which may include Agent or any Bank) or trust
company continuously secured and collateralized by obligations of the
type described in subsection (a) hereof, or by obligations of the type
described in subsection (k) hereof, having a market value determined
not less than daily equal at all times to at least the amount of such
deposit or certificate, to the extent such deposit or certificate is
not insured by the Federal Deposit Insurance Corporation or any
successor thereto;
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<PAGE> 20
(e) interest-bearing notes or commercial paper of any of the
Banks, or interest-bearing notes or commercial paper rated within one
of the three (3) highest rating categories assigned by either Rating
Agency, issued by a bank or bank holding company which has a combined
capital and surplus aggregating at least One Hundred Million Dollars
($100,000,000), or commercial paper rated within rating category A1+,
A1, A2, P1 or P2, as assigned by the applicable Rating Agency, issued
by any other entity;
(f) repurchase agreements and investment agreements issued by
banks (which may include the Agent or any Bank) with a combined capital
and surplus aggregating at least One Hundred Million Dollars
($100,000,000) or by any other entity whose debt or unsecured
securities are, at the time of acquisition, rated within one (1) of the
two (2) highest rating categories assigned by either Rating Agency, or
continuously secured and collateralized by obligations referred to in
subsections (a) through (e) above or (g) through (j) below having a
market value, determined not less frequently than daily, at least equal
at the time of each such determination to the principal balance
collectible pursuant thereto plus accrued interest thereon;
(g) interest-bearing notes or investment agreements secured by
a letter of credit issued by banks (which may include Agent or any
Bank) with a combined capital and surplus aggregating at least One
Hundred Million Dollars ($100,000,000), or by a surety issued by an
insurance company, in each case (other than in the case of a letter of
credit issued by a Bank) the unsecured securities or deposits of either
of which are rated at the time of acquisition within one (1) of the two
(2) highest rating categories assigned by either Rating Agency;
(h) securities with a remaining term of maturity of, or which
are payable at par upon demand by the holder thereof within ninety (90)
days or less, the interest on which is exempt from federal income
taxation, rated by either Rating Agency in its highest note or
commercial paper rating category;
(i) any other securities or obligations selected by Borrower
and approved in writing by the Majority Banks;
(j) shares redeemable on demand at par of, or an investment
agreement with, an Investment Company (as defined in the Investment
Company Act of 1940, as amended) which invests in, or collateralizes
such investment agreement with, obligations of the type described as
Permitted Investments in any other subsection of this definition; and
(k) tax-free money market funds which invest principally in
obligations rated in the highest rating category whether rated as
short-term or long-term obligations by a Rating Agency.
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<PAGE> 21
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency or
political subdivision thereof or any other entity.
"Plan" shall mean (a) an "employee benefit plan" (within the meaning of
ERISA Section 3(3)) that a Controlled Group member at any time sponsors,
maintains, contributes to, has liability with respect to or has an obligation to
contribute to such plan, or (b) a statutory plan relating to any of such matters
which any Person is required to comply with, including, without limitation, the
Canada or Quebec Pension Plans and plans administered pursuant to applicable
provincial health tax, workers' compensation and unemployment insurance
legislation.
"Pledge Agreement" shall mean a Pledge Agreement, in the form of the
attached EXHIBIT K, executed and delivered to Agent and the Banks by Borrower or
a Pledgor, as appropriate, on or after the Closing Date, as the same may be from
time to time amended, restated or otherwise modified.
"Pledgor" shall mean each of the Companies set forth on SCHEDULE 3
hereof which are each executing and delivering to Agent for the benefit of the
Banks a (a) Guaranty of Payment, (b) Security Agreement, (c) Collateral
Assignment and Security Agreement, if applicable, (d) Collateral Assignment of
Licenses and Permits, (e) Pledge Agreement, if applicable, (f) Mortgage, if
applicable, and (g) Preferred Ship Mortgage, if applicable; and any other Person
which shall execute and deliver any of the foregoing to Agent for the benefit of
the Banks subsequent to the Closing Date.
"Preferred Ship Mortgage" shall mean a Preferred Ship Mortgage, in form
and substance satisfactory to Agent, executed by a Company on or after the
Closing Date with respect to a Documented Vessel, as the same may from time to
time be amended, restated or otherwise modified.
"Prime Rate" shall mean the interest rate established from time to time
by Agent as Agent's prime rate, whether or not such rate is publicly announced;
the Prime Rate may not be the lowest interest rate charged by Agent for
commercial or other extensions of credit. Each change in the Prime Rate shall be
effective immediately from and after such change.
"Prime Rate Loan" shall mean a Loan described in Section 2.1 hereof on
which Borrower shall pay interest at a rate based on the Derived Prime Rate.
"Proxy Statement" shall mean the Proxy-Statement Prospectus relating to
the Holding Company Reorganization, filed by Borrower with the SEC on March 3,
1998, as amended on April 8, 1998, and as further amended on April 24, 1998, and
as the same may, with prior written notice to Agent and the Banks, be further
amended, restated or otherwise modified.
"Rating Agency" means Moody's or Standard & Poor's or the successor of
either or, if both no longer exist and have no successors, then any other rating
agency approved by the Majority Banks.
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"Real Property" shall mean any one of the parcels of real property, or
interests therein, owned or leased by a Company (including, but not limited to,
the Mortgaged Real Property) together with all improvements and buildings
thereon and all appurtenances, easements or other rights belonging thereto.
"Related Expenses" shall mean any and all costs, liabilities, and
expenses (including, without limitation, losses, damages, penalties, claims,
actions, reasonable attorneys' fees, legal expenses, judgments, suits, and
disbursements) incurred by, imposed upon, or asserted against, Agent or any Bank
in any attempt by Agent: (a) to obtain, preserve, perfect, or enforce any
security interest evidenced by this Agreement or any Related Writing; (b) to
obtain payment, performance, and observance of any and all of the Debt; (c) to
maintain, insure, audit, collect, preserve, repossess, and dispose of any of the
collateral securing the Debt or any thereof, including, without limitation,
costs and expenses for appraisals, assessments, and audits of Borrower or any
such collateral; or (d) incidental or related to (a) through (c) above,
including, without limitation, interest thereupon from the date incurred,
imposed, or asserted until paid at the Default Rate.
"Related Writing" shall mean the Loan Documents and any assignment,
mortgage, security agreement, guaranty agreement, subordination agreement,
financial statement, audit report or other writing furnished by Borrower, any
Subsidiary or any Obligor, or any of their respective officers, to the Banks
pursuant to or otherwise in connection with this Agreement.
"Release" shall mean any release, spill, emission, leaking, pumping,
pouring, emptying, disposing, injection, deposit, discharge, leaching, or
migration into any media, whether soil, surface water, ground water, building
interior or components, air or any combination of the foregoing, and the
movement of any contamination through any media, and including the abandonment
or discarding of barrels, containers and other closed receptacles containing any
Hazardous Substance.
"Reportable Event" shall mean a reportable event as that term is
defined in Title IV of ERISA, except actions of general applicability by the
Secretary of Labor under Section 110 of such Act.
"Revolving Credit Commitment" shall mean the obligation hereunder,
during the Commitment Period, of (a) each Bank to participate in the making of
Revolving Loans up to the aggregate amount set forth opposite such Bank's name
under the column headed "Revolving Credit Commitment Amount" as set forth on
SCHEDULE 1 hereof (or such lesser amount as shall be determined pursuant to
Section 2.5 hereof), (b) each Bank to participate in the issuance of Letters of
Credit pursuant to the Letter of Credit Commitment and (c) Agent to make Swing
Loans pursuant to the Swing Line Commitment.
"Revolving Credit Note" shall mean any Revolving Credit Note executed
and delivered pursuant to Section 2.1A hereof.
"Revolving Loan" shall mean a Loan granted to Borrower by the Banks in
accordance with Section 2.1A hereof.
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"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Authorities" shall mean The Toronto Stock Exchange, the
appropriate securities commissions or similar regulatory authorities in Canada
and each of the provinces and territories thereof and in the United States and
each of the states thereof.
"Security Agreement" shall mean a Security Agreement, in the form of
the attached EXHIBIT G, executed and delivered by a Company to Agent and the
Banks in connection with this Agreement, as the same may be from time to time
amended, restated or otherwise modified.
"Security Documents" shall mean each of the Security Agreements, each
of the Pledge Agreements, each of the Mortgages, each of the Preferred Ship
Mortgages, each of the Collateral Assignment and Security Agreements, each of
the Collateral Assignments of Licenses and Permits, each U.C.C. financing
statement executed in connection herewith, and any other documents relating to
any of the foregoing, as any of the foregoing may from time to time be amended,
restated or otherwise modified or replaced.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw- Hill, Inc., or any successor to such company.
"Subordinated", as applied to Indebtedness, shall mean that the
Indebtedness has been subordinated (by written terms or written agreement being,
in either case, in form and substance reasonably satisfactory to Agent) in favor
of the prior payment in full of the Debt.
"Subordinated Creditor" shall mean any Person which shall deliver a
Subordination Agreement to Agent and the Banks.
"Subordinated Note Purchase Agreement" shall mean the Note Purchase
Agreement among Borrower, the guarantors a party thereto, and CIBC Oppenheimer
Corp., dated as of May 15, 1998, as the same may be, with the prior written
consent of Agent, which consent shall not be unreasonably withheld, from time to
time, amended, restated or otherwise modified.
"Subordination Agreement" shall mean a Subordination Agreement, in form
and substance satisfactory to Agent, executed and delivered by a Subordinated
Creditor on or subsequent to the Closing Date, as the same may be from time to
time amended, restated or otherwise modified.
"Subsidiary" of Borrower or any of its Subsidiaries shall mean (a) a
corporation more than fifty percent (50%) of the voting power or capital stock
of which is owned, directly or indirectly, by Borrower or by one or more other
subsidiaries of Borrower or by Borrower and one or more subsidiaries of
Borrower, (b) a partnership or limited liability company of which Borrower, one
or more other subsidiaries of Borrower or Borrower and one or more subsidiaries
of Borrower, directly or indirectly, is a general partner or managing member, as
the case may be, or otherwise has the power to direct the policies, management
and affairs thereof, or (c) any other Person (other than a corporation) in which
Borrower, one or more other subsidiaries of Borrower or Borrower and one
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<PAGE> 24
or more subsidiaries of Borrower, directly or indirectly, has at least a
majority ownership interest or the power to direct the policies, management and
affairs thereof.
"Swing Line" shall mean the credit facility established by Agent in
accordance with Section 2.1B hereof.
"Swing Line Commitment" shall mean the commitment of Agent to make
Swing Loans to Borrower up to the maximum aggregate amount at any time
outstanding of Ten Million Dollars ($10,000,000) on the terms and conditions set
forth in Section 2.1B hereof.
"Swing Line Note" shall mean the Swing Line Note executed and delivered
pursuant to Section 2.1B hereof.
"Swing Loan" shall mean a Loan granted to Borrower by Agent in
accordance with Section 2.1B hereof.
"Swing Loan Maturity Date" shall mean, with respect to any Swing Loan,
the earlier of (a) thirty (30) days after the date such Swing Loan is made, or
(b) the last day of the Commitment Period.
"Title XI Ship Mortgage" shall mean the First Preferred Ship Mortgage
executed by Borrower in favor of the United States of America, represented by
the Secretary of Transportation, dated as of May 29, 1981, as supplemented, with
respect to the Columbia Star, as the same may be from time to time further
supplemented, amended, restated or otherwise modified.
"Total Commitment Amount" shall mean the principal amount of Two
Hundred Fifteen Million Dollars ($215,000,000) (or such lesser amount as shall
be determined pursuant to Section 2.5 hereof).
"Total Funded Indebtedness" shall mean all Funded Indebtedness.
"Total Senior Funded Indebtedness" shall mean all Total Funded
Indebtedness other than Subordinated Indebtedness.
"Unmatured Event of Default" shall mean an event or condition which
constitutes, or which with the lapse of any applicable grace period or the
giving of notice or both would constitute, an Event of Default and which has not
been waived by the Majority Banks in writing.
"Voting Power" shall mean, with respect to any Person, the exclusive
ability to control, through the ownership of shares of capital stock,
partnership interests, membership interests or otherwise, the election of
members of the board of directors or other similar governing body of such
Person, and the holding of a designated percentage of Voting Power of a Person
means the ownership of shares of capital stock, partnership interests,
membership interests or other interests
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of such Person sufficient to control exclusively the election of that percentage
of the members of the board of directors or similar governing body of such
Person.
"Welfare Plan" shall mean a Plan that is a "welfare plan" within the
meaning of ERISA Section 3 (l).
"Wholly-Owned Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or other entity all of the securities or
other ownership interest, of which having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"Year 2000 Compliant" shall mean that a Computer System will operate
accurately, without interruption and without any negative change in performance
due to the change of the millennium.
Any accounting term not specifically defined in this Article I shall
have the meaning ascribed thereto by GAAP.
The foregoing definitions shall be applicable to the singular and
plurals of the foregoing defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
conditions of this Agreement, each Bank will participate to the extent
hereinafter provided in making Loans to Borrower, and issuing Letters of Credit
at the request of Borrower, in such aggregate amount as Borrower shall request
pursuant to the Commitment; provided, however, that in no event shall the
aggregate principal amount of all Loans and Letters of Credit outstanding under
this Agreement be in excess of the Total Commitment Amount.
Each Bank, for itself and not one for any other, agrees to participate
in Loans made and Letters of Credit issued hereunder during the Commitment
Period on such basis that (a) immediately after the completion of any borrowing
by Borrower or issuance of a Letter of Credit hereunder, the aggregate principal
amount then outstanding on the Notes (other than the Swing Line Note) issued to
such Bank, when combined with such Bank's pro rata share of the aggregate
undrawn face amount of all issued and outstanding Letters of Credit, shall not
be in excess of the amount shown opposite the name of such Bank under the column
headed "Maximum Amount" as set forth in SCHEDULE 1 hereto, and (b) such
aggregate principal amount outstanding on the Notes (other than the Swing Line
Note) issued to such Bank shall represent that percentage of the aggregate
principal amount then outstanding on all Notes (other than the Swing Line Note)
which is such Bank's Commitment Percentage.
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Each borrowing (other than Swing Loans) from the Banks hereunder shall
be made pro rata according to the Banks' respective Commitment Percentages. The
Loans may be made as Revolving Loans and Swing Loans, and Letters of Credit may
be issued, as follows:
A. Revolving Loans.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Banks shall make a Revolving Loan or Revolving Loans to
Borrower in such amount or amounts as Borrower may from time to time request,
but not exceeding in aggregate principal amount at any time outstanding
hereunder the Revolving Credit Commitment, when such Revolving Loans are
combined with the aggregate principal amount of all Swing Loans outstanding and
the aggregate undrawn face amount of all issued and outstanding Letters of
Credit. Borrower shall have the option to borrow Revolving Loans, maturing on
the last day of the Commitment Period, hereunder by means of any combination of
(a) Prime Rate Loans, or (b) LIBOR Loans.
Borrower shall pay interest on the unpaid principal amount of Prime
Rate Loans outstanding from time to time from the date thereof until paid at the
Derived Prime Rate from time to time in effect. Interest on such Prime Rate
Loans shall be payable on the last day of each June, September, December and
March of each year and at the maturity thereof, commencing June 30, 1998.
Borrower shall pay interest on the unpaid principal amount of each LIBOR Loan
outstanding from time to time from the date thereof until paid at a rate per
annum which shall be the Derived LIBOR Rate, fixed in advance for each Interest
Period (but subject to changes in the Applicable Margin) as herein provided for
each such Interest Period. Interest on such LIBOR Loans shall be payable on each
Interest Adjustment Date with respect to an Interest Period (provided that if an
Interest Period exceeds three (3) months, the interest must be paid every three
(3) months, commencing three (3) months from the beginning of such Interest
Period).
At the request of Borrower, provided no Unmatured Event of Default or
Event of Default exists hereunder, the Banks shall convert Prime Rate Loans to
LIBOR Loans at any time, subject to the notice and other provisions of Section
2.2 hereof, and shall convert LIBOR Loans to Prime Rate Loans on any Interest
Adjustment Date.
The obligation of Borrower to repay the Prime Rate Loans and the LIBOR
Loans made by each Bank and to pay interest thereon shall be evidenced by a
Revolving Credit Note of Borrower substantially in the form of EXHIBIT A hereto,
dated the Closing Date, and payable to the order of such Bank in the principal
amount of its Revolving Credit Commitment, or, if less, the aggregate unpaid
principal amount of Revolving Loans made hereunder by such Bank. Subject to the
provisions of this Agreement, Borrower shall be entitled under this Section 2.1A
to borrow funds, repay the same in whole or in part and re-borrow hereunder at
any time and from time to time during the Commitment Period.
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B. Swing Loans.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, Agent shall make a Swing Loan or Swing Loans to Borrower in
such amount or amounts as Borrower may from time to time request; provided, that
Agent shall not make any Swing Loan under the Swing Line if, after giving effect
thereto, (a) the sum of (i) the aggregate outstanding principal amount of all
Revolving Loans, plus, (ii) the aggregate outstanding principal amount of all
Swing Loans, plus (iii) the aggregate undrawn face amount of all issued and
outstanding Letters of Credit, would exceed the Total Commitment Amount, or (b)
the aggregate outstanding principal amount of all Swing Loans would exceed the
Swing Line Commitment. Each Swing Loan shall be due and payable on the Swing
Loan Maturity Date applicable thereto.
Borrower shall pay interest, for the sole benefit of Agent, on the
unpaid principal amount of each Swing Loan outstanding from time to time from
the date thereof until paid at a rate equal to the Negotiated Rate applicable to
such Swing Loan. Interest on each Swing Loan shall be payable on the Swing Loan
Maturity Date applicable thereto. Each Swing Loan shall bear interest for a
minimum of one (1) day.
The obligation of Borrower to repay the Swing Loans and to pay interest
thereon shall be evidenced by a Swing Line Note of Borrower substantially in the
form of EXHIBIT B hereto, dated the Closing Date, and payable to the order of
Agent in the principal amount of the Swing Loan Commitment, or, if less, the
aggregate unpaid principal amount of Swing Loans made hereunder by Agent.
Subject to the provisions of this Agreement, Borrower shall be entitled under
this Section 2.1B to borrow funds, repay the same in whole or in part and
reborrow hereunder at any time and from time to time during the Commitment
Period.
On any day when a Swing Loan is outstanding (whether before or after
the maturity thereof), Agent shall have the right to request that each Bank
purchase a participation in such Swing Loan, and Agent shall promptly notify
each Bank thereof (by facsimile or telephone, confirmed in writing). Upon such
notice, but without further action, Agent hereby agrees to grant to each Bank,
and each Bank hereby agrees to acquire from Agent, an undivided participation
interest in such Swing Loan in an amount equal to such Bank's Commitment
Percentage of the aggregate principal amount of such Swing Loan. In
consideration and in furtherance of the foregoing, each Bank hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
Agent, for its sole account, such Bank's ratable share of such Swing Loan
(determined in accordance with such Bank's Commitment Percentage). Each Bank
acknowledges and agrees that its obligation to acquire participations in Swing
Loans pursuant to this Section 2.1B is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including, without limitation, the
occurrence and continuance of an Unmatured Event of Default or an Event of
Default, and that each such payment shall be made without any offset, abatement,
recoupment, counterclaim, withholding or reduction whatsoever and whether or not
such Bank's Revolving Credit Commitment shall have been reduced or terminated.
Each Bank shall comply with its obligation under this Section 2.1B by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.2(b) with respect to Revolving Loans to be made by such Bank.
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<PAGE> 28
If Agent elects, by giving notice to Borrower and the Banks, Borrower
agrees that Agent shall have the right, in its sole discretion, to request that
any Swing Loan be refinanced as a Revolving Loan. Such Revolving Loan shall be a
Prime Rate Loan unless and until converted by Borrower to a LIBOR Loan pursuant
to Section 2.1A hereof. Upon receipt of such notice by Borrower, Borrower shall
be deemed on such day to have requested a Revolving Loan in the principal amount
of the Swing Loan in accordance with Sections 2.1 and 2.2. Each Bank agrees to
make a Revolving Loan on the date of such notice, subject to no conditions
precedent whatsoever. Each Bank acknowledges and agrees that its obligation to
make a Revolving Loan pursuant to Section 2.1A when required by this Section
2.1B is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of an
Unmatured Event of Default or Event of Default, and that its payment to Agent,
for the account of Agent, of the proceeds of such Revolving Loan shall be made
without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not such Bank's Revolving Credit Commitment
shall have been reduced or terminated. Borrower irrevocably authorizes and
instructs Agent to apply the proceeds of any borrowing pursuant to this
paragraph to repay in full such Swing Loan.
C. Letters of Credit.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, Agent (or such other Bank as shall agree to be the Fronting
Bank) shall, in its own name, but only as agent for the Banks, issue such
Letters of Credit for the account of Borrower or any Pledgor, as Borrower may
from time to time request. Borrower shall not request any Letter of Credit (and
neither Agent nor any Fronting Bank shall be obligated to issue any Letter of
Credit) if, after giving effect thereto, (a) the aggregate undrawn face amount
of all issued and outstanding Letters of Credit would exceed the Letter of
Credit Commitment, or (b) the sum of (i) the aggregate outstanding principal
amount of all Revolving Loans, plus (ii) the aggregate undrawn face amount of
all issued and outstanding Letters of Credit, plus (iii) the aggregate
outstanding principal amount of all Swing Loans, would exceed the Total
Commitment Amount. The issuance of each Letter of Credit shall confer upon each
Bank the benefits and liabilities of a participation consisting of an undivided
pro rata interest in the Letter of Credit to the extent of that Bank's
Commitment Percentage.
Each request for a Letter of Credit shall be delivered to Agent (and
the Fronting Bank, if the Fronting Bank is a Bank other than Agent) not later
than 11:00 A.M. (Cleveland, Ohio time) three (3) Business Days prior to the day
upon which the Letter of Credit is to be issued. Each such request shall be in a
form acceptable to Agent (and the Fronting Bank, if the Fronting Bank is a Bank
other than Agent) and shall specify the face amount thereof, whether such Letter
of Credit is a commercial documentary or a standby letter of credit, the account
party, the beneficiary, the intended date of issuance, the expiry date thereof,
and the nature of the transaction to be supported thereby. Concurrently with
each such request, Borrower, and any Pledgor for whose benefit the Letter of
Credit is to be issued, shall execute and deliver to Agent (or the Fronting
Bank, if the Fronting Bank is a Bank other than Agent) an appropriate
application and agreement, being in the standard form of the Fronting Bank for
such letters of credit, as amended to conform to the provisions of this
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Agreement if required by Agent. Agent shall give each Bank notice of each such
request for a Letter of Credit.
In respect of each Letter of Credit and the drafts thereunder, if any,
whether issued for the account of Borrower or a Pledgor, Borrower agrees (a) to
pay to Agent, for the pro rata benefit of the Banks, a non-refundable commission
based upon the face amount of the Letter of Credit, which shall be paid
quarterly in arrears, at a rate per annum equal to (i) the then current
Applicable Margin for LIBOR Loans (i.e. the Applicable Margin for LIBOR Loans in
effect on the date such Letter of Credit is issued and, as to each quarterly
payment thereafter, the Applicable Margin for LIBOR Loans in effect on the date
of such quarterly payment), times (ii) the face amount of the Letter of Credit;
(b) to pay to the Fronting Bank, for its sole account, an additional Letter of
Credit fee, which shall be paid on the date that such Letter of Credit is issued
at the rate of one-eighth percent (1/8 of 1%) of the face amount of such Letter
of Credit; and (c) to pay to the Fronting Bank, for its sole account, such other
issuance, amendment, negotiation, draw, acceptance, telex, courier, postage and
similar transactional fees as are generally charged by the Fronting Bank.
Whenever a Letter of Credit is drawn, Borrower shall immediately
reimburse the Fronting Bank for the amount drawn. In the event that (A) the
amount drawn is not reimbursed by Borrower within one (1) Business Day of the
drawing of such Letter of Credit, and (B) Revolving Loans are available to
Borrower, at the option of Agent (and the Fronting Bank, if the Fronting Bank is
a Bank other than Agent), the amount drawn shall be deemed to be a Revolving
Loan to Borrower subject to the provisions of this Section 2.1A and shall be
evidenced by the Revolving Credit Notes. Each such Revolving Loan shall be
deemed to be a Prime Rate Loan unless otherwise requested by and available to
Borrower hereunder. Each Bank is hereby authorized to record on its records
relating to its Revolving Credit Note such Bank's pro rata share of the amounts
paid and not reimbursed on the Letters of Credit.
SECTION 2.2. CONDITIONS TO LOANS AND LETTERS OF CREDIT. The obligation
of the Banks to make Revolving Loans, convert any Revolving Loan or continue any
LIBOR Loan, or of Agent (or a Fronting Bank) to issue Letters of Credit or make
Swing Loans hereunder is conditioned, in the case of each borrowing, conversion,
continuation or issuance hereunder, upon:
(a) all conditions precedent as listed in Article IV hereof shall have
been satisfied;
(b) with respect to the making or conversion of any Revolving Loan,
receipt by Agent of a Notice of Loan, such notice to be received by 11:00 A.M.
(Cleveland, Ohio time) on the proposed date of borrowing or conversion with
respect to Prime Rate Loans and, with respect to LIBOR Loans, by 11:00 A.M.
(Cleveland, Ohio time) three (3) Business Days prior to the proposed date of
borrowing, conversion or continuation. Agent shall notify each Bank of the date,
amount and initial Interest Period (if applicable) promptly upon the receipt of
such notice, and, in any event, by 2:00 P.M. (Cleveland, Ohio time) on the date
such notice is received. On the date any Revolving Loan is to be made, each Bank
shall provide Agent, not later than 3:00 P.M. (Cleveland, Ohio time), with the
amount in federal or other immediately available funds required of it;
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(c) with respect to Swing Loans, receipt by Agent of a Notice of Loan,
such notice to be received by 11:00 A.M. (Cleveland, Ohio time) on the proposed
date of borrowing;
(d) with respect to Letters of Credit, satisfaction of the notice
provisions set forth in Section 2.1C hereof;
(e) Borrower's request for (i) a Prime Rate Loan shall be in an amount
of not less than Five Million Dollars ($5,000,000), increased by increments of
One Hundred Thousand Dollars ($100,000), (ii) a LIBOR Loan shall be in an amount
of not less than Five Million Dollars ($5,000,000), increased by increments of
One Million Dollars ($1,000,000), and (iii) a Swing Loan shall be in the amount
of not less than Two Hundred Fifty Thousand Dollars ($250,000), increased by
increments of Twenty-Five Thousand Dollars ($25,000);
(f) the fact that no Unmatured Event of Default or Event of Default
shall then exist or immediately after the making, conversion or continuation of
the Loan or issuance of the Letter of Credit would exist; and
(g) the fact that each of the representations and warranties contained
in Article VI hereof shall be true and correct with the same force and effect as
if made on and as of the date of the making, conversion or continuation of such
Loan, or the issuance of the Letter of Credit, except to the extent that any
thereof expressly relate to an earlier date.
At no time shall Borrower request that LIBOR Loans be outstanding for
more than ten (10) different Interest Periods at any time.
Each request by Borrower for the making, conversion or continuation of
a Loan , or for the issuance of a Letter of Credit hereunder shall be deemed to
be a representation and warranty by Borrower as of the date of such request as
to the facts specified in (f) and (g) above.
Each request for a LIBOR Loan shall be irrevocable and binding on
Borrower and Borrower shall indemnify Agent and the Banks against any loss or
expense incurred by Agent or the Banks as a result of any failure by Borrower to
consummate such transaction including, without limitation, any loss (including
loss of anticipated profits) or expense incurred by reason of liquidation or
re-employment of deposits or other funds acquired by the Banks to fund such
Loan. A certificate as to the amount of such loss or expense submitted by the
Banks to Borrower shall be conclusive and binding for all purposes, absent
manifest error.
SECTION 2.3. PAYMENT ON NOTES, ETC. All payments of principal, interest
and commitment and other fees shall be made to Agent in immediately available
funds for the account of the Banks (except for any payment received with respect
to any Swing Loan, which shall be for the account of Agent), and Agent, within
one (1) Business Day, shall distribute to each Bank its ratable share of the
amount of principal, interest, and commitment and other fees received by it for
the account of such Bank. Each Bank shall record (a) any principal, interest or
other payment, and (b) the principal amount of the Prime Rate Loans and the
LIBOR Loans and all prepayments thereof
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and the applicable dates with respect thereto, by such method as such Bank may
generally employ; provided, however, that, failure to make any such entry shall
in no way detract from Borrower's obligations under each such Note. The
aggregate unpaid amount of Loans set forth on the records of Agent shall be
rebuttably presumptive evidence of the principal and interest owing and unpaid
on each Note. Whenever any payment to be made hereunder, including, without
limitation, any payment to be made on any Note, shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall in each case be
included in the computation of the interest payable on such Note; provided,
however, that, with respect to any LIBOR Loan, if the next succeeding Business
Day falls in the succeeding calendar month, such payment shall be made on the
preceding Business Day and the relevant Interest Period shall be adjusted
accordingly.
SECTION 2.4. PREPAYMENT. Borrower shall have the right at any time or
from time to time to prepay, on a pro rata basis for all of the Banks, all or
any part of the principal amount of the Notes then outstanding as designated by
Borrower, plus interest accrued on the amount so prepaid to the date of such
prepayment. Borrower shall give Agent notice of prepayment of any Prime Rate
Loan by not later than 11:00 A.M. (Cleveland, Ohio time) on the Business Day
such prepayment is to be made and written notice of the prepayment of any LIBOR
Loan not later than 1:00 P.M. (Cleveland, Ohio time) three (3) Business Days
before the Business Day on which such prepayment is to be made. Prepayments of
Prime Rate Loans shall be without any premium or penalty.
In any case of prepayment of any LIBOR Loan, Borrower agrees that if
the reinvestment rate as quoted by the money desk of Agent ("Reinvestment
Rate"), shall be lower than the LIBOR Rate applicable to the LIBOR Loan which is
intended to be prepaid (hereinafter, "Last LIBOR"), then Borrower shall, upon
written notice by Agent, promptly pay to Agent, for the benefit of the Banks, in
immediately available funds, a prepayment fee equal to the product of (a) a rate
(the "Prepayment Rate") which shall be equal to the difference between the Last
LIBOR and the Reinvestment Rate, times (b) the principal amount of the LIBOR
Loan which is to be prepaid, times (c) (i) the number of days remaining in the
Interest Period of the LIBOR Loan which is to be prepaid, divided by (ii)
three hundred sixty (360). In addition, Borrower shall immediately pay directly
to Agent, for the account of the Banks, the amount of any additional costs or
expenses (including, without limitation, cost of telex, wires, or cables)
incurred by Agent or the Banks in connection with the prepayment, upon
Borrower's receipt of a written statement from Agent. Each prepayment of a LIBOR
Loan shall be in the aggregate principal sum of not less than Five Million
Dollars ($5,000,000), except in the case of a mandatory prepayment pursuant to
Section 2.7 or Article III hereof.
In the case of prepayment of any Swing Loan, Borrower agrees to pay a
prepayment fee equal to the present value (discounted at the Discount Rate, as
hereinafter defined), of (a) the amount, if any, by which (i) the interest rate
on such Swing Loan exceeds (ii) the interest rate (as of the date of prepayment)
on United States Treasury obligations in a like amount as the Swing Loan being
prepaid, and with a maturity approximately equal to the number of days between
the prepayment date and the due date for such Swing Loan, multiplied by (b) the
amount of such Swing Loan being prepaid, multiplied by (c) (i) the number of
days between the prepayment date and the due date for such Swing Loan divided by
(ii) three hundred sixty (360). As used herein, "Discount
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Rate" means a rate equal to the interest rate (as of the date of prepayment) on
United States Treasury obligations in a like amount as the Swing Loan being
prepaid and with a maturity approximately equal to the number of days between
the prepayment date and the date that such Swing Loan was due.
SECTION 2.5. COMMITMENT AND OTHER FEES; REDUCTION OF COMMITMENT.
(a) Borrower shall pay to Agent, for the ratable account of the Banks,
as a consideration for the Commitment hereunder, a commitment fee from the
Closing Date to and including the last day of the Commitment Period equal to (i)
the Applicable Commitment Fee Rate in effect on the payment date, times (ii) (A)
the Total Commitment Amount, less (B) the average aggregate principal amount of
all Revolving Loans outstanding for the time period for which such payment is
being made, less (C) the average aggregate principal amount of all Swing Loans
outstanding for the time period for which such payment is being made, less (D)
the average aggregate amount of all issued and outstanding Letters of Credit for
the time period for which such payment is being made. The commitment fee shall
be payable, in arrears, on June 30, 1998, and on the last day of each September,
December, March and June thereafter.
(b) Borrower shall pay to Agent, for its sole benefit, all fees as set
forth in the Agent Fee Letter.
(c) Borrower may at any time or from time to time permanently reduce in
whole or ratably in part the Commitment of the Banks hereunder to an amount not
less than the aggregate principal amount of the Loans and Letters of Credit then
outstanding, by giving Agent not fewer than three (3) Business Days' written
notice, provided that any such reduction shall be in an aggregate amount for all
of the Banks of Five Million Dollars ($5,000,000), increased by increments of
One Million Dollars ($1,000,000). Any reduction in the Total Commitment Amount
shall be on a pro rata basis in accordance with the respective Commitment
Percentages of the Banks. Agent shall promptly notify each Bank of the date of
each such reduction and such Bank's proportionate share thereof. After each such
reduction, the facility fees payable hereunder shall be calculated upon the
Commitment of the Banks as so reduced. If Borrower reduces in whole the
Commitment of the Banks, on the effective date of such reduction (Borrower
having prepaid in full the unpaid principal balance, if any, of the Notes
outstanding, together with all interest and facility and other fees accrued and
unpaid and provided that no issued and outstanding Letters of Credit shall
exist) all of the Notes shall be delivered to Agent marked "Canceled" and Agent
shall redeliver such Notes to Borrower. Any reduction in the Commitment of the
Banks shall be effective during the remainder of the Commitment Period, and, if
the entire Commitment is terminated, then the Commitment Period shall be deemed
to have ended on the date of such termination.
SECTION 2.6. COMPUTATION OF INTEREST AND FEES; DEFAULT RATE. Interest
on Loans, Related Expenses and commitment and other fees and charges hereunder
shall be computed on the basis of a year having three hundred sixty (360) days
and calculated for the actual number of days elapsed. Anything herein to the
contrary notwithstanding, if an Event of Default
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shall occur hereunder, (a) the principal of each Note (and the unpaid interest
thereon after acceleration of the Debt pursuant to Article VIII hereof) shall
bear interest, until paid, at the Default Rate; and (b) the fee for the
aggregate undrawn face amount of all issued and outstanding Letters of Credit
shall be increased to two percent (2%) in excess of the then applicable fee from
time to time in effect pursuant to Section 2.1C hereof. In no event shall the
rate of interest hereunder exceed the maximum rate allowable by law.
SECTION 2.7. MANDATORY PAYMENT. If the sum of (i) the aggregate
principal amount of all Revolving Loans outstanding, (ii) the aggregate
principal amount of all Swing Loans outstanding, and (iii) the undrawn face
amount of all issued and outstanding Letters of Credit, at any time exceeds the
Total Commitment Amount, Borrower shall, as promptly as practicable, but in no
event later than the next Business Day, prepay an aggregate principal amount of
the Revolving Loans sufficient to bring the aggregate outstanding principal
amount of all Revolving Loans, the aggregate outstanding principal amount of all
Swing Loans and the aggregate undrawn face amount of all issued and outstanding
Letters of Credit within the Total Commitment Amount. Any prepayment of a LIBOR
Loan pursuant to this Section 2.7 shall be subject to the prepayment fees set
forth in Section 2.4 hereof.
SECTION 2.8. EXTENSION OF COMMITMENT. Contemporaneously with the
delivery of the financial statements required pursuant to Section 5.3 (b)
hereof, Borrower may deliver a written request that the Banks extend the
maturity of the Commitment for an additional year. Each such extension shall
require the unanimous written consent of all of the Banks and shall be upon such
terms and conditions as may be agreed to by Agent, Borrower and the Banks.
Borrower shall pay any attorneys' fees or other expenses of Agent in connection
with the documentation of any such extension, as well as such other fees as may
be agreed upon between Borrower and Agent and the Banks.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS;
CAPITAL ADEQUACY
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If, at any time,
any law, treaty or regulation (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) or the interpretation
thereof by any governmental authority charged with the administration thereof or
any central bank or other fiscal, monetary or other authority shall impose
(whether or not having the force of law), modify or deem applicable any reserve
and/or special deposit requirement (other than reserves included in the
Eurocurrency Reserve Percentage, the effect of which is reflected in the
interest rate(s) of the LIBOR Loan(s) in question) against assets held by, or
deposits in or for the amount of any LIBOR Loan by, any Bank, and the result of
the foregoing is to increase the cost (whether by incurring a cost or adding to
a cost) to such Bank of making or maintaining hereunder any LIBOR Loan or to
reduce the amount of principal or interest received by such Bank with respect to
such LIBOR Loan, then, upon demand by such Bank, Borrower shall pay to such Bank
from time to time on Interest Adjustment Dates with respect to such LIBOR Loan,
as additional consideration hereunder, additional amounts sufficient to fully
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compensate and indemnify such Bank for such increased cost or reduced amount,
assuming (which assumption such Bank need not corroborate) such additional cost
or reduced amount was allocable to such LIBOR Loan. A certificate as to the
increased cost or reduced amount as a result of any event mentioned in this
Section 3.1, setting forth the calculations therefor, shall be promptly
submitted by such Bank to Borrower and shall, in the absence of manifest error,
be conclusive and binding as to the amount thereof. Notwithstanding any other
provision of this Agreement, after any such demand for compensation by any Bank,
Borrower, upon at least three (3) Business Days' prior written notice to such
Bank through Agent, may prepay any affected LIBOR Loan in full or convert such
LIBOR Loan to a Prime Rate Loan regardless of the Interest Period thereof. Any
such prepayment or conversion shall be subject to the prepayment fees set forth
in Section 2.4 hereof. Each Bank shall notify Borrower as promptly as
practicable (with a copy thereof delivered to Agent) of the existence of any
event which will likely require the payment by Borrower of any such additional
amount under this Section.
SECTION 3.2. TAX LAW, ETC. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of law, any Bank shall, with respect to this Agreement or
any transaction under this Agreement, be subjected to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other than
any tax imposed upon the total net income of such Bank) and if any such measures
or any other similar measure shall result in an increase in the cost to such
Bank of making or maintaining any LIBOR Loan or in a reduction in the amount of
principal, interest or commitment fee receivable by such Bank in respect
thereof, then such Bank shall promptly notify Borrower stating the reasons
therefor. Borrower shall thereafter pay to such Bank, upon demand from time to
time on Interest Adjustment Dates with respect to such LIBOR Loan, as additional
consideration hereunder, such additional amounts as shall fully compensate such
Bank for such increased cost or reduced amount. A certificate as to any such
increased cost or reduced amount, setting forth the calculations therefor, shall
be submitted by such Bank to Borrower and shall, in the absence of manifest
error, be conclusive and binding as to the amount thereof.
If any Bank receives such additional consideration from Borrower
pursuant to this Section 3.2, such Bank shall use reasonable efforts to obtain
the benefits of any refund, deduction or credit for any taxes or other amounts
on account of which such additional consideration has been paid and shall
reimburse Borrower to the extent, but only to the extent, that such Bank shall
receive a refund of such taxes or other amounts together with any interest
thereon or an effective net reduction in taxes or other governmental charges
(including any taxes imposed on or measured by the total net income of such
Bank) of the United States or any state or subdivision thereof by virtue of any
such deduction or credit, after first giving effect to all other deductions and
credits otherwise available to such Bank. If, at the time any audit of such
Bank's income tax return is completed, such Bank determines, based on such
audit, that it was not entitled to the full amount of any refund reimbursed to
Borrower as aforesaid or that its net income taxes are not reduced by a credit
or deduction for the full amount of taxes reimbursed to Borrower as aforesaid,
Borrower, upon demand of such Bank, shall promptly pay to such Bank the amount
so refunded to which such Bank was not so entitled, or the amount by which the
net income taxes of such Bank were not so reduced, as the case may be.
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Notwithstanding any other provision of this Agreement, after any such
demand for compensation by any Bank, Borrower, upon at least three (3) Business
Days' prior written notice to such Bank through Agent, may prepay any affected
LIBOR Loan in full or convert such LIBOR Loan to a Prime Rate Loan regardless of
the Interest Period of any thereof. Any such prepayment or conversion shall be
subject to the prepayment fees set forth in Section 2.4 hereof.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In respect of any LIBOR Loan, in the event that Agent shall
have determined that dollar deposits of the relevant amount for the relevant
Interest Period for such LIBOR Loan are not available to Bank in the applicable
eurodollar market or that, by reason of circumstances affecting such market,
adequate and reasonable means do not exist for ascertaining the LIBOR Rate
applicable to such Interest Period, as the case may be, Agent shall promptly
give notice of such determination to Borrower and (a) any notice of a new LIBOR
Loan (or conversion of an existing Loan to a LIBOR Loan) previously given by
Borrower and not yet borrowed (or converted, as the case may be) shall be deemed
a notice to make a Prime Rate Loan, and (b) Borrower shall be obligated either
to prepay, or to convert to a Prime Rate Loan, any outstanding LIBOR Loan on the
last day of the then current Interest Period with respect thereto.
SECTION 3.4. INDEMNITY. Without prejudice to any other provisions of
this Article III, Borrower hereby agrees to indemnify each Bank against any loss
or expense which such Bank may sustain or incur as a consequence of any default
by Borrower in payment when due of any amount hereunder in respect of any LIBOR
Loan, including, but not limited to, any loss of profit, premium or penalty
incurred by such Bank in respect of funds borrowed by it for the purpose of
making or maintaining such LIBOR Loan, as determined by such Bank in the
exercise of its sole but reasonable discretion. A certificate as to any such
loss or expense shall be promptly submitted by such Bank to Borrower and shall,
in the absence of manifest error, be conclusive and binding as to the amount
thereof.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any
time any new law, treaty or regulation, or any change in any existing law,
treaty or regulation, or any interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof, shall make it
unlawful for any Bank to fund any LIBOR Loan which it is committed to make
hereunder with moneys obtained in the eurodollar market, the commitment of such
Bank to fund such LIBOR Loan shall, upon the happening of such event forthwith
be suspended for the duration of such illegality, and such Bank shall by written
notice to Borrower and Agent declare that its commitment with respect to such
LIBOR Loan has been so suspended and, if and when such illegality ceases to
exist, such suspension shall cease and such Bank shall similarly notify Borrower
and Agent. If any such change shall make it unlawful for any Bank to continue in
effect the funding in the applicable eurodollar market of any LIBOR Loan
previously made by it hereunder, such Bank shall, upon the happening of such
event, notify Borrower, Agent and the other Banks thereof in writing stating the
reasons therefor, and Borrower shall, on the earlier of (a) the last day of the
then current Interest Period or (b) if required by such law, regulation or
interpretation, on such date as shall be specified in such notice, either
convert such LIBOR Loan to a Prime Rate Loan
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or prepay such LIBOR Loan to the Banks in full. Any such prepayment or
conversion shall be subject to the prepayment fees described in Section 2.4
hereof.
SECTION 3.6. FUNDING. Each Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States.
SECTION 3.7. CAPITAL ADEQUACY. If any Bank shall have determined, after
the Closing Date, that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its lending office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Bank's capital (or
the capital of its holding company) as a consequence of its obligations
hereunder to a level below that which such Bank (or its holding company) could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies or the policies of its holding company with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within fifteen (15) days after demand by such Bank (with
a copy to Agent), Borrower shall pay to such Bank such additional amount or
amounts as shall compensate such Bank (or its holding company) for such
reduction. Each Bank shall designate a different lending office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. A certificate of any Bank claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods. Failure on the
part of any Bank to demand compensation for any reduction in return on capital
with respect to any period shall not constitute a waiver of such Bank's rights
to demand compensation for any reduction in return on capital in such period or
in any other period. The protection of this Section shall be available to each
Bank regardless of any possible contention of the invalidity or inapplicability
of the law, regulation or other condition which shall have been imposed.
ARTICLE IV. CONDITIONS PRECEDENT
SECTION 4.1. CONDITIONS PRECEDENT TO CLOSING. The obligation of the
Banks to make the first Loan and of Agent (or a Fronting Bank) to issue the
first Letter of Credit is subject to Borrower satisfying each of the following
conditions:
(a) NOTES. Borrower shall have executed and delivered to each Bank its
Revolving Credit Note and shall have executed and delivered to Agent the Swing
Line Note.
(b) GUARANTIES OF PAYMENT OF DEBT. Borrower shall have delivered a
Guaranty of Payment of Debt executed by each Oglebay Pledgor.
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(c) OFFICER'S CERTIFICATE, RESOLUTIONS, ORGANIZATIONAL DOCUMENTS.
Borrower and each Oglebay Pledgor shall have delivered to Agent an officer's
certificate certifying the names of the officers of Borrower or such Oglebay
Pledgor authorized to sign the Loan Documents to which Borrower or such Oglebay
Pledgor, as the case may be, is a party, together with the true signatures of
such officers and certified copies of (a) the resolutions of the board of
directors of Borrower and each Oglebay Pledgor evidencing approval of the
execution and delivery of the Loan Documents and the execution of other Related
Writings to which Borrower or such Oglebay Pledgor, as the case may be, is a
party, and (b) the Certificate (Articles) of Incorporation and Bylaws
(Regulations), and all amendments thereto, of Borrower and each Oglebay Pledgor.
(d) LEGAL OPINION. Borrower shall have delivered to Agent an opinion or
opinions of counsel for Borrower and each Oglebay Pledgor, and with respect to
each Mortgage and each Preferred Ship Mortgage, each in form and substance
satisfactory to Agent.
(e) GOOD STANDING CERTIFICATES. Borrower shall have delivered to Agent
a good standing certificate for Borrower and each Oglebay Pledgor issued on or
about the Closing Date by the Secretary of State in the state where Borrower or
such Oglebay Pledgor is incorporated and in each state in which Borrower or such
Pledgor is qualified as a foreign corporation and conducts a material amount of
business.
(f) CLOSING AND LEGAL FEES; AGENT FEE LETTER. Borrower shall have
executed and delivered to Agent the Agent Fee Letter and paid to Agent, for its
sole benefit, the fees described therein and paid all legal fees and expenses of
Agent in connection with the preparation and negotiation of the Loan Documents.
(g) SECURITY DOCUMENTS. Borrower shall have delivered to Agent for the
benefit of the Banks:
(i) a Pledge Agreement, executed by Borrower, each Oglebay
Pledgor, as appropriate, and Oglebay Norton Acquisition, together with
delivery of the share certificates referenced therein (except for the
share certificates referenced Section 4.2(b) hereof);
(ii) a Security Agreement, executed by Borrower and each
Oglebay Pledgor;
(iii) with respect to each Documented Vessel (other than the
Columbia Star), a Preferred Ship Mortgage, executed by Borrower;
(iv) a Collateral Assignment and Security Agreement, executed
by Borrower; and
(v) a Collateral Assignment of Licenses and Permits, executed
by Borrower and each Oglebay Pledgor.
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(h) MORTGAGES. With respect to the Mortgaged Real Property, Borrower
shall have delivered to Agent a Mortgage executed by Borrower or an Oglebay
Pledgor, as appropriate.
(i) FINANCING STATEMENTS AND LIEN SEARCHES. With respect to the
property owned or leased by Borrower and each Oglebay Pledgor and any other
property securing the Debt, Borrower shall have caused to be delivered to Agent:
(i) U.C.C. financing and registration statements satisfactory to Agent; (ii) the
results of U.C.C. and Personal Property Security Act lien searches, satisfactory
to Agent; (iii) the results of federal and state tax lien and judicial lien
searches, satisfactory to Agent; and (iv) U.C.C. and Personal Property Security
Act termination statements reflecting termination of all financing and
registration statements previously filed by any other party having a security
interest in any part of the collateral or any other property securing the Debt.
(j) GLOBAL STONE ACQUISITION. With respect to the Global Stone
Acquisition, Borrower shall have provided to Agent an officer's certificate,
satisfactory to Agent, evidencing that all conditions to the consummation of the
Global Stone Acquisition shall have been satisfied (or waived with the written
approval of Agent) and that the Global Stone Acquisition has been consummated in
accordance with the terms of the Offer Documents, which shall include, but not
be limited to, evidence satisfactory to Agent that the following conditions
shall have been satisfied:
(i) at least sixty-six and two thirds percent (66 2/3%) of the
outstanding Global Stone Shares (calculated on fully diluted basis)
shall have been validly deposited and not withdrawn pursuant to the
terms of the Offer Documents;
(ii) the Global Stone Acquisition shall have been approved by
the Canadian Federal Minister of Industry under the Investment Canada
Act, as amended;
(iii) no action shall have been taken by the Antitrust
Division of the United States Department or Justice and the United
States Federal Trade Commission under the United States Hart-Scott
Rodino Antitrust Improvements Act of 1976, as amended, with respect to
the Global Stone Acquisition; and
(iv) the board of directors of Global Stone shall have
resolved to waive the application of its shareholder rights plan to the
offer by Oglebay Norton Acquisition, to any other actions taken by
Oglebay Norton Acquisition in furtherance of acquiring all of the
Global Stone Shares and to any other "triggering event" as required
under such shareholder rights plan to effect such waiver as of the
expiry date of the offer by Oglebay Norton Acquisition pursuant to the
Offer Documents.
(k) OFFER DOCUMENTS. Borrower shall have delivered to Agent evidence,
satisfactory to Agent, that (i) the Offer Documents have been duly executed and
delivered by the respective parties thereto and that the Offer Documents are in
full force and effect, (ii) the Offer Documents have not been supplemented,
amended, modified or waived since the date of the original filing of the Offer
Documents, together with a copy of the Offer Documents (including all
amendments, modifications and supplements thereto, if any, to and including the
Closing Date), certified by an officer of Borrower as being true and complete,
(iii) a Final Deposit Report from
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Montreal Trust Company of Canada, and (iv) a Take Up Notice from Oglebay Norton
Acquisition to Montreal Trust Company.
(l) SUBORDINATED INDEBTEDNESS. Borrower shall have executed the
Subordinated Note Purchase Agreement, on terms and conditions satisfactory to
Agent, and all conditions precedent thereunder to funding shall have been
satisfied. In addition, Agent shall have received a copy of the Subordinated
Note Purchase Agreement and all ancillary documents related thereto, certified
by an officer of Borrower as being true and complete.
(m) CONSENTS. Borrower shall have delivered to Agent evidence,
satisfactory to Agent, that Borrower shall have obtained such consent or
authorization as may be necessary in connection with the execution, delivery or
performance of any of the Loan Documents pursuant to the NCB Ship Mortgage.
(n) INSURANCE CERTIFICATES. Borrower shall have delivered to Agent
evidence of insurance on ACORD 27 form and otherwise satisfactory to Agent of
adequate personal property and liability insurance of Borrower and each Pledgor,
with Agent listed as mortgagee, loss payee and additional insured.
(o) NO MATERIAL ADVERSE CHANGE. No material adverse change, in the
opinion of Agent, shall have occurred in the financial condition, operations or
prospects of the Companies or Global Stone since December 31, 1997.
(p) MISCELLANEOUS. Borrower shall have provided such other items and
shall have satisfied such other conditions as may be reasonably required by
Agent or the Banks.
SECTION 4.2. CONDITIONS SUBSEQUENT TO CLOSING DATE. On the Closing
Date, or at such later date as specified below, Borrower shall satisfy each of
the following conditions:
(a) INTEREST RATE PROTECTION. Within sixty (60) days of the Closing
Date, Borrower shall provide evidence that Borrower has obtained Interest Rate
Protection for a period of no less than two (2) years beginning on the date of
obtaining such Interest Rate Protection, all on terms and conditions
satisfactory to Agent, with respect to at least fifty percent (50%) of
Borrower's Total Senior Funded Indebtedness.
(b) GLOBAL STONE SHARES. Within seven (7) days after the Closing Date,
Borrower shall have delivered the share certificates representing at least
sixty-five percent (65%) of the Global Stone Shares pursuant to the Pledge
Agreement executed by Oglebay Norton Acquisition.
(c) GLOBAL STONE PLEDGORS. On the Global Control Date, Borrower shall
have delivered to Agent:
(i) a Guaranty of Payment of Debt executed by each Global
Stone Pledgor;
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(ii) an officer's certificate certifying the names of the
officers of such Global Stone Pledgor authorized to sign the Loan
Documents to which it is a party, together with the true signatures of
such officers and certified copies of (a) the resolutions of the board
of directors of such Global Stone Pledgor evidencing approval of the
execution and delivery of the Loan Documents to which it is a party,
and (b) the Certificate (Articles) of Incorporation and Bylaws
(Regulations), and all amendments thereto, of such Global Stone
Pledgor;
(iii) an opinion or opinions of counsel for and each Global
Stone Pledgor, in form and substance satisfactory to Agent;
(iv) a good standing certificate for each Global Stone Pledgor
issued on or about the Closing Date by the Secretary of State in the
state where such Global Stone Pledgor is incorporated and in each state
in which such Global Stone Pledgor is qualified as a foreign
corporation and conducts a material amount of business;
(v) a Pledge Agreement executed by each Global Stone Pledgor,
as appropriate, together with delivery of the share certificates
referenced therein;
(vi) a Security Agreement, executed by and each Global Stone
Pledgor;
(vii) a Collateral Assignment of Licenses and Permits,
executed by each Global Pledgor;
(viii) with respect to any Mortgaged Real Property owned by a
Global Stone Pledgor, Borrower shall have delivered to Agent a Mortgage
executed by such Global Stone Pledgor; and
(ix) with respect to the property owned or leased by each
Global Stone Pledgor and any other property securing the Debt, Borrower
shall have caused to be delivered to Agent: (i) U.C.C. financing and
registration statements satisfactory to Agent; (ii) the results of
U.C.C. and Personal Property Security Act lien searches, satisfactory
to Agent; (iii) the results of federal and state tax lien and judicial
lien searches, satisfactory to Agent; and (iv) U.C.C. and Personal
Property Security Act termination statements reflecting termination of
all financing and registration statements previously filed by any other
party having a security interest in any part of the collateral or any
other property securing the Debt.
(d) GLOBAL REORGANIZATION. Within twenty-one (21) days after the Global
Control Date, Borrower shall have provided evidence to Agent that the Global
Reorganization has occurred.
(e) SUBORDINATED INDEBTEDNESS. Borrower and Oglebay Norton Acquisition
shall have received the proceeds of the notes issued pursuant to the
Subordinated Note Purchase Agreement in an amount not less than Eighty-Five
Million Dollars ($85,000,000), on or before (i)
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May 26, 1998, if less than ninety percent (90%) of the Global Stone Shares have
been acquired on or prior to May 26, 1998, pursuant to the Global Stone
Acquisition, or (ii) June 5, 1998, if greater than or equal to ninety percent
(90%) of the Global Stone Shares have been acquired on or prior to May 26, 1998,
pursuant to the Global Stone Acquisition.
(f) ADDITIONAL SUBORDINATED INDEBTEDNESS. On or before September 8,
1998, Borrower shall have received the proceeds of additional Subordinated
Indebtedness in the original principal amount of not less than Fifteen Million
Dollars ($15,000,000).
(g) PREFERRED SHIP MORTGAGE. Within sixty (60) days of the Closing
Date, Borrower shall have executed and delivered to Agent a Preferred Ship
Mortgage with respect to the Columbia Star.
(h) GLOBAL STONE TRUST INDENTURE. With respect to the Global Stone
Trust Indenture, Borrower shall:
(i) on or before July 31, 1998, have provided to Agent
evidence, in form and substance satisfactory to Agent, that Global
Stone has delivered a notice of redemption pursuant to Section 5.04 of
the Global Stone Trust Indenture that the Debentures (as defined in the
Global Stone Trust Indenture) are to be redeemed within thirty (30)
days of delivery of such notice; and
(ii) on or before August 31, 1998, have provided to Agent
evidence, satisfactory to Agent, that the Indebtedness of Global Stone
pursuant to the Global Stone Trust Indenture has been paid in full and
that all Liens in connection with the Global Stone Trust Indenture have
been released and Borrower shall have delivered to Agent such U.C.C.
and Personal Property Security Act termination statements and such
other releases and discharges satisfactory to Agent reflecting the
termination of all financing and registration statements previously
filed in connection with the Global Stone Trust Indenture and the
release of any other Lien in connection with the Global Stone Trust
Indenture.
(i) LANDLORDS' AND MORTGAGEES' WAIVERS. Within sixty (60) days of the
Closing Date, Borrower shall have delivered a landlord's waiver and mortgagee's
waiver, if applicable, each in form and substance satisfactory to Agent, for
each location not owned by Borrower where any of the collateral or other
property securing the Debt is located.
(j) REAL ESTATE MATTERS. On or before thirty (30) days of the Closing
Date, Borrower shall have delivered to Agent:
(i) for each of the Mortgaged Real Property a Loan Policy of
title insurance, ALTA 1970 Form B (amended 10/17/70 and 10/17/84)
issued to Agent for the benefit of the Banks by a title company
acceptable to Agent, in an amount equal to the fair market value of the
applicable Mortgaged Real Property insuring each Mortgage to be a
valid, first-priority lien on such Mortgage Real Property, free and
clear of all defects and encumbrances except
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such matters of record as are acceptable to Agent, in its sole
discretion, with such endorsements and affirmative insurance as Agent
may require;
(ii) a current (certified not more than thirty (30) days prior
to the Closing Date) "as-built" survey of the Mortgage Real Property
prepared by a licensed surveyor acceptable to Agent, certified to Agent
and the Banks and the applicable title company pursuant to certificate
of survey acceptable to Agent. Such survey shall be in form and
substance acceptable to Agent, in its sole discretion, shall be made in
accordance with the "Minimum Standard Detail Requirements for and Title
Surveys" adopted by the American Land Title Association in 1992,
revised 1997, and shall show, without limitation (A) the location of
the perimeter of the Mortgaged Real Property by courses and distances
with all reference points shown or referred to in the aforesaid title
policy; (B) all easements (including those easements whose existence is
disclosed by physical inspection of the Mortgaged Real Property),
rights-of-way and the location of all utility lines servicing the
improvements on the Mortgaged Real Property; (C) the established
building lines; (D) the full legal description of the Mortgaged Real
Property (conforming to the legal description set forth in the
aforesaid title policy) and a certification as to the acreage and
square footage thereof; (E) the highway and street right-of-way lines
abutting the Mortgaged Real Property and the width thereof; and (F)
encroachments upon the Mortgaged Real Property and the extent thereof
in feet and inches;
(iii) a copy of the certificate of occupancy for each building
located on the Mortgaged Real Property;
(iv) evidence satisfactory to Agent of compliance with all
building and zoning codes applicable to the Mortgaged Real Property;
(v) disclosure to Agent's satisfaction, in its sole
discretion, contained in the surveys described above that no portion of
the Mortgaged Real Property is located in a Special Flood Hazard Area
or is otherwise classified as Class A or Class BX on the Flood Maps
maintained by the Federal Emergency Management Agency;
(vi) environmental reports with respect to the Mortgaged Real
Property and the improvements located thereon, prepared by
environmental engineering firms acceptable to Agent, which reports
shall be in form and substance acceptable to Agent;
(vii) copies of all underlying title documents with respect to
the Mortgaged Real Property requested by Agent or its counsel;
(viii) Estoppel Certificates and Consents, where required by
Agent, from Landlords and other parties having a right or interest in
the Mortgaged Real Property as are acceptable to Agents, in its sole
discretion;
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(ix) Subordination, Non-Disturbance and Attornment Agreements
as are required by and acceptable to Agent in its sole discretion; and
(x) such information relating to the ownership, use,
occupancy, operation and maintenance of the Real Property as Agent may
request from time to time including, but not limited to, copies of all
written inspections, reports, test results, correspondence and
management reports received or sent by Borrower or Pledgor, as the case
may be, from such party's employees, agents, representatives,
architects, engineers, contractors, consultants and any other persons
or entities (including without limitation governmental authorities)
which in any way relate to the Real Property, the operation of the Real
Property, or any part thereof.
ARTICLE V. COVENANTS
Borrower agrees that so long as the Commitment remains in effect and
thereafter until the principal of and interest on all Notes and all other
payments and fees due hereunder shall have been paid in full, Borrower shall
perform and observe, and shall cause each Subsidiary to perform and observe,
each of the following provisions:
SECTION 5.1. INSURANCE. Each Company shall at all times maintain
insurance upon its personal and real property in such form, written by such
companies, in such amounts, for such period, and against such risks as may be
acceptable to Agent, with provisions satisfactory to Agent, for payment of all
losses thereunder to Agent, for the benefit of the Banks, and such Company as
their interests may appear (loss payable endorsement in favor of Agent, for the
benefit of the Banks), and, if required by Agent, Borrower shall deposit the
policies with Agent. Any such policies of insurance shall provide for no fewer
than thirty (30) days prior written notice of cancellation to Agent. Any sums
received by Agent, for the benefit of the Banks, in payment of insurance losses,
returns, or unearned premiums under the policies may, at the option of Agent, be
applied upon any Debt whether or not the same is then due and payable, or may be
delivered to Borrower for the purpose of replacing, repairing, or restoring the
insured property; provided, however, that any sums received by Agent which are
less than the aggregate amount of Ten Million Dollars ($10,000,000) shall be
paid to Borrower, if Borrower so requests, for the sole purpose of rebuilding,
replacing or restoring the property which has been damaged or destroyed. Agent
is hereby authorized to act as attorney-in-fact for Borrower in obtaining,
adjusting, settling and canceling such insurance and indorsing any drafts. In
the event of failure to provide such insurance as herein provided, Agent may, at
its option, provide such insurance and Borrower shall pay to Agent, upon demand,
the cost thereof. Should Borrower fail to pay such sum to Agent upon demand,
interest shall accrue thereon, from the date of demand until paid in full, at
the Default Rate. Within ten (10) days of any Bank's written request, Borrower
shall furnish to such Bank such information about a Company's insurance as such
Bank may from time to time reasonably request, which information shall be
prepared in form and detail satisfactory to such Bank and certified by a
Financial Officer of such Company.
SECTION 5.2. MONEY OBLIGATIONS. Each Company shall pay in full (a)
prior in each case to the date when penalties would attach, all taxes,
assessments and governmental charges and levies (except only those so long as
and to the extent that the same shall be contested in good faith
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by appropriate and timely proceedings and for which adequate reserves have been
established in accordance with GAAP) for which it may be or become liable or to
which any or all of its properties may be or become subject; (b) all of its wage
obligations to its employees in compliance with the Fair Labor Standards Act (29
U.S.C. 206-207) or any comparable provisions; and (c) all of its other
obligations calling for the payment of money (except only those so long as and
to the extent that the same shall be contested in good faith and for which
adequate reserves have been established in accordance with GAAP) before such
payment becomes overdue.
SECTION 5.3. FINANCIAL STATEMENTS. Borrower shall furnish to each Bank:
(a) within forty-five (45) days after the end of each of the first
three (3) quarter-annual periods of each fiscal year of Borrower, balance sheets
of Borrower as of the end of such period and statements of income and cash flows
for the quarter and fiscal year to date periods, all prepared on a Consolidated
and consolidating basis, in accordance with GAAP, and in form and detail
satisfactory to the Banks and certified by a Financial Officer of Borrower;
(b) within ninety (90) days after the end of each fiscal year of
Borrower, an annual audit report of Borrower for that year prepared on a
Consolidated and consolidating basis, in accordance with GAAP, and in form and
detail satisfactory to the Banks and certified by an independent public
accountant satisfactory to Agent (Agent acknowledges that the independent public
accountant being used by Borrower as of the Closing Date is satisfactory to
Agent) , which report shall include balance sheets and statements of income,
stockholders' equity and cash flows for that period, together with a certificate
by the accountant setting forth the Events of Default coming to its attention
during the course of its audit or, if none, a statement to that effect;
(c) concurrently with the delivery of the financial statements in (a)
and (b) above, a Compliance Certificate together with calculations of the
financial covenants set forth in Section 5.7 hereof;
(d) with the delivery of the quarterly and annual financial statements
in (a) and (b) above, a copy of any management report, letter or similar writing
furnished to the Companies by the accountants in respect of the Companies'
systems, operations, financial condition or properties;
(e) within ninety (90) days after the end of each fiscal year of
Borrower, annual pro-forma projections of Borrower and its Subsidiaries for the
then current fiscal year and the next two (2) succeeding fiscal years, to be in
form acceptable to Agent;
(f) as soon as available, copies of all notices, reports, definitive
proxy or other statements and other documents sent by Borrower to its
shareholders, to the holders of any of its debentures or bonds or the trustee of
any indenture securing the same or pursuant to which they are issued, or sent by
Borrower (in final form) to any securities exchange or over the counter
authority or system, or to the Securities and Exchange Commission or any similar
federal agency having regulatory jurisdiction over the issuance of Borrower's
securities; and
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(g) within ten (10) days of any Bank's written request, such other
information about the financial condition, properties and operations of any
Company as such Bank may from time to time reasonably request, which information
shall be submitted in form and detail satisfactory to such Bank and certified by
a Financial Officer of the Company or Companies in question.
SECTION 5.4. FINANCIAL RECORDS. Each Company shall at all times
maintain true and complete records and books of account including, without
limiting the generality of the foregoing, appropriate reserves for possible
losses and liabilities, all in accordance with GAAP, and at all reasonable times
(during normal business hours and upon notice to the Company in question) permit
the Banks to examine that Company's books and records and to make excerpts
therefrom and transcripts thereof.
SECTION 5.5. FRANCHISES. Each Company shall preserve and maintain at
all times its corporate existence and all material rights and franchises.
SECTION 5.6. ERISA COMPLIANCE. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any Plan.
Borrower shall furnish to the Banks (a) either in accordance with the time frame
set forth in the applicable federal regulations or, if no such regulation is
applicable, within thirty (30) days after any Company knows or has reason to
know that any Reportable Event with respect to any Plan has occurred, a
statement of the Financial Officer of such Company, setting forth details as to
such Reportable Event and the action which such Company proposes to take with
respect thereto, together with a copy of the notice of such Reportable Event
given to the PBGC if a copy of such notice is available to such Company, and (b)
promptly after receipt thereof a copy of any notice such Company, or any member
of the Controlled Group may receive from the PBGC or the Internal Revenue
Service with respect to any Plan administered by such Company; provided, that
this latter clause shall not apply to notices of general application promulgated
by the PBGC or the Internal Revenue Service. Borrower shall promptly notify the
Banks of any material taxes assessed, proposed to be assessed or which Borrower
has reason to believe may be assessed against a Company by the Internal Revenue
Service with respect to any Plan. As used in this Section "material" means the
measure of a matter of significance which shall be determined as being an amount
equal to five percent (5%) of the Consolidated Net Worth of Borrower. As soon as
practicable, and in any event within twenty (20) days, after any Company becomes
aware that an ERISA Event has occurred, such Company shall provide Bank with
notice of such ERISA Event with a certificate by a Financial Officer of such
Company setting forth the details of the event and the action such Company or
another Controlled Group member proposes to take with respect thereto. Borrower
shall, at the request of Agent or any Bank, deliver or cause to be delivered to
Agent or such Bank, as the case may be, true and correct copies of any documents
relating to the Plan of any Company.
SECTION 5.7. FINANCIAL COVENANTS.
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(a) PROJECTION COMPLIANCE. The Companies shall be in compliance with
the projections dated as of May 15, 1998, signed by the treasurer of Borrower
and delivered to Agent on the Closing Date, from the Closing Date through June
29, 1998.
(b) LEVERAGE RATIO. The Companies shall not suffer or permit at any
time the Leverage Ratio to exceed (i) 5.00 to 1.00 on June 30, 1998 through
December 31, 1999, and (ii) 4.75 to 1.00 thereafter, based upon the financial
statements of the Companies for the most recently completed four (4) fiscal
quarters.
(c) SENIOR DEBT RATIO. The Companies shall not suffer or permit at any
time the ratio of Total Senior Funded Indebtedness to Consolidated Pro-Forma
EBITDA to be greater than (i) 3.60 to 1.00 on June 30, 1998, (ii) 3.50 to 1.00
on July 1, 1998 through September 30, 1998 and (iii) (A) 3.00 to 1.00 thereafter
at any time that the total amount of Subordinated Indebtedness outstanding is
equal to or greater than One Hundred Forty Million Dollars ($140,000,000), (B)
3.25 to 1.00 thereafter at any time that the total amount of Subordinated
Indebtedness outstanding is equal to or greater than One Hundred Twenty Million
Dollars ($120,000,000) but less than One Hundred Forty Million Dollars
($140,000,000) or (C) 3.50 to 1.00 thereafter at any time that the total amount
of Subordinated Indebtedness outstanding is less than One Hundred Twenty Million
Dollars ($120,000,000); based upon the financial statements of the Companies for
the most recently completed four (4) fiscal quarters.
(d) INTEREST COVERAGE. The Companies shall not suffer or permit at any
time the ratio of (i) Consolidated Pro-Forma Pre-Tax Earnings plus Consolidated
Pro-Forma Interest Expense to (ii) Consolidated Pro-Forma Interest Expense to be
less than (A) 1.50 to 1.00 on June 30, 1998, through June 29, 1999, (B) 1.75 to
1.00 on June 30, 1999 to December 31, 1999, and (C) 2.00 to 1.00 thereafter,
based upon the financial statements of the Companies for the most recently
completed four (4) fiscal quarters.
(e) CASH-FLOW COVERAGE. The Companies shall not suffer or permit at any
time the ratio of (i) Consolidated Pro-Forma Cash Flow to (ii) Consolidated
Pro-Forma Fixed Charges to be less than (A) 0.90 to 1.00 on June 30, 1998, and
(B) 1.10 to 1.00 thereafter, based upon the financial statements of the
Companies for the most recently completed four (4) fiscal quarters.
(f) NET WORTH. The Companies shall not suffer or permit their
Consolidated Net Worth at any time, based upon the Consolidated financial
statements of the Companies for the most recently completed fiscal quarter, to
fall below the current minimum amount required, which current minimum amount
required shall be One Hundred Five Million Six Hundred Thousand Dollars
($105,600,000) on the Closing Date through June 29, 1998, with such current
minimum amount required to be positively increased by the Increase Amount on
June 30, 1998, and by an additional Increase Amount on the last day of each
fiscal quarter thereafter. As used herein, the term "Increase Amount" shall mean
an amount equal to (i) sixty five percent (65%) of the positive Consolidated Net
Earnings of the Companies for the fiscal quarter then ended, plus (ii) one
hundred percent (100%) of the proceeds of any equity offering or any debt
offering convertible to equity.
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(g) CONSOLIDATED PRO-FORMA EBITDA. The Companies shall not suffer or
permit at any time Consolidated Pro-Forma EBITDA to be less than (i) Sixty-Six
Million Dollars ($66,000,000) on June 30, 1998 through June 30, 1999, and (ii)
Seventy Five Million Dollars ($75,000,000) thereafter, based upon the financial
statements of the Companies for the most recently completed four (4) fiscal
quarters.
SECTION 5.8. BORROWING. No Company shall create, incur or have
outstanding any obligation for borrowed money or any Indebtedness of any kind;
provided, that this Section shall not apply to:
(a) the Loans and any other Indebtedness incurred to Agent or the Banks
pursuant to this Agreement;
(b) any loans or capital leases to a Company for the purchase or lease
of assets, which loans or leases are secured by the assets being purchased or
leased, so long as the aggregate principal amount of all such loans or leases
does not exceed Twenty-Five Million Dollars ($25,000,000) at any time
outstanding;
(c) the Indebtedness set forth on SCHEDULE 5.8 hereto;
(d) Indebtedness under any Hedge Agreement acceptable to Agent;
(e) unsecured Subordinated Indebtedness;
(f) the Indebtedness of Borrower existing on the Closing Date in
connection with the NCB Ship Mortgage and the Title XI Ship Mortgage; or
(g) loans to a Company from a Company so long as each such Company is
Borrower or a Pledgor.
SECTION 5.9. LIENS. No Company shall create, assume or suffer to exist
any Lien upon any of its property, including the Real Property, or assets,
whether now owned or hereafter acquired; provided that this Section shall not
apply to the following:
(a) Liens for taxes not yet due or which are being actively contested
in good faith by appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP;
(b) other statutory Liens incidental to the conduct of its business or
the ownership of its property and assets which (i) were not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and (ii) which do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of its
business;
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(c) Liens on property or assets of a Subsidiary to secure obligations
of such Subsidiary to Borrower or a Pledgor;
(d) the Liens set forth on SCHEDULE 5.9 hereto;
(e) Liens on fixed assets securing the loans or capital leases pursuant
to Section 5.8 (b) or (c) hereof, provided that such Lien only attaches to the
property being acquired or leased;
(f) any mortgage, security interest or Lien securing only indebtedness
incurred to Agent for the benefit of the Banks;
(g) easements, rights-of-way or other minor defects or irregularities
in title the Real Property not interfering in any material respect with the use
of such property in the business of any Company; or
(h) any Lien on fixed assets owned by a Company as a result of an
Acquisition permitted pursuant to Section 5.13 hereof, so long as such Lien is
released within ninety (90) days of such Acquisition (unless Borrower shall have
obtained the prior written consent of Agent and the Majority Banks).
No Company shall enter into any contract or agreement (other than a capital
lease or an agreement that creates a purchase money security interest) which
would prohibit Agent or the Banks from acquiring a security interest, mortgage
or other Lien on, or a collateral assignment of, any of the property or assets
of Borrower and/or any of its Subsidiaries.
SECTION 5.10. REGULATIONS U and X. No Company shall take any action
that would result in any non-compliance of the Loans with Regulations U and X of
the Board of Governors of the Federal Reserve System.
SECTION 5.11. INVESTMENTS AND LOANS. No Company shall (a) create,
acquire or hold any Subsidiary, (b) make or hold any investment in any stocks,
bonds or securities of any kind, (c) be or become a party to any joint venture
or other partnership without the prior written consent of Agent and the Majority
Banks, (d) make or keep outstanding any advance or loan to any Person, or (e) be
or become a Guarantor of any kind, except guarantees securing only indebtedness
of the Companies incurred or permitted pursuant to this Agreement; provided,
that this Section shall not apply to:
(i) any endorsement of a check or other medium of payment for deposit
or collection through normal banking channels or similar transaction in the
normal course of business;
(ii) any Permitted Investment;
(iii) the holding of Subsidiaries listed on SCHEDULE 6.1 hereto;
(iv) loans to a Company from a Company so long as each such Company is
Borrower or a Pledgor;
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(v) the holding of stock which has been acquired pursuant to an
Acquisition permitted pursuant to Section 5.13 hereof;
(vi) the creation of a Subsidiary for the purpose of making an
Acquisition permitted pursuant to Section 5.13 hereof;
(vii) the holding of any Subsidiary as a result of an Acquisition made
pursuant to Section 5.13 hereof so long as such Subsidiary becomes a Pledgor
promptly following such Acquisition; or
(viii) the creation of a Subsidiary so long as (i) Borrower notifies
Agent on or prior to the creation of such Subsidiary and, (ii) if the total
assets of such Subsidiary are in excess of Five Hundred Thousand Dollars
($500,000), such Subsidiary becomes a Pledgor (if required by Section 5.25
hereof) promptly after such Subsidiary's creation.
SECTION 5.12. MERGER AND SALE OF ASSETS. No Company shall merge or
consolidate with any other corporation or sell, lease or transfer or otherwise
dispose of all or a substantial part of its assets to any Person or entity,
except that if no Unmatured Event of Default or Event of Default shall then
exist or immediately thereafter shall begin to exist:
(a) any Subsidiary may merge with (i) Borrower (provided that Borrower
shall be the continuing or surviving corporation) or (ii) any one (1) or more
Pledgors, provided that either (A) the continuing or surviving corporation shall
be a Wholly-Owned Subsidiary which is a Pledgor, or (B) after giving effect to
any merger pursuant to this sub-clause (ii), Borrower and/or one or more
Wholly-Owned Subsidiaries which are Pledgor shall own not less than the same
percentage of the outstanding Voting Power of the continuing or surviving
corporation as Borrower and/or one or more Wholly-Owned Subsidiaries (which are
Pledgors) owned of the merged Subsidiary immediately prior to such merger;
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any of its assets to (i) Borrower, (ii) any Wholly-Owned Subsidiary which is a
Pledgor, or (iii) any Pledgor, of which Borrower and/or one or more Wholly-Owned
Subsidiaries, which are Pledgors, shall own not less than the same percentage of
Voting Power as Borrower and/or one or more Wholly-Owned Subsidiaries (which are
Pledgors) then own of the Subsidiary making such sale, lease, transfer or other
disposition;
(c) any Company may engage in any such conduct in connection with an
Acquisition permitted pursuant to Section 5.13 hereof so long as the resulting
Person is either Borrower or a Pledgor;
(d) Borrower may effectuate the Holding Company Reorganization pursuant
to Section 5.14 hereof and the Canadian Amalgamation pursuant to Section 5.15
hereof.
(e) any Company may (i) sell, lease or transfer inventory in the
ordinary course of business, or (ii) dispose of obsolete or no longer useful
equipment or other assets of such Company
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in the ordinary course of business so long as the aggregate amount of all such
dispositions by all Companies does not exceed One Million Dollars ($1,000,000)
during any fiscal year of Borrower.
SECTION 5.13. ACQUISITIONS. Without the prior written consent of Agent
and the Majority Banks, no Company shall effect an Acquisition; provided, that,
so long as no Unmatured Event of Default or Event of Default shall then exist or
immediately thereafter shall begin to exist, this Section shall not apply to:
(a) an Acquisition by Borrower or a Pledgor so long as (i) Borrower or
such Pledgor is the surviving entity of the Acquisition (in the case of a
merger, consolidation or other combination) or the Person to be acquired becomes
a Pledgor promptly after such Acquisition (in the case of the acquisition of the
stock (or other equity interest) of a Person); (ii) the Companies are in full
compliance with the Loan Documents both prior to and subsequent to the
transaction; (iii) Borrower provides to Agent and the Banks, at least ten (10)
days prior to the consummation of such Acquisition, written notice of such
Acquisition, historical financial statements of such Person and a pro forma
financial statement of the Companies accompanied by a certificate of a Financial
Officer of Borrower showing pro forma compliance with Section 5.7 hereof, both
before and after the proposed Acquisition, and (iv) the aggregate consideration
paid by the Companies with respect to such Acquisition, when added to all other
acquisitions for all Companies during any four (4) consecutive fiscal quarters,
would not exceed the aggregate amount of Twenty-Five Million Dollars
($25,000,000); or
(b) the Holding Company Reorganization pursuant to Section 5.14 hereof
and the Canadian Amalgamation pursuant to Section 5.15 hereof.
SECTION 5.14. HOLDING COMPANY REORGANIZATION. Borrower may merge with a
Wholly-Owned Subsidiary of the Holding Company as contemplated by the Proxy
Statement (the "Holding Company Reorganization") so long as at the time of such
transaction:
(a) no Unmatured Event of Default or Event of Default shall then exist
or immediately thereafter shall begin to exist;
(b) the Companies are in full compliance with the Loan Documents both
prior to and subsequent to the Holding Company Reorganization;
(c) the Holding Company shall have executed and delivered to Agent for
the benefit of the Banks, an Assumption Agreement, pursuant to which the Holding
Company unconditionally assumes all of the obligations of Borrower under this
Agreement and the other Loan Documents to which Borrower is a party;
(d) the Holding Company shall have executed and delivered to Agent and
the Banks a Security Agreement, Collateral Assignment and Security Agreement,
Collateral Assignment of Licenses and Permits and such other Security Documents
as Agent and the Banks deem necessary or advisable; and
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(e) Borrower shall have provided to Agent and the Banks such corporate
governance and authorization documents and an opinion of counsel, in form and
substance satisfactory to Agent and the Banks, as may be deemed necessary or
advisable by Agent and the Banks. Upon completion of the such transaction in
accordance with the foregoing requirements, the Holding Company shall (i)
succeed to all of the rights and obligations of Borrower under this Agreement
and the other Loan Documents to which Borrower is a party, (ii) for all purposes
hereof be substituted for Borrower hereunder, and (iii) constitute the
"Borrower" bound by this Agreement and the other Loan Documents to which
Borrower is a party. After the transactions contemplated in this Section 5.14,
to evidence Borrower's obligations as a subsidiary of the Holding Company,
Borrower shall execute and deliver to Agent a Guaranty of Payment.
SECTION 5.15. CANADIAN AMALGAMATION. Borrower may cause the Canadian
Amalgamation to occur so long as at the time of such transaction (a) no
Unmatured Event of Default or Event of Default shall then exist or immediately
thereafter shall begin to exist, and (b) the Companies are in full compliance
with the Loan Documents both prior to and subsequent to the Canadian
Amalgamation.
SECTION 5.16. CANADIAN SECOND STAGE TRANSACTIONS. Borrower may complete
the Canadian Second Stage Transactions as contemplated by the Offer Documents,
so long as at the time of such transactions (a) no Unmatured Event of Default or
Event of Default shall then exist or immediately thereafter shall begin to
exist, and (b) the Companies are in full compliance with the Loan Documents both
prior to and subsequent to the Canadian Second Stage Transactions. Borrower
agrees to inform Agent from time to time, but no less than weekly, of the status
of the actions taken with respect to the Canadian Second Stage Transactions. In
addition, Borrower shall have provided to Agent and the Banks such corporate
governance and authorization documents and an opinion of counsel, in form and
substance satisfactory to Agent and the Banks, as may be deemed necessary or
advisable by Agent and the Banks.
SECTION 5.17. NOTICE.
(a) Borrower shall cause a Financial Officer of Borrower to promptly
notify Agent whenever any Unmatured Event of Default or Event of Default may
occur hereunder or any representation or warranty made in Article VI hereof or
elsewhere in this Agreement or in any Related Writing may for any reason cease
in any material respect to be true and complete.
(b) Borrower shall provide notice to Agent contemporaneously with any
notice provided to the Purchaser (as defined in the Subordinated Note Purchase
Agreement) under the Subordinated Note Purchase Agreement.
SECTION 5.18. ENVIRONMENTAL COMPLIANCE. Each Company shall comply in
all material respects with any and all Environmental Laws including, without
limitation, (a) all Environmental Laws in jurisdictions in which any Company
owns or operates a facility or site, arranges for disposal or treatment of any
Hazardous Substance, solid waste or other wastes, accepts
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for transport any Hazardous Substances, solid waste or other wastes or holds any
interest in real property or otherwise, and (b) all Environmental Laws relating
to permits, licenses, approval, authorizations, consents and registrations
required for such Company's operation. Borrower shall furnish to the Banks,
promptly after receipt thereof, a copy of any notice any Company may receive
from any governmental authority, private person or entity or otherwise that any
material litigation or proceeding pertaining to any environmental, health or
safety matter has been filed or is threatened against such Company, any real
property in which such Company holds any interest or any past or present
operation of such Company. No Company shall allow the Release or, to such
Company's knowledge, disposal of any Hazardous Substance, solid waste or other
wastes on, under, to or about any real property in which any Company holds any
interest or performs any of its operations, in violation of any Environmental
Law. As used in this Section, "litigation or proceeding" means any written
demand, claim, notice, suit, suit in equity action, administrative action,
investigation or inquiry whether brought by any governmental authority, private
person or entity or otherwise. Borrower shall defend, indemnify and hold Agent
and the Banks harmless against all costs, expenses, claims, damages, penalties
and liabilities of every kind or nature whatsoever (including reasonable
attorneys and environmental consultant fees) arising out of or resulting from
the noncompliance of any Company with any Environmental Law.
SECTION 5.19. AFFILIATE TRANSACTIONS. No Company shall, or shall permit
any Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
a Company on terms that are less favorable to such Company or such Subsidiary,
as the case may be, than those that might be obtained at the time in a
transaction with a non-Affiliate; provided, however, that the foregoing shall
not prohibit the payment of customary and reasonable directors' fees to
directors who are not employees of a Company or any Affiliate of a Company. For
purposes of this provision, "Affiliate" shall mean any Person, directly or
indirectly, controlling, controlled by or under common control with a Company
and "control" (including the correlative meanings, the terms "controlling",
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Company, whether through the ownership of voting securities,
by contract or otherwise.
SECTION 5.20. USE OF PROCEEDS. Borrower's use of the proceeds of the
Loans shall be for the consummation of the Global Stone Acquisition, working
capital and other general corporate purposes of Borrower and its Subsidiaries.
SECTION 5.21. CAPITAL EXPENDITURES. Borrower and its Subsidiaries shall
not invest in Consolidated Capital Expenditures more than an aggregate amount
equal to Forty Million Dollars ($40,000,000) during each fiscal year of
Borrower.
SECTION 5.22. CORPORATE NAMES. No Company shall change its corporate
name, unless, in each case, Borrower shall provide Agent and each Bank with
thirty (30) days prior written notice thereof; provided, however, that this
Section shall not apply to the name changes of (a) Oglebay Norton Company to
ONCO Transportation Company, and (b) Oglebay Norton Holding
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Company to Oglebay Norton Company pursuant the Holding Company Reorganization,
which name changes shall occur within thirty (30) days after the Closing Date.
SECTION 5.23. CAPITAL DISTRIBUTIONS. Borrower will not pay or commit
itself to pay Capital Distributions in excess of the aggregate sum of Five
Million Dollars ($5,000,000) during any fiscal year of Borrower.
SECTION 5.24. RESTRICTED PAYMENTS. No Company shall make any payments,
including, but not limited to any prepayment or redemption, of any kind with
respect to any Subordinated Indebtedness, except that if no Unmatured Event of
Default (other than with respect to subpart (a) hereof) or Event of Default
shall then exist or immediately thereafter shall begin to exist:
(a) Borrower may make regularly scheduled payments of interest with
respect to any Subordinated Indebtedness;
(b) Borrower shall pay in full the Indebtedness of Global Stone
pursuant to the Global Stone Trust Indenture in accordance with Section 4.2(h)
hereof; and
(c) Borrower may prepay the entire outstanding principal balance of any
Subordinated Indebtedness so long as (i) Borrower shall have provided Agent with
at least ten (10) days written notice (or such shorter period as Agent shall
agree) prior to the proposed date of repayment; (ii) the Subordinated
Indebtedness being prepaid is being prepaid solely with the proceeds of new
Subordinated Indebtedness; (iii) Borrower shall have provided Agent with all
documentation relating to such new Subordinated Indebtedness at least ten (10)
days prior to the proposed date of repayment, which documents shall be in form
and substance reasonably satisfactory to Agent (it being understood that
covenants and events of default substantially similar, in the reasonable opinion
of Agent, to those set forth in Articles VI, VII and IX, including the
definitions relating thereto, of the Subordinated Note Purchase Agreement are
satisfactory to Agent); and (iv) such new Subordinated Indebtedness shall be
subject to a Subordination Agreement, in form and substance reasonably
satisfactory to Agent (it being understood that provisions substantially
similar, in the reasonable opinion Agent, to those set forth in Articles X and
XI of the Subordinated Note Purchase Agreement, including the definitions
relating thereto, are satisfactory to Agent).
SECTION 5.25. SUBSIDIARIES CREATED, ACQUIRED OR HELD SUBSEQUENT TO
CLOSING DATE. Each Subsidiary or other affiliate of a Company created, acquired
or held subsequent to the Closing Date, shall (a) immediately become a Pledgor
(provided that, any Foreign Entity shall only be required to execute a Pledge
Agreement) and shall deliver to Agent and the Banks such corporate governance
and authorization documents and an opinion of counsel as may be deemed necessary
or advisable by Agent; and (b) Borrower, or a Pledgor, as appropriate, shall
deliver to Agent for the benefit of the Banks the share certificates, or other
evidence of equity interest, pursuant to the terms of the Pledge Agreement,
provided that no Company shall be required to pledge more than sixty-five (65%)
of the outstanding shares of stock of any Foreign Entity. Notwithstanding the
foregoing, a Subsidiary shall not be required to become
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a Pledgor so long as (i) the total assets of such Subsidiary are less than the
amount of Five Hundred Thousand Dollars ($500,000), and (ii) the aggregate of
the total assets of all such Subsidiaries with total asset values of less than
Five Hundred Thousand Dollars ($500,000) does not exceed the aggregate amount of
Three Million Dollars ($3,000,000). In the event that the total assets of any
Subsidiary which is not a Pledgor are at any time equal to or greater than Five
Hundred Thousand Dollars ($500,000), Borrower shall provide Agent and the Banks
with prompt written notice of such asset value.
SECTION 5.26. PROPERTY ACQUIRED OR HELD SUBSEQUENT TO CLOSING DATE.
Borrower shall provide Agent with prompt written notice with respect to any Real
Property or documented vessel acquired or held by a Company with a fair market
value in excess of One Million Dollars ($1,000,000), and with respect to such
Real Property or documented vessel shall, at the request of Agent, provide, or
cause such Company to provide, to Agent for the benefit of the Banks (a) a
Mortgage or Preferred Ship Mortgage, as applicable, (b) such other information,
documents or agreements as may be deemed necessary or advisable by Agent and the
Banks in connection with such Mortgage or Preferred Ship Mortgage, as
applicable, and (c) such corporate governance and authorization documents and an
opinion of counsel as may be deemed necessary or advisable by Agent and the
Banks.
SECTION 5.27. SYNDICATION OF CREDIT. Each Company shall provide to
Agent, upon request, such information and assistance as may be requested by
Agent, including, but not limited to, participation of senior level management,
in Agent's efforts to syndicate the Commitment and the Loans.
SECTION 5.28. OTHER COVENANTS. In the event that Borrower shall enter
into any other contract or agreement for the borrowing of money in excess of the
aggregate amount of Five Million Dollars ($5,000,000), wherein the covenants and
agreements contained therein are more restrictive than the covenants set forth
herein, then the Company shall be bound hereunder by such covenants and
agreements with the same force and effect as if such covenants and agreements
were written herein.
SECTION 5.29. GUARANTY OF SUBORDINATED INDEBTEDNESS. No Company shall
be or become a Guarantor of the Subordinated Indebtedness under the Subordinated
Note Purchase Agreement unless such Company is also a Pledgor hereunder.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that the statements set forth in this
Article VI are true, correct and complete.
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SECTION 6.1. CORPORATE EXISTENCE; FOREIGN QUALIFICATION; SUBSIDIARIES.
(a) Each Company is a corporation duly organized, validly existing, and
in good standing under the laws of its state of incorporation and is duly
qualified and authorized to do business and is in good standing as a foreign
corporation in each jurisdiction where the character of its property or its
business activities makes such qualification necessary, except where the failure
to so qualify will not cause or result in a material adverse effect on the
business, operations or condition (financial or otherwise) of such Company.
(b) SCHEDULE 6.1 hereto sets forth (i) the state of organization of
Borrower, and (ii) each state or other jurisdiction in which Borrower is
qualified to do business as a foreign corporation.
(c) SCHEDULE 6.1 hereto sets forth (i) each Subsidiary of Borrower and
each Subsidiary of each Company, (ii) such Subsidiary's state of incorporation,
(iii) each state or other jurisdiction in which such Subsidiary is qualified to
do business as a foreign corporation, and (iv) the direct or indirect ownership
of Borrower in such Subsidiary.
SECTION 6.2. CORPORATE AUTHORITY. Each Company has the right and power
and is duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents. The Loan Documents to which each Company is a party have
been duly authorized and approved by such Company's Board of Directors and are
the valid and binding obligations of such Company, enforceable against such
Company in accordance with their respective terms. The execution, delivery and
performance of the Loan Documents will not conflict with nor result in any
breach in any of the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Liens permitted under Section 5.9 of this
Agreement) upon any assets or property of any Company under the provisions of,
such Company's Certificate (Articles) of Incorporation, Bylaws (Regulations) or
any agreement.
SECTION 6.3. COMPLIANCE WITH LAWS.
(a) Each Company holds permits, certificates, licenses, orders,
registrations, franchises, authorizations, and other approvals from federal,
state, local, and foreign governmental and regulatory bodies reasonably
necessary for the conduct of its business and the use, operation and ownership
of the Real Property and is in compliance in all material respects with all
applicable laws relating thereto. SCHEDULE 6.3 hereto sets forth each material
permit, certificate, license, registration or authorization necessary for the
conduct of each Company's business.
(b) Each Company is in compliance in all material respects with all
federal, state, local, or foreign applicable statutes, rules, regulations, and
orders including, without limitation, those relating to environmental
protection, occupational safety and health, and equal employment practices and
the use, operation and ownership of the Real Property.
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(c) No Company is in violation of or in default in any material respect
under any agreement to which it is a party or by which its assets are subject or
bound.
SECTION 6.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS. Except as
disclosed on SCHEDULE 6.4 hereto, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or threatened against Borrower or
any of its Subsidiaries, or in respect of which Borrower or any of its
Subsidiaries may have any liability, in any court or before any governmental
authority, arbitration board, or other tribunal, (b) no orders, writs,
injunctions, judgments, or decrees of any court or government agency or
instrumentality to which any Company is a party or by which the property or
assets of any Company are bound and (c) no grievances, disputes, or
controversies outstanding with any union or other organization of the employees
of any Company, or threats of work stoppage, strike, or pending demands for
collective bargaining; which, as to subsections (a) through (c) above, if
determined adversely would not have a material adverse effect on the business,
property or operations (financial or otherwise) of any Company,
SECTION 6.5. LOCATION. SCHEDULE 6.5 hereto sets forth (i) the location
of the chief executive office and the principal place of business of each
Company, (ii) each state or other location where each Company has places of
business or maintains inventory, equipment or records concerning such Company's
accounts, and (iii) each state or other location where each Company owns any
real property.
SECTION 6.6. DOCUMENTED VESSELS. SCHEDULE 6.6 hereto sets forth each
Documented Vessel owned by each Company.
SECTION 6.7. TITLE TO ASSETS. Each Company has good title to and
ownership of all property, including the Real Property, it purports to own or
lease (including leases for or with respect to minerals and mineral rights),
which property is free and clear of all Liens, except those permitted under
Section 5.9 hereto.
SECTION 6.8. LIENS AND SECURITY INTERESTS. On and after the Closing
Date, except for Liens in connection with the Indebtedness referenced in Section
4.2(h) hereof which shall be released in accordance with Section 4.2(h) and
except for Liens permitted pursuant to Section 5.9 hereof, (a) there is no
financing statement or other registration document outstanding covering any
personal property of any Company, other than a financing statement in favor of
Agent on behalf of the Banks; (b) there is no mortgage outstanding covering any
Real Property of any Company, other than a mortgage in favor of Agent on behalf
of the Banks; and (c) no Real Property or personal property of any Company is
subject to any security interest or Lien of any kind other than any security
interest or Lien which may be granted to Agent on behalf of the Banks. On and
after the Closing Date, no Company has entered into any contract or agreement
which would prohibit Agent or the Banks from acquiring a security interest,
mortgage or other Lien on, or a collateral assignment of, any of the property or
assets of Borrower and/or any of its Subsidiaries including the Real Property.
SECTION 6.9. TAX RETURNS. All federal, state and local tax returns and
other reports required by law to be filed in respect of the income, business,
properties and employees of each
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Company have been filed and all taxes, assessments, fees and other governmental
charges which are due and payable have been paid, except as otherwise permitted
herein or the failure to do so does not and will not cause or result in a
material adverse effect on the business, operations or condition (financial or
otherwise) of such Company. The provision for taxes on the books of each Company
is adequate for all years not closed by applicable statutes and for the current
fiscal year.
SECTION 6.10. ENVIRONMENTAL LAWS. Each Company is in material
compliance with any and all Environmental Laws including, without limitation,
(a) all Environmental Laws in all jurisdictions in which any Company owns or
operates, or has owned or operated, a facility or site, arranges for disposal or
treatment of any Hazardous Substance, solid waste or other wastes, accepts or
has accepted for transport any Hazardous Substance, solid waste or other wastes
or holds or has held any interest in real property or otherwise, and (b) all
Environmental Laws relating to permits, licenses, approvals, authorizations,
consents and registrations required for such Company's operation. No litigation
or proceeding arising under, relating to or in connection with any Environmental
Law is pending or, to the best knowledge of each Company, threatened against any
Company, any real property in which any Company holds or has held an interest or
any past or present operation of any Company. No Release, threatened Release or
disposal of any Hazardous Substance, solid waste or other wastes is occurring,
or has occurred (other than those that are currently being cleaned up in
accordance with Environmental Laws), on, under or to any real property in which
any Company holds any interest or performs any of its operations, in violation
of any Environmental Law. As used in this Section, "litigation or proceeding"
means any written demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by any
governmental authority, private person or entity or otherwise.
SECTION 6.11. CONTINUED BUSINESS. To Borrower's knowledge, there exists
no actual, pending or threatened termination, cancellation or limitation of, or
any modification or change in the business relationship of any Company and any
customer or supplier, or any group of customers or suppliers, whose purchases or
supplies, individually or in the aggregate, are material to the business of any
Company which would have a material adverse effect to the Companies taken as a
whole, and there exists no present condition or state of facts or circumstances
which would materially affect adversely any Company in any respect or prevent a
Company from conducting such business or the transactions contemplated by this
Agreement in substantially the same manner which it was theretofore conducted.
SECTION 6.12. EMPLOYEE BENEFITS PLANS. Full payment has been made of
all amounts which a Controlled Group member is required, under applicable law or
under the governing documents, to have been paid as a contribution to or a
benefit under each Plan. The liability of each Controlled Group member with
respect to each Plan has been fully funded based upon reasonable and proper
actuarial assumptions, has been fully insured, or has been fully reserved for on
its financial statements. No changes have occurred or are expected to occur that
would cause a material increase in the cost of providing benefits under the
Plan. With respect to each Plan that is intended to be qualified under Code
Section 401(a): (a) the Plan and any associated trust operationally comply with
the applicable requirements of Code Section 401(a), (b) the Plan and any
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associated trust have been amended to comply with all such requirements as
currently in effect, other than those requirements for which a retroactive
amendment can be made within the "remedial amendment period" available under
Code Section 401(b) (as extended under Treasury Regulations and other Treasury
pronouncements upon which taxpayers may rely), (c) the Plan and any associated
trust have received a favorable determination letter from the Internal Revenue
Service stating that the Plan qualifies under Code Section 401(a), that the
associated trust qualifies under Code Section 501(a) and, if applicable, that
any cash or deferred arrangement under the Plan qualifies under Code Section
401(k), unless the Plan was first adopted at a time for which the
above-described "remedial amendment period" has not yet expired, (d) the Plan
currently satisfies the requirements of Code Section 410(b), without regard to
any retroactive amendment that may be made within the above-described "remedial
amendment period", and (e) no contribution made to the Plan is subject to an
excise tax under Code Section 4972. With respect to any Pension Plan, the
"accumulated benefit obligation" of Controlled Group members with respect to the
Pension Plan (as determined in accordance with Statement of Accounting Standards
No. 87, "Employers' Accounting for Pensions") does not exceed the fair market
value of Pension Plan assets, or if it does, it does not have a material adverse
effect on the Companies taken as whole. Neither Borrower nor any Controlled
Group member has had a complete or partial withdrawal from any Multiemployer
Plan which has resulted in material liability to Borrower which has not been
satisfied, and neither Borrower nor any Controlled Group member would become
subject to any material liability under ERISA if Borrower or such Controlled
Group member were to withdraw completely from all such Multiemployer Plans to
which Borrower or any Controlled Member contributes or has an obligation to
contribute.
SECTION 6.13. CONSENTS OR APPROVALS. No consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority or any other Person is required to be obtained or
completed by Borrower in connection with the execution, delivery or performance
of any of the Loan Documents, which has not already been obtained or completed.
SECTION 6.14. SOLVENCY. Borrower has received consideration which is
the reasonable equivalent value of the obligations and liabilities that Borrower
has incurred to the Banks. Borrower is not insolvent as defined in any
applicable state or federal statute, nor will Borrower be rendered insolvent by
the execution and delivery of the Loan Documents to Agent and the Banks.
Borrower is not engaged or about to engage in any business or transaction for
which the assets retained by it are or will be an unreasonably small amount of
capital, taking into consideration the obligations to Agent and the Banks
incurred hereunder. Borrower does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature.
SECTION 6.15. FINANCIAL STATEMENTS. The audited financial statements of
the Companies for the fiscal year ended December 31, 1997, and the audited
Consolidated financial statements of Global Stone for the fiscal year ended
September 30, 1997, furnished to Agent and the Banks, are true and complete,
have been prepared in accordance with GAAP, and fairly present the Companies'
financial condition as of the date of such financial statements and the results
of their operations for the period then ending. Since the dates of such
statements, there has been no material
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adverse change in any Company's financial condition, properties or business nor
any change in any Company's accounting procedures.
SECTION 6.16. REGULATIONS. Borrower is not engaged principally or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States of America). Neither the granting of any Loan (or any conversion
thereof) nor the use of the proceeds of the Loans will violate, or be
inconsistent with, the provisions of Regulation U or X of said Board of
Governors.
SECTION 6.17. MATERIAL AGREEMENTS. Except as disclosed on SCHEDULE 6.17
attached to this Agreement, no Company is a party to any (a) debt instrument;
(b) lease (capital, operating or otherwise, including leases for Real Property
and leases for or with respect to minerals and mineral rights), whether as
lessee or lessor thereunder; (c) contract, commitment, agreement, or other
arrangement involving the purchase or sale of any inventory by it, or the
license of any right to or by it; (d) contract, commitment, agreement, or other
arrangement with any of its "Affiliates" (as such term is defined in the
Securities Exchange Act of 1934, as amended); (e) management or employment
contract or contract for personal services with any of its Affiliates which is
not otherwise terminable at will or on less than ninety (90) days' notice
without liability; (f) collective bargaining agreement; or (g) other contract,
agreement, understanding, or arrangement which, as to subsections (a) through
(g), above, if violated, breached, or terminated for any reason, would have or
would be reasonably expected to have a material adverse effect on the business,
operation or condition (financial or otherwise) of any Company.
SECTION 6.18. INTELLECTUAL PROPERTY. Each Company owns, possesses, or
has the right to use all of the patents, patent applications, trademarks,
service marks, copyrights, licenses, and rights with respect to the foregoing
necessary for the conduct of its business without any known conflict with the
rights of others. SCHEDULE 6.18 hereto sets forth all intellectual property
owned by the Companies, setting forth in detail a description of such
intellectual property and the owner thereof.
SECTION 6.19. INSURANCE. Each Company maintains with financially sound
and reputable insurers insurance with coverage and limits as required by law and
as is customary with persons engaged in the same businesses as the Companies.
SCHEDULE 6.19 sets forth all insurance carried by the Companies, setting forth
in detail the amount and type of such insurance.
SECTION 6.20. ACCURATE AND COMPLETE STATEMENTS. Neither the Loan
Documents nor any written statement made by any Company in connection with any
of the Loan Documents contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained therein or in the
Loan Documents not misleading. After due inquiry by Borrower, there is no known
fact which any Company has not disclosed to Agent and the Banks which has a
material adverse effect on the business, operations or condition (financial or
otherwise) of any Company.
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SECTION 6.21. YEAR 2000 COMPLIANCE. Each Company's Computer Systems
are, or will be modified to be, Year 2000 Compliant, except to the extent that
noncompliance will not have a material adverse effect to the business,
operations or condition (financial or otherwise) of such Company or except to
the extent that noncompliance is a result of a third party that is not an
affiliate of such Company.
SECTION 6.22. REAL PROPERTY.
(a) To the knowledge of Borrower, there is no existing, proposed or
contemplated plan, study, or effort by any governmental authority or other
Person that in any way effects or would affect materially and adversely the
continued authorization of the present or contemplated ownership, financing,
construction, use or operation of any part of the Real Property or that could or
will result in any tax or other charge being levied or assessed against, or in
the creation of any Lien upon, any part of the Real Property.
(b) No Real Property or any portion thereof is affected by any fire,
explosion, accident, drought, storm, hail, earthquake, embargo, act of God or
other casualty (which is not covered by insurance) which has resulted in or
would reasonably be likely to result in a material adverse effect on such Real
Property.
(c) No condemnation of any Real Property or any portion thereof is
pending, nor, to the best of Borrower's knowledge is threatened, by any
governmental authority or other Person, except for taking of streets, rights of
way and other similar takings not having any material adverse effect on such
Real Property.
SECTION 6.23. SUBORDINATED NOTE PURCHASE AGREEMENT. (a) No Event of
Default (as defined in the Subordinated Note Purchase Agreement) or Default (as
defined in the Subordinated Note Purchase Agreement) exists, nor will any such
Event of Default or Default exist immediately after the granting of any Loan,
under the Subordinated Note Purchase Agreement, or any agreement executed in
connection therewith; (b) no Company has incurred (as defined in the
Subordinated Note Purchase Agreement) any Designated Senior Indebtedness (as
defined in the Subordinated Note Purchase Agreement) other than the Debt; (c);
and (d) no Company has "incurred" (as defined in the Subordinated Note Purchase
Agreement) either prior to or after the granting of any Loan, any Indebtedness
(as defined in the Subordinated Note Purchase Agreement) in violation of Section
6.8 (Limitation on Additional Indebtedness) of the Subordinated Note Purchase
Agreement.
SECTION 6.24. DEFAULTS. No Unmatured Event of Default or Event of
Default exists hereunder, nor will any begin to exist immediately after the
execution and delivery hereof.
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ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
SECTION 7.1. PAYMENTS. If (a) the principal of any Note shall not be
paid in full punctually when due and payable, or (b) the interest on any Note or
any commitment or other fee shall not be paid in full punctually when due and
payable or within five (5) Business Days thereafter.
SECTION 7.2. SPECIAL COVENANTS. If any Company or any Obligor shall
fail or omit to perform and observe Sections 5.7, 5.12, 5.21, 5.23 or 5.24.
SECTION 7.3. OTHER COVENANTS. If any Company or any Obligor shall fail
or omit to perform and observe any agreement or other provision (other than
those referred to in Sections 7.1 or 7.2 hereof) contained or referred to in
this Agreement or any Related Writing that is on such Company's or Obligor's
part, as the case may be, to be complied with, and that Unmatured Event of
Default shall not have been fully corrected within thirty (30) days after the
giving of written notice thereof to Borrower by Agent or any Bank that the
specified Unmatured Event of Default is to be remedied.
SECTION 7.4. REPRESENTATIONS AND WARRANTIES. If any representation,
warranty or statement made in or pursuant to this Agreement or any Related
Writing or any other material information furnished by any Company or any
Obligor to the Banks or any thereof or any other holder of any Note, shall be
false or erroneous in any material respect.
SECTION 7.5. CROSS DEFAULT. If any Company or any Obligor shall default
in the payment of principal or interest due and owing upon any other obligation
for borrowed money in excess of the aggregate, for all such obligations for all
such Companies and Obligors, of Five Million Dollars ($5,000,000) beyond any
period of grace provided with respect thereto or in the performance or
observance of any other agreement, term or condition contained in any agreement
under which such obligation is created, if the effect of such default is to
allow the acceleration of the maturity of such Indebtedness or to permit the
holder thereof to cause such Indebtedness to become due prior to its stated
maturity.
SECTION 7.6. ERISA DEFAULT. The occurrence of one or more ERISA Events
which (a) the Majority Banks determine could have a material adverse effect on
the financial condition of the Companies when taken as a whole, or (b) results
in a Lien on any of the assets of any Company in excess of Two Million Five
Hundred Thousand Dollars ($2,500,000).
SECTION 7.7. CHANGE IN CONTROL. If a Change in Control shall occur.
SECTION 7.8. MONEY JUDGMENT. A final judgment or order for the payment
of money shall be rendered against any Company or any Obligor by a court of
competent jurisdiction, which remains unpaid or unstayed and undischarged for a
period (during which execution shall not be effectively stayed) of thirty (30)
days after the date on which the right to appeal has expired,
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provided that the aggregate of all such judgments for all such Companies and
Obligors not covered by any form of insurance (which coverage shall be proved to
the satisfaction of Agent) shall exceed One Million Five Hundred Thousand
Dollars ($1,500,000).
SECTION 7.9. MATERIAL ADVERSE CHANGE. There shall have occurred any
condition or event which Agent or the Majority Banks determine has or is
reasonably likely to have a material and adverse effect on the business,
prospects, operations or financial condition of Borrower or any of its
Subsidiaries or on the rights and remedies of Agent or the Banks under the Loan
Documents or the ability of Borrower or any of its Subsidiaries to perform their
respective obligations under the Loan Documents.
SECTION 7.10. VALIDITY OF LOAN DOCUMENTS. (a) Any material provision,
in the sole opinion of Agent, of any Loan Document shall at any time for any
reason cease to be valid and binding and enforceable against Borrower or any
Pledgor; (b) the validity, binding effect or enforceability of any Loan Document
against Borrower or any Pledgor shall be contested by any Company or any other
Obligor; (c) Borrower or any Pledgor shall deny that it has any or further
liability or obligation thereunder; or (d) any Loan Document shall be
terminated, invalidated or set aside, or be declared ineffective or inoperative
or in any way cease to give or provide to Agent and the Banks the benefits
purported to be created thereby.
SECTION 7.11. SOLVENCY. If Borrower or any Pledgor shall (a)
discontinue business, (b) generally not pay its debts as such debts become due,
(c) make a general assignment for the benefit of creditors, (d) apply for or
consent to the appointment of a receiver, a custodian, a trustee, an interim
trustee or liquidator of all or a substantial part of its assets, (e) be
adjudicated a debtor or have entered against it an order for relief under Title
11 of the United States Code, as the same may be amended from time to time, (f)
file a voluntary petition in bankruptcy or file a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to take advantage of
any other law (whether federal or state) relating to relief of debtors, or admit
(by answer, by default or otherwise) the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency or other
proceeding (whether federal or state) relating to relief of debtors, (g) suffer
or permit to continue unstayed and in effect for thirty (30) consecutive days
any judgment, decree or order entered by a court of competent jurisdiction,
which approves a petition seeking its reorganization or appoints a receiver,
custodian, trustee, interim trustee or liquidator of all or a substantial part
of its assets, or (h) take, or omit to take, any action in order thereby to
effect any of the foregoing.
SECTION 7.12. SUBORDINATED NOTE PURCHASE AGREEMENT. If (a) any Event of
Default (as defined in the Subordinated Note Purchase Agreement), or any event
or condition which with the lapse of time or giving of notice or both would
constitute an Event of Default (as defined in the Subordinated Note Purchase
Agreement), shall exist under the Subordinated Note Purchase Agreement or any
agreement executed in connection therewith, (b) without the prior written
consent of Agents and the Majority Banks, the Subordinated Note Purchase
Agreement shall be amended or modified in any respect, (c) the debt incurred in
connection with the Subordinated Note Purchase Agreement shall be accelerated
for any reason, or (d) if any Company
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incurs (as defined in the Subordinated Note Purchase Agreement) any Designated
Senior Indebtedness (as defined in the Subordinated Note Purchase Agreement)
other than the Debt.
ARTICLE VIII. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or
elsewhere,
SECTION 8.1. OPTIONAL DEFAULTS. If any Event of Default referred to in
Section 7.1, 7.2., 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 or 7.12 hereof shall
occur, the Majority Banks shall have the right, in their discretion, by
directing Agent, on behalf of the Banks, to give written notice to Borrower, to:
(a) terminate the Commitment and the credits hereby established, if not
theretofore terminated, and, immediately upon such election, the obligations of
the Banks, and each thereof, to make any further Loan and the obligation of
Agent (or a Fronting Bank) to issue any Letter of Credit hereunder immediately
shall be terminated, and/or
(b) accelerate the maturity of all of the Debt (if it be not already
due and payable), whereupon all of the Debt shall become and thereafter be
immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby waived
by Borrower.
SECTION 8.2. AUTOMATIC DEFAULTS. If any Event of Default referred to in
Section 7.11 hereof shall occur:
(a) all of the Commitment and the credits hereby established shall
automatically and immediately terminate, if not theretofore terminated, and no
Bank thereafter shall be under any obligation to grant any further Loan, nor
shall Agent (or a Fronting Bank) be obligated to issue any Letter of Credit
hereunder, and
(b) the principal of and interest then outstanding on all Notes, and
all of the Debt to the Banks, shall thereupon become and thereafter be
immediately due and payable in full (if it be not already due and payable), all
without any presentment, demand or notice of any kind, which are hereby waived
by Borrower.
SECTION 8.3. LETTERS OF CREDIT. If the maturity of the Notes is
accelerated pursuant to Sections 8.1 or 8.2 hereof, Borrower shall immediately
deposit with Agent, as security for Borrower's and any Pledgor's obligations to
reimburse Agent and the Banks for any then outstanding Letters of Credit, cash
equal to the sum of the aggregate undrawn balance of any then outstanding
Letters of Credit. Agent and the Banks are hereby authorized, at their option,
to deduct any and all such amounts from any deposit balances then owing by any
Bank to or for the credit or account of any Company, as security for Borrower's
and any Pledgor's obligations to reimburse Agent and the Banks for any then
outstanding Letters of Credit.
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SECTION 8.4. OFFSETS. If there shall occur or exist any Event of
Default referred to in Section 7.11 hereof or if the maturity of the Notes is
accelerated pursuant to Section 8.1 or 8.2 hereof, each Bank shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all Debt then owing by Borrower to that Bank (including,
without limitation, any participation purchased or to be purchased pursuant to
Section 8.5 hereof), whether or not the same shall then have matured, any and
all deposit balances and all other indebtedness then held or owing by that Bank
to or for the credit or account of Borrower, all without notice to or demand
upon Borrower or any other Person, all such notices and demands being hereby
expressly waived by Borrower.
SECTION 8.5. EQUALIZATION PROVISION. Each Bank agrees with the other
Banks that if it, at any time, shall obtain any Advantage over the other Banks
or any thereof in respect of the Debt (except under Article III hereof), it
shall purchase from the other Banks, for cash and at par, such additional
participation in the Debt as shall be necessary to nullify the Advantage. If any
such Advantage resulting in the purchase of an additional participation as
aforesaid shall be recovered in whole or in part from the Bank receiving the
Advantage, each such purchase shall be rescinded, and the purchase price
restored (but without interest unless the Bank receiving the Advantage is
required to pay interest on the Advantage to the person recovering the Advantage
from such Bank) ratably to the extent of the recovery. Each Bank further agrees
with the other Banks that if it at any time shall receive any payment for or on
behalf of Borrower on any indebtedness owing by Borrower to that Bank by reason
of offset of any deposit or other indebtedness, it will apply such payment first
to any and all indebtedness owing by Borrower to that Bank pursuant to this
Agreement (including, without limitation, any participation purchased or to be
purchased pursuant to this Section or any other Section of this Agreement).
Borrower agrees that any Bank so purchasing a participation from the other Banks
or any thereof pursuant to this Section may exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Bank was a direct creditor of Borrower in the amount of such
participation.
ARTICLE IX. THE AGENT
The Banks authorize KeyBank National Association and KeyBank National
Association hereby agrees to act as agent for the Banks in respect of this
Agreement upon the terms and conditions set forth elsewhere in this Agreement,
and upon the following terms and conditions:
SECTION 9.1. APPOINTMENT AND AUTHORIZATION. Each Bank hereby
irrevocably appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers hereunder as are delegated to Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
Neither Agent nor any of its directors, officers, attorneys or employees shall
be liable for any action taken or omitted to be taken by it or them hereunder or
in connection herewith, except for its or their own gross negligence or willful
misconduct.
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SECTION 9.2. NOTE HOLDERS. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with it,
signed by such payee and in form satisfactory to Agent.
SECTION 9.3. CONSULTATION WITH COUNSEL. Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the opinion of such counsel.
SECTION 9.4. DOCUMENTS. Agent shall not be under any duty to examine
into or pass upon the validity, effectiveness, genuineness or value of any Loan
Documents or any other Related Writing furnished pursuant hereto or in
connection herewith or the value of any collateral obtained hereunder, and Agent
shall be entitled to assume that the same are valid, effective and genuine and
what they purport to be.
SECTION 9.5. AGENT AND AFFILIATES. With respect to the Loans, Agent
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not Agent, and Agent and its affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with any Company or affiliate thereof.
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and
agreed that Agent shall be entitled to assume that no Unmatured Event of Default
or Event of Default has occurred and is continuing, unless Agent has been
notified by a Bank in writing that such Bank believes that an Unmatured Event of
Default or Event of Default has occurred and is continuing and specifying the
nature thereof.
SECTION 9.7. ACTION BY AGENT. So long as Agent shall be entitled,
pursuant to Section 9.6 hereof, to assume that no Unmatured Event of Default or
Event of Default shall have occurred and be continuing, Agent shall be entitled
to use its discretion with respect to exercising or refraining from exercising
any rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions which it may be able to take under or in
respect of, this Agreement. Agent shall incur no liability under or in respect
of this Agreement by acting upon any notice, certificate, warranty or other
paper or instrument believed by it to be genuine or authentic or to be signed by
the proper party or parties, or with respect to anything which it may do or
refrain from doing in the reasonable exercise of its judgment, or which may seem
to it to be necessary or desirable in the premises.
SECTION 9.8. NOTICES, DEFAULT, ETC. In the event that Agent shall have
acquired actual knowledge of any Unmatured Event of Default, Agent shall
promptly notify the Banks and shall take such action and assert such rights
under this Agreement as the Majority Banks shall direct and Agent shall inform
the other Banks in writing of the action taken. Agent may take such action and
assert such rights as it deems to be advisable, in its discretion, for the
protection of the interests of the holders of the Notes.
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SECTION 9.9. INDEMNIFICATION OF AGENT. The Banks agree to indemnify
Agent (to the extent not reimbursed by Borrower), ratably according to their
respective Commitment Percentages from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against Agent in its capacity as agent in any way
relating to or arising out of this Agreement or any Loan Document or any action
taken or omitted by Agent with respect to this Agreement or any Loan Document,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorney fees) or disbursements resulting from Agent's gross
negligence, willful misconduct or from any action taken or omitted by Agent in
any capacity other than as agent under this Agreement.
SECTION 9.10. SUCCESSOR AGENT. Agent may resign as agent hereunder by
giving not fewer than thirty (30) days' prior written notice to Borrower and the
Banks. If Agent shall resign under this Agreement, then either (a) the Majority
Banks shall appoint from among the Banks a successor agent for the Banks (with
the consent of Borrower so long as an Event of Default has not occurred and
which consent shall not be unreasonably withheld), or (b) if a successor agent
shall not be so appointed and approved within the thirty (30) day period
following Agent's notice to the Banks of its resignation, then Agent shall
appoint a successor agent who shall serve as agent until such time as the
Majority Banks appoint a successor agent. Upon its appointment, such successor
agent shall succeed to the rights, powers and duties as agent, and the term
"Agent" shall mean such successor effective upon its appointment, and the former
agent's rights, powers and duties as agent shall be terminated without any other
or further act or deed on the part of such former agent or any of the parties to
this Agreement.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION. Each Bank, by its
signature to this Agreement, acknowledges and agrees that Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between
Agent and such Bank. Each Bank represents that it has made and shall continue to
make its own independent investigation of the creditworthiness, financial
condition and affairs of the Companies in connection with the extension of
credit hereunder, and agrees that Agent has no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or other
information with respect thereto (other than such notices as may be expressly
required to be given by Agent to the Banks hereunder), whether coming into its
possession before the granting of the first Loans hereunder or at any time or
times thereafter.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of
dealing on the part of Agent, any Bank or the holder of any Note in exercising
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any
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such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The remedies herein
provided are cumulative and in addition to any other rights, powers or
privileges held by operation of law, by contract or otherwise.
SECTION 10.3. AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to any
variance therefrom, shall be effective unless the same shall be in writing and
signed by the Majority Banks (except that Agent may consent to the release of
any collateral or other property securing the Debt in an aggregate amount not to
exceed a fair market value of One Million Dollars ($1,000,000) during any fiscal
year of Borrower) and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. Anything herein
to the contrary notwithstanding, unanimous consent of the Banks shall be
required with respect to (a) any increase in the Commitment hereunder, (b) the
extension of maturity of the Notes, the payment date of interest thereunder, or
the payment of commitment or other fees or amounts payable hereunder, (c) any
reduction in the rate of interest on the Notes, or in any amount of principal or
interest due on any Note, or the payment of commitment or other fees hereunder
or any change in the manner of pro rata application of any payments made by
Borrower to the Banks hereunder, (d) any change in any percentage voting
requirement, voting rights, or the Majority Banks definition in this Agreement,
(e) the release of any Pledgor or, except as set forth in the first sentence of
this Section 10.3, of any collateral securing the Debt or any part thereof, or
(f) any amendment to this Section 10.3 or Section 8.5 hereof. Notice of
amendments or consents ratified by the Banks hereunder shall immediately be
forwarded by Agent to Borrower and each of the Banks. Each Bank or other holder
of a Note shall be bound by any amendment, waiver or consent obtained as
authorized by this Section, regardless of its failure to agree thereto.
SECTION 10.4. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to Borrower,
mailed or delivered to it, addressed to it at the address specified on the
signature pages of this Agreement, if to a Bank, mailed or delivered to it,
addressed to the address of such Bank specified on the signature pages of this
Agreement, or, as to each party, at such other address as shall be designated by
such party in a written notice to each of the other parties. All notices,
statements, requests, demands and other communications provided for hereunder
shall be given by overnight delivery or first class mail with postage prepaid by
registered or certified mail, addressed as aforesaid, or sent by facsimile with
telephonic confirmation of receipt, except that all notices hereunder shall not
be effective until received.
SECTION 10.5. COSTS, EXPENSES AND TAXES.
(a) COSTS AND EXPENSES. Borrower agrees to pay on demand all costs and
expenses of Agent, and all Related Expenses, including, but not limited to, (i)
administration, travel and out-of-pocket expenses, including but not limited to
attorneys fees and expenses, of Agent in connection with the preparation,
negotiation and closing of the Loan Documents and the administration of the Loan
Documents, the collection and disbursement of all funds hereunder and the other
instruments and documents to be delivered hereunder, (ii) extraordinary
out-of-pocket
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expenses of Agent in connection with the administration of the Loan Documents
and the other instruments and documents to be delivered hereunder, (iii) the
reasonable fees and out-of-pocket expenses of special counsel for Agent, with
respect to the foregoing, and of local counsel, if any, who may be retained by
said special counsel with respect thereto, (iv) all costs and expenses,
including reasonable attorneys' fees in connection with the syndication of the
Commitment and the Loans; and (v) all costs and expenses, including reasonable
attorneys' fees, of Agent and the Banks, in connection with the restructuring or
enforcement of the Debt, the Loan Documents or any Related Writing.
(b) TAXES.
(i) All payments by Borrower or other payor under this Agreement or
with respect to the Notes shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings imposed on or with respect to such payments, and all interest,
penalties and other liabilities with respect thereto (all such taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes").
(ii) If Borrower or other payor shall be required by law to deduct any
Taxes imposed by or on behalf of the Government of Canada, or any province or
territory thereof, or any taxing authority thereon or thereof ("Canadian Taxes")
from or in respect of any sum payable hereunder or with respect to the Notes,
(A) the sum payable shall be increased by Borrower as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 10.5), such holder receives an amount
equal to the sum it would have received had no such deductions been made, (B)
Borrower or other payor shall make such deductions and (C) Borrower or other
payor shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law; provided, however, that no
such additional amount shall be payable if any such Taxes are required to be
paid by reason of the payees having some connection with a Canadian taxing
jurisdiction other than the receipt of the payments to be made under this
Agreement and the holding and disposition of the Notes to be issued pursuant to
the Agreement.
(iii) In addition, Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies imposed by or on behalf of the United States or any state thereof, the
Government of Canada, or any province or territory thereof, or any other taxing
authority of any of the foregoing, that arise from any payment made under this
Agreement or any other Loan Document or from the execution, delivery,
enforcement or registration of, or otherwise with respect to, this Agreement or
any other Loan Document (other than any transfer taxes payable in connection
with a change in the registered holder of any Notes) (hereinafter referred to as
"Other Taxes").
(iv) Borrower will indemnify each Bank for the full amount of Taxes,
Canadian Taxes or Other Taxes imposed by any Jurisdiction and paid by such Bank
with respect to any amounts payable pursuant to this Section 10.5, and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes, Canadian Taxes
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or Other Taxes were correctly asserted. This indemnification shall be made
within thirty (30) days from the date such Bank makes written demand therefor
(which demand shall identify the nature and amount of Taxes, Canadian Taxes or
Other Taxes for which indemnification is being sought and shall include a copy
of the relevant portion of any written assessment from the relevant taxing
authority demanding payment of such Taxes, Canadian Taxes or Other Taxes).
SECTION 10.6. INDEMNIFICATION. Borrower agrees to defend, indemnify and
hold harmless Agent and the Banks from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including reasonable attorney fees) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
or any Bank in connection with any investigative, administrative or judicial
proceeding (whether or not such Bank or Agent shall be designated a party
thereto) or any other claim by any person or entity relating to or arising out
of this Agreement or any actual or proposed use of proceeds of the Loans or any
of the Debt, or any activities of any Company or any Obligor or any of their
affiliates; provided that no Bank nor Agent shall have the right to be
indemnified under this Section for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction. All obligations
provided for in this Section 10.6 shall survive any termination of this
Agreement.
SECTION 10.7. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS. The
obligations of the Banks hereunder are several and not joint. Nothing contained
in this Agreement and no action taken by Agent or the Banks pursuant hereto
shall be deemed to constitute the Banks a partnership, association, joint
venture or other entity. No default by any Bank hereunder shall excuse the other
Banks from any obligation under this Agreement; but no Bank shall have or
acquire any additional obligation of any kind by reason of such default. The
relationship among Borrower and the Banks with respect to the Loan Documents and
the Related Writings is and shall be solely that of debtor and creditors,
respectively, and neither Agent nor any Bank has any fiduciary obligation toward
Borrower with respect to any such documents or the transactions contemplated
thereby.
SECTION 10.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
SECTION 10.9. BINDING EFFECT; BORROWER'S ASSIGNMENT. This Agreement
shall become effective when it shall have been executed by Borrower, Agent and
by each Bank and thereafter shall be binding upon and inure to the benefit of
Borrower, Agent and each of the Banks and their respective successors and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest herein (except for the assignment in connection with
the Holding Company Reorganization) without the prior written consent of Agent
and all of the Banks.
SECTION 10.10. BANK ASSIGNMENTS/PARTICIPATIONS.
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<PAGE> 70
A. Assignments of Commitments. Each Bank shall have the right at any
time or times to assign to another financial institution, without recourse, all
or a percentage of all of the following: (a) that Bank's Commitment, (b) all
Loans made by that Bank, (c) that Bank's Notes, and (d) that Bank's interest in
any Letter of Credit and any participation purchased pursuant to Section 2.1B or
8.5 hereof; provided, however, in each such case, that the assignor and the
assignee shall have complied with the following requirements:
(i) Prior Consent. No assignment may be consummated pursuant
to this Section 10.10 without the prior written consent of Borrower
(except that the initial syndication of the Commitment and the Loans
may be consummated without the prior written consent of Borrower) and
Agent (other than an assignment by any Bank to any affiliate of such
Bank which affiliate is either wholly-owned by such Bank or is
wholly-owned by a Person that wholly owns, either directly or
indirectly, such Bank), which consent of Borrower and Agent shall not
be unreasonably withheld; provided, however, that, Borrower's consent
shall not be required if, at the time of the proposed assignment any
Event of Default shall then exist. Anything herein to the contrary
notwithstanding, any Bank may at any time make a collateral assignment
of all or any portion of its rights under the Loan Documents to a
Federal Reserve Bank, and no such assignment shall release such
assigning Bank from its obligations hereunder;
(ii) Minimum Amount. Each such assignment shall be in a
minimum amount of the lesser of Ten Million Dollars ($10,000,000) of
the assignor's Commitment or the entire amount of the assignor's
Commitment;
(iii) Assignment Fee; Assignment Agreement. Unless the
assignment shall be to an affiliate of the assignor or the assignment
shall be due to merger of the assignor or for regulatory purposes,
either the assignor or the assignee shall remit to Agent, for its own
account, an administrative fee of Three Thousand Five Hundred Dollars
($3,500). Unless the assignment shall be due to merger of the assignor
or a collateral assignment for regulatory purposes, the assignor shall
(A) cause the assignee to execute and deliver to Borrower and Agent an
Assignment Agreement, and (B) execute and deliver, or cause the
assignee to execute and deliver, as the case may be, to Agent such
additional amendments, assurances and other writings as Agent may
reasonably require; and
(iv) Non-U.S. Assignee. If the assignment is to be made to an
assignee which is organized under the laws of any jurisdiction other
than the United States or any state thereof, the assignor Bank shall
cause such assignee, at least five (5) Business Days prior to the
effective date of such assignment, (A) to represent to the assignor
Bank (for the benefit of the assignor Bank, Agent and Borrower) that
under applicable law and treaties no taxes will be required to be
withheld by Agent, Borrower or the assignor with respect to any
payments to be made to such assignee in respect of the Loans hereunder,
(B) to furnish to the assignor (and, in the case of any assignee
registered in the Register (as defined below), Agent and Borrower)
either (1) U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 or (2) United States Internal Revenue Service
Form W-8 or W-9, as
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<PAGE> 71
applicable (wherein such assignee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments
hereunder), and (C) to agree (for the benefit of the assignor, Agent
and Borrower) to provide the assignor Bank (and, in the case of any
assignee registered in the Register, Agent and Borrower) a new Form
4224 or Form 1001 or Form W-8 or W-9, as applicable, upon the
expiration or obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such
assignee, and to comply from time to time with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.
Upon satisfaction of the requirements specified in clauses (i) through
(iv) above, Borrower shall execute and deliver (A) to Agent, the assignor and
the assignee, any consent or release (of all or a portion of the obligations of
the assignor) required to be delivered by Borrower in connection with the
Assignment Agreement, and (B) to the assignee, an appropriate Note or Notes.
After delivery of the new Note or Notes, the assignor's Note or Notes being
replaced shall be returned to Borrower marked "replaced".
Upon satisfaction of the requirements of set forth in (i) through (iv),
and any other condition contained in this Section 10.10A, (A) the assignee shall
become and thereafter be deemed to be a "Bank" for the purposes of this
Agreement, (B) in the event that the assignor's entire interest has been
assigned, the assignor shall cease to be and thereafter shall no longer be
deemed to be a "Bank" and (C) the signature pages hereto and SCHEDULE 1 hereof
shall be automatically amended, without further action, to reflect the result of
any such assignment.
Agent shall maintain at its address referred to in Section 10.4 a copy
of each Assignment Agreement delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment of,
and principal amount of the Loans owing to, each Bank from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and Borrower, Agent and the Banks may treat each financial institution whose
name is recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for inspection
by Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
B. Sale of Participations. Each Bank shall have the right at any time
or times, without the consent of Agent or Borrower, to sell one or more
participations or sub-participations to a financial institution, as the case may
be, in all or any part of (a) that Bank's Commitment, (b) that Bank's Commitment
Percentage, (c) any Loan made by that Bank, (d) any Note delivered to that
Bank pursuant to this Agreement, and (e) that Bank's interest in any Letter of
Credit and any participation, if any, purchased pursuant to Section 2.1B or 8.5
hereof or this Section 10.10B.
The provisions of Article III shall inure to the benefit of each
purchaser of a participation or sub-participation and Agent shall continue to
distribute payments pursuant to this Agreement as if no participation has been
sold.
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<PAGE> 72
In the event that any Bank shall sell any participation or
sub-participation, that Bank shall, as between itself and the purchaser, retain
all of its rights (including, without limitation, rights to enforce against
Borrower the Loan Documents and the Related Writings) and duties pursuant to the
Loan Documents and the Related Writings, including, without limitation, that
Bank's right to approve any waiver, consent or amendment pursuant to Section
10.3, except if and to the extent that any such waiver, consent or amendment
would:
(i) reduce any fee or commission allocated to the participation or
sub-participation, as the case may be,
(ii) reduce the amount of any principal payment on any Loan
allocated to the participation or sub-participation, as the
case may be, or reduce the principal amount of any Loan so
allocated or the rate of interest payable thereon, or
(iii) extend the time for payment of any amount allocated to the
participation or sub- participation, as the case may be.
No participation or sub-participation shall operate as a delegation of
any duty of the seller thereof. Under no circumstance shall any participation or
sub-participation be deemed a novation in respect of all or any part of the
seller's obligations pursuant to this Agreement.
SECTION 10.11. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to Sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.
SECTION 10.12. INVESTMENT PURPOSE. Each of the Banks represents and
warrants to Borrower that it is entering into this Agreement with the present
intention of acquiring any Note issued pursuant hereto for investment purposes
only and not for the purpose of distribution or resale, it being understood,
however, that each Bank shall at all times retain full control over the
disposition of its assets.
SECTION 10.13. ENTIRE AGREEMENT. This Agreement, any Note and any other
agreement, document or instrument attached hereto or referred to herein or
executed on or as of the Closing Date integrate all the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.
SECTION 10.14. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement, each of the Notes and any Related Writing shall be governed by and
construed in accordance with the laws of the State of Ohio and the respective
rights and obligations of Borrower and the Banks shall be governed by Ohio law,
without regard to principles of conflict of laws.
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<PAGE> 73
Borrower hereby irrevocably submits to the non-exclusive jurisdiction of any
Ohio state or federal court sitting in Cleveland, Ohio, over any action or
proceeding arising out of or relating to this Agreement, the Debt or any Related
Writing, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Ohio state or
federal court. Borrower, on behalf of itself and its Subsidiaries, hereby
irrevocably waives, to the fullest extent permitted by law, any objection it may
now or hereafter have to the laying of venue in any action or proceeding in any
such court as well as any right it may now or hereafter have to remove such
action or proceeding, once commenced, to another court on the grounds of FORUM
NON CONVENIENS or otherwise. Borrower agrees that a final, nonappealable
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
SECTION 10.15. LEGAL REPRESENTATION OF PARTIES. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.
[Remainder of page intentionally left blank.]
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<PAGE> 74
SECTION 10.16. JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANKS
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR
ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
Address: 1100 Superior Avenue OGLEBAY NORTON COMPANY
Cleveland, Ohio 44114
Attention: Treasurer By:________________________________
Michael F. Biehl, Treasurer
Address: Key Center KEYBANK NATIONAL ASSOCIATION,
127 Public Square As a Bank and as Agent
Cleveland, Ohio 44114-1306
Attention: Large Corporate By:_________________________________
Banking Division Lawrence A. Mack, Vice President
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<PAGE> 75
SCHEDULE 1
<TABLE>
<CAPTION>
REVOLVING
CREDIT
COMMITMENT COMMITMENT
BANKING INSTITUTIONS PERCENTAGE AMOUNT MAXIMUM AMOUNT
-------------------- ---------- ------ --------------
<S> <C> <C> <C>
KeyBank National 100 % $215,000,000 $215,000,000
Association ----- ------------ ------------
Total Commitment Amount 100% $215,000,000 $215,000,000
</TABLE>
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<PAGE> 76
<TABLE>
<CAPTION>
SCHEDULE 2
MORTGAGED REAL PROPERTY
- --------------------------------------------------------------------------------
Owner Location
- --------------------------------------------------------------------------------
<S> <C>
Oglebay Engineered Material, Inc. Dunkirk, Indiana
- --------------------------------------------------------------------------------
Oglebay Norton Industrial Sands, Inc. Glenford, Ohio
- --------------------------------------------------------------------------------
Oglebay Norton Industrial Sands, Inc. Millwood, Ohio
- --------------------------------------------------------------------------------
Texas Mining, LP Voca, Texas
- --------------------------------------------------------------------------------
Texas Mining, LP Brady, Texas
- --------------------------------------------------------------------------------
Oglebay Norton Limestone Company Gulliver, Michigan
- --------------------------------------------------------------------------------
Global Stone Tenn Lutrell Company Lutrell, Tennessee
- --------------------------------------------------------------------------------
Global Stone Chemstone Corporation Strasburg, Virginia
- --------------------------------------------------------------------------------
Global Stone PenRoc, Inc. York, Pennsylvania
- --------------------------------------------------------------------------------
Global Stone St. Clair Inc. Marble City, Oklahoma
- --------------------------------------------------------------------------------
Global Stone Chemstone Corporation Buchanan, Virginia
- --------------------------------------------------------------------------------
Global Stone Chemstone Corporation Middletown, Virginia
- --------------------------------------------------------------------------------
</TABLE>
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<PAGE> 77
SCHEDULE 3
PLEDGORS
1. Oglebay Norton Holding Company
2. ONCO Investment Company
3. Oglebay Norton Industrial Minerals, Inc.
4. Oglebay Norton Management Company
5. Oglebay Norton Industrial Sands, Inc.
6. Texas Mining, LP
7. Colorado Silica Sand, Inc.
8. Oglebay Norton Terminals, Inc.
9. Oglebay Norton Engineered Materials, Inc.
10. Oglebay Norton Acquisition Company
11. Oglebay Norton Limestone Company
12. Global Stone (USA) Inc.
13. Global Stone Tenn Lutrell Company
14. Global Stone Chemstone Corporation
15. Global Stone Detroit Lime Company
16. Global Stone St. Clair, Inc.
17. Global Stone PenRoc Inc.
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<PAGE> 78
SCHEDULE 6.6
DOCUMENTED VESSELS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Official
Name Type Number Hailing Port
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Armco Coastwise Great-Lakes Self-Unloader 265621 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
Buckeye Coastwise Great-Lakes Self-Unloader 264391 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
Courtney Burton Coastwise Great-Lakes Self-Unloader 265246 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
Columbia Star Coastwise Great-Lakes Self-Unloader 635289 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
Joseph H. Frantz Coastwise Great-Lakes Self-Unloader 224409 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
Middletown Coastwise Great-Lakes Self-Unloader 251093 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
David Z. Norton Coastwise Great-Lakes Self-Unloader 549231 Cleveland, Ohio
- --------------------------------------------------------------------------------------------------------
Oglebay Norton Coastwise Great-Lakes Self-Unloader 592377 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
Reserve Coastwise Great-Lakes Self-Unloader 265360 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
Fred R. White, Jr. Coastwise Great-Lakes Self-Unloader 606421 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
Wolverine Coastwise Great-Lakes Self-Unloader 560339 Wilmington, Delaware
- --------------------------------------------------------------------------------------------------------
</TABLE>
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EXHIBIT A
REVOLVING CREDIT NOTE
$________________ Cleveland, Ohio
May 15, 1998
FOR VALUE RECEIVED, the undersigned, OGLEBAY NORTON COMPANY
("Borrower") promises to pay on the last day of the Commitment Period, as
defined in the Credit Agreement (as hereinafter defined), to the order of
__________________ ("Bank") at the Main Office of KEYBANK NATIONAL ASSOCIATION,
Agent, 127 Public Square, Cleveland, Ohio 44114-1306 the principal sum of
.................................................................... DOLLARS
or the aggregate unpaid principal amount of all Loans made by Bank to Borrower
pursuant to Section 2.1A of the Credit Agreement, whichever is less, in lawful
money of the United States of America. As used herein, "Credit Agreement" means
the Credit Agreement dated as of May 15, 1998, among Borrower, the banks named
therein and KeyBank National Association, as Agent, as the same may from time to
time be amended, restated or otherwise modified. Capitalized terms used herein
shall have the meanings ascribed to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each Loan from time to time outstanding, from the date of such Loan until the
payment in full thereof, at the rates per annum which shall be determined in
accordance with the provisions of Section 2.1A of the Credit Agreement. Such
interest shall be payable on each date provided for in such Section 2.1A;
provided, however, that interest on any principal portion which is not paid when
due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof, will
be shown on the records of Bank by such method as Bank may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from Borrower's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be the Default Rate. All payments of principal of and interest
on this Note shall be made in immediately available funds.
This Note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to
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<PAGE> 80
anticipate payments hereof, the right of the holder hereof to declare this Note
due prior to its stated maturity, and other terms and conditions upon which this
Note is issued.
Except as expressly provided in the Credit Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.
JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANKS WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
OGLEBAY NORTON COMPANY
By:__________________________________
Michael F. Biehl, Treasurer
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<PAGE> 81
EXHIBIT B
SWING LINE NOTE
$10,000,000 Cleveland, Ohio
May 15, 1998
FOR VALUE RECEIVED, the undersigned, OGLEBAY NORTON COMPANY
("Borrower"), promises to pay to the order of KEYBANK NATIONAL ASSOCIATION
("Bank") at the Main Office of KEYBANK NATIONAL ASSOCIATION, as Agent, 127
Public Square, Cleveland, Ohio 44114-1306 the principal sum of
TEN MILLION AND 00/100. . . . . . . . . . . . . . . . . . . . . . . . DOLLARS
or the aggregate unpaid principal amount of all Swing Loans, as defined in the
Credit Agreement (as hereinafter defined), made by Bank to Borrower pursuant to
Section 2.1B of the Credit Agreement, whichever is less, in lawful money of the
United States of America on the earlier of the last day of the Commitment
Period, as defined in the Credit Agreement, or, with respect to each Swing Loan,
the Swing Loan Maturity Date applicable thereto. As used herein, "Credit
Agreement" means the Credit Agreement dated as of May 15, 1998, among Borrower,
the banks named therein and KeyBank National Association, as Agent, as it may
from time to time be amended, restated or otherwise modified. Capitalized terms
used herein shall have the meanings ascribed to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each Swing Loan from time to time outstanding, from the date of such Swing
Loan until the payment in full thereof, at the rates per annum which shall be
determined in accordance with the provisions of Section 2.1B of the Credit
Agreement. Such interest shall be payable on each date provided for in such
Section 2.1B; provided, however, that interest on any principal portion which is
not paid when due shall be payable on demand.
The principal sum hereof from time to time and payments of principal
hereof, shall be shown on the records of Bank by such method as Bank may
generally employ; provided, however, that failure to make any such entry shall
in no way detract from Borrower's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at the Default
Rate. All payments of principal of and interest on this Note shall be made in
immediately available funds.
Except as expressly provided in the Credit Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.
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<PAGE> 82
This Note is the Swing Line Note referred to in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the undersigned's
payment obligations hereunder, the right of the holder hereof to declare this
Note due prior to its stated maturity, and other terms and conditions upon which
this Note is issued.
JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE BANKS WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
OGLEBAY NORTON COMPANY
By:___________________________
Michael F. Biehl, Treasurer
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<PAGE> 83
EXHIBIT C
NOTICE OF LOAN
[Date]_______________________, 19____
KeyBank National Association
127 Public Square
Cleveland, Ohio 44114-0616
Attention: ________________
Ladies and Gentlemen:
The undersigned, OGLEBAY NORTON COMPANY, refers to the Credit
Agreement, dated as of May 15, 1998 ("Credit Agreement", the terms defined
therein being used herein as therein defined), among the undersigned, the Banks,
as defined in the Credit Agreement, and KeyBank National Association, as Agent,
and hereby gives you notice, pursuant to Section 2.2 of the Credit Agreement
that the undersigned hereby requests a Loan under the Credit Agreement, and in
connection therewith sets forth below the information relating to the Loan (the
"Proposed Loan") as required by Section 2.2 of the Credit Agreement:
(a) The Business Day of the Proposed Loan is __________, 19__.
(b) The amount of the Proposed Loan is $_______________.
(c) The Proposed Loan is to be a Prime Rate Loan ____ /LIBOR Loan
___. (Check one.)
(d) If the Proposed Loan is a LIBOR Loan, the Interest Period
requested is one month ___, two months ___, three months ___,
six months ____ (Check one.)
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Loan:
(i) the representations and warranties contained in each Loan
Document are correct, before and after giving effect to the Proposed
Loan and the application of the proceeds therefrom, as though made on
and as of such date;
(ii) no event has occurred and is continuing, or would result
from such Proposed Loan, or the application of proceeds therefrom,
which constitutes an Unmatured Event of Default or Event of Default;
and
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<PAGE> 84
(iii) the conditions set forth in Section 2.2 and Article IV
of the Credit Agreement have been satisfied.
Very truly yours,
OGLEBAY NORTON COMPANY
By:_______________________________
Name:____________________________
Title:_____________________________
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<PAGE> 85
EXHIBIT D
COMPLIANCE CERTIFICATE
For Fiscal Quarter ended ____________________
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected Chief Financial Officer or Treasurer of
OGLEBAY NORTON COMPANY, a Delaware corporation ("Borrower");
(2) I am familiar with the terms of that certain Credit Agreement,
dated as of May 15, 1998, among the undersigned, the Banks, as defined in the
Credit Agreement, and KeyBank National Association, as Agent (as the same may
from time to time be amended, restated or otherwise modified, the "Credit
Agreement", the terms defined therein and not otherwise defined in this
Certificate being used herein as therein defined), and the terms of the other
Loan Documents, and I have made, or have caused to be made under my supervision,
a review in reasonable detail of the transactions and condition of Borrower and
its Subsidiaries during the accounting period covered by the attached financial
statements;
(3) The review described in paragraph (2) above did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
or constituted an Unmatured Event of Default or Event of Default, at the end of
the accounting period covered by the attached financial statements or as of the
date of this Certificate;
(4) The representations and warranties made by Borrower contained in
each Loan Document are true and correct as though made on and as of the date
hereof; and,
(5) Set forth on Attachment I hereto are calculations of the financial
covenants set forth in Sections 5.7 and 5.20 of the Credit Agreement, which
calculations show compliance with the terms thereof.
IN WITNESS WHEREOF, the undersigned has signed this certificate the ___
day of _________, 19___.
OGLEBAY NORTON COMPANY
By:_______________________________
Title: _____________________________
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<PAGE> 86
EXHIBIT E
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Assignment and Acceptance Agreement (this "Assignment Agreement")
between ______________________ (the "Assignor") and ______________________ (the
"Assignee") is dated as of ________, 199_. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. Assignor is a party to a Credit Agreement,
dated as of May 15, 1998 (which, as it may from time to time be amended,
restated or otherwise modified is herein called the "Credit Agreement"), among
OGLEBAY NORTON COMPANY, ("Borrower"), the banking institutions named on SCHEDULE
1 thereto (collectively, "Banks" and, individually, "Bank"), and KEYBANK
NATIONAL ASSOCIATION, as agent for the Banks ("Agent"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings attributed to
them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. Assignor hereby sells and assigns to
Assignee, and Assignee hereby purchases and assumes from Assignor, an interest
in and to Assignor's rights and obligations under the Credit Agreement,
effective as of the Assignment Effective Date (as hereinafter defined), equal to
the percentage interest specified on ANNEX 1 hereto (hereinafter, "Assignee's
Percentage") of Assignor's right, title and interest in and to (a) the
Commitment of Assignor as set forth on ANNEX 1 (hereinafter, "Assigned Amount"),
(b) any Loan made by Assignor which is outstanding on the Assignment Effective
Date, (c) Assignor's interest in any Letter of Credit, as defined in the Credit
Agreement, which is issued and outstanding on the Assignment Effective Date, (d)
any Note delivered to Assignor pursuant to the Credit Agreement, and (e) the
Credit Agreement and the other Related Writings. After giving effect to such
sale and assignment and on and after the Assignment Effective Date, Assignee
shall be deemed to have a "Commitment Percentage" under the Credit Agreement
equal to the Commitment Percentage set forth in subpart I.C on ANNEX 1 hereto.
3. ASSIGNMENT EFFECTIVE DATE. The Assignment Effective Date (the
"Assignment Effective Date") shall be two (2) Business Days (or such other time
agreed to by Agent) after the following conditions precedent have been
satisfied:
(a) receipt by Agent of this Assignment Agreement, including ANNEX 1
hereto, properly executed by Assignor and Assignee and accepted and consented to
by Agent and, if necessary pursuant to the provisions of Section 10.10(A)(i) of
the Credit Agreement, by Borrower;
(b) receipt by Agent from Assignor of a fee of Three Thousand Five
Hundred Dollars ($3,500), in accordance with Section 10.10A of the Credit
Agreement;
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<PAGE> 87
(c) receipt by Agent from Assignee of an administrative questionnaire,
or other similar document, which shall include (i) the address for notices under
the Credit Agreement, (ii) the address of its Lending Office, (iii) wire
transfer instructions for delivery of funds by Agent, (iv) and such other
information as Agent shall request; and
(d) receipt by Agent from Assignor or Assignee of any other information
required pursuant to Section 10.10 of the Credit Agreement or otherwise
necessary to complete the transaction contemplated hereby.
4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of
Loans hereunder, Assignee shall pay Assignor, on the Assignment Effective Date,
an amount in Dollars equal to Assignee's Percentage. Any interest, fees and
other payments accrued prior to the Assignment Effective Date with respect to
the Assigned Amount shall be for the account of Assignor. Any interest, fees and
other payments accrued on and after the Assignment Effective Date with respect
to the Assigned Amount shall be for the account of Assignee. Each of Assignor
and Assignee agrees that it will hold in trust for the other part any interest,
fees or other amounts which it may receive to which the other party is entitled
pursuant to the preceding sentence and to pay the other party any such amounts
which it may receive promptly upon receipt thereof.
5. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY. Assignee
represents and warrants to Assignor, Borrower, Agent and the other Banks (a)
that it is capable of making and has made and shall continue to make its own
credit determinations and analysis based upon such information as Assignee
deemed sufficient to enter into the transaction contemplated hereby and not
based on any statements or representations by Assignor, (b) Assignee confirms
that it meets the requirements to be an assignee as set forth in Section 10.10
of the Credit Agreement; (c) Assignee confirms that it is able to fund the Loans
and the Letters of Credit as required by the Credit Agreement; and (d) Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement and the Related Writings
are required to be performed by it as a Bank thereunder. It is understood and
agreed that the assignment and assumption hereunder are made without recourse to
Assignor and that Assignor makes no representation or warranty of any kind to
Assignee and shall not be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency or collectibility of the
Credit Agreement or any Related Writings, (ii) any representation, warranty or
statement made in or in connection with the Credit Agreement or any of the
Related Writings, (iii) the financial condition or creditworthiness of Borrower
or any Guarantor, (iv) the performance of or compliance with any of the terms or
provisions of the Credit Agreement or any of the Related Writings, (v)
inspecting any of the property, books or records of Borrower, or (vi) the
validity, enforceability, perfection, priority, condition, value or sufficiency
of any collateral securing or purporting to secure the Loans or Letters of
Credit. Neither Assignor nor any of its officers, directors, employees, agents
or attorneys shall be liable for any mistake, error of judgment, or action taken
or omitted to be taken in connection with the Loans, the Letters of Credit, the
Credit Agreement or the Related Writings, except for its or their own bad faith
or willful misconduct. Assignee appoints Agent to take such action as agent
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on its behalf and to exercise such powers under the Credit Agreement as are
delegated to Agent by the terms thereof.
6. INDEMNITY. Assignee agrees to indemnify and hold Assignor harmless
against any and all losses, cost and expenses (including, without limitation,
attorneys' fees) and liabilities incurred by Assignor in connection with or
arising in any manner from Assignee's performance or non-performance of
obligations assumed under this Assignment Agreement.
7. SUBSEQUENT ASSIGNMENTS. After the Assignment Effective Date,
Assignee shall have the right pursuant to Section 10.10 of the Credit Agreement
to assign the rights which are assigned to Assignee hereunder, provided that (a)
any such subsequent assignment does not violate any of the terms and conditions
of the Credit Agreement, any of the Related Writings, or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Credit Agreement or any of the Related Writings
has been obtained, (b) the assignee under such assignment from Assignee shall
agree to assume all of Assignee's obligations hereunder in a manner satisfactory
to Assignor and (c) Assignee is not thereby released from any of its obligations
to Assignor hereunder.
8. REDUCTIONS OF AGGREGATE AMOUNT OF COMMITMENTS. If any reduction in
the Total Commitment Amount occurs between the date of this Assignment Agreement
and the Assignment Effective Date, the percentage of the Total Commitment Amount
assigned to Assignee shall remain the percentage specified in Section 1 hereof
and the dollar amount of the Commitment of Assignee shall be recalculated based
on the reduced Total Commitment Amount.
9. ACCEPTANCE OF AGENT. This Assignment Agreement is conditioned upon
the acceptance and consent of Agent and, if necessary pursuant to Section 10.10A
of the Credit Agreement, upon the acceptance and consent of Borrower. The
execution of this Assignment Agreement by Agent and, if necessary, by Borrower
is evidence of such acceptance and consent.
10. ENTIRE AGREEMENT. This Assignment Agreement embodies the entire
agreement and understanding between the parties hereto and supersede all prior
agreements and understandings between the parties hereto relating to the subject
matter hereof.
11. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Ohio.
12. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth under each party's name on the signature pages hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
ASSIGNOR:
Address: _____________________ ________________________________
Attn:_________________ By:_____________________________
Phone: _______________ Title: _________________________
Fax:__________________
ASSIGNEE:
Address: _____________________ ________________________________
Attn:_________________ By:_____________________________
Phone: _______________ Title: _________________________
Fax:__________________
Accepted and Consented to this ___ day of ___, 199_:
KEYBANK NATIONAL ASSOCIATION,
as Agent
By: __________________________
Title:_________________________
Accepted and Consented to this ___ day of _______, 19__:
OGLEBAY NORTON COMPANY
By:___________________________
Title:__________________________
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ANNEX 1
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
On and after ___________, 199_ (the "Assignment Effective Date"), the
Commitment of Assignee, and, if this is less than an assignment of all of
Assignor's interest, Assignor, shall be as follows:
I. ASSIGNEE'S COMMITMENT
A. Assignee's Percentage __________%
B. Assigned Amount $__________
C. Assignee's Commitment Percentage
under the Credit Agreement __________%
II. ASSIGNOR'S COMMITMENT
A. Assignor's Commitment Percentage
under the Credit Agreement __________%
B. Assignor's Commitment Amount
under the Credit Agreement $__________
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EXHIBIT F
FORM OF
GUARANTY OF PAYMENT OF DEBT
1. RECITALS.
Concurrently herewith, OGLEBAY NORTON COMPANY, a Delaware corporation
(together with its successors and assigns, "Oglebay") is entering into the
Credit Agreement, as hereinafter defined, with the financial institutions listed
on SCHEDULE 1 to the Credit Agreement (collectively, "Banks", and individually,
"Bank") and KEYBANK NATIONAL ASSOCIATION, as agent for the Banks ("Agent"),
pursuant to which Oglebay and certain of its subsidiaries may obtain loans,
letters of credit and other financial accommodations from the Banks. It is
anticipated that Oglebay and its subsidiaries will or may be restructured such
that Oglebay will become a subsidiary of OGLEBAY NORTON HOLDING COMPANY
(together with its successors and assigns, "Oglebay Holding"). It is further
anticipated that Oglebay Holding will or may assume all of the benefits and
obligations of Oglebay under the Credit Agreement pursuant to such restructuring
of Oglebay and its subsidiaries. [________________ , an __________] corporation,
("Guarantor") desires that the Banks grant the financial accommodations
described in the Credit Agreement to Oglebay and certain of its subsidiaries,
and, after any such restructuring, to Oglebay Holding (collectively,
"Borrower").
Guarantor deems it to be in the direct pecuniary and business interests
of Guarantor that Borrower obtain from the Banks the Commitment, as defined in
the Credit Agreement, and the Loans and Letters of Credit, as hereinafter
defined, provided for in the Credit Agreement.
Guarantor understands that the Banks are willing to enter into the
Credit Agreement with Borrower only upon certain terms and conditions, one of
which is that Guarantor guarantee the payment of the Debt (as hereinafter
defined), and this instrument is being executed and delivered in consideration
of the Banks entering into the Credit Agreement and for other valuable
considerations.
2. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
2.1. "Collateral" shall mean, collectively, all property securing the
Debt or any part thereof at the time in question.
2.2. "Credit Agreement" shall mean the Credit Agreement originally
executed by and among Oglebay, Agent and the Banks and dated as of the 15th day
of May, 1998, as it may from time to time be amended, restated or otherwise
modified.
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2.3. "Debt" shall mean, collectively, (a) all Loans and the Letters of
Credit; (b) all other indebtedness now owing or hereafter incurred by Borrower
to the Banks pursuant to the Credit Agreement and the Notes executed in
connection therewith; (c) each renewal, extension, consolidation or refinancing
of any of the foregoing, in whole or in part; (d) all interest from time to time
accruing on any of the foregoing, and all commitment and other fees pursuant to
the Credit Agreement; (e) all other amounts payable by Borrower to Agent or any
of the Banks pursuant to the Credit Agreement or any Related Writing; and (f)
all costs and expenses, including attorney fees, incurred by Agent in connection
with the Credit Agreement or by Agent or the Banks in connection with the
collection of any portion of the indebtedness described in (a), (b), (c), (d) or
(e) hereof.
2.4. "Letter of Credit" shall mean any Letter of Credit, as defined in
the Credit Agreement, issued pursuant to the Credit Agreement.
2.5. "Loan" shall mean any Loan, as defined in the Credit Agreement,
granted pursuant to the Credit Agreement.
2.6. "Obligor" shall mean any Person which, or any of whose property,
is or shall be obligated on the Debt or any part thereof in any manner and
includes, without limiting the generality of the foregoing, Borrower, Guarantor
and any other co-maker, endorser, guarantor of payment, subordinating creditor,
assignor, grantor of a security interest, pledgor, mortgagor or any hypothecator
of property, if any.
2.7. "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, corporation,
limited liability company, institution, trust, estate, government or other
agency or political subdivision thereof or any other entity.
Except as otherwise specifically defined herein, capitalized terms used herein
which are defined in the Credit Agreement shall have their respective meanings
ascribed to them in the Credit Agreement.
3. GUARANTY OF DEBT. Guarantor hereby absolutely and unconditionally
guarantees the prompt payment in full of all of the Debt as and when the
respective parts thereof become due and payable. If the Debt or any part thereof
shall not be paid in full when due and payable, Agent and the Majority Banks in
each case shall have the right to proceed directly against Guarantor under this
instrument to collect the payment in full of the Debt, regardless of whether or
not Agent and the Banks shall have theretofore proceeded or shall then be
proceeding against Borrower or any other Obligor or Collateral, or any of the
foregoing, it being understood that Agent and the Majority Banks, in their sole
discretion may proceed against any Obligor and any Collateral, and may exercise
each right, power or privilege that Agent or the Banks may then have, either
simultaneously or separately, and, in any event, at such time or times and as
often and in such order as Agent and the Majority Banks, in their sole
discretion, may from time to time deem expedient to collect the payment in full
of the Debt.
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4. PAYMENTS CONDITIONAL. Whenever Agent or any Bank shall credit any
payment to the Debt or any part thereof, whatever the source or form of payment,
the credit shall be conditional as to Guarantor unless and until the payment
shall be final and valid as to all the world. Without limiting the generality of
the foregoing, Guarantor agrees that if any check or other instrument with which
such payment is made shall be dishonored by the drawer or any party thereto, or
if any proceeds of Collateral or payment so applied shall thereafter be
recovered by any trustee in bankruptcy or any other Person, each Bank, in each
case, may reverse any entry relating thereto in its books and Guarantor shall
remain liable therefor even if such Bank may no longer have in its possession
any evidence of the Debt to which the payment in question was applied.
5. GUARANTOR'S OBLIGATIONS ABSOLUTE AND UNCONDITIONAL.
Regardless of the duration of time, regardless of whether Borrower may from time
to time cease to be indebted to the Banks and irrespective of any act, omission
or course of dealing whatever on the part of Agent or any Bank, Guarantor's
liabilities and other obligations under this instrument shall remain in full
effect until the payment in full of the Debt. Without limiting the generality of
the foregoing:
5.1. BANKS HAVE NO DUTY TO MAKE ADVANCES. No Bank shall at any time be
under any duty to Guarantor to grant any financial accommodation to Borrower,
irrespective of any duty or commitment of any of the Banks to Borrower, or to
follow or direct the application of the proceeds of any such financial
accommodation;
5.2. GUARANTOR'S WAIVER OF NOTICE, PRESENTMENT, ETC. Guarantor waives
(a) notice of the granting of any Loan to Borrower, the issuance of any Letter
of Credit or the incurring of any other indebtedness by Borrower or the terms
and conditions thereof, (b) presentment, demand for payment and notice of
dishonor of the Debt or any part thereof, or any other indebtedness incurred by
Borrower to any of the Banks, (c) notice of any indulgence granted to any
Obligor, and (d) any other notice, to the extent permitted by statute, to which
Guarantor might, but for this waiver, be entitled;
5.3. BANKS' RIGHTS NOT PREJUDICED BY ACTION OR OMISSION. Agent and the
Banks in their sole discretion may, without any prejudice to their rights under
this instrument, at any time or times, without notice to or the consent of
Guarantor, (a) grant Borrower whatever financial accommodations that Agent and
the Banks may from time to time deem advisable, even if Borrower might be in
default in any respect and even if those financial accommodations might not
constitute indebtedness the payment of which is guaranteed hereunder, (b) assent
to any renewal, extension, consolidation or refinancing of the Debt or any part
thereof, (c) forbear from demanding security, if Agent and the Banks shall have
the right to do so, (d) release any Obligor or Collateral or assent to any
exchange of Collateral, if any, irrespective of the consideration, if any,
received therefor, (e) grant any waiver or consent or forbear from exercising
any right, power or privilege that Agent and the Banks may have or acquire, (f)
assent to any amendment, deletion, addition, supplement or other modification
in, to or of any writing evidencing or securing any Debt or pursuant to which
any Debt is created, (g) grant any other indulgence to any Obligor, (h) accept
any Collateral for, or any other
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Obligor upon, the Debt or any part thereof, and (i) fail, neglect or omit in any
way to realize upon any Collateral or to protect the Debt or any part thereof or
any Collateral therefor;
5.4. LIABILITIES SURVIVE GUARANTOR'S DISSOLUTION. Guarantor's
liabilities and other obligations under this instrument shall survive any
dissolution of Guarantor; and
5.5. LIABILITIES ABSOLUTE AND UNCONDITIONAL. Guarantor's liabilities
and other obligations under this instrument shall be absolute and unconditional
irrespective of any lack of validity or enforceability of the Credit Agreement,
the Notes, any Loan Document or any other agreement, instrument or document
evidencing the Loans or the Letters of Credit or related thereto, or any other
defense available to Guarantor in respect of this instrument.
6. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Agent and each of the Banks that (a) Guarantor is a duly organized and validly
existing corporation, in good standing under the laws of the state of its
incorporation (as referenced in the first paragraph of this instrument), and is
qualified to do business in each other state where failure to so qualify would
have a material adverse effect on Guarantor; (b) Guarantor has legal power and
right to execute and deliver this instrument and to perform and observe the
provisions hereof; (c) the officers executing and delivering this instrument on
behalf of Guarantor have been duly authorized to do so, and this instrument,
when executed, is legal and binding upon Guarantor in every respect; (d) except
for matters described or referenced in the Credit Agreement or any Schedule
thereto, no litigation or proceeding is pending or threatened against Guarantor
before any court or any administrative agency which, in Guarantor's opinion
after consultation with counsel, is reasonably expected to have a material
adverse effect on Guarantor; (e) Guarantor has received consideration which is
the reasonable equivalent value of the obligations and liabilities that
Guarantor has incurred to Agent and the Banks; (f) Guarantor is not insolvent as
defined in any applicable state or federal statute, nor will Guarantor be
rendered insolvent by the execution and delivery of this instrument to Agent and
the Banks; (g) Guarantor is not engaged or about to engage in any business or
transaction for which the assets retained by Guarantor are or will be an
unreasonably small amount of capital, taking into consideration the obligations
to the Banks incurred hereunder; and (h) Guarantor does not intend to, nor does
Guarantor believe that Guarantor will, incur debts beyond Guarantor's ability to
pay them as they mature.
7. DISABILITY OF OBLIGOR. Without limiting the generality of any of the
other provisions hereof, Guarantor specifically agrees that upon the dissolution
of any Obligor and/or the filing or other commencement of any bankruptcy or
insolvency proceedings by, for or against any Obligor, including without
limitation, any assignment for the benefit of creditors or other proceedings
intended to liquidate or rehabilitate any Obligor, Agent and the Majority Banks,
in their sole discretion, may declare the unpaid principal balance of and
accrued interest on the Debt to be forthwith due and payable in full without
notice. Upon the occurrence of any of the events enumerated in the immediately
preceding sentence, Guarantor shall, upon the demand of Agent or the Majority
Banks, whenever made, purchase from the Banks (without recourse upon any Bank
and
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without warranties either express or implied) the Notes or any other evidence of
the Debt for an amount equal to the then unpaid principal balance of and accrued
interest on the Debt.
8. WAIVER OF GUARANTOR'S RIGHTS AGAINST BORROWER AND
COLLATERAL. To the extent permitted by law, Guarantor waives any claim or other
right which Guarantor might now have or hereafter acquire against Borrower or
any other Obligor which arises from the existence or performance of Guarantor's
liabilities or other obligations under this instrument, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, and any right to participate in any claim or remedy of Agent or
any Bank against Borrower or any Collateral which Agent or any Bank now has or
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law.
9. MAXIMUM LIABILITY OF GUARANTOR.
9.1. GUARANTOR'S LIABILITY LIMITED IN AMOUNT. Subject to subsection 9.5
hereof, but otherwise notwithstanding anything to the contrary contained in this
instrument, the maximum liability of Guarantor under this instrument shall not
exceed the sum of (a) that portion of the Loans and Letters of Credit the
proceeds of which are used by Borrower to make Valuable Transfers (as
hereinafter defined) to Guarantor, plus (b) ninety-five percent (95%) of the
Adjusted Net Worth (as hereinafter defined), but only to the extent that the
Adjusted Net Worth is a positive number, of Guarantor at the date of this
instrument.
9.2. DEFINITION OF TERMS USED IN SECTION 9. For purposes of this
Section 9:
"Adjusted Net Worth" shall mean, as of any date of
determination thereof, the excess of (a) the amount of the fair saleable value
of the assets of Guarantor as of the date of such determination, determined in
accordance with applicable federal and state laws governing determinations of
insolvency of debtors, over (b) the amount of all liabilities of Guarantor,
contingent or otherwise, as of the date of such determination, determined on the
basis provided in the preceding clause (a), and in all events prior to giving
effect to Valuable Transfers.
"Valuable Transfer" shall mean (a) all loans, advances or
capital contributions made to Guarantor with proceeds of the Loans and Letters
of Credit; (b) the fair market value of all property acquired with proceeds of
the Loans and Letters of Credit and transferred to Guarantor; (c) the interest
on and the fees in respect of the Loans and the Letters of Credit, the proceeds
of which are used to make such a Valuable Transfer; and (d) the value of any
quantifiable economic benefits not included in clauses (a) through (c) above,
but includable in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, accruing to Guarantor as a result
of the Loans and Letters of Credit.
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9.3. DEBT MAY EXCEED GUARANTOR'S MAXIMUM LIABILITY. Guarantor agrees
that the Debt may at any time and from time to time exceed the maximum liability
of Guarantor hereunder without impairing this instrument or affecting the rights
and remedies of Agents or the Banks hereunder.
9.4. GUARANTOR'S LIABILITY NOT REDUCED BY PAYMENTS BY OTHERS. No
payment or payments made by Borrower, Guarantor or any other Person or received
or collected by Agents or the Banks from Borrower, Guarantor or any other person
by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Debt shall be deemed to modify, reduce, release or otherwise affect the
liability of Guarantor under this instrument and Guarantor shall,
notwithstanding any such payment or payments (other than payments made to Agents
or the Banks by Guarantor or payments received or collected by Agents or the
Banks from Guarantor), remain liable for the Debt up to the maximum liability
amount of Guarantor set forth above until the Debt is indefeasibly paid in full
in cash.
9.5. ADJUSTMENTS TO MAXIMUM LIABILITY. Anything in this Section 9 to
the contrary notwithstanding, in no event shall Guarantor's liability set forth
in subsections 9.1 through 9.4 hereof exceed the maximum amount that, after
giving effect to the incurring of the obligations hereunder and to any rights to
contribution of Guarantor from other affiliates of Borrower, would not render
Agent's or the Banks' rights to payment hereunder void, voidable or avoidable
under any applicable fraudulent transfer law; and further provided that, if a
greater amount of the Debt than the maximum liability set forth in this Section
9 could be repaid by Guarantor as a result of an increase in Guarantor's
Adjusted Net Worth subsequent to the date hereof, without rendering Agent's or
the Banks' rights to payment hereunder void, voidable or avoidable under any
applicable fraudulent transfer law, then the amount of Guarantor's maximum
liability calculated in subsection 9.1 hereof shall be calculated based upon
Guarantor's Adjusted Net Worth on such later date, rather than the date of
execution of this instrument.
10. NOTICE. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Guarantor, mailed or
delivered to it, addressed to it at the address specified on the signature page
of this instrument and, if to a Bank, mailed or delivered to it, addressed to
the address of such Bank specified on the signature pages of the Credit
Agreement. All notices, statements, requests, demands and other communications
provided for hereunder shall be deemed to be given or made when delivered or
forty-eight (48) hours after being deposited in the mails with postage prepaid
by registered or certified mail, addressed as aforesaid, or sent by facsimile
with telephonic confirmation of receipt, except that notices pursuant to any of
the provisions hereof shall not be effective until received.
11. MISCELLANEOUS. This instrument shall bind Guarantor and Guarantor's
successors and assigns and shall inure to the benefit of Agent and each Bank and
their respective successors and assigns, including (without limitation) each
holder of any Note evidencing any Debt. The provisions of this instrument and
the respective rights and duties of Guarantor, Agent, and the Banks hereunder
shall be interpreted and determined in accordance with Ohio law, without regard
to principles of conflict of laws. If at any time one or more provisions of this
instrument is or becomes invalid, illegal or unenforceable in whole or in part,
the validity, legality and enforceability
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of the remaining provisions shall not in any way be affected or impaired
thereby. This instrument constitutes a final written expression of all of the
terms of this instrument, is a complete and exclusive statement of those terms
and supersedes all oral representations, negotiations and prior writings, if
any, with respect to the subject matter hereof. The relationship between (a)
Guarantor and (b) Agent and the Banks with respect to this instrument is and
shall be solely that of debtor and creditors, respectively, and Agent and the
Banks shall have no fiduciary obligation toward Guarantor with respect to this
instrument or the transactions contemplated hereby. The captions herein are for
convenience of reference only and shall be ignored in interpreting the
provisions of this instrument.
12. GOVERNING LAW; SUBMISSION TO JURISDICTION. The provisions of this
instrument and the respective rights and duties of Guarantor, Agent and the
Banks hereunder shall be governed by and construed in accordance with Ohio law,
without regard to principles of conflict of laws. Guarantor hereby irrevocably
submits to the non-exclusive jurisdiction of any Ohio state or federal court
sitting in Cleveland, Ohio, over any action or proceeding arising out of or
relating to this instrument, any Loan Document or any Related Writing, and
Guarantor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court.
Guarantor, on behalf of itself and its Subsidiaries, hereby irrevocably waives,
to the fullest extent permitted by law, any objection it may now or hereafter
have to the laying of venue in any action or proceeding in any such court as
well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to another court on the grounds of FORUM NON
CONVENIENS or otherwise. Guarantor agrees that a final, nonappealable judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
[Remainder of page intentionally left blank.]
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12. (JURY TRIAL WAIVER) GUARANTOR, AGENT AND THE BANKS, TO THE EXTENT
PERMITTED BY LAW, EACH WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, ANY
OF THE BANKS, BORROWER AND/OR GUARANTOR ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN EACH OF THEM
AND GUARANTOR IN CONNECTION WITH THIS INSTRUMENT OR ANY NOTE OR OTHER AGREEMENT,
INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE
TRANSACTIONS RELATED THERETO.
Signed as of the 15th day of May, 1998, at Cleveland, Ohio.
Address: 1100 Superior Avenue _________________________
Cleveland, Ohio 44114
Attention: Treasurer
By:______________________
Title:___________________
and______________________
Title:___________________
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EXHIBIT G
FORM OF
SECURITY AGREEMENT
1. RECITALS
Concurrently herewith, OGLEBAY NORTON COMPANY, a Delaware corporation
(together with its successors and assigns, "Oglebay") is entering into the
Credit Agreement, as hereinafter defined, with the financial institutions listed
on SCHEDULE 1 to the Credit Agreement (collectively, "Banks", and individually,
"Bank") and KEYBANK NATIONAL ASSOCIATION, as agent for the Banks ("Agent"),
pursuant to which Oglebay and certain of its subsidiaries may obtain loans,
letters of credit and other financial accommodations from the Banks. It is
anticipated that Oglebay and its subsidiaries will or may be restructured such
that Oglebay will become a subsidiary of OGLEBAY NORTON HOLDING COMPANY
(together with its successors and assigns, "Oglebay Holding"). It is further
anticipated that Oglebay Holding will or may assume all of the benefits and
obligations of Oglebay under the Credit Agreement pursuant to such restructuring
of Oglebay and its subsidiaries. [________________ , an __________] corporation,
("Pledgor") desires that the Banks grant the financial accommodations described
in the Credit Agreement to Oglebay and certain of its subsidiaries, and, after
any such restructuring, to Oglebay Holding (collectively, "Borrower").
Pledgor deems it to be in the direct pecuniary and business interests
of Pledgor that Borrower obtain from the Banks the Commitment, as defined in the
Credit Agreement, and the Loans and Letters of Credit, as hereinafter defined,
provided for in the Credit Agreement.
Pledgor understands that the Banks are willing to grant such financial
accommodations to Borrower only upon certain terms and conditions, one of which
is that Pledgor grant to Agent, for the benefit of the Banks, a security
interest in and an assignment of the Collateral, as hereinafter defined, and
this Agreement (as the same may from time to time be amended, restated or
otherwise modified, this "Agreement") is being executed and delivered in
consideration of each financial accommodation, if any, granted to Borrower by
the Banks and for other valuable considerations.
2. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
"Account" shall mean (a) any right to payment now or hereafter owing to
Pledgor (including but not limited to any such right to payment by reason of any
lease, sale, manufacture, repair, processing or fabrication of personal property
formerly, now or hereafter owned or otherwise held by Pledgor, by reason of any
services formerly, now or hereafter rendered by or on behalf of Pledgor or by
reason of any former, existing or future contract for any such lease, sale,
manufacture, repair, processing, fabrication and/or services), whether such
right to payment be classified by law as an
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instrument, chattel paper, contract right, account, document, general intangible
or otherwise; (b) the security, if any, for such right to payment; (c) Pledgor's
right, title and interest (including, without limitation, all of Pledgor's
rights as an unpaid vendor, and any applicable right of stoppage in transit) in
or to the personal property, if any, which is the subject of such rights to
payment; (d) all books and records pertaining to such rights to payment; and (e)
all proceeds of any of the foregoing, irrespective of the form or kind thereof.
"Account Debtor" shall mean any Person obligated to pay all or any part
of any Account in any manner and includes (without limitation) any guarantor
thereof or other accommodation party therefor.
"Cash Collateral Account" shall mean a commercial Deposit Account
designated "cash collateral account" and maintained by Pledgor with Agent,
without liability by Agent or the Banks to pay interest thereon, from which
account Agent shall have the exclusive right to withdraw funds until all of the
Debt is paid in full.
"Cash Security" shall mean all cash, instruments, Deposit Accounts, and
other cash equivalents, whether matured or unmatured, whether collected or in
the process of collection, upon which Pledgor presently has or may hereafter
have any claim, wherever located, including but not limited to any of the
foregoing that are presently or may hereafter be existing or maintained with,
issued by, drawn upon, or in the possession of Agent or any Bank.
"Collateral" shall mean (a) all of Pledgor's existing and future
Accounts, accounts receivable, instruments, contract rights, chattel paper,
Investment Property, documents and General Intangibles; (b) all of Pledgor's
Inventory, Equipment and Mineral Interests, whether now owned or hereafter
acquired by Pledgor; (c) all funds now or hereafter on deposit in the Cash
Collateral Account, if any; (d) all of Pledgor's existing and future Cash
Security; and (e) all of the Proceeds, products, profits, and rents of any of
(a) through (d) above.
"Credit Agreement" shall mean the Credit Agreement executed by and
among Borrower, Agent and the Banks and dated as of the 15th day of May, 1998,
as it may be from time to time amended, restated or otherwise modified.
"Debt" shall mean, collectively, (a) all Loans and Letters of Credit;
(b) all other indebtedness now owing or hereafter incurred by Borrower to Agent
or any Bank pursuant to the Credit Agreement and the Notes executed in
connection therewith; (c) each renewal, extension, consolidation or refinancing
of any of the foregoing, in whole or in part; (d) all interest from time to time
accruing on any of the foregoing, and all commitment and other fees pursuant to
the Credit Agreement; (e) all obligations and liabilities of Borrower now
existing or hereafter incurred to Agent or any of the Banks under, arising out
of, or in connection with any Hedge Agreement; (f) all other amounts payable by
Borrower to Agent or any Bank pursuant to the Credit Agreement or any Related
Writing; and (g) all Related Expenses.
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"Deposit Account" shall mean (a) any deposit account, and (b) any
demand, time, savings, passbook, or a similar account maintained with a bank,
savings and loan association, credit union, or similar organization.
"Equipment" shall mean (a) all equipment as defined in Chapter 1309 of
the Ohio Revised Code, including without limitation, machinery, motor vehicles,
trade fixtures, office and other furniture and furnishings; (b) all goods that
are used or bought for use primarily in Pledgor's business; (c) all goods that
are not consumer goods, farm products (as defined in Chapter 1309 of the Ohio
Revised Code), or Inventory; and (d) all substitutes or replacements for, and
all parts, accessories, additions, attachments, or accessions to (a) through (c)
above.
"General Intangibles" shall mean all general intangibles now owned or
hereafter acquired by Pledgor, including, but not limited to, general
intangibles as defined in Chapter 1309 of the Ohio Revised Code, choses in
action, causes of action, all customer lists, corporate or other business
records, inventions, designs, patents, patent applications, service marks,
registrations, trade names, trademarks, copyrights, goodwill, computer software,
rights to indemnification and tax refunds, and all Proceeds of any of the
foregoing, irrespective of the form or kind thereof.
"Hedge Agreement" shall mean any currency swap or hedge agreement,
interest rate swap, cap, collar or floor agreement, or other interest rate
management device entered into by Borrower with Agent or any of the Banks, or
any of their respective affiliates in connection with the Debt.
"Inventory" shall mean (a) all inventory as defined in Chapter 1309 of
the Ohio Revised Code; (b) all goods that are raw materials; (c) all goods that
are work in process; (d) all goods that are materials used or consumed in the
ordinary course of Pledgor's business; (e) all goods that are, in the ordinary
course of Pledgor's business, held for sale or lease or furnished or to be
furnished under contracts of service; and (f) all substitutes and replacements
for, and parts, accessories, additions, attachments, or accessions to (a)
through (e) above.
"Investment Property" shall mean "investment property" as defined in
Chapter 1309 of the Ohio Revised Code, unless the Uniform Commercial Code as in
effect in another jurisdiction would govern the perfection and/or priority of a
security interest in investment property, and, in such case, "investment
property" shall be defined in accordance with the law of that jurisdiction.
"Letter of Credit" shall mean any Letter of Credit, as defined in the
Credit Agreement, issued pursuant to the Credit Agreement.
"Loan" shall mean any Loan, as defined in the Credit Agreement, granted
pursuant to the Credit Agreement.
"Mineral Interest" shall mean (a) any right of Pledgor to extract
minerals from the ground, (b) any minerals which have been extracted from the
ground, and (c) any proceeds or payments owing to Pledgor by virtue of the lease
or sublease of mineral rights or the sale of minerals.
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"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency or
political subdivision thereof or any other entity.
"Proceeds" shall mean (a) any proceeds, and (b) whatever is received
upon the sale, exchange, collection, or other disposition of Collateral or
proceeds, whether cash or non-cash. Cash proceeds includes, without limitation,
moneys, checks, and Deposit Accounts. Proceeds includes, without limitation, any
Account arising when the right to payment is earned under a contract right, any
insurance payable by reason of loss or damage to the Collateral, and any return
or unearned premium upon any cancellation of insurance. Except as expressly
authorized in this Agreement, the right of Agent and the Banks to Proceeds
specifically set forth herein or indicated in any financing statement shall
never constitute an express or implied authorization on the part of Agent or any
Bank to Pledgor's sale, exchange, collection, or other disposition of any or all
of the Collateral.
"Related Expenses" shall mean any and all costs, liabilities, and
expenses (including, without limitation, losses, damages, penalties, claims,
actions, reasonable attorneys' fees, legal expenses, judgments, suits, and
disbursements) incurred by, imposed upon, or asserted against, Agent or any Bank
in any attempt by Agent or any Bank: (a) to obtain, preserve, perfect, or
enforce any security interest evidenced by this Agreement, the Credit Agreement
or any Related Writing; (b) to obtain payment, performance, and observance of
any and all of the Debt; (c) to maintain, insure, audit, collect, preserve,
repossess, and dispose of any of the Collateral or any other collateral securing
the Debt, including, without limitation, costs and expenses for appraisals,
assessments, and audits of Pledgor or any such collateral; or (d) incidental or
related to (a) through (c) above, including, without limitation, interest
thereupon from the date incurred, imposed, or asserted until paid at the Default
Rate, as defined in the Credit Agreement.
Except as specifically defined herein, all capitalized terms shall have the
meanings ascribed to them in the Credit Agreement.
3. SECURITY INTEREST. In consideration of and as security for the full
and complete payment of all of the Debt, Pledgor hereby agrees that Agent shall
at all times have, and hereby grants to Agent, for the benefit of the Banks, a
security interest in and assignment of all of the Collateral, including (without
limitation) all of Pledgor's future Collateral, irrespective of any lack of
knowledge by Agent or the Banks of the creation or acquisition thereof.
4. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants to Agent and each Bank as follows:
4.1. Pledgor is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, and is duly
qualified to do business in each state in which a failure to so qualify would
have a material adverse effect on Pledgor.
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4.2. Pledgor has full power, authority and legal right to pledge the
Collateral, to execute and deliver this Agreement, and to perform and observe
the provisions hereof. The officers acting on Pledgor's behalf have been duly
authorized to execute and deliver this Agreement and to execute and file
appropriate financing statements in respect hereof. This Agreement is valid and
binding upon Pledgor in accordance with the terms hereof.
4.3. Neither the execution and delivery of this Agreement, nor the
performance and observance of the provisions hereof, by Pledgor will conflict
with, or constitute a violation or default under, any provision of any
applicable law or of any contract (including, without limitation, Pledgor's
certificate (or articles) of incorporation and bylaws (or code of regulations))
or of any other writing binding upon Pledgor in any manner.
4.4. Pledgor's principal place of business and the location where
Pledgor keeps records in respect of the Accounts are set forth on SCHEDULE 6.5
to the Credit Agreement and Pledgor has places of business or maintains
Collateral at the locations set forth on SCHEDULE 6.5 to the Credit Agreement.
4.5. At the execution and delivery hereof (a) except as permitted
pursuant to the Credit Agreement, there is no financing statement outstanding
covering the Collateral or any part thereof other than a financing statement in
favor of Agent for the benefit of the Banks; (b) except as permitted pursuant to
the Credit Agreement, none of the Collateral is subject to any security interest
or lien of any kind other than the security interest herein granted to Agent for
the benefit of the Banks or previously granted to Agent for the benefit of the
Banks; (c) to Pledgor's knowledge, the Internal Revenue Service has not alleged
the nonpayment or underpayment of any tax by Pledgor or threatened to make any
assessment in respect thereof; (d) except as permitted pursuant to the Credit
Agreement, upon execution of this Agreement and the filing of the U.C.C.
financing statements being executed in connection herewith, Agent will have, for
the benefit of the Banks, a valid and enforceable first security interest in the
Collateral; and (e) except as permitted pursuant to the Credit Agreement,
Pledgor has not entered into any contract or agreement which would prohibit
Agent and the Banks from acquiring a security interest, mortgage or other lien
on, or a collateral assignment of, any of the property or assets of Pledgor.
4.6. Pledgor has received consideration which is the reasonable
equivalent value of the obligations and liabilities that Pledgor has incurred to
the Banks. Pledgor is not insolvent as defined in any applicable state or
federal statute nor will Pledgor be rendered insolvent by the execution and
delivery of this Agreement to Agent or any other documents executed and
delivered to Agent or the Banks in connection herewith. Pledgor has not engaged,
nor is it about to engage, in any business or transaction for which the assets
retained by it are or will be an unreasonably small amount of capital, taking
into consideration the obligations to the Banks incurred hereunder. Pledgor does
not intend to, nor does it believe that it will, incur debts beyond its ability
to pay them as they mature.
4.7. At the execution and delivery hereof, a Default (as hereinafter
defined) shall not exist hereunder.
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5. INSURANCE. Pledgor shall at all times maintain insurance upon its
Inventory, Equipment and other personal and real property in accordance with
SECTION 5.1 of the Credit Agreement.
6. TAXES AND OTHER PLEDGOR OBLIGATIONS. Pledgor shall pay in full (a)
all taxes, assessments and governmental charges and levies in accordance with
SECTION 5.2 of the Credit and Security Agreement; (b) all of its wage
obligations to its employees in accordance with SECTION 5.2 of the Credit and
Security Agreement; (c) all obligations under the Employee Retirement Income
Security Act of 1974, as amended from time to time, in accordance with SECTION
5.6 of the Credit and Security Agreement; and (d) all of Pledgor's other
obligations calling for the payment of money in accordance with SECTION 5.2 of
the Credit and Security Agreement.
7. CORPORATE NAMES AND LOCATION OF COLLATERAL. Pledgor shall not
change its name, unless, in each case, Pledgor shall provide Agent with at least
thirty (30) days' prior written notice thereof. Pledgor shall not use trade
names, assumed names or fictitious names without giving Agent at least thirty
(30) days' prior written notice thereof. Pledgor shall also provide Agent with
at least thirty (30) days' prior written notification of: (a) any change in any
location where any of Pledgor's Inventory or Equipment is maintained, and any
new locations where any of Pledgor's Inventory or Equipment is to be maintained;
(b) any change in the location of the office where Pledgor's records pertaining
to its Accounts are kept; (c) the location of any new places of business and the
changing or closing of any of its existing places of business; and (d) any
change in Pledgor's chief executive office. In the event of any of the
foregoing, Pledgor shall promptly execute and deliver to Agent (and Pledgor
agrees that Agent may execute and deliver the same as Pledgor's irrevocable
attorney-in-fact) new U.C.C. financing statements describing the Collateral and
otherwise in form and substance sufficient for recordation wherever necessary or
appropriate, as determined in Agent's sole discretion, to perfect or continue
perfected the security interest of Agent, for the benefit of the Banks, in the
Collateral, based upon such new places of business or names, and Pledgor shall
pay all filing and recording fees and taxes in connection with the filing or
recordation of such financing statements and shall immediately reimburse Agent
therefor if Agent pays the same. Such amounts not so paid or reimbursed shall be
Related Expenses hereunder.
8. NOTICE. Pledgor shall give Agent prompt written notice if any
Default occurs hereunder or if the Internal Revenue Service shall allege the
nonpayment or underpayment of any tax by Pledgor or threaten to make any
assessment in respect thereof to the extent that such nonpayment, underpayment
or assessment would have a material adverse effect on Pledgor.
9. FINANCIAL RECORDS. Pledgor shall (a) maintain at all times true and
complete financial records and books of accounts in accordance with generally
accepted accounting principles consistently applied; and (b) forward to Agent
upon the reasonable request of Agent or any Bank, whenever made, (i) invoices,
sales journals or other documents satisfactory to Agent or such Bank, as the
case may be, which summarize Pledgor's Accounts certified by an officer of
Pledgor, (ii) within a reasonable time, an aging report of the Accounts then
outstanding setting forth, in such
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form and detail and with such representations and warranties as Agent or such
Bank may from time to time reasonably require, the unpaid balances of all
invoices billed respectively during that period and during each of the three
next preceding periods, and certified by an officer of Pledgor, and (iii) with
respect to Inventory and any other Collateral, such reports and other documents
that are reasonably satisfactory to Agent and the Banks.
10. TRANSFERS, LIENS AND MODIFICATIONS REGARDING COLLATERAL.
Except as specifically permitted pursuant to the Credit Agreement or this
Agreement, Pledgor shall not, without Agent's prior written consent, (a) sell,
assign, transfer, or otherwise dispose of, or grant any option with respect to,
or create, incur, or permit to exist any pledge, lien, mortgage, hypothecation,
security interest, charge, option or any other encumbrance with respect to any
of the Collateral, or any interest therein, or any proceeds thereof, except for
the lien and security interest provided for by this Agreement and any security
agreement securing only Agent, for the benefit of the Banks; (b) grant any
security interest in or incur any lien of any kind on any of the Collateral
other than any security interest granted to Agent, for the benefit of the Banks;
or (c) enter into or assent to any amendment, compromise, extension, release or
other modification of any kind of, or substitution for, any of its Accounts.
11. COLLATERAL. Pledgor shall:
(a) at all reasonable times allow Agent by or through any of its
officers, agents, employees, attorneys, or accountants to (i) examine, inspect,
and make extracts from Pledgor's books and other records, including, without
limitation, the tax returns of Pledgor, (ii) after the occurrence of a Default,
arrange for verification of Pledgor's Accounts, under reasonable procedures,
directly with Account Debtors or by other methods, and (iii) examine and inspect
Pledgor's Inventory and Equipment, wherever located;
(b) promptly furnish to Agent and the Banks upon reasonable request (i)
additional statements and information with respect to the Collateral, and all
writings and information relating to or evidencing any of Pledgor's Accounts
(including, without limitation, computer printouts or typewritten reports
listing the mailing addresses of all present Account Debtors), and (ii) any
other writings and information as Agent may request;
(c) immediately notify Agent and the Banks in writing of any
information which Pledgor has or may receive with respect to the Collateral
which might in any manner materially and adversely affect the value thereof or
the rights of Agent or the Banks with respect thereto;
(d) maintain the Equipment in good operating condition and repair,
ordinary wear and tear excepted, making all necessary replacements thereof so
that the value and operating efficiency thereof shall at all times be maintained
and preserved, and promptly inform Agent of any additions to or deletions from
the Equipment; and
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(e) upon request of Agent, promptly take such action and promptly make,
execute, and deliver all such additional and further items, deeds, assurances,
instruments and any other writings as Agent or the Banks may from time to time
deem necessary or appropriate, including, without limitation, financing
statements and chattel paper, to carry into effect the intention of this
Agreement or so as to completely vest in and ensure to Agent and the Banks their
rights hereunder and in or to the Collateral.
If certificates of title or applications for title are issued or outstanding
with respect to any of Pledgor's Inventory or Equipment, Pledgor shall, upon
request of Agent, (i) execute and deliver to Agent a short form security
agreement, in form and substance satisfactory to Agent, and (ii) deliver such
certificate or application to Agent and cause the interests of Agent and the
Banks to be properly noted thereon. Pledgor hereby authorizes Agent or Agent's
designated agent (but without obligation by Agent to do so) to incur Related
Expenses (whether prior to, upon, or subsequent to any Default hereunder), and
Pledgor shall promptly repay, reimburse, and indemnify Agent for any and all
Related Expenses. If Pledgor fails to keep and maintain the Equipment in good
operating condition, Agent may (but shall not be required to) so maintain or
repair all or any part of the Equipment and the cost thereof shall be a Related
Expense. All Related Expenses are payable to Agent upon demand therefor.
12. COLLECTIONS AND RECEIPT OF PROCEEDS BY PLEDGOR. Prior to exercise
by Agent or the Banks of their rights under this Agreement, both (a) the lawful
collection and enforcement of all of Pledgor's Accounts, and (b) the lawful
receipt and retention by Pledgor of all Proceeds of all of Pledgor's Accounts
and Inventory shall be as the agent of Agent and the Banks. Upon written notice
to Pledgor from Agent after a Default, a Cash Collateral Account shall be opened
by Pledgor at the main office of Agent and all such lawful collections of
Pledgor's Accounts and such Proceeds of Pledgor's Accounts and Inventory shall
be remitted daily by Pledgor to Agent in the form in which they are received by
Pledgor, either by mailing or by delivering such collections and Proceeds to
Agent, appropriately endorsed for deposit in the Cash Collateral Account. In the
event that such notice is given to Pledgor from Agent, Pledgor shall not
commingle such collections or Proceeds with any of Pledgor's other funds or
property, but shall hold such collections and Proceeds separate and apart
therefrom upon an express trust for Agent. In such case, Agent may, in its sole
discretion, at any time and from time to time, apply all or any portion of the
account balance in the Cash Collateral Account as a credit against the Debt. If
any remittance shall be dishonored, or if, upon final payment, any claim with
respect thereto shall be made against Agent on its warranties of collection,
Agent may charge the amount of such item against the Cash Collateral Account or
any other Deposit Account maintained by Pledgor with Agent, and, in any event,
retain the same and Pledgor's interest therein as additional security for the
Debt. Agent may, in its sole discretion, at any time and from time to time,
release funds from the Cash Collateral Account to Pledgor for use in Pledgor's
business. The balance in the Cash Collateral Account may be withdrawn by Pledgor
upon termination of this Agreement and payment in full of all of the Debt. At
Agent's request, Pledgor shall cause all remittances representing collections
and Proceeds of Collateral to be mailed to a lock box in Cleveland, Ohio, to
which Agent shall have access for the
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processing of such items in accordance with the provisions, terms, and
conditions of Agent's customary lock box agreement.
13. COLLECTIONS AND RECEIPT OF PROCEEDS BY AGENT. After the
occurrence of a Default, Agent shall at all times have the right, but not the
duty, to collect and enforce any or all of the Accounts as Agent may deem
advisable and, if Agent shall at any time or times elect to do so in whole or in
part, Agent shall not be liable to Pledgor except for willful misconduct, if
any. Pledgor hereby constitutes and appoints Agent, or Agent's designated agent,
as Pledgor's attorney-in-fact to exercise, at any time after a Default, all or
any of the following powers which, being coupled with an interest, shall be
irrevocable until the complete and full payment of all of the Debt:
(a) to receive, retain, acquire, take, endorse, assign, deliver,
accept, and deposit, in Agent's name or Pledgor's name, any and all of Pledgor's
cash, instruments, chattel paper, documents, Proceeds of Accounts, Proceeds of
Inventory, collection of Accounts, and any other writings relating to any of the
Collateral. Pledgor hereby waives presentment, demand, notice of dishonor,
protest, notice of protest, and any and all other similar notices with respect
thereto, regardless of the form of any endorsement thereof. Neither Agent nor
the Banks shall be bound or obligated to take any action to preserve any rights
therein against prior parties thereto;
(b) to transmit to Account Debtors, on any or all of Pledgor's
Accounts, notice of assignment to Agent, for the benefit of the Banks, thereof
and the security interest of Agent, for the benefit of the Banks, and to request
from such Account Debtors at any time, in Agent's name or in Pledgor's name,
information concerning Pledgor's Accounts and the amounts owing thereon;
(c) to transmit to purchasers of any or all of Pledgor's Inventory,
notice of the security interest of Agent for the benefit of the Banks, and to
request from such purchasers at any time, in Agent's name or in Pledgor's name,
information concerning Pledgor's Inventory and the amounts owing thereon by such
purchasers;
(d) to notify and require Account Debtors on Pledgor's Accounts and
purchasers of Pledgor's Inventory to make payment of their indebtedness directly
to Agent, for the benefit of the Banks;
(e) to enter into or assent to such amendment, compromise, extension,
release or other modification of any kind of, or substitution for, the accounts
or any thereof as Agent, in its reasonable discretion, may deem to be advisable;
(f) to enforce the Accounts or any thereof, or any other Collateral, by
suit or otherwise, to maintain any such suit or other proceeding in Agent's own
name or in Pledgor's name, and to withdraw any such suit or other proceeding.
Pledgor agrees to lend every assistance demanded by Agent in respect of the
foregoing, all at no cost or expense to Agent or the Banks and including,
without limitation, the furnishing of such witnesses and of such records and
other writings as Agent
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may require in connection with making legal proof of any Account. Pledgor agrees
to reimburse Agent and the Banks in full for all court costs and reasonable
attorneys' fees and every other cost, expense or liability, if any, incurred or
paid by Agent or the Banks in connection with the foregoing, which obligation of
Pledgor shall constitute Debt, shall be secured by the Collateral and shall bear
interest, until paid, at the Default Rate; and
(g) to accept all collections in any form relating to the Collateral,
including remittances which may reflect deductions, and to deposit the same,
into Pledgor's Cash Collateral Account or, at the option of Agent, to apply them
as a payment on the Debt.
14. USE OF INVENTORY AND EQUIPMENT. Until any Default shall occur
hereunder: (a) Pledgor may retain possession of and use its Inventory and
Equipment in any lawful manner not inconsistent with this Agreement or with the
terms, conditions, or provisions of any policy of insurance thereon; (b) Pledgor
may sell or lease its Inventory in the ordinary course of business; provided,
however, that a sale or lease in the ordinary course of business does not
include a transfer in partial or total satisfaction of an indebtedness, except
for transfers in satisfaction of partial or total purchase money prepayments by
a buyer in the ordinary course of Pledgor's business; and (c) Pledgor may also
use and consume any raw materials or supplies, the use and consumption of which
are necessary in order to carry on Pledgor's business.
15. [INTENTIONALLY OMITTED]
16. DEFAULT AND REMEDIES.
16.1. Any of the following shall constitute a default ("Default") under
this Agreement: (a) an Event of Default, as defined in the Credit Agreement,
shall occur under the Credit Agreement; (b) any representation, warranty or
statement made by Pledgor in or pursuant to this Agreement or in any other
writing received by Agent or the Banks in connection with the Debt shall be
false or erroneous in any material respect; or (c) Pledgor shall fail or omit to
perform or observe any agreement made by Pledgor in or pursuant to this
Agreement or in any other writing received by Agent or the Banks pursuant
hereto.
16.2. Upon the occurrence of a Default hereunder, and at all times
thereafter, Agent and the Banks shall have the rights and remedies of a secured
party under the Ohio Revised Code, in addition to the rights and remedies of a
secured party provided elsewhere within this Agreement or in any other writing
executed by Pledgor. Agent may require Pledgor to assemble the Collateral, which
Pledgor agrees to do, and make it available to Agent at a reasonably convenient
place to be designated by Agent. Agent may, with or without notice to or demand
upon Pledgor and with or without the aid of legal process, make use of such
force as may be necessary to enter any premises where the Collateral, or any
thereof, may be found and to take possession thereof (including anything found
in or on the Collateral that is not specifically described in this Agreement,
each of which findings shall be considered to be an accession to and a part of
the Collateral) and for that purpose may pursue the Collateral wherever the same
may be found, without liability for trespass or damage
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caused thereby to Pledgor. After any delivery or taking of possession of the
Collateral, or any thereof, pursuant to this Agreement, then, with or without
resort to Pledgor or any other Person or property, all or which Pledgor hereby
waives, and upon such terms and in such manner as Agent may deem advisable,
Agent, in its discretion, may sell, assign, transfer and deliver any of the
Collateral at any time or, from time to time. No prior notice need be given to
Pledgor or to anyone else in the case of any sale of Collateral which Agent
determines to be perishable or to be declining speedily in value or which is
customarily sold in any recognized market, but, in any other case, Agent shall
give Pledgor not fewer than ten (10) days' prior notice of either the time and
place of any public sale of the Collateral or of the time after which any
private sale or other intended disposition thereof is to be made. Pledgor waives
advertisement of any such sale and (except to the extent specifically required
by the preceding sentence) waives notice of any kind in respect of any such
sale. At any such public sale, Agent or any Bank may purchase the Collateral, or
any part thereof, free from any right of redemption, all of which rights Pledgor
hereby waives and releases. After deducting all Related Expenses, and after
paying all claims, if any, secured by liens having precedence over this
Agreement, Agent may apply the net proceeds of each such sale to or toward the
payment of the Debt, whether or not then due, in such order and by such division
as Agent, in its sole discretion, may deem advisable. Any excess, to the extent
permitted by law, shall be paid to Pledgor, and the obligors on the Debt shall
remain liable for any deficiency. In addition, Agent shall at all times have the
right to obtain new appraisals of Pledgor or the Collateral, the cost of which
shall be paid by Pledgor.
17. MAXIMUM LIABILITY OF PLEDGOR.
17.1. PLEDGOR'S LIABILITY LIMITED IN AMOUNT. Subject to subsection 17.5
hereof, but otherwise notwithstanding anything to the contrary contained in this
Agreement, the maximum amount of the Debt secured by this Agreement shall not
exceed the sum of (a) that portion of the Loans and Letters of Credit the
proceeds of which are used by Borrower to make Valuable Transfers (as
hereinafter defined) to Pledgor, plus (b) ninety-five percent (95%) of the
Adjusted Net Worth (as hereinafter defined), but only to the extent that the
Adjusted Net Worth is a positive number, of Pledgor at the date of this
Agreement.
17.2. DEFINITION OF TERMS USED IN SECTION 17. For purposes of this
Section 17:
"Adjusted Net Worth" shall mean, as of any date of
determination thereof, the excess of (a) the amount of the fair saleable value
of the assets of Pledgor as of the date of such determination, determined in
accordance with applicable federal and state laws governing determinations of
insolvency of debtors, over (b) the amount of all liabilities of Pledgor,
contingent or otherwise, as of the date of such determination, determined on the
basis provided in the preceding clause (a), and in all events prior to giving
effect to Valuable Transfers.
"Valuable Transfer" shall mean (a) all loans, advances or
capital contributions made to Pledgor with proceeds of the Loans and Letters of
Credit; (b) the fair market value of all property acquired with proceeds of the
Loans and Letters of Credit and transferred to Pledgor; (c) the interest
which are used to
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on and the fees in respect of the Loans and the Letters of Credit, the proceeds
of make such a Valuable Transfer; and (d) the value of any quantifiable economic
benefits not included in clauses (a) through (c) above, but includable in
accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, accruing to Pledgor as a result of the Loans and
Letters of Credit.
17.3. DEBT MAY EXCEED PLEDGOR'S MAXIMUM LIABILITY. Pledgor agrees that
the Debt may at any time and from time to time exceed the maximum amount of the
Debt secured by this Agreement without impairing this Agreement or affecting the
rights and remedies of Agents or the Banks hereunder.
17.4. PLEDGOR'S LIABILITY NOT REDUCED BY PAYMENTS BY OTHERS. No payment
or payments made by Borrower, Pledgor or any other Person or received or
collected by Agents or the Banks from Borrower, Pledgor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Debt shall be deemed to modify, reduce, release or otherwise affect the
amount of the Debt secured by this Agreement and this Agreement shall,
notwithstanding any such payment or payments (other than payments made to Agents
or the Banks by Pledgor or payments received or collected by Agents or the Banks
from Pledgor), secure the Debt up to the maximum amount of the Debt secured by
this Agreement as set forth above until the Debt is indefeasibly paid in full in
cash.
17.5. ADJUSTMENTS TO MAXIMUM LIABILITY. Anything in this Section 17 to
the contrary notwithstanding, in no event shall the amount of the Debt secured
by this Agreement as set forth in subsections 17.1 through 17.4 hereof exceed
the maximum amount that, after giving effect to the incurring of the obligations
hereunder and to any rights to contribution of Pledgor from other affiliates of
Borrower, would not render Agent's or the Banks' rights to payment hereunder
void, voidable or avoidable under any applicable fraudulent transfer law; and
further provided that, if a greater amount of the Debt than the maximum
liability as set forth in this Section 17 could be secured by Pledgor as a
result of an increase in Pledgor's Adjusted Net Worth subsequent to the date
hereof, without rendering Agent's or the Banks' rights to payment hereunder
void, voidable or avoidable under any applicable fraudulent transfer law, then
the amount of Pledgor's maximum liability calculated in subsection 17.1 hereof
shall be calculated based upon Pledgor's Adjusted Net Worth on such later date,
rather than the date of execution of this instrument.
18. INTERPRETATION. Each right, power or privilege specified or
referred to in this Agreement is cumulative and in addition to and not in
limitation of any other rights, powers and privileges that Agent or the Banks
may otherwise have or acquire by operation of law, by contract or otherwise. No
course of dealing by Agent or the Banks in respect of, nor any omission or delay
by Agent or the Banks in the exercise of, any right, power or privilege shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or privilege preclude any other or further exercise thereof or
of any other right, power or privilege, as Agent or the Banks may exercise each
such right, power or privilege either independently or concurrently with others
and as often and in such order as Agent and the Banks may deem expedient. No
waiver, consent or other
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agreement shall be deemed to have been made by Agent or the Banks or be binding
upon Agent or the Banks in any case unless specifically granted in writing, and
each such writing shall be strictly construed. If at any time one or more
provisions of this Agreement is or becomes invalid, illegal or unenforceable in
whole or in part, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. A carbon,
photographic, or other reproduction of this Agreement may be used as a financing
statement. The captions to sections herein are inserted for convenience only and
shall be ignored in interpreting the provisions of this Agreement. This
Agreement and the rights and all obligations hereunder shall be construed in
accordance with the laws of the State of Ohio, without regard to principles of
conflict of laws.
19. NOTICE. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Pledgor, mailed or
delivered to it, addressed to it at the address specified on the signature page
of this Agreement, if to a Bank, mailed or delivered to it, addressed to the
address of such Bank specified on the signature pages of the Credit Agreement.
All notices, statements, requests, demands and other communications provided for
hereunder shall be given by overnight delivery or first class mail with postage
prepaid by registered or certified mail, addressed as aforesaid, or sent by
facsimile with telephonic confirmation of receipt, except that all notices
hereunder shall not be effective until received.
20. GOVERNING LAW; SUBMISSION TO JURISDICTION. The provisions of this
Agreement and the respective rights and duties of Pledgor, Agent and the Banks
hereunder shall be governed by and construed in accordance with Ohio law,
without regard to principles of conflict of laws. Pledgor hereby irrevocably
submits to the non-exclusive jurisdiction of any Ohio state or federal court
sitting in Cleveland, Ohio, over any action or proceeding arising out of or
relating to this Agreement, any Loan Document or any Related Writing, and
Pledgor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court.
Pledgor, on behalf of itself and its Subsidiaries, hereby irrevocably waives, to
the fullest extent permitted by law, any objection it may now or hereafter have
to the laying of venue in any action or proceeding in any such court as well as
any right it may now or hereafter have to remove such action or proceeding, once
commenced, to another court on the grounds of FORUM NON CONVENIENS or otherwise.
Pledgor agrees that a final, nonappealable judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
21. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
Pledgor and Pledgor's successors and assigns and shall inure to the benefit of,
be enforceable and exercisable by, and be binding upon Agent and the Banks and
their respective successors and assigns.
22. ENTIRE AGREEMENT. This Agreement integrates all of the terms and
conditions as to the Collateral and supersedes all oral representations and
negotiations and prior writings with respect to the subject matter hereof. This
Agreement and the security interest herein created in the Collateral shall
terminate only if (a) Pledgor delivers a written request for termination to
Agent and
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the Banks; (b) the Debt shall have been paid in full at the time such
written termination is received by Agent and the Banks; and (c) Agent executes
an appropriate termination statement.
[Remainder of page intentionally left blank.]
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23. PLEDGOR, AGENT AND THE BANKS WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, AMONG PLEDGOR, BORROWER, AGENT AND THE BANKS, OR ANY THEREOF, ARISING
OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THE TRANSACTIONS RELATED THERETO.
Executed this 15th day of May, 1998, at Cleveland, Ohio.
Address: ______________ _____________________________
______________ By:__________________________
Title:_______________________
and:_________________________
Title:_______________________
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EXHIBIT H
FORM OF
COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
RECITALS:
Concurrently herewith, OGLEBAY NORTON COMPANY, a Delaware corporation
(together with its successors and assigns, "Oglebay") is entering into the
Credit Agreement, as hereinafter defined, with the financial institutions listed
on SCHEDULE 1 to the Credit Agreement (collectively, "Banks", and individually,
"Bank") and KEYBANK NATIONAL ASSOCIATION, as agent for the Banks ("Agent")
pursuant to which Oglebay and certain of it subsidiaries may obtain loans,
letters of credit and other financial accommodations from the Banks.. It is
anticipated that Oglebay and its subsidiaries will or may be restructured such
that Oglebay will become a subsidiary of OGLEBAY NORTON HOLDING COMPANY
(together with its successors and assigns, "Oglebay Holding"). It is further
anticipated that Oglebay Holding will or may assume all of the benefits and
obligations of Oglebay under the Credit Agreement pursuant to such restructuring
of Oglebay and its subsidiaries. OGLEBAY NORTON COMPANY, a Delaware corporation,
("Pledgor") desires that the Banks grant the financial accommodations described
in the Credit Agreement to Oglebay and its subsidiaries and, after any such
restructuring, to Oglebay Holding (collectively, "Borrower").
Pledgor deems it to be in the direct pecuniary and business interests
of Pledgor that Borrower obtain from the Banks the Commitment, as defined in the
Credit Agreement, and the Loans and Letters of Credit, as hereinafter defined,
provided for in the Credit Agreement.
Pledgor understands that the Banks are willing to grant such financial
accommodations to Borrower only upon certain terms and conditions, one of which
is that Pledgor grant to Agent, for the benefit of the Banks, a security
interest in and an assignment of the Collateral, as hereinafter defined, and
this Agreement (as the same may from time to time be amended, restated or
otherwise modified, this "Agreement") is being executed and delivered in
consideration of each financial accommodation, if any, granted to Borrower by
the Banks and for other valuable considerations.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. GRANT OF ASSIGNMENT AND SECURITY INTEREST. To secure the Debt, as
hereinafter defined, Pledgor hereby grants to Agent, for the benefit of the
Banks, a security interest in, and assigns and conveys to Agent, for the benefit
of the Banks, as security for the obligations under the Credit Agreement,
subject to Section 9 hereof, all of Pledgor's patents, patent applications,
trademarks and all goodwill associated therewith, and trademark registrations,
now owned and
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hereafter acquired, including, but not limited to, the patents, patent
applications, trademark registrations, both federal and state, trademark
applications, common law trademark rights, improvements, inventions, copyrights,
and copyright registrations listed in SCHEDULE A hereto and all goodwill
associated therewith (as such SCHEDULE A may be amended pursuant hereto from
time to time, but only with the prior written consent of Agent), including,
without limitation, all renewals thereof, all proceeds on infringement suits,
the right to sue for past, present and future infringements and all rights
corresponding thereto throughout the world, and the goodwill of the business to
which each of the trademarks relate (all of the foregoing collectively referred
to herein as the "Collateral"). SCHEDULE A is incorporated into and made a part
of this Agreement by reference, the same as if it were fully set forth herein.
2. OBLIGATIONS SECURED.
(a) The obligations secured by this Agreement (collectively, the
"Debt") are the payment and performance of, collectively, (a) all Loans and
Letters of Credit; (b) all other indebtedness now owing or hereafter incurred by
Borrower to Agent or any Bank pursuant to the Credit Agreement and the Notes
executed in connection therewith; (c) each renewal, extension, consolidation or
refinancing of any of the foregoing, in whole or in part; (d) all interest from
time to time accruing on any of the foregoing, and all commitment and other fees
pursuant to the Credit Agreement; (e) all obligations and liabilities of
Borrower now existing or hereafter incurred to Agent or the Banks under, arising
out of, or in connection with any Hedge Agreement; (f) all other amounts payable
by Borrower to Agent or any Bank pursuant to the Credit Agreement or any Related
Writing; and (g) all Related Expenses.
(b) DEFINITIONS. Except as specifically defined herein, all capitalized
terms used herein which are defined in the Credit Agreement shall have their
respective meanings ascribed to them in the Credit Agreement.
3. WARRANTIES AND REPRESENTATIONS. Pledgor represents and warrants to
Agent and the Banks that each of the following statements is true and complete:
(a) Pledgor owns the Collateral and, whether the same are registered or
unregistered, no such Collateral has been adjudged invalid or unenforceable.
(b) The Collateral is valid and enforceable.
(c) Pledgor has no knowledge of any claim that the use of any of the
Collateral does or may violate the rights of any third person.
(d) Except for the liens granted in this Agreement or permitted by the
Credit Agreement, Pledgor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to the Collateral, free and clear
of any liens, charges and encumbrances, including, without
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limitation, pledges, assignments, licenses, registered user agreements and
covenants by Pledgor not to sue third persons.
(e) Pledgor has full power, authority and legal right to pledge the
Collateral and enter into this Agreement and perform its terms.
(f) Pledgor has used, and will continue to use, for the duration of
this Agreement, proper statutory notice in connection with its use of the
Collateral, except where the failure to do so will not have a material adverse
effect.
4. RIGHT TO USE. Unless and until there shall have occurred an Event of
Default (as that term is defined in Section 8 of this Agreement), Agent and the
Banks, to the extent permitted by law, hereby grants to Pledgor the exclusive,
royalty-free, world-wide, nontransferable right and license to use the
Collateral on and in connection with products manufactured, distributed, or both
by or in connection with products sold by Pledgor, for Pledgor's sole benefit
and account and for none other. Pledgor shall not enter into any agreement which
is inconsistent with Pledgor's obligations under this Agreement and shall not
otherwise sell or assign its interest in, or grant any sublicense under, the
license granted to Pledgor hereunder, without Agent's prior written consent.
Absent such prior written consent, any attempted sale or license is null and
void.
5. RIGHT TO INSPECT. Pledgor hereby grants to Agent and its employees
and agents the right, during regular business hours, to visit Pledgor's plants
and facilities or the plants and facilities of any subcontractors which
manufacture, inspect, sell or store products sold under any of the Collateral,
and to inspect the products and quality control records relating thereto at
reasonable times during regular business hours, at Pledgor's expense.
6. STANDARD PATENT AND TRADEMARK USE.
Pledgor shall not use the Collateral in any manner that would
jeopardize the validity or legal status thereof. Pledgor shall comply with all
patent marking requirements as specified in 35 U.S.C. Section 287. Pledgor shall
further conform its usage of any trademarks to standard trademark usage,
including, but not limited to, using the trademark symbols (R), (TM), and SM
where appropriate.
7. [INTENTIONALLY OMITTED]
8. EVENT OF DEFAULT.
(a) The occurrence of any of the following shall constitute an "Event
of Default" under this Agreement:
(i) If an Event of Default, as defined in the Credit
Agreement, shall occur under the Credit Agreement; or
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(ii) If Pledgor shall fail to perform any obligation of
Pledgor to be performed under this Agreement and the same shall not
have been fully corrected within thirty (30) days after the giving of
written notice thereof to Pledgor by Agent.
(b) If any Event of Default shall have occurred, Pledgor irrevocably
authorizes and empowers Agent, on behalf of the Banks, to terminate Pledgor's
use of the Collateral and to exercise such rights and remedies as allowed by
law. Without limiting the generality of the foregoing, Agent may immediately
sell at public or private sale, in a commercially reasonable manner, or
otherwise realize upon all or, from time to time, any of the Collateral together
with the associated goodwill, or any interest which Pledgor may have therein,
and, after deducting from the proceeds of sale or other disposition of the
Collateral all expenses (including all reasonable expenses for attorneys' and
brokers' fees and other legal services), Agent shall apply the residue of such
proceeds against payment of the Debt for the benefit of the Banks. Any remainder
of the proceeds, after payment in full of the Debt, shall be distributed in
accordance with the Chapter 1309 of the Ohio Revised Code. Notice of any sale or
other disposition of the Collateral shall be given to Pledgor at least five (5)
business days before the time of any intended public or private sale or other
disposition of the Collateral is to be made, which Pledgor hereby agrees shall
be reasonable notice of such sale or other disposition. At any such sale or
other disposition, Agent or any Bank may, to the extent permissible under
applicable law, purchase the whole or any part of the Collateral sold, free from
any right of redemption on the part of Pledgor, which right is hereby waived and
released.
9. TERMINATION. At such time as the Debt has been irrevocably paid in
full, the Commitment, as defined in the Credit Agreement, terminated, and the
Credit Agreement terminated and not replaced by any other credit facility with
Agent and the Banks, this Agreement shall terminate and Agent shall execute and
deliver to Pledgor all deeds, assignments, and other instruments as may be
necessary or proper to release Agent's security interest in and assignment of
the Collateral and to re-vest in Pledgor full title to the Collateral, subject
to any disposition thereof which may have been made by Agent pursuant hereto.
10. MAINTAINING COLLATERAL, ATTORNEYS' FEES, COSTS AND EXPENSES.
Pledgor shall have the obligation and duty to perform all acts necessary to
maintain or preserve the Collateral, provided that Pledgor shall not be
obligated to maintain any Collateral in the event Pledgor determines, in the
reasonable business judgment of Pledgor, that the maintenance of such Collateral
is no longer necessary in Pledgor's business. Any and all reasonable fees, costs
and expenses, of whatever kind or nature, including, without limitation, the
attorneys' fees and legal expenses incurred by Agent and the Banks in connection
with the amendment and enforcement of this Agreement, all renewals, required
affidavits and all other documents relating hereto and the consummation of this
transaction, the filing or recording of any documents (including all taxes in
connection therewith) in public offices, the payment or discharge of any taxes,
counsel fees, maintenance fees, encumbrances or otherwise protecting,
maintaining or preserving the Collateral, or in defending or prosecuting any
actions or proceedings arising out of or related to the Collateral, shall be
borne and paid by Pledgor, upon demand by Agent, and, until so paid, shall be
added to the principal amount of the Debt.
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11. PLEDGOR'S OBLIGATIONS TO PROSECUTE. Except as otherwise agreed to
by Agent in writing, Pledgor shall have the duty to prosecute diligently any
patent application or trademark application pending as of the date of this
Agreement or thereafter until the Debt shall have been paid in full, to file and
prosecute opposition and cancellation proceedings and to do any and all acts
which are necessary or desirable to preserve and maintain all rights in the
Collateral, including, but not limited to, payment of any maintenance fees. Any
expenses incurred in connection with the Collateral shall be borne by Pledgor.
Pledgor shall not abandon any Collateral without the prior written consent of
Agent, unless such abandonment will not have a material adverse effect on
Pledgor or such abandonment is in connection with the abandonment of a Product
or Product line.
12. AGENT'S RIGHTS TO ENFORCE. Pledgor shall have the right to bring
any opposition proceedings, cancellation proceedings or lawsuit in its own name
to enforce or protect the Collateral. Agent and the Banks shall have the right,
but shall have no obligation, to join in any such action. Pledgor shall
promptly, upon demand, reimburse and indemnify Agent and the Banks for all
damages, costs and expenses, including attorneys' fees incurred by Agent in
connection with the provisions of this Section 12, in the event Agent and the
Banks elect to join in any such action commenced by Pledgor.
13. POWER OF ATTORNEY. Pledgor hereby authorizes and empowers Agent, on
behalf of the Banks, to make, constitute and appoint any officer or agent of
Agent as Agent may select, in its exclusive discretion, as Pledgor's true and
lawful attorney-in-fact, with the power to endorse, after the occurrence of an
Event of Default, Pledgor's name on all applications, documents, papers and
instruments necessary for Agent to use the Collateral, or to grant or issue any
exclusive or nonexclusive license under the Collateral to any third party, or
necessary for Agent to assign, pledge, convey or otherwise transfer title in or
dispose of the Collateral, together with associated goodwill to a third party or
parties. Pledgor hereby ratifies all that such attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney shall be irrevocable
for the life of this Agreement.
14. AGENT'S RIGHT TO PERFORM OBLIGATIONS. If Pledgor fails to comply
with any of its obligations under this Agreement, Agent, on behalf of the Banks,
may, but is not obligated to, do so in Pledgor's name or in Agent's name, but at
Pledgor's expense, and Pledgor hereby agrees to reimburse Agent on demand in
full for all expenses, including reasonable attorneys' fees, incurred by Agent
in protecting, defending and maintaining the Collateral.
15. ADDITIONAL DOCUMENTS. Pledgor shall, upon written request of Agent,
enter into such additional documents or instruments as may be required by Agent
in order to effectuate, evidence or perfect Agent's interests in the Collateral
as evidenced by this Agreement.
16. NEW COLLATERAL. If, before the Debt shall have been satisfied in
full, Pledgor shall obtain rights to any new Collateral, the provisions of
Section 1 shall automatically apply thereto as if the same were identified on
Schedule A as of the date hereof and Pledgor shall give Agent prompt written
notice thereof.
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17. MODIFICATION FOR NEW COLLATERAL. Pledgor hereby authorizes Agent to
modify this Agreement by amending Schedule A to include any future Collateral as
contemplated by Sections 1 and 16 hereof and, at Agent's request, Pledgor shall
execute any documents or instruments required by Agent in order to modify this
Agreement as provided in this Section 17, provided that any such modification to
Schedule A shall be effective without the signature of Pledgor.
18. NO WAIVER. No course of dealing between Pledgor and Agent and the
Banks, nor any failure to exercise, nor any delay in exercising, on the part of
Agent or the Banks, any right, power or privilege hereunder, under any of the
Loan Documents, or any other document executed in connection with any of the
foregoing ("Documents") shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
19. MAXIMUM LIABILITY OF PLEDGOR.
19.1. PLEDGOR'S LIABILITY LIMITED IN AMOUNT. Subject to subsection 19.5
hereof, but otherwise notwithstanding anything to the contrary contained in this
Agreement, the maximum amount of the Debt secured by this Agreement shall not
exceed the sum of (a) that portion of the Loans and Letters of Credit the
proceeds of which are used by Borrower to make Valuable Transfers (as
hereinafter defined) to Pledgor, plus (b) ninety-five percent (95%) of the
Adjusted Net Worth (as hereinafter defined), but only to the extent that the
Adjusted Net Worth is a positive number, of Pledgor at the date of this
Agreement.
19.2. DEFINITION OF TERMS USED IN SECTION 19. For purposes of this
Section 19:
"Adjusted Net Worth" shall mean, as of any date of
determination thereof, the excess of (a) the amount of the fair saleable value
of the assets of Pledgor as of the date of such determination, determined in
accordance with applicable federal and state laws governing determinations of
insolvency of debtors, over (b) the amount of all liabilities of Pledgor,
contingent or otherwise, as of the date of such determination, determined on the
basis provided in the preceding clause (a), and in all events prior to giving
effect to Valuable Transfers.
"Valuable Transfer" shall mean (a) all loans, advances or
capital contributions made to Pledgor with proceeds of the Loans and Letters of
Credit; (b) the fair market value of all property acquired with proceeds of the
Loans and Letters of Credit and transferred to Pledgor; (c) the interest on and
the fees in respect of the Loans and the Letters of Credit, the proceeds of
which are used to make such a Valuable Transfer; and (d) the value of any
quantifiable economic benefits not included in clauses (a) through (c) above,
but includable in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, accruing to Pledgor as a result of
the Loans and Letters of Credit.
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19.3. DEBT MAY EXCEED PLEDGOR'S MAXIMUM LIABILITY. Pledgor agrees that
the Debt may at any time and from time to time exceed the maximum amount of the
Debt secured by this Agreement without impairing this Agreement or affecting the
rights and remedies of Agents or the Banks hereunder.
19.4. PLEDGOR'S LIABILITY NOT REDUCED BY PAYMENTS BY OTHERS. No payment
or payments made by Borrower, Pledgor or any other Person or received or
collected by Agents or the Banks from Borrower, Pledgor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Debt shall be deemed to modify, reduce, release or otherwise affect the
amount of the Debt secured by this Agreement and this Agreement shall,
notwithstanding any such payment or payments (other than payments made to Agents
or the Banks by Pledgor or payments received or collected by Agents or the Banks
from Pledgor), secure the Debt up to the maximum amount of the Debt secured by
this Agreement as set forth above until the Debt is indefeasibly paid in full in
cash.
19.5. ADJUSTMENTS TO MAXIMUM LIABILITY. Anything in this Section 19 to
the contrary notwithstanding, in no event shall the amount of the Debt secured
by this Agreement as set forth in subsections 19.1 through 19.4 hereof exceed
the maximum amount that, after giving effect to the incurring of the obligations
hereunder and to any rights to contribution of Pledgor from other affiliates of
Borrower, would not render Agent's or the Banks' rights to payment hereunder
void, voidable or avoidable under any applicable fraudulent transfer law; and
further provided that, if a greater amount of the Debt than the maximum
liability set forth in this Section 19 could be secured by Pledgor as a result
of an increase in Pledgor's Adjusted Net Worth subsequent to the date hereof,
without rendering Agent's or the Banks' rights to payment hereunder void,
voidable or avoidable under any applicable fraudulent transfer law, then the
amount of Pledgor's maximum liability calculated in subsection 19.1 hereof shall
be calculated based upon Pledgor's Adjusted Net Worth on such later date, rather
than the date of execution of this Agreement.
20. REMEDIES CUMULATIVE. All of the rights and remedies of Agent and
the Banks with respect to the Collateral, whether established hereby or by the
Documents, or by any other agreements or by law shall be cumulative and may be
executed singularly or concurrently.
21. SEVERABILITY. The provisions of this Agreement are severable, and,
if any clause or provision shall be held invalid and unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
22. MODIFICATIONS. This Agreement may be amended or modified only by a
writing signed by the parties hereto, except as provided in Section 17 above. In
the event that any provision herein is deemed to be inconsistent with any
provision of any other Loan Documents (except the Credit Agreement) relating to
the Collateral, the provisions of this Agreement shall control.
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23. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the respective successors and permitted assigns of the
parties, except that Pledgor may not assign any of its rights or duties
hereunder without the prior written consent of Agent. Any attempted assignment
or transfer without the prior written consent of Agent shall be null and void.
24. NOTICE. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Pledgor, mailed or
delivered to it, addressed to it at the address specified on the signature page
to this Agreement, if to Agent or a Bank, mailed or delivered to it, addressed
to the address of Agent or such Bank specified on the signature pages of the
Credit Agreement. All notices, statements, requests, demands and other
communications provided for hereunder shall be given by overnight delivery or
first class mail with postage prepaid by registered or certified mail, addressed
as aforesaid, or sent by facsimile with telephonic confirmation of receipt,
except that notices pursuant to any of the provisions hereof shall not be
effective until received.
25. GOVERNING LAW/JURISDICTION. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of Ohio, without regard to principles of conflicts of law.
Pledgor hereby consents to the personal jurisdiction of the state and federal
courts of the State of Ohio in connection with any controversy related to this
Agreement, waives any argument that venue in such forums is not convenient and
agrees that any litigation initiated by Pledgor against Agent or any Bank shall
be venued in the State or Federal District Courts of Ohio.
26. JURY TRIAL WAIVER. PLEDGOR, AGENT AND THE BANKS, TO THE EXTENT PERMITTED BY
LAW, EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, THE BANKS AND
PLEDGOR, OR ANY OF THEM, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR
DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the 15th day of May, 1998.
Address: 1100 Superior Avenue OGLEBAY NORTON COMPANY
Cleveland, Ohio 44114
Attention: Treasurer
By:_______________________
Title:____________________
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KEYBANK NATIONAL ASSOCIATION,
as Agent
By:____________________________________
Title:___________________________________
ACKNOWLEDGMENTS
THE STATE OF _________ )
) SS:
COUNTY OF _____________ )
BEFORE ME, the undersigned authority, on this day personally appeared
_________________, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and acknowledged to me that the same was
the act of the said OGLEBAY NORTON COMPANY, a Delaware corporation, and that he
executed the same as the act of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this _____ day of May, 1998.
-------------------------------
NOTARY PUBLIC
THE STATE OF _________ )
) SS:
COUNTY OF ___________ )
BEFORE ME, the undersigned authority, on this day personally appeared
____________ known to me to be the person and officer whose name is subscribed
to the foregoing instrument and acknowledged to me that the same was the act of
the said KEYBANK NATIONAL ASSOCIATION, a national banking association, and that
he executed the same as the act of such national banking association for the
purposes and consideration therein expressed, and in the capacity therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this _____ day of May, 1998.
-------------------------------
NOTARY PUBLIC
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SCHEDULE A
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EXHIBIT I
FORM OF
COLLATERAL ASSIGNMENT OF LICENSES AND PERMITS
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, _________________, a ___________ corporation,
together with its successors and assigns ("Assignor"), as additional security
for the obligations incurred and to be incurred pursuant to a Credit Agreement
(the "Credit Agreement", capitalized terms not defined herein shall have the
meaning given to them in the Credit Agreement) dated May 15, 1998, and entered
into by and among OGLEBAY NORTON COMPANY, a Delaware corporation ("Borrower"),
KeyBank National Association ("Agent") as Agent for the banking institutions
named in SCHEDULE 1 to the Credit Agreement (collectively, the "Banks" and
individually, a "Bank"), and the Banks in respect of the amounts advanced and to
be advanced to Borrower pursuant to the Credit Agreement, hereby collaterally
assigns and transfers to Agent, for the benefit of the Banks, all the licenses,
permits, and similar documents or instruments set forth on EXHIBIT A hereto
(collectively, the "Permits") held by or issued to Assignor in connection with
any and all activities in which Assignor is engaged and all benefits thereunder,
such assignment to be effective immediately after an Event of Default at the
election of Agent, without notice to Assignor, and subject to the following
terms and conditions of this Assignment ("Assignment"):
1. Assignor represents and warrants that set forth set forth in EXHIBIT
A is a true, complete and correct list of the Permits, that Assignor's interest
in the Permits is not subject to any claim, lien or encumbrance of any nature,
and that the Permits have not been amended or modified and are in full force and
effect and free from default.
2. No consent or authorization is necessary in connection with this
Assignment of any of the Permits, unless the same shall have been obtained by
Assignor, and the execution and delivery of this Assignment will not result in a
violation under the terms and conditions of any of the Permits.
3. Neither this Assignment nor any action or actions on the part of
Agent or the Banks shall constitute an assumption of any obligations on the part
of Assignor under the Permits, and Assignor shall continue to be liable for all
obligations thereunder, Assignor hereby agreeing to perform each and all of its
obligations under the Permits. Assignor agrees to protect, defend, indemnify and
hold Agent and the Banks free and harmless from and against any loss, cost,
liability or expense (including, but not limited to, reasonable attorneys fees)
resulting from any failure of Assignor so to perform. Assignor agrees not to
modify or amend in any material respect the Permits, or permit them to lapse,
terminate or expire without the prior written consent of Agent.
4. Agent shall have the right at any time (but shall have no
obligation) to take in Agent's name or in the name of Assignor or otherwise such
action as Agent may at any time or from
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time to time determine to be necessary or reasonable to cure any default by
Assignor under the Permits or to protect the rights of Assignor or Agent
thereunder. Agent or the Banks shall not incur any liability if any action taken
by Agent or on Agent's behalf in good faith, in order to cure any default by
Assignor under the Permits or to protect the rights of Assignor or Agent
thereunder, shall prove to be, in whole or in part, inadequate or invalid, and
Assignor agrees to protect, defend, indemnify and hold Agent and the Banks free
and harmless from and against any loss, cost, liability or expense (including,
but not limited to, reasonable attorneys fees) incurred in connection with any
such action or actions.
5. Assignor hereby irrevocably constitutes and appoints Agent,
Assignor's true and lawful attorneys in fact and authorizes Agent after an Event
of Default to act, in Assignor's name and otherwise to enforce all rights of
Assignor under the Permits.
Dated as of this _____ day of __________, 1998.
Signed and acknowledged _________________________________
in the presence of:
Sign: By:
---------------------------- -------------------------------
Print: Its:
---------------------------- -------------------------------
Sign:
---------------------------
Print:
--------------------------
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EXHIBIT A
LIST OF PERMITS
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EXHIBIT J
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is made
effective as of the ___ day of _________, 1998, between OGLEBAY NORTON HOLDING
COMPANY, an Ohio corporation, ("Holding Company") and OGLEBAY NORTON COMPANY, a
Delaware corporation ("Original Borrower"):
WHEREAS, Original Borrower, KEYBANK NATIONAL ASSOCIATION, as agent
("Agent"), and the banks a party to the Credit Agreement (as hereinafter
defined) (the "Banks"), are parties to the Credit Agreement dated as of May 15,
1998 (as the same may from time to time be amended, restated or otherwise
modified, the "Credit Agreement", each term not defined herein being therein
defined) wherein Agent and the Banks have agreed to make Loans and Agent has
agreed to issue Letters of Credit on behalf of the Banks, all upon certain terms
and conditions;
WHEREAS, pursuant to Section 5.14 of the Credit Agreement, effective on
_____________, 1998 (the "Effective Date"), the Original Borrower became a
Wholly-Owned Subsidiary of Holding Company;
WHEREAS, Agent and the Banks are willing to (a) allow Original Borrower
to assign all of its rights and obligations under the Credit Agreement, and the
Commitment thereunder, to Holding Company, and (b) continue to grant the Loans
and issue the Letters of Credit pursuant to the Credit Agreement upon certain
terms and conditions, one of which is that the Holding Company assume all
obligations of Original Borrower under the Credit Agreement and the other Loan
Documents to which Original Borrower is a party, and this Agreement is being
executed and delivered in consideration of each financial accommodation, if any,
granted to Holding Company by the Banks and for other valuable considerations;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Holding Company hereby agrees as follows:
1. ASSUMPTION. On and after the Assignment Effective Date, as
hereinafter defined, Holding Company irrevocably and unconditionally (a) assumes
all of the obligations of Original Borrower under the Credit Agreement and the
Notes, as fully as if Holding Company had been an original party to such Loan
Documents in place of the Original Borrower thereunder, and (b) becomes bound by
all representations, warranties, covenants, provisions and conditions of such
Loan Documents applicable to the Original Borrower thereunder as if Holding
Company had been the original party making such representations, warranties and
covenants.
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2. ASSIGNMENT. On and after the Assignment Effective Date, Original
Borrower hereby transfers and assigns to Holding Company all of its rights and
obligations under the Credit Agreement and the Notes.
3. ASSIGNMENT EFFECTIVE DATE. The Assignment Effective Date (the
"Assignment Effective Date") shall be _______________________.
4. HOLDING COMPANY REPRESENTATIONS AND WARRANTIES. Holding Company
represents and warrants to Agent and each of the Banks that:
(a) Holding Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio, and
is duly qualified to do business in each state in which Holding Company
is doing business;
(b) Holding Company has full power, authority and legal right
to execute and deliver this Agreement, and to perform and observe the
provisions hereof and of the Credit Agreement and the Notes, and the
officers acting on Holding Company's behalf have been duly authorized
to execute and deliver this Agreement;
(c) this Agreement and the Credit Agreement and the Notes are
each valid and binding upon Holding Company and enforceable against
Holding Company in accordance with their respective terms; and
(d) neither the execution and delivery of this Agreement, nor
the performance and observance of the provisions hereof, by Holding
Company will conflict with, or constitute a violation or default under,
any provision of any applicable law or of any contract (including,
without limitation, Holding Company's Articles of Incorporation and
Code of Regulations) or of any other writing binding upon Holding
Company in any manner.
5. HOLDING COMPANY AND ORIGINAL BORROWER REPRESENTATIONS AND
WARRANTIES. Original Borrower and Holding Company represent and warrant to Agent
and each of the Banks that:
(a) no Unmatured Event of Default or Event of Default exists
under the Credit Agreement, nor will any occur immediately after the
execution and delivery of this Agreement or by the performance or
observance of any provision hereof; and
(b) neither Original Borrower nor Holding Company has any
claim or offset against, or defense or counterclaim to, any Company's
obligations or liabilities under the Credit Agreement or any Related
Writing.
6. ORIGINAL BORROWER TO REMAIN PLEDGOR. Anything herein to the contrary
notwithstanding, Original Borrower shall remain bound by the terms and
conditions of all of the
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Security Documents to which Original Borrower is a party regardless of the
assignment made hereunder. On and after the Assignment Effective Date, Original
Borrower shall remain a Pledgor under the Credit Agreement.
7. WAIVER OF CLAIMS. Each of Original Borrower and Holding Company
hereby waives and releases Agent and each of the Banks and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all such claims, offsets, defenses and counterclaims of which Original
Borrower and Holding Company is aware, such waiver and release being with full
knowledge and understanding of the circumstances and effect thereof and after
having consulted legal counsel with respect thereto.
8. DELIVERY OF DOCUMENTS. Concurrently with the execution of this
Agreement, Original Borrower or Holding Company, as appropriate, shall:
(a) if required by Agent, execute and deliver to Agent new Notes dated
as of May 15, 1998, made payable to each Bank;
(b) pay all legal fees and expenses of Agent incurred in connection
with this Agreement and the Holding Company Reorganization, as defined in the
Credit Agreement.
(c) deliver to Agent and the Banks a Guaranty of Payment of Debt and
such corporate governance and authorization documents and an opinion of counsel
as may be deemed necessary or advisable by Agent and the Banks;
(d) cause each Pledgor to consent and agree to and acknowledge the
terms of this Agreement;
(e) provide such other items as may be reasonably required by Agent or
the Banks in connection with this Agreement.
9. BINDING NATURE OF AGREEMENT. All provisions of the Credit Agreement
shall remain in full force and effect and be unaffected hereby. This Agreement
is a Related Writing as defined in the Credit Agreement. This Agreement shall
bind and benefit Original Borrower and Holding Company and their respective
successors and assigns, provided that the interest assigned hereunder shall not
be further assigned without the prior written consent of Agent and the Banks.
10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement. This Agreement shall not be effective until Agent
has executed the consent set forth below.
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11. OHIO LAW TO GOVERN. The rights and obligations of all parties
hereto shall be governed by the laws of the State of Ohio, without regard to
principles of conflicts of laws.
OGLEBAY NORTON HOLDING
COMPANY
By:__________________________
Title:________________________
and_________________________
Title:________________________
OGLEBAY NORTON COMPANY
By:__________________________
Title:________________________
and_________________________
Title:________________________
The undersigned consent and agree to and acknowledge the terms of this
Agreement:
[ADD SIGNATURE OF AGENT]
[ADD SIGNATURE OF BANKS ]
[ADD SIGNATURE OF PLEDGORS]
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EXHIBIT K
FORM OF
PLEDGE AGREEMENT
RECITALS:
Concurrently herewith, OGLEBAY NORTON COMPANY, a Delaware corporation
(together with its successors and assigns, "Oglebay") is entering into the
Credit Agreement, as hereinafter defined, with the financial institutions listed
on SCHEDULE 1 to the Credit Agreement (collectively, "Banks", and individually,
"Bank") and KEYBANK NATIONAL ASSOCIATION, as agent for the Banks ("Agent"),
pursuant to which Olgebay and certain subsidiaries may obtain loans, letters of
credit and other financial accommodations from the Banks. It is anticipated that
Oglebay and its subsidiaries will or may be restructured such that Oglebay will
become a subsidiary of OGLEBAY NORTON HOLDING COMPANY (together with its
successors and assigns, "Oglebay Holding"). It is further anticipated that
Oglebay Holding will or may assume all of the benefits and obligations of
Oglebay under the Credit Agreement pursuant to such restructuring of Oglebay and
its subsidiaries. [________________ , an __________] corporation, ("Pledgor")
desires that the Banks grant the financial accommodations described in the
Credit Agreement to Oglebay and its subsidiaries, and, after any such
restructuring, to Oglebay Holding (collectively, "Borrower").
Pledgor deems it to be in the direct pecuniary and business interests
of Pledgor that Borrower obtain from the Banks the Commitment, as defined in the
Credit Agreement, and the Loans and Letters of Credit, as hereinafter defined,
provided for in the Credit Agreement.
Pledgor understands that the Banks are willing to grant such financial
accommodations to Borrower only upon certain terms and conditions, one of which
is that Pledgor grant to Agent, for the benefit of the Banks, a security
interest in and an assignment of the Collateral, as hereinafter defined, and
this Agreement (as the same may from time to time be amended, restated or
otherwise modified, this "Agreement") is being executed and delivered in
consideration of each financial accommodation, if any, granted to Borrower by
the Banks and for other valuable considerations.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor hereby agrees as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
"Collateral" shall mean, collectively, the Pledged Securities and each
addition, if any, thereto and each substitution, if any, therefor, in whole or
in part, the certificates representing the Pledged
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Securities, and the dividends, cash, instruments and other property distributed
in respect of and other proceeds of any of the foregoing.
"Credit Agreement" shall mean the Credit Agreement executed by and
among Borrower, Agent and the Banks and dated as of the 15th day of May, 1998,
as it may be from time to time amended, restated or otherwise modified.
"Debt" shall mean, collectively, (a) all Loans and Letters of Credit;
(b) all other indebtedness now owing or hereafter incurred by Borrower to Agent
or any Bank pursuant to the Credit Agreement and the Notes executed in
connection therewith; (c) each renewal, extension, consolidation or refinancing
of any of the foregoing, in whole or in part; (d) all interest from time to time
accruing on any of the foregoing, and all commitment and other fees pursuant to
the Credit Agreement; (e) all obligations and liabilities of Borrower now
existing or hereafter incurred to Agent or the Banks under, arising out of, or
in connection with any Hedge Agreement; (f) all other amounts payable by
Borrower to Agent or any Bank pursuant to the Credit Agreement or any Related
Writing; and (g) all Related Expenses.
"Event of Default" shall mean an event or condition that constitutes an
event of default pursuant to Section 7 hereof.
"Letter of Credit" shall mean any Letter of Credit, as defined in the
Credit Agreement, issued pursuant to the Credit Agreement.
"Loan" shall mean any Loan, as defined in the Credit Agreement, granted
pursuant to the Credit Agreement.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency or
political subdivision thereof or any other entity.
"Pledged Securities" shall mean all of the shares of stock of each
Subsidiary of Pledgor owned by Pledgor, listed, and represented by the stock
certificate numbers set forth on, EXHIBIT A hereto, and all additional shares of
stock of each Subsidiary of Pledgor owned by Pledgor from time to time or
acquired by Pledgor in any manner.
Capitalized terms used in this Agreement without definition have the meanings
ascribed to such terms in the Credit Agreement.
2. SECURITY INTEREST. Pledgor hereby grants to Agent, for the benefit
of the Banks, a security interest in the Collateral as security for the Debt.
For the better protection of Agent and the Banks hereunder, Pledgor has executed
appropriate transfer powers, in the form of EXHIBIT B hereto, with respect to
the Pledged Securities and, concurrently herewith, is depositing the Pledged
Securities and the aforesaid transfer powers with Agent for the benefit of the
Banks. Pledgor authorizes Agent, at any time after the occurrence of an Event of
Default, to transfer the Pledged
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Securities into the name of Agent or Agent's nominee, but Agent shall be under
no duty to do so. Notwithstanding any provision or inference herein or elsewhere
to the contrary, Agent shall have no right to vote the Pledged Securities at any
time unless and until there shall have occurred an Event of Default.
3. PLEDGOR'S REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants to Agent and the Banks as follows:
3.1. Pledgor is the legal record and beneficial owner of, and has good
and marketable title to, the Pledged Securities, and the Pledged Securities are
not subject to any pledge, lien, mortgage, hypothecation, security interest,
charge, option, warrant, or other encumbrance whatsoever, nor to any agreement
purporting to grant to any third party a security interest in the property or
assets of Pledgor that would include such Pledged Securities, except the
security interest created by this Agreement or otherwise securing only Agent and
the Banks.
3.2. All of the Pledged Securities have been duly authorized and
validly issued, and are fully paid and non-assessable.
3.3. Pledgor has full power, authority and legal right to pledge all of
the Pledged Securities pursuant to the terms of this Agreement.
3.4. No consent, license, permit, approval or authorization, filing or
declaration with any governmental authority, domestic or foreign, and no consent
of any other party, is required to be obtained by Pledgor in connection with the
pledge of the Pledged Securities hereunder, which has not been obtained or made,
and is not in full force and effect.
3.5. The pledge, assignment and delivery of the Pledged Securities
hereunder creates a valid first lien on, and a first perfected security interest
in, the Pledged Securities and the proceeds thereof.
3.6. The Pledged Securities constitute one hundred percent (100%) of
the outstanding capital stock of each Subsidiary of Pledgor.
3.7. Pledgor fully anticipates that the Debt will be repaid without the
necessity of selling the Pledged Securities.
3.8. Pledgor has received consideration which is the reasonable
equivalent value of the obligations and liabilities that Pledgor has incurred to
Agent and the Banks. Pledgor is not insolvent as defined in any applicable state
or federal statute, nor will Pledgor be rendered insolvent by the execution and
delivery of this Agreement to Agent for the benefit of the Banks. Pledgor is not
engaged or about to engage in any business or transaction for which the assets
retained by Pledgor are or will be an unreasonably small amount of capital,
taking into consideration the obligations to
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Agent and the Banks incurred hereunder. Pledgor does not intend to incur debts
beyond Pledgor's ability to pay them as they mature.
3.9. If the Pledged Securities are "restricted" within the meaning of
Rule 144, or any amendment thereof, promulgated under the Securities Act of
1933, as amended (the "Securities Act"), as determined by counsel for Agent,
Pledgor further represents and warrants that (a) Pledgor has been the beneficial
owner of the Pledged Securities for a period of at least three (3) years prior
to the date hereof, (b) the full purchase price or other consideration for the
Pledged Securities has been paid or given at least three (3) years prior to the
date hereof, and (c) Pledgor does not have a short position in or any put or
other option to dispose of any securities of the same class as the Pledged
Securities or any other securities convertible into securities of such class.
4. EVENT OF DEFAULT. If an Event of Default shall occur hereunder,
Agent, on behalf of the Banks, may, in Agent's discretion and upon such terms
and in such manner as Agent shall deem advisable, sell, assign, transfer and
deliver the Collateral, or any part thereof, and, in each case, Agent shall
apply the net proceeds of the sale thereof to the Debt, whether or not due, by
such allocation as to item and maturity as Agent, in Agent's discretion, may
deem advisable. No prior notice need be given to Pledgor or any other Person in
the case of any sale of Collateral which Pledgor in good faith determines to be
declining speedily in value or which is customarily sold at any securities
exchange or in the over-the-counter market or in any other recognized market;
but, in any other case, Agent shall give Pledgor not fewer than five (5)
Business Days' prior notice of either the date after which any intended private
sale may be made or the time and place of any intended public sale. Pledgor
waives advertisement of sale and, except to the extent required by the preceding
sentence, waives notice of any kind in respect of any sale. At any public sale,
Agent or any of the Banks may purchase the Collateral, or any part thereof, free
from any right of redemption, which rights are hereby waived and released.
5. TERM OF AGREEMENT. Irrespective of any action, omission or course of
dealing whatever by Agent or the Banks, this Agreement shall remain in full
force and effect until the Debt shall have been paid in full. Without limiting
the generality of the foregoing, Pledgor (a) agrees that neither Agent nor any
Bank shall have any duty to make any presentment or collection, or to preserve
any right of any kind, with reference to the Collateral, and (b) agrees that
Agent and the Banks shall at all times have the right to grant any indulgence to
Borrower and to deal in any other manner with Borrower, including the granting
of any extension, renewal or increase of the Debt or any part thereof, the
increase or decrease of any rate of interest, the forbearance from exercising
any right, power, or privilege, including any right to demand security, the
release of, or forbearance from proceeding against, any security or any obligor,
the effecting of any other release, compromise or settlement, the substitution
of security (even if of a different character or value), and (c) waives notice
of the creation of any Debt, of any default under any Note or other instrument
evidencing the Debt or any part thereof, of any act, omission, or course of
dealing by Agent and the Banks, and any other notice to which Pledgor might be
entitled to but for the within waiver.
6. ADDITIONAL COVENANTS OF PLEDGOR.
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6.1. Pledgor covenants and agrees to defend the right, title and
security interest of Agent and the Banks in and to the Pledged Securities and
the proceeds thereof, and to maintain and preserve the lien and security
interest provided for by this Agreement against the claim and demands of all
Persons, so long as this Agreement shall remain in effect.
6.2. Pledgor covenants and agrees not to sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, or
create, incur or permit to exist any pledge, lien, mortgage, hypothecation,
security interest, charge, option or any other encumbrance with respect to any
of the Pledged Securities, or any interest therein, or any proceeds thereof,
except for the lien and security interest provided for by this Agreement and any
security agreement securing only Agent and the Banks.
6.3. Pledgor covenants and agrees (a) to cooperate, in good faith, with
Agent and the Banks and to do or cause to be done all such other acts as may be
necessary to enforce the rights of Agent and the Banks under this Agreement, (b)
not to take any action, or to fail to take any action that would be adverse to
the interest of Agent and the Banks in the Collateral and hereunder, and (c) to
make any sale or sales of any portion or all of the Pledged Securities valid and
binding and in compliance with any and all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales at Pledgor's expense.
7. EVENTS OF DEFAULT. An Event of Default shall exist hereunder if (a)
the Debt, or any portion thereof, shall not be paid in full when due and
payable, whether due by lapse of time or acceleration of maturity or otherwise,
(b) an Event of Default, as defined in the Credit Agreement, shall exist under
the Credit Agreement, (c) Pledgor shall fail to fully perform or omit to perform
in any material respect any agreement or other provision contained or referred
to in this Agreement, or (d) any representation, warranty or statement made in
or pursuant to this Agreement, shall be false or erroneous in any material
respect.
8. ATTORNEY-IN-FACT. Pledgor hereby authorizes and empowers Agent, on
behalf of the Banks, to make, constitute and appoint any officer or agent of
Agent as Agent may select, in its exclusive discretion, as Pledgor's true and
lawful attorney-in-fact, with the power to endorse Pledgor's name on all
applications, documents, papers and instruments necessary for Agent to take
actions with respect to the Collateral after the occurrence of an Event of
Default, including, without limitation, actions necessary for Agent to assign,
pledge, convey or otherwise transfer title in or dispose of the Collateral to
any Person. Pledgor ratifies all that such attorney shall lawfully do or cause
to be done by virtue hereof. This power of attorney shall be irrevocable for the
life of this Agreement.
9. MAXIMUM LIABILITY OF PLEDGOR.
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9.1. PLEDGOR'S LIABILITY LIMITED IN AMOUNT. Subject to subsection 9.5
hereof, but otherwise notwithstanding anything to the contrary contained in this
Agreement, the maximum amount of the Debt secured by this Agreement shall not
exceed the sum of (a) that portion of the Loans and Letters of Credit the
proceeds of which are used by Borrower to make Valuable Transfers (as
hereinafter defined) to Pledgor, plus (b) ninety-five percent (95%) of the
Adjusted Net Worth (as hereinafter defined), but only to the extent that the
Adjusted Net Worth is a positive number, of Pledgor at the date of this
Agreement.
9.2. DEFINITION OF TERMS USED IN SECTION 9. For purposes of this
Section 9:
"Adjusted Net Worth" shall mean, as of any date of
determination thereof, the excess of (a) the amount of the fair saleable value
of the assets of Pledgor as of the date of such determination, determined in
accordance with applicable federal and state laws governing determinations of
insolvency of debtors, over (b) the amount of all liabilities of Pledgor,
contingent or otherwise, as of the date of such determination, determined on the
basis provided in the preceding clause (a), and in all events prior to giving
effect to Valuable Transfers.
"Valuable Transfer" shall mean (a) all loans, advances or
capital contributions made to Pledgor with proceeds of the Loans and Letters of
Credit; (b) the fair market value of all property acquired with proceeds of the
Loans and Letters of Credit and transferred to Pledgor; (c) the interest on and
the fees in respect of the Loans and the Letters of Credit, the proceeds of
which are used to make such a Valuable Transfer; and (d) the value of any
quantifiable economic benefits not included in clauses (a) through (c) above,
but includable in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, accruing to Pledgor as a result of
the Loans and Letters of Credit.
9.3. DEBT MAY EXCEED PLEDGOR'S MAXIMUM LIABILITY. Pledgor agrees that
the Debt may at any time and from time to time exceed the maximum amount of the
Debt secured by this Agreement without impairing this Agreement or affecting the
rights and remedies of Agents or the Banks hereunder.
9.4. PLEDGOR'S LIABILITY NOT REDUCED BY PAYMENTS BY OTHERS. No payment
or payments made by Borrower, Pledgor or any other Person or received or
collected by Agents or the Banks from Borrower, Pledgor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Debt shall be deemed to modify, reduce, release or otherwise affect the
amount of the Debt secured by this Agreement and this Agreement shall,
notwithstanding any such payment or payments (other than payments made to Agents
or the Banks by Pledgor or payments received or collected by Agents or the Banks
from Pledgor), secure the Debt up to the maximum amount of the Debt secured by
this Agreement as set forth above until the Debt is indefeasibly paid in full in
cash.
9.5. ADJUSTMENTS TO MAXIMUM LIABILITY. Anything in this Section 9 to
the contrary notwithstanding, in no event shall the amount of the Debt secured
by this Agreement as set forth in
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subsections 9.1 through 9.4 hereof exceed the maximum amount that, after giving
effect to the incurring of the obligations hereunder and to any rights to
contribution of Pledgor from other affiliates of Borrower, would not render
Agent's or the Banks' rights to payment hereunder void, voidable or avoidable
under any applicable fraudulent transfer law; and further provided that, if a
greater amount of the Debt than the maximum liability set forth in this Section
9 could be secured by Pledgor as a result of an increase in Pledgor's Adjusted
Net Worth subsequent to the date hereof, without rendering Agent's or the Banks'
rights to payment hereunder void, voidable or avoidable under any applicable
fraudulent transfer law, then the amount of Pledgor's maximum liability
calculated in subsection 9.1 hereof shall be calculated based upon Pledgor's
Adjusted Net Worth on such later date, rather than the date of execution of this
Agreement.
10. COSTS AND EXPENSES. If Pledgor fails to comply with any of its
obligations hereunder, Agent may do so in Pledgor's name or in Agent's name, but
at Pledgor's expense, and Pledgor hereby agrees to reimburse Agent and the Banks
in full for all expenses, including reasonable attorneys' fees, incurred by
Agent and the Banks in protecting, defending and maintaining the Collateral.
Without limiting the foregoing, any and all reasonable fees, costs and expenses,
of whatever kind or nature, including the reasonable attorneys' fees and
expenses incurred in connection with the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, maintenance fees, encumbrances or otherwise protecting,
maintaining or preserving the Collateral, or in defending or prosecuting any
actions or proceedings arising out of or related to the Collateral, shall be
borne and paid by Pledgor on demand by Agent.
11. NOTICE. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Pledgor, mailed or
delivered to it, addressed to it at the address specified on the signature page
of this Agreement, if to Agent or a Bank, mailed or delivered to it, addressed
to the address of Agent or such Bank specified on the signature pages of the
Credit Agreement. All notices, statements, requests, demands and other
communications provided for hereunder shall be given by overnight delivery or
first class mail with postage prepaid by registered or certified mail, addressed
as aforesaid, or sent by facsimile with telephonic confirmation of receipt,
except that notices pursuant to any of the provisions hereof shall not be
effective until received.
12. NO SUBROGATION. Pledgor shall have no rights against Borrower with
respect to this Agreement or the Pledged Securities and shall have no right of
subrogation and hereby waives any right to enforce any remedy which Agent or the
Banks now has or may hereafter have against Borrower, any endorser or any other
guarantor of all or any part of the Debt, and Pledgor hereby waives all setoffs
and counterclaims and all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this Agreement. Pledgor further waives all notices of the
existence, creation or incurring of new or additional indebtedness, arising
either from additional loans extended to Borrower or otherwise, and also waives
all notices that the principal amount, or any portion thereof, and/or any
interest on any instrument or document evidencing all or any part of the Debt is
due, notices of any and all proceedings to collect from the maker, any endorser
or any other guarantor of all or any part of the
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Debt, or from any other Person, and, to the extent permitted by law, notices of
exchange, sale, surrender or other handling of any security or collateral given
to Bank to secure payment of the Debt.
13. INTERPRETATION. Each right, power or privilege specified or
referred to in this Agreement is in addition to any other rights, powers and
privileges that Agent or the Banks may have or acquire by operation of law, by
other contract or otherwise. No course of dealing in respect of, nor any
omission or delay in the exercise of, any right, power or privilege by Agent and
the Banks shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any further or other exercise thereof or of any other,
as each right, power or privilege may be exercised by Agent and the Banks either
independently or concurrently with other rights, powers and privileges and as
often and in such order as Agent and the Banks may deem expedient. No waiver or
consent granted by Agent and the Banks in respect of this Agreement shall be
binding upon Agent or the Banks unless specifically granted in writing, which
writing shall be strictly construed.
14. ASSIGNMENT AND SUCCESSORS. This Agreement shall not be assigned by
Pledgor without the prior written consent of Agent. This Agreement shall bind
the successors and permitted assigns of Pledgor and shall benefit the respective
successors and assigns of Agent and the Banks.
15. GOVERNING LAW. The provisions of this Agreement, and the respective
rights and duties of Pledgor, Agent and the Banks hereunder, shall be governed
by the laws of the State of Ohio, without regard to principles of conflict of
laws.
16. SEVERABILITY. If, at any time, one or more provisions of this
Agreement is or becomes invalid, illegal or unenforceable in whole or in part,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
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17. WAIVER. PLEDGOR WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
PLEDGOR, AGENT AND THE BANKS, OR ANY OF THEM, ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
RELATED THERETO.
Executed and delivered at Cleveland, Ohio, as of the 15th day of May,
1998.
Address: 1100 Superior Avenue __________________________
Cleveland, Ohio 44114
Attention: Treasurer By:______________________
Title:___________________
and______________________
Title:___________________
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<PAGE> 140
EXHIBIT A
PLEDGED SECURITIES
Name of Corporation Number of Shares Certificate Number
- ------------------- ---------------- ------------------
135
<PAGE> 141
EXHIBIT B
FORM OF STOCK TRANSFER POWER
FOR VALUE RECEIVED, __________________________________ hereby sells,
assigns and transfers unto ___________________ (_______ ) Shares of the
_________________________ Capital Stock of
___________________________________________ standing in ___________ name on the
books of said corporation and represented by Certificate No. _________ herewith
and does hereby irrevocably constitute and appoint ___________________ attorney
to transfer the said stock on the books of the within named corporation with
full power of substitution in the premises.
----------------------------
Dated By:_________________________
Title:______________________
and_________________________
Title:______________________
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<PAGE> 142
THE PRE-ACQUISITION AGREEMENT entered into this 15th day of April, 1998.
B E T W E E N:
OGLEBAY NORTON COMPANY, a corporation existing under the laws
of the State of Delaware,
(hereinafter called the "Acquiror")
- and -
GLOBAL STONE CORPORATION, a corporation existing under the
laws of Canada,
(hereinafter called the "Company")
RECITALS
WHEREAS:
1. There is an outstanding take-over bid to the shareholders of the Company
offering to purchase all of the outstanding common shares of the Company at
price of $6.45 per common share;
2. The board of directors of the Company wishes to encourage the Acquiror to
make a take-over bid to the shareholders of the Company offering to purchase all
of the outstanding common shares of the Company at a price of $7.80 per common
share in cash (the "Offer Price");
3. The board of directors of the Company has determined that it would be in the
best interests of the Company and its shareholders to recommend acceptance of
the Acquiror's offer to the shareholders of the Company, to cooperate with the
Acquiror and take all reasonable action to support the Acquiror's offer and to
waive the application of the Company's Shareholder Rights Plan to the Acquiror's
offer;
4. The board of directors of the Company has determined that it would be in the
best interests of the Company and its shareholders to enter into this Agreement;
and
5. The Acquiror will make an offer subject to the terms and conditions of this
Agreement.
<PAGE> 143
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NOW THEREFORE IN CONSIDERATION of the mutual covenants hereinafter set
out, the parties hereto hereby agree as follows:
ARTICLE I
THE OFFER
1.1 THE OFFER. Subject to the terms and conditions of this Agreement, the
Acquiror agrees to mail as soon as practicable but in any event no later than
April 27, 1998 to the holders of common shares of the Company, an offer to
purchase all of the common shares (including the associated rights issued
pursuant to the Company's Shareholder Rights Plan, hereinafter called the
"Rights" and together with the common shares called the "Shares" and the holders
of Shares are hereinafter called "Shareholders") at the Offer Price, subject to
the terms and conditions set out in Schedule "A" to this Agreement as the same
may be amended pursuant to the terms hereof (the "Offer"). The Acquiror further
agrees that it will not amend the terms of the Offer other than to increase the
consideration payable thereunder, to extend the expiry thereof or to waive any
conditions thereof, except with the prior consent of the Company.
1.2 COMPANY APPROVAL OF THE OFFER. The Company represents that its board of
directors, upon consultation with its advisors, has determined unanimously that:
(a) the Offer is fair to the Shareholders and is in the best
interests of the Company and the Shareholders;
(b) the board of directors will recommend that Shareholders accept
the Offer; and
(c) this Agreement is in the best interests of the Company and the
Shareholders.
1.3 COMPANY COOPERATION. The Company covenants to cooperate with the Acquiror,
to take all reasonable action to support the Offer and to provide the Acquiror
with a draft copy of any Directors' Circular to be issued, from time to time,
prior to the mailing thereof, on a confidential basis, and to provide the
Acquiror with a reasonable opportunity to review and provide comments thereon.
The Company further covenants to use reasonable commercial efforts to mail the
Directors' Circular to be issued in connection with the mailing of the Offer on
the same date that the Acquiror mails the Offer to the Shareholders. The
Acquiror covenants to cooperate with the Company and to provide the Company with
a draft copy of the Offer and any take-over bid circular to be issued in respect
of the Offer, prior to the mailing thereof, on a confidential basis, and to
provide the Company with a reasonable opportunity to review and provide comments
thereon.
1.4 JOINT PRESS RELEASE AND PUBLIC DISCLOSURE. The parties agree to jointly
issue a press release as soon as practicable in a mutually agreeable form.
1.5 POST OFFER COVENANTS. If the Acquiror takes up and pays for Shares pursuant
to the Offer, the Acquiror and the Company agree to use all reasonable efforts
to enable the Acquiror to acquire the balance of the
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Shares as soon as practicable after completion of the Offer by way of compulsory
acquisition, arrangement, amalgamation or other type of acquisition transaction
carried out for a consideration per Share of not less than the Offer Price. The
Company agrees and represents that its board of directors has determined
unanimously to use its and their respective reasonable efforts to enable the
Acquiror to elect or appoint all of the directors of the Company as soon as
possible after the Acquiror takes up and pays for in excess of 50% of the Shares
pursuant to the Offer.
1.6 SHAREHOLDER RIGHTS PLAN.
(a) The Company represents that its board of directors has
resolved to waive the application of the Shareholder Rights
Plan to: (i) the Offer, (ii) any other actions taken by the
Acquiror in furtherance of acquiring all of the Shares, and
(iii) any other "Triggering Event" as required under the
Shareholder Rights Plan; and the Company covenants to take all
action necessary pursuant to the Shareholder Rights Plan to
effect such waiver, such waiver to become effective on the
date (the "Waiver Date") that is the earlier of June 14, 1998
or the expiry date of the Offer, as set forth on Schedule "A"
hereto, as it may be extended from time to time pursuant to
the terms of the Offer.
(b) The Company covenants and agrees and represents that, except
as provided in Section 1.6(a) above, its board of directors
has resolved not to waive the application of the Shareholder
Rights Plan or to redeem any of the outstanding Rights or take
any other action which would limit the application of the
Shareholder Rights Plan to any transaction other than an
Acquisition Proposal (as defined in section ).
1.7 OUTSTANDING STOCK OPTIONS. The Company agrees and represents that its board
of directors has unanimously resolved to use its and their respective reasonable
efforts to encourage all persons holding options to purchase Shares pursuant to
the Company's employee stock option plan and other compensation arrangements or
otherwise, to exercise their options prior to the expiry of the Offer and to
tender all Shares issued in connection therewith to the Offer. The Company
further agrees and represents that the board of directors of the Company has
also resolved and has authorized and directed the Company to, cause the vesting
of option entitlements under its employee stock option plans and other
compensation arrangements to accelerate prior to the expiry of the Offer, such
that all outstanding Options to acquire Shares become exercisable prior to and
expire concurrently with the expiry of the Offer, and to arrange for all Shares
that are fully paid thereunder to be distributed to those persons entitled
thereto so as to be able to be tendered into the Offer and to thereafter satisfy
all other obligations of the Company under such plans or, upon the acquisition
by the Acquiror of Shares pursuant to the Offer, to cause all entitlements under
such arrangements to terminate upon the payment of an amount in respect of each
outstanding option equal to the difference between the exercise price thereof
and the Offer price.
<PAGE> 145
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ARTICLE II
COVENANTS OF THE COMPANY
2.1 ORDINARY COURSE OF BUSINESS. The Company covenants and agrees that, prior to
the time (the "Effective Time") of the appointment or election to the board of
directors of the Company of persons designated by the Acquiror pursuant to
Section , unless the Acquiror shall otherwise agree in writing or as otherwise
expressly contemplated or permitted by this Agreement:
(a) the Company shall, and shall cause each of its direct and
indirect subsidiaries (collectively its "Subsidiaries") to,
conduct its and their respective business only in and not take
any action except in, the usual, ordinary and regular course
of business and consistent with past practice;
(b) the Company shall not directly or indirectly do or permit to
occur any of the following, whether directly or indirectly:
(i) issue, sell, pledge, lease, dispose of, grant any
interest in, encumber or agree to issue, sell,
pledge, lease, dispose of, grant any interest in or
encumber (or permit any of its Subsidiaries to issue,
sell, pledge, lease, dispose of, grant any interest
in, encumber or agree to issue, sell, pledge, lease,
dispose of, grant any interest in or encumber):
(A) any additional shares of, or any options,
warrants, calls, conversion privileges or
rights of any kind to acquire any shares of,
any capital stock of the Company or any of
its Subsidiaries (other than pursuant to the
exercise of employee stock options currently
outstanding), or
(B) any assets of the Company or any of its
Subsidiaries (except for sales of inventory
in the ordinary course of business and sales
and other dispositions of equipment and
other personal property not required in
running the current business operations of
the Company and having an aggregate
acquisition cost not in excess of $500,000);
(ii) amend or propose to amend its articles or by-laws or
those of any of its Subsidiaries;
(iii) split, combine or reclassify any outstanding Shares,
or declare, set aside or pay any dividend (other than
as disclosed in writing to the Acquiror prior to the
date hereof) or other distribution payable in cash,
stock, property or otherwise with respect to the
Shares;
(iv) redeem, purchase or offer to purchase (or permit any
of its Subsidiaries to redeem, purchase or offer to
purchase) any Shares or other securities of the
Company or any of its Subsidiaries;
<PAGE> 146
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(v) reorganize, amalgamate or merge the Company or any of
its Subsidiaries with any other person, corporation,
partnership or other business organization
whatsoever;
(vi) except for the potential acquisition disclosed to the
Acquiror under the code name "Watergate", acquire or
agree to acquire (by merger, amalgamation,
acquisition of stock or assets or otherwise) any
person, corporation, partnership or other business
organization or division or acquire or agree to
acquire any material assets; or
(vii) incur or commit to incur any indebtedness for
borrowed money or issue any debt securities except
for the borrowing of working capital in the ordinary
course of business and consistent with past practice
and except borrowings or guarantees necessary to
facilitate the financing of the exercise of options
pursuant to Section 1.7
(c) the Company shall not, and shall cause each of its
Subsidiaries to not (otherwise than as may be contemplated in
Section of this Agreement):
(i) enter into or modify any employment, severance,
collective bargaining or similar agreements, policies
or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any
officers or directors of the Company other than
pursuant to agreements in effect (without amendment)
on the date hereof; or
(ii) in the case of employees who are not officers or
directors, take any action other than in the
ordinary, regular and usual course of business and
consistent with past practice (none of which actions
shall be unreasonable or unusual) with respect to the
entering into or modifying of any employment,
severance, collective bargaining or similar
agreements, policies or arrangements or with respect
to the grant of any bonuses, salary increases, stock
options, pension benefits, retirement allowances,
deferred compensation, severance or termination pay
or any other form of compensation or profit sharing
or with respect to any increase of benefits payable
otherwise than pursuant to agreements, policies or
arrangements in effect (without amendment) on the
date hereof;
(d) the Company shall use its reasonable efforts to cause its
current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance and re-insurance companies of nationally recognized
standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies
for substantially similar premiums are in full force and
effect;
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(e) the Company shall:
(i) use its reasonable efforts, and cause each of its
Subsidiaries to use its reasonable efforts, to
preserve intact their respective business operations,
business organizations and goodwill, to keep
available the services of its officers and employees
as a group and to maintain satisfactory relationships
with suppliers, agents, distributors, customers and
others having business relationships with it or its
Subsidiaries;
(ii) not take any action, or permit any of its
Subsidiaries to take any action, that would render,
or that reasonably may be expected to render, any
representation or warranty made by it in this
Agreement untrue in any material respect at any time
prior to the Effective Time if then made; and
(iii) promptly notify the Acquiror orally and in writing of
any material adverse change in the normal course of
its or any of its material Subsidiaries' businesses
or in the operation of its or any of its material
Subsidiaries' properties, and of any material
governmental or third party complaints, orders,
investigations or hearings (or communications
indicating that the same may be contemplated);
(f) the Company shall not settle or compromise any claim brought
by any current, future, former or purported holder of any
securities of the Company in connection with the transactions
contemplated by this Agreement or the Offer prior to the
Effective Time without the prior written consent of the
Acquiror; and
(g) the Company shall not enter into or modify any contract,
agreement, commitment or arrangement with respect to any of
the matters set forth in this Section without the prior
consent of the Acquiror.
2.2 NON-SOLICITATION.
(a) The Company shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the
Company or any of its Subsidiaries, solicit or encourage
(including by way of furnishing information or entering into
any form of agreement, arrangement or understanding) the
initiation of any inquiries or proposals regarding any merger,
amalgamation, reorganization, recapitalization, take-over bid,
sale of substantial assets, sale of treasury shares or similar
transactions involving the Company or any Subsidiaries of the
Company (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"), provided
nothing contained in this Section or any other provision of
this Agreement shall prevent the board of directors of the
Company from considering, negotiating, approving and
recommending to the Shareholders an unsolicited bona fide
<PAGE> 148
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written Acquisition Proposal for which adequate financial
arrangements have been made, which the board of directors of
the Company determines in good faith (after consultation with
its financial advisors, and after receiving a written opinion
of outside counsel, or advice of outside counsel that is
reflected in the minutes of the board of directors of the
Company, to the effect that the board of directors is required
to do so in order to discharge properly its fiduciary duties)
would, if consummated in accordance with its terms, result in
a transaction more favorable to the Shareholders than the
transaction contemplated by this Agreement (any such
Acquisition Proposal being referred to herein as a "Superior
Proposal").
(b) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties
(other than the Acquiror) with respect to any potential
Acquisition Proposal. The Company agrees not to release any
third party from any confidentiality agreement to which the
Company and such third party is a party or to waive any of the
provisions of such agreements provided, however, that the
Company may waive the standstill provisions contained in
confidentiality agreements entered into before the date
hereof. The Company shall immediately request the return or
destruction of all information provided to any third parties
who have entered into a confidentiality agreement with the
Company relating to a potential Acquisition Proposal and shall
use all reasonable efforts to ensure that such requests are
honoured.
(c) The Company shall immediately notify the Acquiror of any
existing Acquisition Proposals or of any future Acquisition
Proposal or any request for non-public information relating to
the Company or any of its Subsidiaries in connection with an
Acquisition Proposal or for access to the properties, books or
records of the Company or any Subsidiary by any person or
entity that informs any member of the board of directors of
the Company or such Subsidiary that it is considering making,
or has made, an Acquisition Proposal. Such notice to the
Acquiror shall be made, from time to time, orally and
confirmed in writing and shall indicate such details of the
proposal, inquiry or contact known to such person as the
Acquiror may reasonably request including the identity of the
person making such proposal, inquiry or contact.
(d) If the board of directors of the Company receives a request
for material non-public information from a party who proposes
to the Company a bona fide Acquisition Proposal and the board
of directors of the Company determines that such proposal is a
Superior Proposal pursuant to Section , then, and only in such
case, the Company may, subject to the prior execution and
delivery of a confidentiality agreement in substantially the
same form and containing the same restrictions and limitations
as are set forth in the confidentiality agreement then in
effect between the Company and the Acquiror, provide such
party with access to information regarding the Company;
provided that, in respect of any Acquisition Proposal
currently outstanding, no such term need be imposed that would
be inconsistent with,
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or would render the party unable to make, the unamended
Acquisition Proposal or to complete the unamended Acquisition
Proposal pursuant to the terms thereof. The Company agrees to
send a copy of any such confidentiality agreement to the
Acquiror immediately upon its execution.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its Subsidiaries and any
investment bankers or other advisors or representatives
retained by the Company are aware of the provisions of this
section, and the Company shall be responsible for any breach
of this Section by such bankers, advisors or representatives.
2.3 ACCESS TO INFORMATION. Subject to the existing Confidentiality Agreement
between the Company and the Acquiror dated March 18, 1998 (the "Confidentiality
Agreement"), upon reasonable notice, the Company shall (and shall cause each of
its Subsidiaries to) afford the Acquiror's officers, employees, counsel,
accountants and other authorized representatives and advisors
("Representatives") reasonable access, during normal business hours from the
date hereof and until the expiration of this Agreement, to its properties,
books, contracts and records as well as to its management personnel, and, during
such period, the Company shall (and shall cause each of its Subsidiaries to)
furnish promptly to the Acquiror all information concerning its business,
properties and personnel as the Acquiror may reasonably request. For greater
certainty, the Company hereby waives the standstill provisions in section 9 of
the Confidentiality Agreement.
ARTICLE III
FEES AND OTHER ARRANGEMENTS
3.1 PAYMENT OF FEE.
(a) If at any time after the execution of this Agreement:
(i) the board of directors has withdrawn, redefined or
changed, during the term of the Offer, any of its
recommendations, resolutions or determinations
referred to in Sections , , 1.6 or in a manner
adverse to the Acquiror or shall have resolved to do
so;
(ii) any third party acquires by any means whatsoever
during the term of the Offer Shares so as to own in
excess of 50% of the Shares; or
(iii) the Company breaches in any material respect any of
its representations, warranties or covenants made in
this Agreement, including, without limitation, the
representations and covenants in Section ;
(each of the above being a "Full Fee Event"), then the
Company shall pay to the Acquiror $8,000,000, in
immediately available funds to an account designated by
the Acquiror, such amount to be due and payable
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within one business day after the first to occur of the
Full Fee Events described above.
(b) If following the execution of this Agreement,
(i) an Acquisition Proposal is made to the Shareholders
or to the Company, or the currently outstanding
Acquisition Proposal is amended to increase the
consideration offered thereunder and upon the expiry
of the Offer the Minimum Condition (as defined in
Schedule "A" to this Agreement) of the Offer has not
been satisfied; and
(ii) a Full Fee Event (as defined in Section 3.1(a)) has
not occurred
then the Company shall pay to the Acquiror $4,000,000, in
immediately available funds to an account designated by the
Acquiror, such amount to be due and payable within one
business day after the occurrence of the event (a "Half Fee
Event") described in clause (b)(i) above. Full Fee Events and
the Half Fee Event being hereinafter referred to as Fee
Events.
ARTICLE IV
COVENANTS OF THE ACQUIROR
4.1 EMPLOYMENT AGREEMENTS. The Acquiror covenants and agrees, and after the
Effective Time will cause the Company and any successor to the Company to agree,
to honour and comply with the terms of those existing employment and severance
agreements and policies of the Company which the Company has disclosed to the
Acquiror prior to the date hereof.
4.2 OFFICERS' AND DIRECTORS' INSURANCE. The Acquiror agrees to use reasonable
efforts to secure directors' and officers' insurance coverage for the Company's
current and former directors and officers on a seven year "trailing" (or "run-
off") basis on terms and conditions no less advantageous to the directors and
officers of the Company than those contained in the policy in effect on the date
hereof. If a trailing policy is not available at a reasonable cost (a
"reasonable cost" being not greater than the estimated cost of providing the
coverage referred to in this and the next sentence), then the Acquiror agrees
that for the entire period from the Effective Time until three years after the
Effective Time, the Acquiror will cause the Company or any successor to the
Company to maintain the Company's current directors' and officers' insurance
policy or an equivalent policy, subject in either case to terms and conditions
no less advantageous to the directors and officers of the Company than those
contained in the policy in effect on the date hereof, for all current and former
directors and officers of the Company, covering claims made prior to or within
three years after the Effective Time.
<PAGE> 151
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 REPRESENTATIONS. The Company hereby provides to the Acquiror those
representations and warranties as set forth in Schedule "B" to this Agreement
(and acknowledges that the Acquiror is relying upon those representations and
warranties in connection with entering into this Agreement).
5.2 INVESTIGATION. Any investigation by the Acquiror and its advisors shall not
mitigate, diminish or affect the representations and warranties of the Company
provided pursuant to this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
6.1 REPRESENTATIONS. The Acquiror hereby represents and warrants to the Company
as provided in Schedule "C" to this Agreement (and acknowledges that the Company
is relying upon such representations and warranties in connection with the
entering into of this Agreement).
ARTICLE VII
MUTUAL COVENANTS
7.1 CONSULTATION. The Acquiror and the Company agree to consult with each other
in issuing any press releases or otherwise making public statements with respect
to the Offer or any other Acquisition Proposal and in making any filings with
any federal, provincial or state governmental or regulatory agency or with any
securities exchange with respect thereto. Each party shall use its reasonable
efforts to enable the other party to review and comment on all such press
releases prior to release thereof.
7.2 FURTHER ASSURANCE. Subject to the terms and conditions herein, the Acquiror
and the Company agree to use their respective reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations, to
consummate the transactions contemplated by this Agreement and the Offer. The
Company and the Acquiror will, and will cause each of their respective
Subsidiaries to, use their reasonable efforts (i) to obtain all necessary
waivers, consents and approvals from other parties to material loan agreements,
leases and other contracts or agreements (including, in particular but without
limitation, the agreement of any persons as may be required pursuant to any
agreement, arrangement or understanding relating to the Company's or to its
Subsidiaries' operations), (ii) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal, provincial,
state or foreign law or regulations with respect to this Agreement or the Offer,
(iii) to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby or by the Offer, and (iv) to fulfil all conditions and
satisfy all provisions of this Agreement and the Offer. For greater
<PAGE> 152
- 11 -
certainty, the Company and the Acquiror agree that an order of a regulatory
authority having jurisdiction which cease trades the Rights issued pursuant to
the Company's Shareholder Rights Plan does not in and of itself constitute a
breach of this Agreement or relieve either party of its obligations hereunder.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated prior to the Effective Time:
(a) by mutual written consent of the Acquiror and the Company;
(b) by the Company after June 30, 1998 if the Acquiror has not
become legally obligated to accept and take-up any Shares
pursuant to the Offer by such date;
(c) by either the Acquiror or the Company, if the Minimum
Condition or any other condition of the Offer has not been
satisfied or waived on the expiry of the Offer, as the same
may be extended from time to time by the Acquiror pursuant to
the terms of the Offer;
(d) by the Acquiror at any time following the occurrence of a Fee
Event as provided in Section 3.1; or
(e) by the Company, if the Acquiror does not mail the Offer as
provided in Section , provided that no Fee Event has occurred;
except that the obligations set forth in Section shall survive
the termination of this Agreement, other than in respect of a
termination pursuant to Section above.
8.2 WITHDRAWAL OF OFFER. If this Agreement is terminated as provided in Section
above, the Acquiror may terminate or withdraw the Offer without any liability or
further obligation on its part under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENT OR WAIVER. This Agreement may be amended, modified or superseded,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, but only by written instrument executed by the Acquiror
and the Company; provided, however, that either the Acquiror or the Company may
in its discretion waive a condition herein which is solely for its benefit
without the consent of the other. No waiver of any nature, in any one or more
instances, shall be deemed or construed as a further or
<PAGE> 153
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continued waiver of any condition or any breach of any other term,
representation or warranty in this Agreement.
9.2 ENTIRE AGREEMENT. This Agreement and the documents referred to herein
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements, arrangements or understandings
with respect thereto.
9.3 HEADINGS. The descriptive headings are for convenience of reference only and
shall not control or affect the meaning or construction of any provisions of
this Agreement.
9.4 NOTICES. All notices or other communications which are required or permitted
hereunder shall be communicated confidentially and in writing and shall be
sufficient if delivered personally, or sent by confidential telecopier addressed
as follows:
To the Acquiror:
c/o Oglebay Norton Company
1100 Superior Avenue, 20th Floor
Cleveland, OH 44114-2598
Attention: Mr. Jeffrey S. Gray
Vice President - Corporate Development and
Legal Affairs
Facsimile: (216) 861-2314
With a Copy to:
Stikeman, Elliott
Suite 5300
Commerce Court West
Toronto, Ontario
M5L 1B9
Attention: Mr. John M. Stransman
Mr. Robert W.A. Nicholls
Facsimile: (416) 947-0866
<PAGE> 154
- 13 -
To the Company:
251 North Service Road West
Suite 306
Oakville, Ontario
L6M 3E7
Attention: Mr. Robert Stone
Facsimile: (604) 608-6163
With a Copy to:
McCarthy, Tetrault
55 King Street West
TD Bank Tower
TD Centre, 49th Floor
Toronto, Ontario
M5K 1E6
Attention: Mr. David Armstrong
Mr. Graham Gow
Facsimile: (416) 868-1891
9.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts
and each such counterpart shall be deemed to be an original instrument but all
such counterparts together shall constitute but one Agreement.
9.6 EXPENSES. Each party will pay its own expenses. The Acquiror and the Company
represent and warrant to each other that, except for CIBC Wood Gundy Securities
Inc. in the case of the Company, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission, or to the
reimbursement of any of its expenses, in connection with the Offer. The Company
has provided to the Acquiror a correct and complete copy of all agreements
between the Company and each of its financial advisors as are in existence at
the date hereof. The Company covenants not to amend the terms of any such
agreements relating to the payment of fees and expenses without the prior
written approval of the Acquiror.
9.7 ASSIGNMENT. The Acquiror may assign all or any part of its rights or
obligations under this Agreement to a direct or indirect Subsidiary of the
Acquiror, but, if such assignment takes place, the Acquiror shall continue to be
liable to the Company for any default in performance by the assignee. This
Agreement shall not otherwise be assignable by either party without the prior
written consent of the other party.
9.8 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable,
<PAGE> 155
- 14 -
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be effected,
impaired or invalidated and the parties shall negotiate in good faith to modify
the Agreement to preserve each party's anticipated benefits under the Agreement.
9.9 CURRENCY. All references to dollars or "$" in this Agreement refer to
Canadian dollars.
9.10 CHOICE OF LAW. This Agreement shall be governed by, construed and
interpreted in accordance with the laws of the Province of Ontario.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized as of the
date first written above.
OGLEBAY NORTON COMPANY
By: ___________________________
Name: John N. Lauer
Title: President and C.E.O.
GLOBAL STONE CORPORATION
By: ____________________________
Name: Robert R. Stone
Title: Chairman
<PAGE> 156
SCHEDULE "A"
TERMS OF THE OFFER
1. GENERAL TERMS. The Offer shall be made by a circular bid prepared in
compliance with the Securities Act (Ontario) and other applicable
provincial securities laws and in accordance with the
Multi-Jurisdictional Disclosure System to United States Shareholders.
2. EXPIRY DATE. The Offer shall be open until midnight on the 21st day
following the mailing thereof (provided that the Acquiror may extend
such period of time in its sole discretion).
3. OFFER PRICE. The Offer shall be made in cash at a price of not less
than $7.80 per Share (including Shares which may become outstanding on
the exercise of options, warrants or other rights to purchase Shares
(other than rights issued pursuant to the Shareholder Rights Plan)).
4. CONDITIONS OF THE OFFER. The Offer shall not be subject to any
conditions other than those substantially described as follows:
(a) at the expiry time there shall have been validly deposited
under the Offer and not withdrawn a number of Shares which
constitutes at least 662/3% of the outstanding Shares
(calculated on a fully diluted basis) (the "Minimum
Condition");
(b) the Acquiror shall have determined, acting reasonably, that no
material right, property, franchise or license of the Company
or any of its Subsidiaries has been or may be impaired (which
impairment has not been cured or waived) or otherwise
adversely affected as a result of the making of the Offer or
the taking up and paying for Shares deposited under the Offer
including, for greater certainty, through the triggering of
any third party's right (including subject to the provision of
notice, the lapse of time, or both) to acquire any material
asset of the Corporation or any of its Subsidiaries;
(c) all requisite governmental, stock exchange or regulatory
approvals, consents and exemptions with respect to the Offer
or any other transaction contemplated by the Offer shall have
been obtained on terms satisfactory to the Acquiror acting
reasonably including without limitation:
(i) all approvals or exemptions required under the
Investment Canada Act shall have been obtained on
terms satisfactory to the Acquiror acting reasonably;
(ii) no proceedings shall have been taken or threatened
under the merger provisions of Part VIII or under
Part VI of the Competition Act
<PAGE> 157
- 2 -
(Canada) in respect of the transaction which may
result from the Offer; and
(iii) any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976
shall have expired or been earlier terminated;
(d) no act, action, suit or proceeding shall have been threatened
or taken before or by any Canadian or United States federal,
provincial, state or foreign court or other tribunal or
governmental agency or other regulatory or administrative
agency or commission or by any elected or appointed public
official or private person (including without limitation any
individual, corporation, firm, group or other entity) in
Canada, the United States or elsewhere, whether or not having
the force of law, and no law, regulation or policy shall have
been proposed, enacted, promulgated or applied, whether or not
having the force of law, which could reasonably be expected to
have the effect of:
(i) making illegal, or otherwise directly or indirectly
restraining or prohibiting or making materially more
costly, the making of the Offer, the acceptance for
payment of, payment for, or ownership, directly or
indirectly, of some or all of the Shares by the
Acquiror, the completion of a compulsory acquisition
or any subsequent acquisition transaction or the
consummation of any of the transactions contemplated
by the Offer;
(ii) prohibiting or materially limiting the ownership or
operation by the Company or any of its Subsidiaries,
or by the Acquiror (or the parent of the Acquiror),
directly or indirectly, of all or any material
portion of the business or assets of the Company, on
a consolidated basis, or the Acquiror (or the parent
of the Acquiror), directly or indirectly, or
compelling the Acquiror (or the parent of the
Acquiror), directly or indirectly, to dispose of or
hold separate all or any material portion of the
business or assets of the Company, on a consolidated
basis, or the Acquiror (or the parent of the
Acquiror), directly or indirectly, as a result of the
transactions contemplated by the Offer;
(iii) imposing or confirming limitations on the ability of
the Acquiror, directly or indirectly, effectively to
acquire or hold or to exercise full rights of
ownership of the Shares, including without limitation
the right to vote any Shares acquired or owned by the
Acquiror (or the parent of the Acquiror), directly or
indirectly, on all matters properly presented to the
Shareholders of the Company, including without
limitation the right to vote any shares of capital
stock of any Subsidiary (other than immaterial
Subsidiaries) directly or indirectly owned by the
Company;
(iv) requiring divestiture by the Acquiror, directly or
indirectly, of any Shares; or
<PAGE> 158
- 3 -
(v) materially adversely affecting the business,
financial condition or results of operations of the
Company and its Subsidiaries taken as a whole or the
value of the Shares or of the Offer to the Acquiror;
(e) there shall not exist any prohibition at law against the
Acquiror making the Offer or taking up and paying for all of
the Shares under the Offer or completing any compulsory
acquisition or any subsequent acquisition transaction;
(f) there shall not have occurred (or if there shall have occurred
prior to the commencement of the Offer and not publicly
disclosed, there shall not have been generally disclosed or
disclosed to the Acquiror in writing after the commencement of
the Offer) any change (or any condition, event or development
involving a prospective change) in the business, assets,
capitalization, financial condition, licenses, permits,
rights, privileges or liabilities (including without
limitation any contingent liabilities that may arise through
outstanding, pending or threatened litigation or otherwise),
whether contractual or otherwise, of the Company and its
Subsidiaries considered as a whole which, in the reasonable
judgment of the Acquiror, is materially adverse and there
shall not have occurred any change (or any condition, event or
development involving a prospective change) in the business,
assets, capitalization, financial condition, licenses,
permits, rights, privileges or liabilities (including without
limitation any contingent liabilities that may arise through
outstanding, pending or threatened litigation or otherwise),
whether contractual or otherwise, of the Acquiror which is
materially adverse (other than a material adverse change that
has occurred as a result of acts or omissions within the
reasonable control of the Acquiror);
(g) (A) neither the board of directors of the Company nor any
committee thereof shall have approved or recommended any
proposal or any other acquisition of Shares other than the
Offer, (B) no corporation, partnership, person or other entity
or group shall have entered into a definitive agreement or an
agreement in principle with the Company with respect to a
take-over bid (other than the Offer), tender offer or exchange
offer, merger, sale of assets, amalgamation, plan of
arrangement, reorganization, consolidation, business
combination, recapitalization, liquidation, dissolution or
similar transaction with or involving the Company or any of
its Subsidiaries and (C) neither the board of directors of the
Company nor any committee thereof shall have resolved to do
any of the foregoing; and
(h) there shall not have occurred any material breach by the
Company of any of the representations, warranties or covenants
of the Pre-Acquisition Agreement or any termination of the
Pre-Acquisition Agreement pursuant to the terms thereof.
The foregoing conditions shall be for the exclusive benefit of
the Acquiror and may be waived by the Acquiror in whole or in part at any time
and from time to time, both before or after the expiry time.
<PAGE> 159
SCHEDULE "B"
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(a) ORGANIZATION. Each of the Company and each of its direct and indirect
Subsidiaries (collectively, the "Subsidiaries") has been duly
incorporated or formed under applicable law, is validly existing and
has full corporate or legal power and authority to own its properties
and conduct its businesses as currently owned and conducted. All of the
outstanding shares of capital stock and other ownership interests of
the Subsidiaries are validly issued, fully paid and non- assessable and
all such shares and other ownership interests owned directly or
indirectly by the Company are owned free and clear of all material
liens, claims or encumbrances, and except as disclosed in writing to
the Acquiror prior to the date hereof, there are no outstanding
options, rights, entitlements, understandings or commitments
(contingent or otherwise) regarding the right to acquire any shares of
capital stock or other ownership interests in any of the Subsidiaries.
(b) CAPITALIZATION. As of the date hereof, there are 29,679,025 Shares
issued and outstanding. As at the date hereof, up to a maximum of
2,199,000 Shares may be issued pursuant to outstanding stock option
entitlements. Except as described in the immediately preceding
sentence, there are no options, warrants, conversion privileges or
other rights, agreements, arrangements or commitments obligating the
Company or any Subsidiary to issue or sell any shares of any capital
stock of the Company or any of its Subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any shares
of capital stock of the Company, any Subsidiary or any other person,
nor, except as disclosed to the Acquiror prior to the date hereof, is
there outstanding any stock appreciation rights, phantom equity or
similar rights, agreements, arrangements or commitments based upon the
book value, income or any other attribute of the Company or any
Subsidiary.
(c) AUTHORITY. The Company has the requisite corporate power and authority
to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by the board of directors of the
Company and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other laws relating to or affecting creditors'
rights generally and to general principles of equity. Except as
disclosed in writing to the Acquiror prior to the date hereof, the
execution and delivery by the Company of this Agreement and performance
by it of its obligations hereunder and (subject to satisfying the
conditions to the Offer specified in clause 4(d) of Schedule "A" with
respect to subparagraph A(ii) below) the completion of the Offer and
the transactions contemplated thereby, will not:
<PAGE> 160
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(A) result in a violation or breach of, require any consent to be
obtained under or give rise to any termination rights under
any provision of:
(i) its or any Subsidiary's certificate of incorporation,
articles, by-laws or other charter documents,
including any unanimous shareholder agreement or any
other agreement or understanding with any party
holding an ownership interest in any Subsidiary;
(ii) any law, regulation, order, judgment or decree; or
(iii) any material contract, agreement, license, franchise
or permit to which the Company or any Subsidiary is
bound or is subject or is the beneficiary;
(B) give rise to any right of termination or acceleration of
indebtedness, or cause any indebtedness to come due before its
stated maturity or cause any available credit to cease to be
available; or
(C) result in the imposition of any encumbrance, charge or lien
upon any of its material assets or the material assets of any
Subsidiary, or restrict, hinder, impair or limit the ability
of the Company or any Subsidiary to carry on the business of
the Company or any Subsidiary as and where it is now being
carried on or as and where it may be carried on in the future.
(d) ABSENCE OF CHANGES. Since September 30, 1997, and except as has been
publicly disclosed in any document filed with the Ontario Securities
Commission (i) the Company and the Subsidiaries have conducted their
respective businesses only in the ordinary course, (ii) no liability or
obligation of any nature (whether absolute, accrued, contingent or
otherwise) material to the Company or any Subsidiary has been incurred,
and (iii) there has not been any material adverse change in the
financial conditions, results of operations or businesses of the
Company or any Subsidiary.
(e) NO MATERIAL MISREPRESENTATION. As at their respective dates, the public
filings made by the Company under the Securities Act (Ontario) did not
contain any material misstatement or any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statement made therein, in light of the
circumstances under which they were made, not misleading.
(f) FINANCIAL STATEMENTS. The audited consolidated balance sheets and
consolidated statements of loss and deficit and consolidated statements
of changes in financial position as at or for the periods ended
September 30, 1997 and September 30, 1997, as applicable, as contained
in the Company's 1997 Annual Report, were prepared in accordance with
generally accepted accounting principles in Canada consistently
applied, and fairly present the consolidated financial condition of the
Company at the respective dates indicated and the results of operations
of the Company (on a consolidated basis) for the periods covered.
<PAGE> 161
- 3 -
(g) LITIGATION, ETC. Except as set forth or specifically reflected in any
document filed with the Ontario Securities Commission, or as disclosed
in writing to the Acquiror prior to the date hereof, there is no claim,
action, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or relating to the Company or any
Subsidiary or affecting any of their properties or assets before any
court or governmental or regulatory authority or body that, if
adversely determined, is likely to have a material adverse effect on
the Company or any Subsidiary or prevent or materially delay
consummation of the transactions contemplated by this Agreement or the
Offer, and the Company is not aware of any basis for any such claim,
action, proceeding or investigation. Neither the Company nor any
Subsidiary is subject to any outstanding order, writ, injunction or
decree that has had or may have a material adverse effect or prevent or
materially delay consummation of the transactions contemplated by this
Agreement or the Offer.
(h) ENVIRONMENTAL. Except as has been disclosed in writing to the Acquiror
prior to the date hereof, neither the Company nor any Subsidiary is
aware of, or has received:
(i) any order or directive which relates to environmental
matters which requires any material work, repairs,
construction, or capital expenditures; or
(ii) any demand, notice or other communication with
respect to or alleging the material breach of any
environmental, health, or safety law applicable to
the Company or any Subsidiary, including, without
limitation, any regulations respecting the use,
storage, treatment, transportation, or disposition of
environmental contaminants or hazardous substances or
materials.
(i) INSURANCE. Policies of insurance in force as of the date hereof naming
the Company as an insured adequately cover all risks reasonably and
prudently foreseeable in the operation and conduct of the business of
the Company and the Subsidiaries as would be customary in respect of
the businesses carried on by the Company.
(j) TAX MATTERS.
(A) DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or
other additions that may become payable in respect
thereof, imposed by any federal, territorial, state,
local or foreign government or any agency or
political subdivision of any such government, which
taxes shall include, without limiting the generality
of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes
and provincial income taxes), payroll and employee
withholding taxes, unemployment insurance, social
insurance taxes, sales and use taxes, ad valorem
taxes, excise
<PAGE> 162
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taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental
taxes, transfer taxes, workers' compensation and
other governmental charges, and other obligations of
the same or of a similar nature to any of the
foregoing, which the Company or any of its material
Subsidiaries is required to pay, withhold or collect.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements
and returns relating to, or required to be filed in
connection with, any Taxes.
(B) RETURNS FILED AND TAXES PAID. All Returns required to be filed
by or on behalf of the Company or any material Subsidiaries
have been duly filed on a timely basis and such Returns are
true, complete and correct. All Taxes shown to be payable on
the Returns or on subsequent assessments with respect thereto
have been paid in full on a timely basis, and no other Taxes
are payable by the Company or any material Subsidiaries with
respect to items or periods covered by such Returns.
(C) TAX RESERVES. The Company has paid or provided adequate
accruals in its financial statements for the year ended dated
September 30, 1997 for Taxes, including income taxes and
related deferred taxes, in conformity with generally accepted
accounting principles applicable in Canada.
(E) TAX DEFICIENCIES; AUDITS; STATUTES OF LIMITATIONS. Except as
disclosed in writing to the Acquiror, no deficiencies exist or
have been asserted with respect to Taxes of the Company or any
material Subsidiary. Neither the Company nor any material
Subsidiary is a party to any action or proceeding for
assessment or collection of Taxes, nor has such event been
asserted or threatened against the Company or any material
Subsidiary or any of their respective assets. No waiver or
extension of any statute of limitations is in effect with
respect to Taxes or Returns of the Company or any material
Subsidiary. Except as has been disclosed in writing to the
Acquiror, the Returns of the Company and any material
Subsidiary have never been audited by a government or taxing
authority, nor is any such audit in process, pending or
threatened.
(k) PENSION AND TERMINATION BENEFITS. Other than as disclosed in writing to
the Acquiror prior to the date hereof, the Company has provided
adequate accruals in its financial statements for the year ended
September 30, 1997 (or such amounts are fully funded) for all pension
or other employee benefit obligations of the Company arising under or
relating to each of the pension or retirement income plans or other
employee benefit plans or agreements or policies maintained by or
binding on the Company or any of its Subsidiaries as well as for any
other payment required to be made by the Company in connection with the
termination of employment or retirement of any employee of the Company
or any Subsidiary.
<PAGE> 163
SCHEDULE "C"
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
(a) ORGANIZATION. The Acquiror has been duly incorporated and organized,
and is validly existing, as a corporation under the laws of the State
of Delaware and has the requisite corporate power and authority to
carry on its business as it is now being conducted.
(b) AUTHORITY. The Acquiror has the requisite corporate power and authority
to enter into this Agreement and to carry out its respective
obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized and no other corporate proceedings on the part of the
Acquiror are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Acquiror and constitutes a valid and binding
obligation of the Acquiror, enforceable by the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general principles of equity.
(c) FINANCING. The Acquiror has made adequate arrangements to ensure that
required funds are available to effect payment in full for all Shares
offered to be acquired pursuant to the Offer and pursuant to Section of
the Agreement.
<PAGE> 1
Exhibit 10.3
================================================================================
SENIOR SUBORDINATED INCREASING RATE NOTES
NOTE PURCHASE AGREEMENT
dated as of
May 15, 1998
among
OGLEBAY NORTON COMPANY,
and
THE GUARANTORS PARTY HERETO
and
CIBC OPPENHEIMER CORP.,
as Purchaser
================================================================================
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
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SECTION 1.1. Definitions .......................................... 1
SECTION 1.2. Other Definitions .................................... 30
SECTION 1.3. Accounting Terms and Determinations .................. 31
SECTION 1.4. Rules of Construction ................................ 31
ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.1. Commitment to Purchase ............................... 31
SECTION 2.2. Notice of Purchase ................................... 32
SECTION 2.3. Purchase of Notes .................................... 32
SECTION 2.4. Termination of Commitment ............................ 33
SECTION 2.5. Optional Redemption .................................. 33
SECTION 2.6. Conversion ........................................... 34
SECTION 2.7. Interest Rate......................................... 34
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS
SECTION 3.1. Organization.......................................... 35
SECTION 3.2. Capitalization; Equity Ownership ..................... 35
SECTION 3.3. Authority ............................................ 36
SECTION 3.4. Financing Documents .................................. 36
SECTION 3.5. SEC Documents; Acquisition Documents;
Financial Statements ............................... 37
SECTION 3.6. Solvency ............................................. 38
SECTION 3.7. Absence of Certain Changes ........................... 39
SECTION 3.8. No Violation ......................................... 40
SECTION 3.9. Title and Condition of Properties and
Assets; Adequacy .................................... 41
SECTION 3.10. Leased Property ...................................... 41
SECTION 3.11. Material Contracts ................................... 41
SECTION 3.12. Litigation ........................................... 42
SECTION 3.13. Patents, Copyrights and Trademarks ................... 42
SECTION 3.14. Compliance with Laws, Etc............................. 43
SECTION 3.15. Governmental Authorizations and
Regulations ........................................ 43
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<PAGE> 3
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SECTION 3.16. Labor Matters ........................................ 43
SECTION 3.17. Relationships ........................................ 44
SECTION 3.18. Environmental Matters ................................ 45
SECTION 3.19. Brokers .............................................. 46
SECTION 3.20. Tax Matters .......................................... 46
SECTION 3.21. Investment Company; Public Utility
Holding Company ..................................... 47
SECTION 3.22. ERISA ................................................ 47
SECTION 3.23. Securities Matters ................................... 49
SECTION 3.24. Insurance ............................................ 49
SECTION 3.25. Employees ............................................ 50
SECTION 3.26. Payments ............................................. 50
SECTION 3.26. Guarantees ........................................... 50
SECTION 3.27. Representations and Warranties in
Acquisition Agreement and Senior
Credit Facility ..................................... 50
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 4.1. Purchaser Representations ............................ 51
ARTICLE V
CONDITIONS PRECEDENT TO PURCHASE OF NOTES
SECTION 5.1. Conditions to Purchaser's Obligations at
Each Time of Purchase ............................... 52
SECTION 5.2. Conditions to Purchaser's Obligations at
the Initial Time of Purchase ....................... 55
SECTION 5.3. Conditions to Purchaser's Obligations at
the Second Time of Purchase ........................ 56
SECTION 5.4. Certificates ......................................... 56
ARTICLE VI
COVENANTS
SECTION 6.1. Information .......................................... 57
SECTION 6.2. Payment of Obligations ............................... 58
SECTION 6.3. Inspection of Property, Books and
Records ............................................. 58
SECTION 6.4. Investment Company Act ............................... 58
SECTION 6.5. Waiver of Stay, Extension or Usury Laws .............. 59
SECTION 6.6. Taxes ................................................ 59
SECTION 6.7. Limitation on Restricted Payments .................... 59
</TABLE>
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SECTION 6.8. Limitation on Incurrence of Indebtedness ............. 62
SECTION 6.9. Limitation on Liens .................................. 64
SECTION 6.10. Limitation on Asset Sales ............................ 64
SECTION 6.11. Limitation on Transactions with
Affiliates ......................................... 66
SECTION 6.12. Limitation on Restrictions Affecting
Restricted Subsidiaries ............................ 67
SECTION 6.13. Designation of Unrestricted Subsidiaries ............. 68
SECTION 6.14. Limitation on the Issuance and Sale of
Capital Stock of Restricted
Subsidiaries ....................................... 69
SECTION 6.15. Change of Control .................................... 70
SECTION 6.16. Limitation on Preferred Equity Interests
of Restricted Subsidiaries .......................... 71
SECTION 6.17. Additional Guarantees ................................ 71
SECTION 6.18. Limitation on Sale and Leaseback
Transactions ........................................ 71
SECTION 6.19. Payments for Consent ................................. 72
SECTION 6.20. Legal Existence ...................................... 72
SECTION 6.21. Maintenance of Properties; Insurance;
Compliance with Law; Conduct of
Business ............................................ 72
SECTION 6.22. Reports to Holders ................................... 73
SECTION 6.23. Use of Proceeds ...................................... 74
SECTION 6.24. Permanent Financing; Resale .......................... 74
SECTION 6.25. Restrictions on Certain Amendments ................... 76
ARTICLE VII
SUCCESSOR CORPORATION
SECTION 7.1. Limitation on Consolidation, Merger and
Sale of Assets ..................................... 76
SECTION 7.2. Successor Person Substituted ......................... 78
ARTICLE VIII
LIMITATION ON TRANSFERS
SECTION 8.1. Restrictions on Transfer ............................. 78
SECTION 8.2. Restrictive Legends .................................. 79
SECTION 8.3. Notice of Proposed Transfers ......................... 79
</TABLE>
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ARTICLE IX
EVENTS OF DEFAULT
<TABLE>
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SECTION 9.1. Events of Default .................................... 80
SECTION 9.2. Acceleration ......................................... 82
SECTION 9.3. Powers and Remedies Cumulative ....................... 83
SECTION 9.4. Waiver of Past Defaults and Events of
Default ............................................. 83
SECTION 9.5. Rights of Holders to Receive Payment ................. 84
SECTION 9.6. Restoration of Rights and Remedies ................... 84
ARTICLE X
GUARANTEE OF NOTES
SECTION 10.1. Guarantee ............................................ 84
SECTION 10.2. Execution and Delivery of Guarantees ................. 85
SECTION 10.3. Limitation of Subsidiary Guarantees .................. 85
SECTION 10.4. Release of Guarantor ................................. 86
SECTION 10.5. Guarantee Obligations Subordinated to
Guarantor Senior Indebtedness ....................... 86
SECTION 10.6. Payment Over of Proceeds upon
Dissolution, etc., of a Guarantor ................... 87
SECTION 10.7. Suspension of Guarantee Obligations When
Guarantor Senior Indebtedness in
Default ............................................. 88
SECTION 10.8. Subrogation to Rights of Holders of
Guarantor Senior Indebtedness ....................... 91
SECTION 10.9. Guarantee Subordination Provisions
Solely To Define Relative Rights .................... 91
SECTION 10.10. Application of Certain Article XI
Provisions .......................................... 92
ARTICLE XI
SUBORDINATION OF NOTES
SECTION 11.1. Notes Subordinate to Senior Indebtedness ............. 93
SECTION 11.2. Payment Over of Proceeds upon
Dissolution, etc .................................... 93
SECTION 11.3. Suspension of Payment When Senior
Indebtedness in Default ............................ 95
SECTION 11.4. Subrogation to Rights of Holders of
Senior Indebtedness ................................ 97
SECTION 11.5. Provisions Solely To Define Relative
Rights .............................................. 97
</TABLE>
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SECTION 11.6. No Waiver of Subordination Provisions ................ 98
SECTION 11.7. Reliance on Judicial Order or
Certificate of Liquidating Agent .................... 99
SECTION 11.8. No Suspension of Remedies ............................ 99
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Notices .............................................. 100
SECTION 12.2. No Waivers ........................................... 100
SECTION 12.3. Indemnification ...................................... 101
SECTION 12.4. Expenses; Documentary Taxes .......................... 104
SECTION 12.5. Payment .............................................. 104
SECTION 12.6. Register ............................................. 104
SECTION 12.7. Successors and Assigns ............................... 104
SECTION 12.8. New York Law; Submission to
Jurisdiction; Waiver of Jury Trial .................. 105
SECTION 12.9. Independence of Representations,
Warranties and Covenants ............................ 105
SECTION 12.10. Severability ......................................... 105
SECTION 12.11. Entire Agreement; Benefit ............................ 106
SECTION 12.12. Headings ............................................. 106
SECTION 12.13. Counterparts ......................................... 106
SECTION 12.14. Effectiveness ........................................ 106
</TABLE>
SIGNATURE PAGES
Schedules
- ---------
Schedule 3.3 - Documents
Schedule 3.5 - Dividends
Schedule 3.7 - Compensation Matters
Schedule 3.8 - Violations
Schedule 3.10 - Leased Property
Schedule 3.11 - Material Contracts
Schedule 3.12 - Litigation
Schedule 3.13 - Intellectual Property Rights
Schedule 3.15 - Governmental Authorizations, etc.
Schedule 3.16 - Labor Matters
Schedule 3.17 - Business Relationships
Schedule 3.25 - Employee Matters
Schedule 3.27A - Non-Guarantor Subsidiaries
Schedule 3.27B - Foreign Subsidiaries
Schedule 6.11 - Existing Affiliate Transactions
Schedule 6.12 - Existing Dividend Restrictions
-v-
<PAGE> 7
Exhibits
- --------
Page
----
Exhibit A - Form of Note
Exhibit B - Form of Guarantee
Exhibit C - Form of Purchase Request
Exhibit D-1 - Form of Opinion of Jones, Day, Reavis &
Pogue
Exhibit D-2 - Form of Opinion of Stikeman, Elliott
Exhibit D-3 - Form of Opinion of Thompson Hine & Flory
LLP
Exhibit E - Form of Registration Rights Agreement
Exhibit F - Form of Joinder Agreement
Exhibit G - Form of Assumption Agreement
-vi-
<PAGE> 8
NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT dated as of May 15, 1998 ("AGREEMENT") between
Oglebay Norton Company, a Delaware corporation, and CIBC Oppenheimer Corp.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"ACQUIRED ENTITIES" means Global and its Subsidiaries .
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (a) assumed in
connection with an Asset Acquisition from such Person or (b) existing at the
time such Person becomes a Restricted Subsidiary or is merged or consolidated
with or into the Company or any Restricted Subsidiary; PROVIDED, HOWEVER, that
such Indebtedness was not incurred in connection with, or in contemplation of,
such Asset Acquisition, such Person becoming a Restricted Subsidiary or such
merger or consolidation.
"ACQUISITION AGREEMENT" means the Pre-Merger Agreement, dated April 15,
1998, between Original ONC and Global, including all schedules, annexes and
other attachments thereto.
"ADDITIONAL INTEREST" has the meaning provided in Section 4(a) of the
Registration Rights Agreement.
"ADJUSTED NET ASSETS" of a Guarantor at any date shall mean the lesser
of the amount by which (x) the fair value of the property of such Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities), but excluding liabilities under the Guarantee, of such Guarantor
at such date and (y) the present fair salable value of the assets of such
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities and after giving effect to any
<PAGE> 9
-2-
collection from any Subsidiary of such Guarantor in respect of the obligations
of such Guarantor under the Guarantee), excluding Indebtedness in respect of the
Guarantee, as they become absolute and matured.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "CONTROL"
(including, with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. Affiliates of any
Person shall include each director or executive officer of such Person and each
other Person that beneficially owns 10% or more of the Voting Equity Interests
of such Person.
"AMEND" means amend, modify, supplement, restate or amend and restate,
including successively; and "AMENDING" and "AMENDED" have correlative meanings.
"ASSET ACQUISITION" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Company or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated, merged with or into the Company
or any Restricted Subsidiary or (ii) any acquisition by the Company or any
Restricted Subsidiary of the assets of any Person which constitute all or
substantially all of an operating unit or line of business of such Person or
which is otherwise outside of the ordinary course of business.
"ASSET SALE" means any direct or indirect sale, conveyance, transfer,
lease (that has the effect of a disposition) or other disposition (including,
without limitation, by way of any merger, consolidation or Sale and Leaseback
Transaction) to any Person other than the Company or a Wholly Owned Restricted
Subsidiary, in one transaction or a series of related transactions, of (i) any
Equity Interest of any Restricted Subsidiary or (ii) other than in the ordinary
course of business, any other property or asset of the Company or any Restricted
Subsidiary (including the receipt of proceeds paid on account of
<PAGE> 10
-3-
the loss of or damage to any property or asset and awards of compensation for
any asset taken by condemnation, eminent domain or similar proceedings) . The
term "ASSET SALE" shall not include (a) any transaction consummated in
compliance with Section 7.1; PROVIDED, HOWEVER, that any transaction consummated
in compliance with Section 7.1 involving a sale, conveyance, assignment,
transfer, lease or other disposal of less than all of the properties or assets
of the Company and the Restricted Subsidiaries shall be deemed to be an Asset
Sale with respect to the properties or assets of the Company and Restricted
Subsidiaries that are not so sold, conveyed, assigned, transferred, leased or
otherwise disposed of in such transaction; (b) sales of property or equipment
that has become worn out, obsolete or damaged or otherwise unsuitable for use in
the business of the Company or any Restricted Subsidiary, as the case may be;
and (c) any Restricted Payment permitted by Section 6.7. In addition, solely for
purposes of Section 6.10, sales, conveyances, transfers, leases or other
dispositions of properties or assets in a single transaction or series of
transactions involving assets with a fair market value of less than $2.0 million
shall be deemed not to be an Asset Sale.
"ASSUMPTION AGREEMENT" means an assumption agreement, substantially in
the form of EXHIBIT G.
"ATTRIBUTABLE INDEBTEDNESS" in respect of a Sale and Leaseback
Transaction means, as at the time of determination, the greater of (i) the fair
value of the property subject to such arrangement (as determined by the Board of
Directors of the Company) and (ii) the present value of the total obligations
(discounted at a rate of 10%, compounded annually) of the lessee for rental
payments during the remaining term of the lease included in such Sale and
Leaseback Transaction (including any period for which such lease has been
extended) .
"AVAILABILITY PERIOD" means the period from and including the date
hereof to and including the Expiration Date.
"BANKRUPTCY LAW" means Title 11 of the United States Code entitled
"Bankruptcy" or any other Law relating to bankruptcy, insolvency, winding up,
liquidation, reorganization or relief of debtors, whether in effect on the date
hereof or hereafter.
"BANKRUPTCY ORDER" means any court order made in a proceeding pursuant
to or within the meaning of any Bankruptcy Law, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, winding up, dissolution
or reorgani-
<PAGE> 11
-4-
zation, or appointing a custodian of a debtor or of all or any substantial part
of a debtor's property, or providing for the staying, arrangement, adjustment or
composition of indebtedness or other relief of a debtor.
"BOARD OF DIRECTORS" means (i) in the case of a Person that is a
corporation, the board of directors of such Person or any committee authorized
to act therefor, (ii) in the case of a Person that is a limited partnership,
the board of directors of its corporate general partner or any committee
authorized to act therefor (or, if the general partner is itself a limited
partnership, the board of directors of such general partner's corporate general
partner or any committee authorized to act therefor) and (iii) in the case of
any other Person, the board of directors, management committee or similar
governing body or any authorized committee thereof responsible for the
management of the business and affairs of such Person.
"BOARD RESOLUTION" means a copy of a resolution certified pursuant to an
Officers' Certificate to have been duly adopted by the Board of Directors of the
Company and to be in full force and effect, and delivered to Purchaser.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which (i) commercial banks in the City of New York are authorized or required by
law to close or (ii) the New York Stock Exchange is not open for trading.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"CASH EQUIVALENTS" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition; (c) certificates of deposit and Eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) entered into with any financial institution meeting the
qualifications specified in clause (c) above; and (e) commercial paper rated
P-1, A-1 or the equiva-
<PAGE> 12
-5-
lent thereof by Moody's or S&P, respectively, and in each case maturing within
six months after the date of acquisition.
"CHANGE OF CONTROL" shall mean the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Company): (a)
any Person or "group" (1) is or becomes the "beneficial owner," directly or
indirectly, of Equity Interests representing 50% or more of the total voting
power of the Voting Equity Interests of the Company or representing 50% or more
of the equity of the Company or (2) has the power, directly or indirectly, to
elect a majority of the members of the Board of Directors of the Company; (b)
the Company consolidates with, or merges with or into, another Person or the
Company or one or more Restricted Subsidiaries sell, assign, convey, transfer,
lease or otherwise dispose of all or substantially all of the assets of the
Company and the Restricted Subsidiaries, taken as a whole, to any Person (other
than a Wholly Owned Restricted Subsidiary), or any Person consolidates with, or
merges with or into, the Company, in any such event other than pursuant to a
transaction in which the Person or Persons that "beneficially owned," directly
or indirectly, Equity Interests representing a majority of the Voting Equity
Interests of the Company or representing 50% or more of the equity of the
Company immediately prior to such transaction, "beneficially own," directly or
indirectly, Equity Interests representing a majority of the total voting power
of the Voting Equity Interests or representing 50% or more of the equity of the
surviving or transferee Person; (c) during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by the
stockholder of the Company or whose nomination for election by the Board of
Directors of the Company was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the Company
then in office; or (d) there shall occur the liquidation or dissolution of the
Company or the stockholders of the Company shall approve such liquidation or
dissolution. For purposes of this definition, (I) "group" has the meaning under
Section 13(d) and 14(d) of the Exchange Act, including any group acting for the
purpose of acquiring, holding or disposing of securities within the meaning of
Rule 13d-5(b) (1) under the Exchange Act, and (II) "beneficial ownership" has
the meaning set forth in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of all securities
that such Person has the right to
<PAGE> 13
-6-
acquire, whether such right is exercisable immediately or only after the passage
of time, upon the happening of an event or otherwise.
"CLOSING DATE" means the initial Time of Purchase.
"CODE" means the Internal Revenue Code of 1986.
"COMMISSION" means the Securities and Exchange Commission.
"COMMITMENT" means Purchaser's obligations under Section 2.1.
"COMMITMENT AMOUNT" means $100,000,000.
"COMMITMENT LETTER" means the Commitment Letter, dated May 8, 1998,
between Original ONC and Purchaser, relating to Purchaser's commitment to
purchase up to $100.0 million aggregate principal amount of senior subordinated
increasing rate notes, together with the related indemnity letter dated the same
date.
"COMMON EQUITY INTERESTS" means any Equity Interests other than
Preferred Equity Interests.
"COMPANY" means (i) prior to the Reorganization, Original ONC and (ii)
after the Reorganization and the assumption by New ONC of the Company's
obligations under the Financing Documents in accordance with Section 7.1, New
ONC.
"CONSOLIDATED EBITDA" means, for any period, the sum (without
duplication) of (i) Consolidated Net Income plus (ii) to the extent Consolidated
Net Income has been reduced thereby, (A) all income taxes of the Company and the
Restricted Subsidiaries paid or accrued in accordance with GAAP for such period
(other than income taxes attributable to extraordinary, unusual or nonrecurring
gains or losses or taxes attributable to sales or dispositions outside the
ordinary course of business), (B) Consolidated Interest Expense, (C)
Consolidated Non-cash Charges and (D) debt prepayment premiums or penalties
paid, and other transaction costs incurred, in connection with the Transactions
less (iii) any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for the Company and the
Restricted Subsidiaries in accordance with GAAP. At any time of determination,
"Consolidated EBITDA" shall be calculated for the four full fiscal quarter
period of the Company for which financial statements are avail-
<PAGE> 14
-7-
able at the date of determination ending at or prior to such time of
determination after giving pro forma effect to include the results of operations
of any Person or assets subject to an Asset Acquisition by the Company or any
Restricted Subsidiary since the beginning of such four quarter period and at or
prior to such time of determination (to the extent such results of operations
are confirmed by audited financial or other information satisfactory to
Purchaser) and to exclude the results of operations of any Person or assets
subject to an Asset Sale by the Company or any Restricted Subsidiary since the
beginning of such period and at or prior to such time of determination.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum, without
duplication, of (i) Consolidated Interest Expense, plus (ii) the product of (x)
the amount of all cash dividend payments on any series of Preferred Equity
Interests of the Company or any Restricted Subsidiary paid, accrued or scheduled
to be paid or accrued during such period times (y) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal. At any time of determination, "Consolidated Fixed
Charges" shall be calculated for the four full fiscal quarter period of the
Company for which financial statements are available at the date of
determination ending at or prior to such time of determination after giving pro
forma effect to the incurrence or repayment of any Indebtedness of the Company
or any Restricted Subsidiary giving rise to the need to make such calculation
and any incurrence or repayment of other Indebtedness (other than the incurrence
or repayment of Indebtedness in the ordinary course of business for working
capital purposes pursuant to working capital credit facilities) since the
beginning of such four quarter period and at or prior to such time of
determination, as if such incurrence or repayment, as the case may be, occurred
on the first day of such four quarter period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum of,
without duplication: (i) the aggregate of the interest expense of the Company
and the Restricted Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP, including (a) any amortization of debt discount,
(b) the net costs under Interest Rate Protection Obligations, (c) all
capitalized interest and (d) the interest portion of any deferred payment
obligation, but excluding amortization or write-off of deferred financing costs;
and (ii) the interest component of Capital Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company and the
<PAGE> 15
-8-
Restricted Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any period, the net
income of the Company and the Restricted Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP, adjusted, to the extent
included in calculating such net income, by excluding, without duplication, (a)
all extraordinary, unusual or non-recurring gains or losses for such period, (b)
all gains or losses from Asset Sales (net of taxes, fees and expenses relating
to the transaction giving rise thereto) during such period; (c) that portion of
such net income derived from or in respect of investments in Persons other than
Restricted Subsidiaries, except to the extent actually received in cash by the
Company or (subject to the provisions of clause (f) of this definition) any
Restricted Subsidiary; (d) the portion of such net income (or loss) allocable to
minority interests in any Person (other than a Restricted Subsidiary) for such
period, except to the extent the Company's allocation portion of such Person's
net income for such period is actually received in cash by the Company (subject
to the provisions of clause (f) of this definition or any Restricted
Subsidiary); (e) the net income (or loss) of any other Person combined with the
Company or any Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination; and (f) the net
income of any Restricted Subsidiary to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income
is not at the time (regardless of any waiver) permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulations applicable to that
Restricted Subsidiary or the holders of its Equity Interest.
"CONSOLIDATED NON-CASH CHARGES" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Company and the
Restricted Subsidiaries reducing Consolidated Net Income of the Company and the
Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
"CONSOLIDATED TANGIBLE ASSETS" means, at any time, the total amount of
assets of the Company and the Restricted Subsidiaries, less all goodwill, trade
names, trademarks, pat-
<PAGE> 16
-9-
ents, unamortized debt discount and expense and all other intangibles, all as
set forth on the most recent consolidated balance sheet of the Company delivered
to the Holders and calculated in accordance with GAAP.
"CONVERSION DATE" means the date which is 120 days after the Closing
Date.
"CURRENCY AGREEMENT" shall mean any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary against fluctuations in currency values.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"DEFAULT" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means (a) any Senior Indebtedness under
the Senior Credit Facility and (b) any other Senior Indebtedness which at the
time of determination exceeds $25 million in aggregate principal amount (or
accreted value in the case of Indebtedness issued at a discount) outstanding or
available under a committed facility, which is specifically designated in the
instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness" by such Person and as to which the Holders have been given written
notice of such designation.
"DISINTERESTED DIRECTOR" means a member of the Board of Directors of the
Company who does not have any direct or indirect financial interest in or with
respect to the transaction being considered.
"DISPOSITION" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.
"DISQUALIFIED EQUITY INTEREST" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder thereof), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a
<PAGE> 17
-10-
sinking fund obligation or otherwise, or redeemable, at the option of the holder
thereof, in whole or in part, on or prior to the earlier of the Final Maturity
Date; PROVIDED, HOWEVER, that any Equity Interests that would not constitute
Disqualified Equity Interests but for provisions thereof giving holders thereof
the right to require the Company to redeem such Equity Interests upon the
occurrence of a change in control occurring on or prior to the Final Maturity
Date shall not constitute Disqualified Equity Interests if the change in control
provisions applicable to such Equity Interests are no more favorable to the
holders of such Equity Interests than Section 6.15 and such Equity Interests
specifically provide that the Company will not redeem any such Equity Interests
pursuant to such provisions prior to the Company's repurchase of the Notes as
are required to be repurchased pursuant to the Section 6.15.
"ENGAGEMENT LETTER" means the Engagement Letter, dated May 8, 1998,
between Original ONC and Purchaser, together with the related indemnity letter
dated the same date.
"ENVIRONMENT" means any surface water, ground water, drinking water
supply, land surface or subsurface strata, ambient air, indoor air and any
indoor air location and all natural resources such as flora, fauna and wetlands.
"ENVIRONMENTAL CLAIM" means any notice, claim, demand, complaint, suit
or other communication by any person alleging potential or actual liability
(including, without limitation, liability for response or corrective action or
damages to any person, property or natural resources, and any fines or
penalties) arising out of or relating to (1) the Release or threatened Release
of any Hazardous Material or (2) any violation, or alleged violation, of any
applicable Environmental Law.
"ENVIRONMENTAL LAW" means the Comprehensive Environmental Response,
Compensation and Liability Act, ("CERCLA"), the Resource Conservation and
Recovery Act of 1976 and any other applicable federal, state, local, or foreign
statute, rule, regulation, order, judgment, directive, decree, permit, license
or common law as in effect now or at any time during the term of this Agreement,
and regulating, relating to, or imposing liability or standards of conduct
concerning air emissions, water discharges, noise emissions, the release or
threatened release or discharge of any Hazardous Material into the environment,
the generation, handling, treatment, storage, transport or disposal of any
Hazardous Material or otherwise
<PAGE> 18
-11-
concerning pollution or the protection of the Environment, or human health or
safety.
"ENVIRONMENTAL PERMIT" means any permit, license, registration,
approval, consent or other authorization by a federal, state, local or foreign
government or regulatory entity pursuant to any Environmental Law.
"EQUITY INTEREST" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
the rules and regulations promulgated thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules
and regulations promulgated thereunder.
"EXPIRATION DATE" means (a) June 30, 1998 if no Notes have been issued
(other than as a result of Purchaser's failure to fulfill its obligations
hereunder) and (b) with respect to the commitment under Section 2.1(ii) (but
only if the Expiration Date did not occur on June 30, 1998), September 8, 1998.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules
and regulations promulgated thereunder.
"EXISTING BUSINESS" means a business of the ONC Entities or the Acquired
Entities conducted on the date hereof or any activity reasonably related
thereto.
"FAIR MARKET VALUE" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction. For purposes of Sections 6.7 and 6.10,
fair market value shall be determined in good faith by the Board of Directors of
the Company, which determination shall be evidenced by a Board Resolution
delivered to the Holders.
"FINAL MATURITY DATE" means the tenth anniversary of the Closing Date.
<PAGE> 19
-12-
"FINANCING DOCUMENTS" means this Agreement, the Registration Rights
Agreement, the Notes and the Guarantees.
"FOREIGN SUBSIDIARY" means a Restricted Subsidiary that is incorporated
in a jurisdiction other than the United States or a state thereof or the
District of Columbia and, following the Reorganization, with respect to which
more than 80% of any of its sales, earnings or assets (determined on a
consolidated basis in accordance with GAAP) are located in, generated from or
derived from operations located in territories outside the United States of
America and jurisdictions outside the United States of America.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.
"GLOBAL" means Global Stone Corporation, a Canada corporation.
"GLOBAL ACQUISITION" means the acquisition of all of the Equity
Interests of Global pursuant to the Tender Offer and, if not all such Equity
Interests are tendered in the Tender Offer, the acquisition of the remaining
Equity Interests in the manner described in the Tender Offer Documents.
"GOVERNMENTAL AUTHORITY" shall mean any government or political
subdivision of the United States or any other country or any agency, authority,
board, bureau, central bank, securities exchange, commission, department or
instrumentality thereof or therein, including any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to such government or political subdivision.
"GUARANTEE" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guarantee shall include
any agreement to maintain or preserve any other person's
<PAGE> 20
-13-
financial condition or to cause any other Person to achieve certain levels of
operating results.
"GUARANTEE" means, as the context may require, individually, a
guarantee, or collectively, any and all guarantees, of the Obligations of the
Company under this Agreement and the Notes by each Guarantor, if any, pursuant
to Article X.
"GUARANTOR" means (i) each Person listed as such on the signature pages
hereof as a "Guarantor" and (ii) each Person that becomes a Guarantor pursuant
to Section 6.17, until, in each case, the Guarantee of such Person is released
in accordance with this Agreement.
"GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any Guarantor,
all Obligations due pursuant to the terms of all agreements, documents and
instruments providing for, creating, securing or evidencing or otherwise entered
into in connection with (a) all Obligations of such Guarantor owed to lenders
under the Senior Credit Facility; (b) all obligations of such Guarantor with
respect to any Interest Rate Protection Obligation; (c) all obligations of such
Guarantor to reimburse any bank or other person in respect of amounts paid under
letters of credit, acceptances or other similar instruments; (d) all other
Indebtedness of such Guarantor which does not provide that it is to rank PARI
PASSU with or subordinate to the Guarantee of such Guarantor; and (e) all
deferrals, refinancings and extensions of, and amendments to, any of the
Guarantor Senior Indebtedness described above. Notwithstanding anything to the
contrary in the foregoing, Guarantor Senior Indebtedness will not include, with
respect to any Guarantor, (i) Indebtedness of such Guarantor to any of its
Subsidiaries, or to any Affiliate of such Guarantor or any of such Affiliate's
Subsidiaries; (ii) Indebtedness represented by the Guarantees; (iii) any
Indebtedness which by the express terms of the agreement or instrument creating,
evidencing or governing the same is junior or subordinate in right of payment to
any other obligations of such Guarantor; (iv) any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business; (v) Indebtedness incurred in violation of this Agreement; (vi)
Indebtedness represented by Disqualified Capital Stock; and (vii) any
Indebtedness owed to, or guaranteed on behalf of, any stockholder, director,
officer or employee of any ONC Entity.
"HAZARDOUS MATERIAL" means any pollutant, contaminant or hazardous,
toxic, or dangerous waste, substance, constituent or material, defined or
regulated as such in, or for purposes
<PAGE> 21
-14-
of, any Environmental Law, including any asbestos, any petroleum, oil (including
crude oil or any fraction thereof) , any radioactive substance, any
polychlorinated biphenyls, any toxin, chemical, and any other substance that
gives rise to liability under any Environmental Law.
"IN THE ORDINARY COURSE OF BUSINESS" means in the ordinary course of
business of the Company and its Subsidiaries consistent with past practice.
"INCUR" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "INCURRENCE," "INCURRED" and "INCURRING" shall have meanings
correlative to the foregoing). Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or is merged or consolidated with or
into the Company or any Restricted Subsidiary shall be deemed to be incurred at
such time.
"INDEBTEDNESS" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (a) every obligation of such Person for money borrowed; (b)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable incurred in the
ordinary course of business and payable in accordance with industry practices,
or other accrued liabilities arising in the ordinary course of business which
are not overdue or which are being contested in good faith); (e) every Capital
Lease Obligation of such Person; (f) every net obligation under interest rate
swap or similar agreements or foreign currency hedge, exchange or similar
agreements of such Person; (g) every obligation of the type referred to in
clauses (a) through (f) of another Person and all dividends of another Person
the payment of which, in either case, such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise; and (h) any and all deferrals, extensions and refinancings of, or
amendments to,
<PAGE> 22
-15-
any liability of the kind described in any of the preceding clauses (a) through
(g) above. Indebtedness (i) shall never be calculated taking into account any
cash and cash equivalents held by such Person; (ii) shall not include
obligations of any Person (x) arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business, provided
that such obligations are extinguished within two Business Days of their
incurrence unless covered by an overdraft line, (y) resulting from the
endorsement of negotiable instruments for collection in the ordinary course of
business and (z) under stand-by letters of credit to the extent collateralized
by cash or Cash Equivalents; (iii) which provides that an amount less than the
principal amount thereof shall be due upon any declaration of acceleration
thereof shall be deemed to be incurred or outstanding in an amount equal to the
accreted value thereof at the date of determination determined in accordance
with GAAP; and (iv) shall include the liquidation preference and any mandatory
redemption payment obligations in respect of any Disqualified Equity Interests
of the Company and any Preferred Equity Interests of any Restricted Subsidiary.
"INDEPENDENT FINANCIAL ADVISOR" means a nationally recognized
accounting, appraisal, investment banking firm or consultant (i) that does not,
and whose directors, officers and employees or Affiliates do not, have a direct
or indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"IN REST" means, with respect to the Notes, the sum of any interest and
any Additional Interest on the Notes.
"INTEREST PAYMENT DATES" means each January 15 and July 15, commencing
July 15, 1998.
"INTEREST RATE PROTECTION OBLIGATIONS" means, with respect to any
Person, the Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"INVESTMENT" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit or capital contribution to
(by means of transfers of
<PAGE> 23
-16-
cash or other property or assets to others or payments for property or services
for the account or use of others, or otherwise), or purchase or acquisition of
capital stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any other Person. The amount of any Investment shall be
the original cost of such Investment, PLUS the cost of all additions thereto,
and MINUS the amount of any portion of such Investment repaid to such Person in
cash as a repayment of principal or a return of capital, as the case may be, but
without any other adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment. In determining the
amount of any Investment involving a transfer of any property or asset other
than cash, such property shall be valued at its fair market value at the time of
such transfer, as determined in good faith by the Board of Directors of the
Person making such transfer.
"JOINDER AGREEMENT" means a Joinder Agreement, substantially in the form
of EXHIBIT F, pursuant to which a Restricted Subsidiary shall become a Guarantor
hereunder.
"LAWS" means any applicable federal, state, local or foreign statutes,
laws, codes, common law rules, ordinances, rules, regulations, permits,
licensing or other requirements or any judicial or administrative decision of
any Governmental Authority.
"LIEN" means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including any
conditional sale or capital lease or other title retention agreement, any lease
in the nature thereof) and any agreement to give any of the foregoing.
"MAJORITY HOLDERS" means (i) at any time prior to the 90th day following
the Closing Date, Purchaser and (ii) at any time thereafter, the Holders of more
than 50% in aggregate principal amount of the Notes outstanding at such time.
"MARKET DISRUPTION EVENT" means (i) any suspension of trading in
securities generally on the New York, American or Toronto Stock Exchanges, or
any setting of minimum or maximum prices for trading on any such exchange; (ii)
any banking moratorium declared by U.S. Federal or New York authorities; or
(iii) any outbreak or escalation of hostilities between the United States and
any foreign power or an outbreak or escalation of any insurrection or amend
conflict involving the United States or any other substantial national or
international calamity or emergency, which in any case under this clause (iii),
<PAGE> 24
-17-
makes it, in Purchaser's judgment, impracticable or inadvisable to purchase
Notes.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
business, assets, condition (financial or otherwise), results of operations or
properties of the Company and its Subsidiaries, taken as a whole, (ii) a
material adverse effect on the legality, validity, binding effect or
enforceability of any Financing Document or the rights of the Holders or
Purchaser thereunder or (iii) a material adverse effect on the ability of the
Company to consummate the Global Acquisition.
"MOODY'S" means Moody's Investors Service, Inc.
"NET CASH PROCEEDS" means the aggregate proceeds in the form of cash or
cash equivalents received by the Company or any Restricted Subsidiary in respect
of any Asset Sale, including all cash or cash equivalents received upon any
sale, liquidation or other exchange of proceeds of Asset Sales received in a
form other than cash or cash equivalents, net of (a) the direct costs relating
to such Asset Sale (including legal, accounting and investment banking fees, and
sales commissions) and any relocation expenses incurred as a result thereof; (b)
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements); (c)
amounts required to be applied to the repayment of Indebtedness secured by a
Lien on the asset or assets that were the subject of such Asset Sale; (d)
amounts deemed, in good faith, appropriate by the Board of Directors of the
Company to be provided as a reserve, in accordance with GAAP, against any
liabilities directly associated with such assets which are the subject of such
Asset Sale (provided that the amount of any such reserves shall be deemed to
constitute Net Cash proceeds at the time such reserves shall have been released
or are not otherwise required to be retained as a reserve); and (e) with respect
to Asset Sales by Subsidiaries, the portion of such cash payments attributable
to Persons holding a minority interest in such Subsidiary.
"NEW ONC" means Oglebay Norton Holding Company, a newly formed Ohio
corporation, to be renamed Oglebay Norton Company following the Reorganization.
"NEWCO" means Oglebay Norton Acquisition Limited, a Canada corporation.
<PAGE> 25
-18-
"NON-PAYMENT EVENT OF DEFAULT" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"NOTES" means the Company's senior subordinated increasing rate notes
substantially in the form set forth as EXHIBIT A in a maximum aggregate
principal amount equal to $100, 000, 000.
"OBLIGATIONS" means any principal, interest (including post-petition
interest), penalties, fees, indemnifications, reimbursement obligations, damages
and other liabilities payable under the documentation governing any
Indebtedness.
"OBLIGORS" means the Company and the Guarantors, collectively; and
"OBLIGOR" means any of them.
"OFFER" has the meaning set forth in the definition of "OFFER TO
PURCHASE."
"OFFER EXPIRATION DATE" has the meaning set forth in the definition of
"Offer to Purchase."
"OFFER TO PURCHASE" means a written offer (the "OFFER") sent by or on
behalf of the Company by first-class mail, postage prepaid, to each Holder at
his address appearing in the register for the Notes on the date of the Offer
offering to purchase up to the principal amount of Notes specified in such Offer
at the purchase price specified in such Offer (as determined pursuant to this
Agreement). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "OFFER EXPIRATION DATE") of the Offer to Purchase, which
shall be not less than 30 Business Days nor more than 60 days after the date of
such Offer, and a settlement date (the "PURCHASE DATE") for purchase of Notes to
occur no later than five Business Days after the Offer Expiration Date. The
Offer shall contain all the information required by applicable law to be
included therein. The Offer shall also contain information concerning the
business of the Company and its Subsidiaries which the Company in good faith
believes will enable such Holders to make an informed decision with respect to
the Offer to Purchase. Such information shall include, at a minimum, (i) the
most recent annual and quarterly financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the document required to be delivered to Holders pursuant to
Section 6.22 (which re-
<PAGE> 26
-19-
quirements may be satisfied by delivery of such documents together with the
Offer), (ii) a description of material developments in the Company's business
subsequent to the date of the latest of such financial statements referred to in
clause (i) (including a description of the events requiring the Company to make
the Offer to Purchase), (iii) if applicable, appropriate PRO FORMA financial
information concerning the Offer to Purchase and the events requiring the
Company to make the Offer to Purchase and (iv) any other information required by
applicable law to be included therein. The Offer shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Offer to Purchase. The Offer shall also state:
(1) the Section of this Agreement pursuant to which the Offer to
Purchase is being made;
(2) the Offer Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Notes
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to the Section of this Agreement requiring the Offer
to purchase) (the "PURCHASE AMOUNT")
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Notes accepted for payment (the "PURCHASE
PRICE")
(5) that the Holder may tender all or any portion of the Notes
registered in the name of such Holder and that any portion of a Note
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Notes are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue
to accrue;
(8) that on the Purchase Date the Purchase Price will become due
and payable upon each Note being accepted for payment pursuant to the
Offer to Purchase and that interest thereon shall cease to accrue on and
after the Purchase Date;
<PAGE> 27
-20-
(9) that each Holder electing to tender all or any portion of a
Note pursuant to the Offer to Purchase will be required to surrender
such Note at the place or places specified in the Offer prior to the
close of business on the Offer Expiration Date (such Note being, if the
Company so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company duly executed
by, the Holder thereof or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all or any
portion of Notes tendered if the Company receives, not later than the
close of business on the fifth Business Day next preceding the Offer
Expiration Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the holder, the principal amount of the Note
the Holder tendered, the certificate number of the Note the holder
tendered and a statement that such holder is withdrawing all or a
portion of its tender;
(11) that (a) if Notes in an aggregate principal amount less
than or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Notes and (b) if Notes in an aggregate principal amount in excess of the
Purchase Amount are tendered and not withdrawn pursuant to the Offer to
Purchase, the Company shall purchase Notes having an aggregate principal
amount equal to the Purchase Amount on a pro rata basis (with such
adjustments as may be deemed appropriate so that only Notes in
denominations of $1,000 principal amount at maturity or integral
multiples thereof shall be purchased); and
(12) that in the case of any Holder whose Note is purchased only
in part, the Company shall execute and deliver to the Holder of such
Note without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unpurchased portion of the Note
so tendered.
An Offer to Purchase shall be governed by and effected in accordance
with the provisions above pertaining to any Offer.
"OFFICER," with respect to any Person, means the Chief Executive
Officer, the President, any Vice President and the Chief Financial Officer, the
Treasurer or the Secretary of
<PAGE> 28
-21-
such Person, or any other officer designated by the Board of Directors of such
Person, as the case may be.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed by the Chief Executive Officer or the President and the Chief Financial
Officer, the Treasurer or the Assistant Treasurer of such Person that shall
comply with applicable provisions of this Agreement. Each Officers' Certificate
with respect to the satisfaction of a condition precedent shall state (i) that
the signers have read such condition and any definitions or provisions contained
in the Financing Documents relating thereto, (ii) that they have made or have
caused to be made such examination or investigation as is necessary, in the
opinion of the signers, to enable them to express an informed opinion as to
whether or not such condition has been complied with and (iii) whether, in the
opinion of the signers, such condition has been complied with.
"ONC ENTITIES" means the Obligors and their respective Subsidiaries,
collectively; and "ONC ENTITY" means any of them.
"ORDERS" means any judgment, decree, order, regulation, injunction, writ
or rule of any Governmental Authority applicable to any Obligor or any of their
respective Subsidiaries.
"ORIGINAL ONC" means Oglebay Norton Company, a Delaware corporation, to
be renamed ONCO Transportation Company following the Reorganization.
"PAYMENT DEFAULT" means any default, whether or not any requirement for
the giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of (or premium, if any) or interest on or any other amount payable in connection
with Designated Senior Indebtedness.
"PERMANENT FINANCING" means any debt securities of the Company issued
pursuant to the Engagement Letter for gross cash proceeds at least equal to the
greater of (x) $85,000,0000 and (y) the aggregate principal amount of Notes then
outstanding.
"PERMITS" means all licenses, permits, exemptions, registrations,
filings and approvals of or with Governmental Authority.
<PAGE> 29
-22-
"PERMITTED INVESTMENTS" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (c) loans and
advances to employees made in the ordinary course of business not to exceed $1.0
million in the aggregate at any one time outstanding; (d) Interest Rate
Protection Obligations and Currency Agreements permitted under Section 6.8(b)
(vi); and (e) Investments in promissory notes issued to the Company or any
Restricted Subsidiary as consideration in Asset Sales made in compliance with
Section 6.10; PROVIDED, HOWEVER, that the aggregate principal amount of such
promissory notes outstanding shall not exceed the greater of (x) $10.0 million
and (y) 2.0% of Consolidated Tangible Assets.
"PERMITTED LIENS" means (a) Liens on property of a Person existing at
the time such Person is acquired by, or merged into or consolidated with, the
Company or any Restricted Subsidiary; PROVIDED, HOWEVER, that such Liens were in
existence prior to the contemplation of such acquisition, merger or
consolidation and do not secure any property or assets of the Company or any
Restricted Subsidiary other than the property or assets subject to the Liens
prior to such acquisition, merger or consolidation; (b) Liens existing on the
date hereof; (c) Liens securing Purchase Money Indebtedness incurred pursuant to
Section 6.8(b) (iv); PROVIDED, HOWEVER, that (i) such Liens do not extend to any
assets of the Company or any Restricted Subsidiary other than the assets
acquired with the proceeds of such Indebtedness (and improvements thereto or
thereon) and (ii) such Liens attach within 90 days of the incurrence of such
Indebtedness or such improvement; (d) Liens to secure any Permitted
Refinancings, in whole or in part, of any Indebtedness secured by Liens referred
to in the clauses above so long as such Lien does not extend to any other assets
(other than improvements thereto); (e) Liens securing letters of credit entered
into in the ordinary course of business; (f) Liens for taxes not yet due or
which are being actively contested in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with GAAP; (g)
other statutory Liens incidental to the conduct of business or the ownership of
property and assets by the Company or any Restricted Subsidiary which (i) were
not incurred in connection with the borrowing of money or the obtaining of
advances or credit, and (ii) which do not in the aggregate materially detract
from the value of the property or assets or materially impair the use thereof in
the operation of the business of the Company or any Restricted Subsidiary; (h)
easements, rights of way or other minor defects or irregularities in title of
real
<PAGE> 30
-23-
property not interfering in any material respect with the use of such property
in the business of the Company or any Restricted Subsidiary; and (i) Liens
securing Senior Indebtedness.
"PERMITTED REFINANCING" means, with respect to any Indebtedness,
Indebtedness to the extent representing a refinancing of such Indebtedness;
PROVIDED, HOWEVER, that (1) the refinancing Indebtedness shall not exceed the
sum of the amount of the Indebtedness being refinanced, PLUS the amount of
accrued interest or dividends thereon, the amount of any reasonably determined
prepayment premium necessary to accomplish such refinancing and reasonable fees
and expenses incurred in connection therewith; (2) the refinancing Indebtedness
shall have a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being refinanced and shall
not permit redemption or other retirement (including pursuant to any required
offer to purchase to be made by the Company or any Restricted Subsidiary) of
such Indebtedness at the option of the holder thereof prior to the final stated
maturity of the Indebtedness being refinanced, other than a redemption or other
retirement at the option of the holder of such Indebtedness (including pursuant
to a required offer to purchase made by the Company or a Restricted Subsidiary)
upon a change of control of the Company pursuant to provisions substantially
similar to Section 6.15; (3) Indebtedness that ranks PARI PASSU with the Notes
may be refinanced only with Indebtedness that is made PARI PASSU with or
subordinate in right of payment to the Notes, and Indebtedness that is
subordinated in right of payment to the Notes may be refinanced only with
Indebtedness that is subordinate in right of payment to the Notes on terms no
less favorable to the Holders than those contained in the Indebtedness being
refinanced; and (4) the refinancing Indebtedness shall be incurred by the
obligor on the Indebtedness being refinanced or by the Company.
"PERMITTED TRANSFEREE" means any Person that acquires Notes in
compliance with Article VIII other than any Person who acquires such Notes (i)
in a public offering or (ii) in the open market, pursuant to sales under Rule
144.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
partnership, limited partnership, trust, unincorporated organization or
government or any agency or political subdivision thereof or other entity.
<PAGE> 31
-24-
"PREFERRED EQUITY INTEREST," in any Person, means an Equity Interest of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
"PRINCIPAL" of a debt security means the principal of the security plus,
when appropriate, the premium, if any, on the security, including, in the case
of the Notes, the Cancellation Fee, the Conversion Fee or any fee payable to the
Purchaser pursuant to Section 6.15(b).
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"PROXY STATEMENT" means the Proxy Statement/Prospectus of the Company
for its May 22, 1998 meeting of its stock- holders, as filed with the Commission
on April 28, 1998.
"PUBLIC EQUITY OFFERING" means an underwritten public offering for cash
of Common Equity Interests of the Company pursuant to an effective registration
statement filed under the Securities Act (excluding registration statements
filed on Form S-4, S-8 or similar forms).
"PURCHASE AMOUNT" has the meaning set forth in the definition of "OFFER
TO PURCHASE."
"PURCHASE DATE" has the meaning set forth in the definition of "OFFER TO
PURCHASE."
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness incurred in the
ordinary course of business for the purpose of financing all or any part of the
purchase price, or the cost of installation, construction or improvement, of
property or equipment; PROVIDED, HOWEVER, (x) such Indebtedness shall not exceed
the cost of such property or assets and shall not be secured by any property or
assets of the Company or any Restricted Subsidiary other than the property and
assets so acquired or constructed and (y) the Lien securing such Indebtedness
shall be created within 90 days of such acquisition or construction or, in the
case of a refinancing of any Purchase Money Indebtedness, within 90 days of such
refinancing.
<PAGE> 32
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"PURCHASE PRICE" has the meaning set forth in the definition of "OFFER
TO PURCHASE."
"PURCHASER" means CIBC Oppenheimer Corp.
"QUALIFIED EQUITY INTEREST" means any Equity Interest of the Company
other than any Disqualified Equity Interest.
"RATE DETERMINATION PERIOD" means with respect to any 30-day Period the
calendar week ending on the last Friday prior to the first day of such 30-day
Period.
"REDEEM" means redeem, repurchase, defease or otherwise acquire or
retire for value; and "REDEMPTION" and "REDEEMED" have correlative meanings.
"REFINANCE" means refinance, renew, extend, replace, defease or refund,
in whole or in part, including successively; and "REFINANCING" and "REFINANCED"
have correlative meanings.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated the Closing Date between the Obligors and Purchaser, substantially in the
form of EXHIBIT E.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the Environment.
"REORGANIZATION" means the reorganization described in the Proxy
Statement, pursuant to which the Company will become a second-tier wholly owned
subsidiary of New ONC.
"REPLACEMENT ASSETS" means (x) properties and assets (other than cash or
any Equity Interests or other security) that will be used in an Existing
Business or (y) Equity Interests of any Person engaged primarily in an Existing
Business, which Person will become on the date of acquisition thereof a
Restricted Subsidiary as a result of the Company's acquiring such Equity
Interests.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company other than
any Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Corporation and its successors.
<PAGE> 33
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"SALE AND LEASEBACK TRANSACTION" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of any
real or tangible personal Property, which Property has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such Person in
contemplation of such leasing.
"SECURITIES" means the Notes and the Guarantees.
"SECURITIES ACT" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder.
"SENIOR CREDIT FACILITY" means the Credit Agreement dated as of May 15,
1998 between the Company and KeyBank National Association, together with the
documents related thereto (including any guarantee agreements and security
documents), in each case as such agreements may be amended, refinanced or
restructured from time to time (including to increase the amount of available
borrowings thereunder (provided that such increase in borrowings is permitted by
Section 6.8 hereof) or adding Subsidiaries of the Company as additional
borrowers or guarantors thereunder or adding additional collateral thereunder)
with respect to all or any portion of the Indebtedness under such agreement or
any successor or replacement agreement and whether by the same or any other
agent, lender or group of lenders.
"SENIOR INDEBTEDNESS" means all Obligations due pursuant to the terms of
all agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with (a) all Obligations of
the Company owed to lenders under the Senior Credit Facility; (b) all
obligations of the Company with respect to any Interest Rate Protection
Obligation; (c) all obligations of the Company to reimburse any bank or other
person in respect of amounts paid under letters of credit, acceptances or other
similar instruments; (d) all other Indebtedness of the Company which does not
provide that it is to rank PARI PASSU with or subordinate to the Notes; and (e)
all deferrals, refinancings and extensions of, and amendments to, any of the
Senior Indebtedness described above. Notwithstanding anything to the contrary in
the foregoing, Senior Indebtedness will not include (i) Indebtedness of the
Company to any of its Subsidiaries, or to any Affiliate of the Company or any of
such Affiliate's Subsidiaries; (ii) Indebtedness represented by the Notes; (iii)
any Indebtedness which by the express terms of the agreement or instrument
creating, evidencing or governing the same is junior or subordinate in right of
payment to any other obligations of the Com-
<PAGE> 34
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pany; (iv) any trade payable arising from the purchase of goods or materials or
for services obtained in the ordinary course of business; (v) Indebtedness
incurred in violation of this Agreement; (vi) Indebtedness represented by
Disqualified Capital Stock; and (vii) any Indebtedness owed to, or guaranteed on
behalf of, any stockholder, director, officer or employee of any ONC Entity.
"SIGNIFICANT SUBSIDIARY," means, at any date of determination, (a) any
Restricted Subsidiary that satisfies the criteria for a "significant subsidiary"
set forth in Rule 1.02 of Regulation S-X under the Securities Act (except that
references to 10% in such definition shall be changed to 5%), and (b) for
purposes of Section 9.1, any Restricted Subsidiary which, when aggregated with
all other Restricted Subsidiaries that are not otherwise Significant
Subsidiaries and as to which any event described in Section 9.1(8), (9) or (10)
has occurred and is continuing, would constitute a Significant Subsidiary under
clause (a) of this definition.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Company or any
Guarantor which is expressly subordinated in right of payment to the Notes or
the Guarantee of such Guarantor.
"SUBSIDIARY" means, with respect to any Person at any time, (a) any
corporation of which the outstanding Voting Equity Interests having at least a
majority of the votes entitled to be cast in the election of directors shall at
the time be owned, directly or indirectly, by such Person, or (b) any other
Person of which at least a majority of Voting Equity Interests are at the time,
directly or indirectly, owned by such first Person; PROVIDED, HOWEVER, that
for purposes of Article III only, the Acquired Entities shall not be deemed
Subsidiaries of the Company following the Reorganization.
"SURVIVING PERSON" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
"TEN-YEAR TREASURY RATE" means, with respect to any date, the weekly
average per annum yield to maturity values adjusted to constant maturities of
ten years for the Rate Determination Period with respect to the 30-day Period in
which such date occurs as read from the yield curves of the most actively traded
marketable United States Treasury fixed interest rate securities (a) constructed
daily by the United States Treasury
<PAGE> 35
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Department (i) as published by the Federal Reserve Board in its Statistical
Release H.15(519), "Selected Interest Rates," which weekly average yield to
maturity values currently are set forth in such statistical release under the
caption "U.S. Government Securities Treasury Constant Maturities 10 Years," or
(ii) if said Statistical Release H.15(519) is not then published, as published
by the Federal Reserve Board in any release comparable to its Statistical
Release H.15(519), or (iii) if the Federal Reserve Board shall not be publishing
a comparable release, as published in any official publication or release of any
other United States Government department or agency, or (b) if the United States
Treasury Department shall not then be constructing such yield curves, as
constructed by the Federal Reserve Board or any other United States Government
department or agency and published as set forth in (a) above. However, if the
Ten-Year Treasury Rate cannot be determined as provided above, then the term
"Ten-Year Treasury Rate" shall mean the arithmetic average (rounded to the
nearest .01%) of the per annum yields to maturity for each Business Day during
the Rate Determination Period of all of the issues of actively traded marketable
United States Treasury fixed interest rate securities with a maturity of not
less than 117 months nor more than 123 months from such Business Day (excluding
all such securities which can be surrendered at the option of the holder at face
value in payment of any federal estate tax, which provide tax benefits to the
holder or which were issued at a substantial discount) (1) as published in The
Wall Street Journal, or (2) if The Wall Street Journal shall cease such
publication, based on average asked prices (or yields) as quoted by each of
three United States government securities dealers of recognized national
standing selected by the Company.
"30-DAY PERIOD" means each consecutive 30-day period following the
Closing Date provided that the last 30-day Period shall end on the Conversion
Date.
"TENDER OFFER" means the offer to purchase by Newco of all of the common
shares of Global pursuant to the Tender Offer Documents.
"TENDER OFFER DOCUMENTS" means the Offer to Purchase of Newco dated
April 24, 1998 and the accompanying Circular, Letter of Transmittal and Notice
of Guaranteed Delivery.
"TRANSACTIONS" means (i) the consummation of the Global Acquisition,
(ii) the issuance of the Securities, (iii) the initial borrowing under the
Senior Credit Facility, (iv) redemption of all outstanding Trust Debentures, (v)
the redemp-
<PAGE> 36
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tion of the Notes pursuant to the Permanent Financing and (vi) the payment of
fees and expenses in connection therewith.
"TRANSFER" means any disposition of Notes that would constitute a sale
thereof under the Securities Act.
"TRUST DEBENTURES" means the debentures issued under the Trust Indenture
between Global and Montreal Trust Company of Canada, as trustee, dated as of
February 15, 1995.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company designated
as such pursuant to Section 6.13, until such designation is revoked pursuant to
Section 6.13.
"U.S. GOVERNMENT OBLIGATIONS" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the Company thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a) (2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"VOTING EQUITY INTERESTS" means Equity Interests in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled pay-
<PAGE> 37
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ment of principal, including payment of final maturity, in respect thereof, by
(ii) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment, by (b) the then
outstanding aggregate principal amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary all
of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company.
SECTION 1.2. OTHER DEFINITIONS. The definitions of
the following terms may be found in the sections indicated as
follows:
<TABLE>
<S> <C>
"Affiliate Transaction" ......................................... 6.12(a)
"Agreement" ..................................................... Introduction
"Basket" ........................................................ 6.7(I)
"Cancellation Fee" .............................................. 2.5
"Change of Control Date" ........................................ 6.15(a)
"Commonly Controlled Entity" .................................... 3.22
"Company Account" ............................................... 2.2(c)
"Controlling Person" ............................................ 12.3
"Conversion Fee" ................................................ 2.6
"Designation" ................................................... 6.13
"Designation Amount" ............................................ 6.13
"Disclosure Documents" .......................................... 12.3
"Documents" ..................................................... 3.3
"Employee Benefit Plan" ......................................... 3.22
"Event of Default" .............................................. 9.1
"Guarantor Payment Blockage Period" ............................. 10.7(b)
"Guarantor Representative" ...................................... 10.7(a)
"Holder" ........................................................ 12.6
"Indemnified Parties" ........................................... 12.3
"Initial Blockage Period" ....................................... 11.3(b)
"Initial Guarantee Blockage Period" ............................. 10.7(b)
"Intellectual Property Rights" .................................. 3.13
"Licenses" ...................................................... 3.15
"Material Contract" ............................................. 3.12.
"Multiemployer Plan" ............................................ 3.22
"Payment Blockage Period" ....................................... 11.3(b)
"PBGC" .......................................................... 3.22
"Personnel ...................................................... 3.7
"Purchase Request" .............................................. 2.2
"Register" ...................................................... 12.6
"Reportable Event" .............................................. 3.22
"Representative" ................................................ 11.3(a)
"SEC Documents" ................................................. 3.5
</TABLE>
<PAGE> 38
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<TABLE>
<S> <C>
"Taxpayers" ..................................................... 3.20
"Time of Purchase" .............................................. 2.2(a)
</TABLE>
SECTION 1.3. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a consistent basis.
SECTION 1.4. RULES OF CONSTRUCTION. (a) The definitions in Section 1.1
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "INCLUDE," "INCLUDES" and
"INCLUDING" shall be deemed to be followed by the phrase "WITHOUT LIMITATION."
(b) Unless the context shall otherwise require, all references herein to
(i) Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement, (ii)
Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons, (iii) agreements and other contractual instruments include
subsequent amendments, assignments, and other modifications thereto to the date
hereof and thereafter, but in the case of any amendment, assignment or
modification after the date hereof, only to the extent such amendments,
assignments or other modifications thereto are not prohibited by their terms or
the terms of any Financing Document, (iv) statutes and related regulations
include any amendments of same and any successor statutes and regulations, and
(v) time shall be deemed to be to New York City time.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.1. COMMITMENT TO PURCHASE. Subject to the terms and conditions
set forth herein and in reliance on the representations and warranties of the
Obligors contained herein, Purchaser agrees to purchase from the Company, at any
time during the Availability Period, at a purchase price of 100% of the
principal amount thereof, (i) at the initial Time
<PAGE> 39
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of Purchase, Notes in an aggregate principal amount of up to $100.0 million but
not less than $85.0 million and (ii) at the second Time of Purchase (which may
be the same date and time as the initial Time of Purchase but shall not be after
September 8, 1998), Notes in an aggregate principal amount equal to the
difference, if any, between $100.0 million and the aggregate principal amount of
Notes purchased at the initial Time of Purchase.
SECTION 2.2. NOTICE OF PURCHASE. The Company shall give or have given
Purchaser notice not later than 8:00 a.m. on the Business Day of the issuance
and sale of Notes at the initial Time of Purchase and (if the second Time of
Purchase shall be at a different date and time from the initial Time of
Purchase) not later than 10:00 a.m. on the fifth Business Day before the
issuance and sale of Notes at the second Time of Purchase (each, a "PURCHASE
REQUEST"), specifying:
(a) the date and time of the purchase and sale of the Notes
(such date and time, if at all, the "TIME OF PURCHASE");
(b) the aggregate principal amount of Notes to be issued and
sold to Purchaser at such Time of Purchase (which amount shall be an
integral multiple of $1.0 million); and
(c) wire instructions for the account of the Company (the
"COMPANY ACCOUNT") where the purchase price for the Notes is to be
delivered at such Time of Purchase.
SECTION 2.3. PURCHASE OF NOTES. At each Time of Purchase, subject to the
satisfaction of all terms and conditions set forth herein, Purchaser shall
deliver, by wire transfer to the Company Account, immediately available funds in
an amount equal to the aggregate purchase price of the Notes to be issued and
sold to Purchaser at such Time of Purchase, less a funding fee in an aggregate
amount equal to 1.0% of the aggregate principal amount of the Notes purchased
and sold at such Time of Purchase. At each Time of Purchase, against payment as
set forth in the preceding sentence, the Company shall deliver to Purchaser a
single Note representing the aggregate principal amount of Notes issued at such
Time of Purchase, registered in the name of Purchaser, or, if requested by
Purchaser, separate Notes in such other denominations as shall be designated by
Purchaser by notice to the Company at least two Business Days prior to such Time
of Purchase.
<PAGE> 40
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SECTION 2.4. TERMINATION OF COMMITMENT. The Commitment shall terminate
on the Expiration Date.
SECTION 2.5. OPTIONAL REDEMPTION. (a) At any time up to and including
the Conversion Date, the Company may, at its option, redeem the Notes, in whole
or in part, at a redemption price in cash equal to 100% of the principal amount
of Notes so redeemed, together with accrued and unpaid interest thereon through
the redemption date. On the redemption date, the Company shall pay to Purchaser
in cash a cancellation fee in an amount equal to 3.0% of the aggregate principal
amount of the Notes so redeemed (the "CANCELLATION FEE") . The Cancellation Fee
shall be credited against any placement fees or initial purchaser's discounts
and commissions paid to Purchaser in connection with the Permanent Financing (to
the extent the proceeds thereof are used to redeem the Notes pursuant to such
redemption) .
(b) After the Conversion Date and up to and including the third
anniversary of the Closing Date, the Company may, at its option, redeem the
Notes at a redemption price in cash equal to 100% of the aggregate principal
amount of Notes so redeemed, plus (i) a premium (expressed as a percentage)
equal to the sum of the interest rate per annum on the Notes as of the
Conversion Date and (ii) accrued and unpaid interest thereon through the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings; PROVIDED, HOWEVER, that (i) after giving effect to any such
redemption, at least 65% of the aggregate principal amount of the Notes issued
under this Agreement shall remain outstanding after such redemption and (ii)
such redemption shall occur within 90 days following the closing of such Public
Equity Offering.
(c) From and after the fifth anniversary of the Closing Date, the
Company may, at its option, redeem the Notes, in whole or in part, at a
redemption price in cash equal to 100% of the principal amount of Notes so
redeemed, plus a premium (expressed as a percentage) beginning at one-half the
interest rate per annum then being paid on the Notes and declining ratably on
each subsequent anniversary of the Closing Date to par on and after the eighth
anniversary of the Closing Date, together, in each case, with accrued and unpaid
interest thereon through the redemption date.
(d) The Notes shall not be redeemable at the option of the Company
except as expressly provided in this Section 2.5.
<PAGE> 41
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(e) To effect any redemption pursuant to this Section 2.5, the Company
shall give notice to the Holders at least five Business Days prior to the
redemption date.
(f) Any partial redemption of the Notes pursuant to this Section 2.5
shall be in a minimum amount of at least $500,000 and multiples of $100,000. Any
partial redemption shall be made so that the Notes then held by each Holder
shall be prepaid in a principal amount which shall bear the same ratio, as
nearly as may be, to the total principal amount being prepaid as the principal
amount of such Notes held by such Holder shall bear to the aggregate principal
amount of all Notes then outstanding. In the event of a partial redemption, upon
presentation of any Note, the Company shall execute and deliver to or on the
order of the Holder thereof, at the expense of the Company, a new Note in
principal amount equal to the remaining outstanding portion of such Note.
SECTION 2.6. CONVERSION. In the event that the Company does not redeem
all of the Notes on or prior to the Conversion Date with the proceeds of an
offering of the Permanent Financing, the Notes then outstanding will
automatically convert on the Conversion Date into fixed rate obligations, on the
terms set forth in the Notes, pursuant to which, on the Conversion Date, the
interest rate on the Notes shall adjust to, and shall be fixed at, the
then-existing Ten-Year Treasury Rate plus 458 basis points. On the Conversion
Date, unless the Notes have been redeemed prior thereto or are to be redeemed on
the Conversion Date, the Company shall pay to Purchaser in cash a conversion fee
in an amount equal to 3.0% of the aggregate principal amount of the Notes
outstanding on the Conversion Date (the "CONVERSION FEE") .
SECTION 2.7. INTEREST RATE. (a) Interest on the Notes will be payable in
cash, on each Interest Payment Date in arrears. Prior to the Conversion Date,
the interest rate will increase at the end of each period detailed below
subsequent to the Closing Date and will be set on the first day of each period
detailed below at the then Ten-Year Treasury Rate plus the spread set forth in
the column next to each period detailed below:
<PAGE> 42
-35-
<TABLE>
<CAPTION>
Days After Spread over Ten-
Closing Date Year Treasury Rate
------------ ------------------
<S> <C> <C>
0-30 333 basis points
31-60 358 basis points
61-90 383 basis points
91-120 408 basis points
</TABLE>
(b) Effective on the Conversion Date, the rate at which interest accrues
on the Notes will automatically become fixed as set forth in Section 2.6.
(c) Interest will be calculated on the basis of a 360-day year comprised
of twelve 30-day months and paid for the actual number of days elapsed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE OBLIGORS
The Obligors jointly and severally represent and warrant to and agree
with Purchaser and each of the Holders on the date hereof and at each Time of
Purchase as follows:
SECTION 3.1. ORGANIZATION. Each ONC Entity is a corporation or limited
partnership duly organized, validly existing and in good standing under the laws
of the state of its organization and has the organizational power and authority
to carry on its business as now being conducted and to own and operate the
properties and assets now owned and being operated by it. Each ONC Entity is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which such qualification is necessary under applicable law as a
result of the conduct of its business or the ownership of its properties, except
as would not, singly or in the aggregate, have a Material Adverse Effect.
SECTION 3.2. CAPITALIZATION; EQUITY OWNERSHIP. At the Closing Date, the
authorized, issued and outstanding capitalization of the Company consists of the
following: 10,000,000 authorized shares of common stock, par value $1.00 per
share, of which 4,763,351 shares are issued and outstanding; and 5,000,000
authorized shares of preferred stock, no par value, of which no shares are
outstanding. All of the issued and outstanding securities of each ONC Entity
have been duly author-
<PAGE> 43
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ized and validly issued and are fully paid and non-assessable and none of them
have been issued in violation of any preemptive or other right. Except as
disclosed in the SEC Documents, no ONC Entity is a party to or bound by any
contract, agreement or arrangement to issue, sell or otherwise dispose of
(including pursuant to any option, warrant or other right to acquire or
purchase) or redeem, purchase or otherwise acquire any Equity Interests or any
other security of any Obligor exercisable or exchangeable for or convertible
into any Equity Interests of any ONC Entity.
SECTION 3.3. AUTHORITY. Each ONC Entity has the corporate or other
organizational power to enter into the Financing Documents, the Acquisition
Agreement and the Senior Credit Facility (to the extent a party thereto) and all
other agreements, instruments and documents executed and delivered by such ONC
Entity pursuant hereto or thereto (all of which are listed on SCHEDULE 3.3)
(collectively, the "DOCUMENTS") and to carry out its obligations hereunder and
thereunder, including issuing the Securities in the manner and for the purpose
contemplated by this Agreement. The execution, delivery and performance of the
Documents and the consummation of the transactions contemplated thereby have
been duly authorized by each ONC Entity (to the extent a party thereto), and no
other proceeding or approval on the part of any ONC Entity is necessary to
authorize the execution and delivery of the Documents or the performance of any
of the transactions contemplated thereby.
SECTION 3.4. FINANCING DOCUMENTS. (a) This Agreement has been duly
authorized, executed and delivered by each Obligor and is a valid and legally
binding agreement of such Obligor, enforceable against it in accordance with its
terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor may
be brought.
(b) The Notes have been duly authorized by the Company and, when
executed by the Company and delivered to and paid for by Purchaser in accordance
with the terms of this Agreement, will constitute valid and legally binding
obligations of the Company, enforceable against it in accordance with its terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
eq-
<PAGE> 44
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uity and the discretion of the court before which any proceeding therefor may
be brought.
(c) The Guarantee of each Guarantor to be issued at such Time of
Purchase has been duly authorized by such Guarantor and, when the Notes have
been executed by the Company and delivered to and paid for by Purchaser in
accordance with the terms of this Agreement, such Guarantee will constitute
valid and legally binding obligations of such Guarantor, enforceable against it
in accordance with their terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
SECTION 3.5. SEC DOCUMENTS; ACQUISITION DOCUMENTS: FINANCIAL STATEMENTS.
(a) Each report, proxy statement, registration statement or other document,
including all exhibits and schedules thereto, required to be filed by any ONC
Entity with the Commission under the Securities Act or the Exchange Act from and
after January 1, 1995 and at or prior to such Time of Purchase (the "SEC
DOCUMENTS") have been filed by EDGAR and are available through the Commission's
website. As of their respective dates, the SEC Documents (i) complied as to form
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.
(b) The financial statements included in the SEC Documents were prepared
in accordance with GAAP (except that interim financial statements lack full
footnote disclosure and are subject to normal year-end adjustments) and fairly
present the consolidated financial position, results of operations, cash flows
and changes in stockholders' equity of ONC and its Subsidiaries at the dates and
for the periods presented.
(c) As of their respective dates, the Tender Offer Documents (i)
complied in all material respects with the applicable requirements of Canadian
securities laws and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(d) The Company has, or has caused to be, delivered to purchaser and its
counsel true and complete copies of the
<PAGE> 45
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Tender Offer Documents, the Acquisition Agreement and the Recommendation of the
Tender Offer by Global's Board of Directors. Such materials constitute the only
agreements or documents entered into or delivered in connection with the Global
Acquisition and have not been amended since their respective dates.
(e) Except such liabilities or obligations incurred under the Documents,
there are no liabilities or obligations of any ONC Entity accrued, absolute or
contingent, and whether due or to become due, other than liabilities or
obligations incurred in the ordinary course (none of which is the result of a
claim for breach of contract, a warranty claim, a tort or an infringement) or
reflected or adequately reserved against in the consolidated balance sheet of
the Company as of March 31, 1998 included in its Quarterly Report on Form l0-Q.
(f) Except as set forth on SCHEDULE 3.6, no dividends or distributions
have been made or declared on any Equity Interests of the Company since March
31, 1998.
SECTION 3.6. SOLVENCY. (a) After giving effect to the consummation of
the transactions contemplated by the Documents, (i) the fair value of the assets
of the Company is greater than the total amount of liabilities, including
contingent liabilities, of the Company, (ii) the present fair salable value of
the assets of the Company is not less than the amount that will be required to
pay the probable liability of the Company on its debts as they become absolute
and matured, (iii) the Company does not intend to, or believe that it will,
incur debts and liabilities beyond the Company's ability to pay as such debts
and liabilities mature, (iv) the Company is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which the Company's assets would constitute unreasonably small capital and (v)
the Company is able to pay its debts as they become due and payable .
(b) After giving effect to the consummation of the transactions
contemplated by the Documents, (i) the fair value of the assets of each
Significant Subsidiary is greater than the total amount of liabilities,
including contingent liabilities, of such Significant Subsidiary, (ii) the
present fair salable value of the assets of such Significant Subsidiary is not
less than the amount that will be required to pay the probable liability of such
Significant Subsidiary on its debts as they become absolute and matured, (iii)
such Significant Subsidiary does not intend to, and does not believe that it
will, incur debts and liabilities beyond its ability to pay as such
<PAGE> 46
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debts and liabilities mature, (iv) such Significant Subsidiary is not engaged in
a business or a transaction, and is not about to engage in a business or a
transaction, for which its assets would constitute unreasonably small capital
and (v) such Significant Subsidiary is able to pay its debts as they become due
and payable.
SECTION 3.7. ABSENCE OF CERTAIN CHANGES. Since December 31, 1997 (except
(i) for the negotiation, execution and delivery of the Documents or as
contemplated thereby and (ii) as set forth in SCHEDULE 3.7):
(a) No ONC Entity has had any change in its condition,
operations, business, properties, assets or liabilities, except where
such changes have not had or could not reasonably be expected to have a
Material Adverse Effect;
(b) Except for actions taken in the ordinary course, (i) there
has not been any increase in the compensation payable or to become
payable by any ONC Entity to any of its directors, officers, employees
or agents (collectively, "PERSONNEL"), (ii) except pursuant to existing
plans and arrangements described in SCHEDULE 3.7, there has not been any
bonus, incentive compensation, service award or other like benefit
granted, made or accrued, contingently or otherwise, for or to the
credit of any of the Personnel with respect to which any ONC Entity will
have any material obligation or liability, (iii) there has not been any
employee welfare, pension, retirement, profit-sharing or similar payment
or arrangement made or agreed to by any ONC Entity for any Personnel
except pursuant to existing plans and arrangements described in SCHEDULE
3.7 and (iv) except as set forth on SCHEDULE 3.7, there has not been any
new employment or consulting agreement to which any ONC Entity is a
party;
(c) No property or asset of a material nature to any ONC Entity
has been sold, transferred or otherwise disposed of, and no ONC Entity
has agreed to sell, transfer or otherwise dispose of, any of its
material properties or assets, except in the ordinary course;
(d) No property or asset of a material nature to any ONC Entity
has been subjected to any Lien and no ONC Entity has agreed to subject
any of its material properties or assets to any Lien, except for
Permitted Liens, other than in the ordinary course;
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(e) No ONC Entity has incurred or committed to incur any
material Indebtedness or made any loan or advance to any Person, other
than trade payables and wages, advances and loans to employees incurred
in the ordinary course; and
(f) There has not been any amendment or termination of any
contract, agreement or license that would have a Material Adverse
Effect.
SECTION 3.8. NO VIOLATION. Except as set forth on Schedule 3.8, neither
the execution, delivery or performance of any Document nor the consummation of
any of the transactions contemplated thereby (i) will violate or conflict with
the charter or by-laws or similar organizational document of any ONC Entity or
any Acquired Entity, (ii) will result in any breach of or default under any
provision of any material contract or agreement to which any ONC Entity or, to
the Obligors' knowledge, any Acquired Entity is a party or by which any ONC
Entity or, to the Obligors' knowledge, any Acquired Entity is bound or to which
any of its property or assets are subject, (iii) violates or is prohibited by
any Law, (iv) will cause any acceleration of maturity of any note, instrument or
other indebtedness to which any ONC Entity or, to the Obligors' knowledge, any
Acquired Entity is a party or by which any ONC Entity or, to the Obligors'
knowledge, any Acquired Entity is bound or with respect to which any ONC Entity
or, to the Obligors' knowledge, any Acquired Entity is an obligor or guarantor,
or (v) other than pursuant to the Senior Credit Facility, will result in the
creation or imposition of any Lien upon or give to any other Person any interest
or right (including any right of termination or cancellation) in or with respect
to the equity or any of the properties, assets, business, agreements or
contracts of any ONC Entity or, to the Obligors' knowledge, any Acquired Entity.
SECTION 3.9. TITLE AND CONDITION OF PROPERTIES AND ASSETS; ADEQUACY. The
ONC Entities have good title to or a valid leasehold interest in all of their
respective assets and properties (except as sold or otherwise disposed of as
described in SCHEDULE 3.7 or in the ordinary course of business), subject to no
Liens other than Permitted Liens (subject only to the filing of UCC-3
termination statements (or other forms of similar effect) to be delivered at the
initial Time of Purchase) other than such imperfections in title as would not,
individually or in the aggregate, have a Material Adverse Effect.
<PAGE> 48
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SECTION 3.10. LEASED PROPERTY. Attached as SCHEDULE 3.10 is a true and
complete list of all material real property leased by any ONC Entity. Each lease
set forth in SCHEDULE 3.10 is in full force and effect and is valid and
enforceable in accordance with its terms except that the enforcement hereof may
be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally,
and (ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought. There is not under any such lease
any default by any ONC Entity, or any event that with notice or lapse of time or
both would constitute such a material default by any ONC Entity and with respect
to which any ONC Entity has not taken adequate steps to prevent such default
from occurring, except for any such default as would not have a Material Adverse
Effect. Except as set forth in SCHEDULE 3.10, there is not under any such lease
any default by any other party thereto or any event that with notice or lapse of
time or both would constitute such a default thereunder by such party, which
default would have a Material Adverse Effect .
SECTION 3.11. MATERIAL CONTRACTS. All Material Contracts to which any
ONC Entity is a party (other than any Document) or by which any ONC Entity is
bound are listed on SCHEDULE 3.11. Except as disclosed on SCHEDULE 3.11, each
Material Contract is valid and binding and ONC Entity party thereto has duly
performed all its material obligations under each such Material Contract to
which it is a party and no breach or default by any ONC Entity in any material
respect, or, to the Obligors' knowledge, by any other party or obligor
thereunder in any material respect, has occurred or will result from the
execution, delivery and performance of the Documents. For purposes hereof, a
"MATERIAL CONTRACT" of any Person means any agreement, arrangement, bond,
commitment, indemnity, lease or license that (i) by its terms obligates such
Person to pay an amount in excess of $500,000 per year and which cannot be
terminated or canceled by such Person without liability or penalty upon 60 days'
or less prior notice, (ii) limits or restricts the ability of such Person to
compete or to conduct its business in any manner or place, (iii) is a credit
agreement, note, bond, mortgage, deed of trust or indenture evidencing any
Indebtedness of such Person (other than any such Indebtedness that will be
repaid and discharged in full and as to which commitments will be terminated
prior to or at the Closing Date), (v) represents or relates to an Investment
(other than an Investment in Cash Equivalents), or (vi) the termination of which
would have a Material Adverse Effect.
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SECTION 3.12. LITIGATION. Except as set forth on SCHEDULE 3.12, there
are no actions, suits, proceedings or investigations, either at law or in
equity, or before any Governmental Authority in any United States or any other
jurisdiction, of any kind now pending or, to the Obligors' knowledge, threatened
and involving in excess of $1.0 million, involving or affecting any ONC Entity
or which questions the validity of any Document or which seeks to delay,
prohibit or restrict in any manner any action taken or contemplated to be taken
by under any Document.
SECTION 3.13. PATENTS, COPYRIGHTS AND TRADEMARKS. SCHEDULE 3.13 sets
forth a complete list of all material copyrights, patents, trade names,
trademarks and service marks, identifying whether registered or at common law,
and all applications therefor that are pending or in the process of preparation
(collectively, the "INTELLECTUAL PROPERTY RIGHTS"), that are directly or
indirectly owned or used by any ONC Entity and all material licenses and other
agreements allowing any ONC Entity to use Intellectual Property Rights of third
parties. Except as otherwise set forth in Schedule 3.13, an ONC Entity is the
sole and exclusive owner of the Intellectual Property Rights listed therein,
free and clear of any Lien (other than Permitted Liens), and such Intellectual
Property Rights have not been and are not being challenged in any way or
involved in any pending or threatened unfair competition proceeding. Except as
set forth on SCHEDULE 3.13, there has been no claim challenging the scope,
validity or enforceability of any of the Intellectual Property Rights. No ONC
Entity has infringed or is, to any Obligors' knowledge, subject to any unfair
competition claim with respect to, any service mark or trade name registration
or application therefor, trademark, trademark registration or application
therefor, copyright, copyright registration or application therefor, patent,
patent registration or application therefor, or any other proprietary or
intellectual property right of any person or entity, which infringement or claim
would have a Material Adverse Effect and no ONC Entity has received or has any
knowledge of any such claim or other notice of any such violation or
infringement.
SECTION 3.14. COMPLIANCE WITH LAWS. ETC. (i) Each ONC Entity has
complied with all Laws and all Orders, except as would not have a Material
Adverse Effect and (ii) since December 31, 1997, no ONC Entity has received
any written or oral communication from any Person that alleges that any ONC
Entity, its predecessor or any of its previously owned subsidiaries was not or
is not in compliance with any such Law or Order.
<PAGE> 50
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SECTION 3.15. GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. Except as
disclosed in SCHEDULE 3.15 hereto, (a) each ONC Entity has been in compliance
with all Permits required to conduct its business as presently conducted; and
(b) all such Permits are valid, binding, and in full force and effect, except in
the case of either (a) or (b) for such failures to be in compliance or valid,
binding and in full force and effect as would not, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth on SCHEDULE 3.15,
no Permit is required in connection with the execution, delivery or performance
by any ONC Entity or, to the Obligors' knowledge, any Acquired Entity of any
Document or any of the transactions contemplated thereby, except (i) as may be
required under state securities or "blue sky" laws or the laws of any foreign
jurisdiction in connection with the offer and sale of the Notes by Purchaser,
(ii) the registration under the Securities Act required by the Registration
Rights Agreement or (iii) as would not have a Material Adverse Effect. All such
authorizations, consents, approvals, filings, declarations and registrations
which are required to have been obtained by the date hereof have been obtained
or made, as the case may be, and are in full force and effect and not the
subject of any pending or, to the Obligors' knowledge, threatened attack by
appeal or direct proceeding or otherwise.
SECTION 3.16. LABOR MATTERS. Except as disclosed on SCHEDULE 3.16 or, in
the case of paragraph (b), (c), (d), (e) or (f), as has not and would not have a
Material Adverse Effect:
(a) COLLECTIVE BARGAINING REPRESENTATIVE. There is no collective
bargaining representative of any employees of any ONC Entity;
(b) LABOR DISPUTES. There is and for the past three years has
been no labor strike, work stoppage, lockout or other work action, and
no such dispute is actually pending or, to the Obligors' knowledge,
threatened against or affecting any ONC Entity;
(c) REPRESENTATIVE QUESTIONS. No union organization or
decertification campaign is in progress or, to the Obligors' knowledge,
threatened with respect to any ONC Entity; and no question concerning
representation exists respecting such employees;
(d) UNFAIR LABOR PRACTICES. There is no unfair labor practice
charge or complaint pending or, to the Obli-
<PAGE> 51
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gors' knowledge, threatened before the National Labor Relations Board
or any similar Governmental Authority;
(e) GRIEVANCES. There is no pending or, to the Obligors'
knowledge, threatened labor grievance against any ONC Entity;
(f) EMPLOYMENT MATTERS. No actions or investigations with
respect to any Law relating to the employment of labor are under way or,
to the Obligors' knowledge, threatened against any ONC Entity; and
(g) COLLECTIVE BARGAINING OBLIGATIONS. All collective bargaining
obligations required by any Law or contract have been, or prior to the
Closing Date will be, satisfied by the ONC Entities in all material
respects.
SECTION 3.17. RELATIONSHIPS. The relationships of the ONC Entities with
their material suppliers, distributors, dealers, sales representatives,
customers and others having business relationships with them are generally
satisfactory, and no ONC Entity has received any notice by any such Person to
terminate or modify the terms of any of such relationships. Without limiting the
foregoing, except as set forth on SCHEDULE 3.17, no ONC Entity has received any
notice that any customer who accounted for more than 5% of the consolidated
revenues of the Company and its Subsidiaries during the past 24 months intends
to terminate or materially reduce its business with any ONC Entity in the
future, and except as set forth in SCHEDULE 3.17, no such customer has
terminated or materially reduced its business with any ONC Entity during the
past twelve months.
SECTION 3.18. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE
3.18,
(a) Each ONC Entity possesses all material Environmental Permits
required under applicable Environmental Laws to conduct its businesses as
currently conducted and as proposed, and are, and to the Obligor's knowledge,
have been, in material compliance with the terms and conditions of such
Environmental Permits. No ONC Entity (i) has received any notice that any
Environmental Permit currently held by any ONC Entity will be revoked, suspended
or will not be renewed or (ii) has any reason to believe that any such
Environmental Permit will be revoked or modified prior to its expiration or will
not be renewed (in each case, without incurring any material additional
expense).
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(b) The execution and delivery of the Documents and the consummation of
the transactions contemplated thereby will not trigger any notification,
registration, reporting, filing, investigation, or remediation obligation on the
part of Obligor under any Environmental Law.
(c) The ONC Entities have complied in all material respects with, all
applicable Environmental Laws, and to the Obligors' knowledge, no circumstances
or conditions currently exist that would prevent compliance in all material
respects in the future, or which could result in Environmental Claims being
asserted against the ONC Entities which, individually or in the aggregate, could
result in an Material Adverse Effect.
(d) (i) There is no material Environmental Claim pending or, to the
Obligors' knowledge, threatened against any ONC Entity, including, but not
limited to, any Environmental Claim resulting from any liability that any ONC
Entity may have retained or assumed either contractually or by operation of law,
and (ii) to the Obligors' knowledge, no conditions or circumstances exist which
may give rise to a future material Environmental Claim against any ONC Entity.
(e) No property or facility currently owned, operated or leased or
formerly owned or, to the Obligors' knowledge, formerly operated or leased by
any ONC Entity, or, to the Obligors' knowledge, by any respective predecessor in
interest, is listed or proposed for listing on the National Priorities List or
the Comprehensive Environmental Response, Compensation and Liability Information
System, both promulgated under CERCLA, or on any comparable foreign or state
list established under any Environmental Law in connection with investigation,
removal, remediation or other cleanup activities relating to identified, or
suspected soil, or ground water surface water conditions, including, but not
limited to, such lists relating to petroleum contamination.
(f) (i) There has been no Release and there is currently no threatened
Release of any Hazardous Material generated, used, owned, or stored by any ONC
Entity or, to the Obligors' knowledge, any respective predecessor in interest,
on, at, under or emanating from any property presently or formerly owned, leased
or operated by any ONC Entity or, to the Obligors' knowledge, any respective
predecessor in interest, and (ii) there are no Hazardous Materials located in,
at, on, or under such facility or property, or at any other location, which, in
the case of either clause (i) or (ii), could reasonably be expected to require
investigation, removal, remedial or
<PAGE> 53
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corrective action involving material costs or penalties to any ONC Entity or
that would reasonably likely result, individually or in the aggregate, in a
Material Adverse Effect.
(g) No asbestos or polychlorinated biphenyls have been used or disposed
of, or have been located at, on, or under any such facility or property owned,
leased or operated by any ONC Entity that could reasonably be expected to result
in material liability of any ONC Entity.
(h) No Lien has been recorded against any properties, assets or
facilities currently owned, leased or operated by any ONC Entity under any
Environmental Law.
SECTION 3.19. BROKERS. Except as provided herein and in the Acquisition
Agreement, there are no claims for commissions or fees from any investment
banker, broker, finder, consultant or intermediary hired by or on behalf of any
ONC Entity in connection with the transactions contemplated by any Document
based on any binding arrangement or agreement.
SECTION 3.20. TAX MATTERS. The ONC Entities (hereinafter referred to
collectively as the "TAXPAYERS") have duly filed all tax reports and returns
required to be filed by them, including all federal, state, local and foreign
tax returns and reports. The Taxpayers have paid in full all taxes required to
be paid by such Taxpayers before such payment became delinquent. The Taxpayers
have made adequate provision, in conformity with generally accepted accounting
principles consistently applied, for the payment of all taxes which may
subsequently become due. All taxes which any Taxpayer has been required to
collect or withhold have been duly collected or withheld and, to the extent
required, have been or will be duly paid to the proper taxing authority. There
are no governmental audits known by the Taxpayers to be pending of any of the
Taxpayers' tax returns or tax liabilities, and there are no claims which have
been asserted relating to any of the Taxpayers' tax returns filed or tax
liabilities for any year which if determined adversely would result in the
assertion by any governmental agency of any deficiency. There have been no
waivers of statutes of limitations by any Taxpayer. Neither of the Taxpayers has
filed a statement under Section 341(f) of the Code (or any comparable state
income tax provision), consenting to have the provisions of Section 341(f) (2)
(collapsible corporations provisions) of the Code (or any comparable state
income tax provision) apply to any disposition of any of the Taxpayers' assets
or property, and no property of the Taxpayers is property which any Taxpayer is
or will be required to treat as
<PAGE> 54
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owned by another person pursuant to the provisions of Section 168(f) (safe
harbor leasing provisions) of the Code. No Taxpayer is a party to any tax
sharing agreement or similar arrangement with any other party. For the purpose
of this Agreement, any federal, state, local or foreign income, sales, use,
transfer, payroll, personal property, occupancy or other tax, levy, impost, fee,
imposition, assessment or similar charge, together with any related addition to
tax, interest or penalty thereof, is referred to as a "TAX."
SECTION 3.21. INVESTMENT COMPANY: PUBLIC UTILITY HOLDING COMPANY. No
Obligor is, and immediately after the Time of Purchase no Obligor will be, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of and regulated under the Investment Company Act of 1940 or a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935.
SECTION 3.22. ERISA. The execution and delivery of Documents and the
consummation of the transactions contemplated thereby will not involve any
non-exempt prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code on the part of any ONC Entity. The preceding
representation is made in reliance on and subject to the accuracy of Purchaser's
representations and warranties in Section 4.1 hereof. No reportable event (as
defined in Section 4043 of ERISA) the reporting of which has not been waived by
the Pension Benefit Guaranty Corporation ("PBGC") (a "REPORTABLE EVENT") has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Employee Benefit Plan,
and the Company and Commonly Controlled Entities (as defined below) have
complied in all material respects with the applicable provisions of ERISA and
the Code in connection with the Employee Benefit Plans (as defined below) . The
present value of all accrued benefits under each Employee Benefit Plan subject
to Title IV of ERISA (based on the current liability, interest rate and other
assumptions used in preparation of the plan's Form 5500 Annual Report) did not,
as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
plan allocable to such accrued benefits by more than $250,000. Neither the
Company nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any multiemployer plan (as defined in Section 4001 (a) (3) of
ERISA) which has resulted in material liability to the Company which has not
been satisfied, and neither the Company nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Com-
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pany or any such Commonly Controlled Entity were to withdraw completely from all
such multiemployer plans to which the Company or any Commonly Controlled Entity
contributes or has an obligation to contribute (a "MULTIEMPLOYER PLAN") as of
the valuation date most closely preceding the date on which such representation
is made or deemed made. No such Multiemployer Plan is in reorganization or
insolvent. There are no material liabilities of the Company or any Commonly
Controlled Entity for post-retirement benefits to be provided to their current
and former employees under plans which are welfare benefit plans (as described
in Section 3 (1) of ERISA) . With respect to each Employee Benefit Plan, no
event has occurred and there exist no conditions or set of circumstances in
connection with which the Company or any of its subsidiaries may, directly or
indirectly (through a Commonly Controlled Entity or otherwise), be subject to
material liability under the Code, ERISA or any other applicable law, except for
liability for benefit claims and funding obligations payable in the ordinary
course. "COMMONLY CONTROLLED ENTITY" means any person or entity that, together
with the Company, is treated as a single employer under Section 414(b), (c),
(in) or (o) of the Code, other than any Acquired Entity. "EMPLOYEE BENEFIT PLAN"
means an employee benefit plan, as defined in Section 3(3) of ERISA, which is
maintained or contributed to by the Company or any Commonly Controlled Entity or
to which the Company or any Commonly Controlled Entity may have liability.
SECTION 3.23. SECURITIES MATTERS. No form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) was used by any Obligor or their representatives in connection
with the offer and sale of the Securities. No Obligor or any Person acting on
any Obligor's behalf has, either directly or indirectly, sold or offered for
sale any of the Securities or any other similar security of any Obligor to, or
solicited any offers to buy any thereof from, or has otherwise approached or
negotiated in respect thereof with, any Person or Persons other than with or
through Purchaser; and each Obligor agrees that neither it nor any Person acting
on its behalf will sell or offer for sale any Securities to, or solicit any
offers to buy any Securities from, or otherwise approach or negotiate in
respect thereof with, any Person or Persons so as thereby to bring the issuance
or sale of any of the Securities within the provisions of Section 5 of the Act.
Assuming the accuracy of Purchaser's representations and warranties set forth in
Section 4.1 hereof, and the due performance by Purchaser of the covenants and
agreements set forth in Section 4.1 hereof, the offer and sale of the Notes to
Purchaser in the manner contemplated by this
<PAGE> 56
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Agreement does not require registration under the Securities Act. No ONC Entity
has engaged nor has any Person (other than Purchaser) been authorized by on or
behalf of any ONC Entity to engage, in the marketing of any issue of debt
securities or commercial bank facilities (other than the Senior Credit Facility)
of any ONC Entity of a type or in a manner which would compete with the offering
of the Notes or the Permanent Financing.
SECTION 3.24. INSURANCE. The ONC Entities maintain insurance with
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are reasonably prudent and customary in the businesses in
which they are engaged. No ONC Entity (i) has received notice from any insurer
or agent of such insurer that substantial capital improvements or other
material expenditures will have to be made in order to continue such insurance,
except as would not have a Material Adverse Effect, or (ii) has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
on terms, except as would not have a Material Adverse Effect.
SECTION 3.25. EMPLOYEES. Except as set forth on SCHEDULE 3.25, since
December 31, 1997, there has been no resignation or termination of employment of
any officer or key employee of any ONC Entity, and no Obligor has any knowledge
of any impending or threatened resignation or termination of employment of such
officer or employee. Except as set forth on SCHEDULE 3.25, no ONC Entity is
party to any severance or similar arrangement in respect of any present or
former employees that will result in any obligation (absolute or contingent) of
any ONC Entity to make any payment to any present or former employees following
termination of employment.
SECTION 3.26. PAYMENTS. No ONC Entity has, directly or indirectly, paid
or delivered any fee, commission or other sum of money or item of property,
however characterized, to any finder, agent, government official or other party,
in the United States or any other country, which is in any manner related to the
business or operations of any ONC Entity, which any ONC Entity knows or has
reason to believe to have been illegal under any Laws.
SECTION 3.27. GUARANTEES. Each Subsidiary of the Company is listed as a
"Guarantor" on the signature pages hereof, other than any such Subsidiary that
(A) (i) is listed on SCHEDULE 3.27A, (ii) has no material assets, operations or,
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except as disclosed on SCHEDULE 3.27A, liabilities, (iii) other than Oglebay
Norton Management Company, will be liquidated, dissolved or disposed of as soon
as practicable and (iv) is not an obligor under the Senior Credit Facility, (B)
(i) is listed on SCHEDULE 3.27(B), (ii) is a Foreign Subsidiary or a Subsidiary
of a Foreign Subsidiary and (iii) is not an obligor under the Senior Credit
Facility or (C) has been separately disclosed to Purchaser.
SECTION 3.28. REPRESENTATIONS AND WARRANTIES IN ACQUISITION AGREEMENT
AND SENIOR CREDIT FACILITY. The representations and warranties of Original ONC
contained in the Acquisition Agreement and the Senior Credit Facility are true
and correct in all material respects. To the Obligors' knowledge, the
representations and warranties of Global contained in the Acquisition Agreement
are true and correct in all material respects (without giving effect to any
exception thereto based on information previously provided to Purchaser unless
such information has been furnished in writing to Purchaser).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 4.1. PURCHASER REPRESENTATIONS. Purchaser represents and
warrants to the Company that:
(a) Purchaser is an accredited investor within the meaning of
Rule 501(a) under the Securities Act and the Securities to be acquired
by it pursuant to this Agreement are being acquired for its own account
and not with a view toward, or for sale in connection with, any
distribution thereof except in compliance with applicable United States
federal and state securities laws;
(b) the execution, delivery and performance of this Agreement,
including the purchase of the Securities pursuant hereto, are within
Purchaser's corporate powers and have been duly and validly authorized
by all requisite corporate action;
(c) this Agreement has been duly executed and delivered by
Purchaser;
(d) this Agreement constitutes a valid and binding agreement of
Purchaser, enforceable in accordance with its
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terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought;
(e) Purchaser has such knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks
of its investment in the Securities and Purchaser is capable of bearing
the economic risks of such investment; and
(f) Purchaser is not acquiring the Securities to be acquired by
it pursuant to this Agreement with "plan assets" of any "employee
benefit plan" (or its related trust) within the meaning of Section 3(3)
of ERISA that is subject to Title I of ERISA or with any assets of any
"plan" (or its related trust) as defined in Section 4975 of the Code.
ARTICLE V
CONDITIONS PRECEDENT TO PURCHASE OF NOTES
SECTION 5.1. CONDITIONS TO PURCHASER'S OBLIGATIONS AT EACH TIME OF
PURCHASE. The obligation of Purchaser to purchase any Notes is subject to the
prior or concurrent satisfaction of each of the following conditions:
(a) All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents
incidental thereto shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received the following items, each of which
shall be in form and substance reasonably satisfactory to Purchaser and, unless
otherwise noted, dated such Time of Purchase:
(1) the certified copy of each ONC Entity's charter or other
organizational document, together with a certificate of status,
compliance, good standing or like certificate with respect to each ONC
Entity issued by the appropriate government officials of the
jurisdiction of its incorporation and of each jurisdiction in which it
owns any material assets or carries on any material business, each to be
dated a recent date prior to the Closing Date;
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(2) a copy of each ONC Entity's by-laws, certified by its
Secretary or one of its Assistant Secretaries;
(3) resolutions of each ONC Entity's Board of Directors
approving and authorizing the execution, delivery and performance of
each Document (to the extent a party thereto) and approving and
authorizing the execution, delivery and payment of the Securities and
the consummation of the Transactions, each certified by its Secretary or
one of its Assistant Secretaries as being in full force and effect
without amendment;
(4) signature and incumbency certificates with respect to the
officers of each Obligor executing the Financing Documents;
(5) Notes executed and delivered by the Company, for the
aggregate principal amount to be purchased at such Time of Purchase,
substantially in the form of EXHIBIT A registered in the name of
Purchaser and with appropriate insertions;
(6) Notes executed and delivered by the Company, for the
aggregate principal amount to be purchased at such Time of Purchase,
substantially in the form of EXHIBIT A registered in the name of
Purchaser and with appropriate insertions;
(7) a notation of Guarantee on each Note, executed and delivered
by each Guarantor, substantially in the form of EXHIBIT B;
(8) an originally executed Purchase Request, substantially in
the form of EXHIBIT C, signed by the President or a Vice President or
other senior officer of the Company and delivered to Purchaser;
(9) originally executed copies of the opinions of Jones, Day,
Reavis & Pogue, special counsel for the Obligors, Stikeman, Elliott,
special Canadian counsel for the Obligors, and Thompson Hine & Flory
LLP, special counsel for the Obligors, substantially in the form of
EXHIBITS D-1, D-2 and D-3, respectively, and addressed to Purchaser;
(10) a certificate of the Chief Financial Officer of the Company
to the effect set forth in Section 3.6; and
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(11) a certificate of the Chief Financial Officer of the Company
stating that the ratio of (x) total Indebtedness of the Company and its
Subsidiaries calculated on a consolidated basis in accordance with GAAP
after giving pro forma effect to the Transactions at the end of the
fiscal quarter immediately preceding such Time of Purchase to (y)
Consolidated EBITDA (after giving pro forma effect to include the
results of operations of the Acquired Entities) is less than 5.25 to
1.0.
(b) The ONC Entities and the Acquired Entities shall have received all
material approvals from Governmental Authorities and third parties necessary for
the consummation of the Transactions being consummated at such Time of Purchase,
and such approvals shall be in full force and effect as of the Time of Purchase.
(c) No Order of any Governmental Authority shall enjoin or restrain
Purchaser from purchasing any Notes.
(d) Purchaser shall be reasonably satisfied that there has been no, and
is not any, marketing of any issue of debt securities or commercial bank
facilities (other than the Senior Credit Facility) of any ONC Entity or any
Acquired Entity of a type or in a manner which would compete with the offering
of the Notes or the Permanent Financing.
(e) There shall not have occurred any Market Disruption Event.
(f) The Engagement Letter shall be in full force and effect, and the
Company shall be in compliance with all agreements thereunder.
(g) The Company shall have reimbursed Purchaser for all reasonable fees
and disbursements of Purchaser's legal counsel and advisors, including but not
limited to the reasonable fees and disbursements of Cahill Gordon & Reindel,
Purchaser's special counsel, and all of Purchaser's travel and other reasonable
out-of-pocket expenses incurred in connection with the Transactions or otherwise
arising out of the Lender's commitment under the Commitment Letter, up to a
maximum of $250, 000.
(h) The Company shall have paid to Purchaser the fee payable at such
Time of Purchase pursuant to Section 2.3.
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(i) The representations and warranties of the Obligors in the Financing
Documents shall be true and correct at such Time of Purchase to the same extent
as though made at such Time of Purchase.
(j) The Obligors shall have performed and complied with all covenants
and conditions to be performed and observed by the Obligors under the Financing
Documents at or prior to such Time of Purchase.
(k) No Default shall have occurred and be continuing or shall result
from the issuance of Securities at such Time of Purchase.
SECTION 5.2. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE INITIAL TIME
OF PURCHASE. The obligation of Purchaser to purchase Notes pursuant to Section
2.1(i) is subject to the prior or concurrent satisfaction of each of the
following conditions, as well as the prior or concurrent satisfaction of each of
the conditions set forth in Section 5.1:
(a) Purchaser shall have received the results of each Phase I or other
environmental study delivered to the lenders under the Senior Credit Facility
(or the credit facility which is being refinanced by the Senior Credit
Facility), and Purchaser shall be satisfied with the results thereof in all
material respects. No information shall have come to the attention of Purchaser
that leads Purchaser to conclude that such environmental report or studies are
inaccurate in any material respect.
(b) Purchaser shall be reasonably satisfied in all material respects
with the corporate and capital structure of the ONC Entities after giving effect
to the Transactions to be consummated on the Closing Date. On or before the
Closing Date, all existing Indebtedness of any ONC Entity or any Acquired Entity
(except up to $30.0 million of Indebtedness and other than the Trust Debentures)
shall be repaid in full and all commitments thereunder shall be terminated.
(c) Purchaser shall have received true and complete copies of each
definitive agreement relating to the Senior Credit Facility and all other
agreements or documents (including opinions and certificates) entered into or
delivered in connection with the Senior Credit Facility, all of which shall be
reasonably satisfactory in form and substance to Purchaser. The Senior Credit
Facility shall have been duly executed and delivered by all parties thereto. All
conditions to
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borrowing thereunder set forth in Section 4.1(j), (k) and (o) thereof shall be
satisfied substantially on the terms set forth in the form most recently
provided to Purchaser a reasonable time prior to the Closing Date and shall not
have been waived or amended without Purchaser's prior written consent. The
Company shall have at least $25.0 million of undrawn availability thereunder
after giving effect to the Transactions.
(d) All conditions to the consummation of the Tender Offer in the Tender
Offer Documents shall be satisfied substantially on the terms set forth therein
and shall not have been waived or amended without Purchaser's prior written
consent (such consent not to be unreasonably withheld or delayed). Immediately
following the purchase of the Notes by Purchaser, the Tender Offer shall be
consummated without the waiver of any conditions precedent thereto except for
any waiver approved by Purchaser (such consent not to be unreasonably withheld
or delayed).
(e) The Obligors shall have executed and delivered the Registration
Rights Agreement, and the Registration Rights Agreement shall be in full force
and effect.
(f) This Agreement shall have become effective in accordance with
Section 12.14.
(g) The Company shall have delivered an Officers' Certificate to
Purchaser stating that all of the conditions set forth in Sections 5.1(b), (c),
(d), (f), (i), (j) and (k) and 5.2(b), (c) and (d) (in each case, without giving
effect to any references to Purchaser's satisfaction) are satisfied.
SECTION 5.3. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE SECOND TIME OF
PURCHASE. The obligation of Purchaser to purchase Notes pursuant to Section
2.1(ii) is subject to the prior or concurrent satisfaction of each of the
following conditions, as well as the prior or concurrent satisfaction of each of
the conditions set forth in Section 5.1:
(a) The Company shall have delivered an Officers' Certificate to
Purchaser stating that all of the conditions set forth in Section 5.1(b), (c),
(d), (f), (i), (j) and (k) are satisfied.
SECTION 5.4. CERTIFICATES. Each certificate signed by any officer of any
ONC Entity and delivered to Purchaser under this Article V shall be deemed to
be a representation and
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warranty by the Obligors to Purchaser and the Holders as to the matters covered
thereby.
ARTICLE VI
COVENANTS
Each Obligor hereby agrees that, from and after the date hereof and
until the Expiration Date and thereafter so long as any Notes remain outstanding
and unpaid and for the benefit of Purchaser and the Holders:
SECTION 6.1. INFORMATION. The Company shall deliver, or cause to be
delivered, to Purchaser and each Holder:
(a) within 45 days after the end of each fiscal quarter of the Company,
an Officers' Certificate of the Company stating that a review of the activities
of the Company and its Subsidiaries during such fiscal quarter has been made
under the supervision of the signing officers with a view to determining whether
the ONC Entities have kept, observed, performed and fulfilled its obligations
under this Agreement, and further stating that to the best of such signers'
knowledge the ONC Entities have kept, observed, performed and fulfilled each and
every covenant contained in this Agreement and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default shall have occurred, describing all such Defaults of which
such signers may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of such signers'
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes are
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto;
(b) within five days after any responsible officer of the Company
obtains knowledge of a Default, a certificate of the chief financial officer or
the chief accounting officer of the Company setting forth the details thereof
and the action which the Company is taking or propose to take with respect
thereto;
(c) prior to the Conversion Date, promptly following the commencement
thereof, notice and a description in reason-
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able detail of any litigation or proceeding to which any ONC Entity is a party
in which the amount involved is in excess of $1.0 million or in which injunctive
or similar relief is sought which could reasonably be expected to have a
Material Adverse Effect;
(d) prior to the Conversion Date, promptly following the occurrence
thereof, notice and a description in reasonable detail of any event or
circumstance that could reasonably be expected to have a Material Adverse
Effect; and
(e) prior to the Conversion Date, from time to time such additional
information regarding the financial position or business of any ONC Entity as
Purchaser may reasonably request.
SECTION 6.2. PAYMENT OF OBLIGATIONS. The Company shall, and shall cause
its Subsidiaries to, pay and discharge at or before maturity all material
obligations and liabilities (including tax liabilities), except where the same
may be contested in good faith by appropriate proceedings, and shall, and shall
cause its Restricted Subsidiaries to, maintain, in accordance with GAAP,
appropriate reserves for the accrual of any of the same.
SECTION 6.3. INSPECTION OF PROPERTY, BOOKS AND RECORDS. Prior to the
Conversion Date, the Company shall, and shall cause its Subsidiaries to, keep
proper books of record and account in which full, true and correct entries shall
be made of all dealings and transactions in relation to their respective
businesses and activities; and shall, and shall cause its Subsidiaries to,
permit during normal business hours and upon written notice, representatives of
Purchaser to visit and inspect any of their respective properties, to examine
and make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective executive
officers and independent public accountants, all at such reasonable times and as
often as may reasonably be desired. The Obligors shall reimburse Purchaser for
all out-of-pocket expenses, including fees and disbursements of its special
counsel, incurred in performing any of the activities described in the foregoing
sentence at or after the occurrence of a Default.
SECTION 6.4. INVESTMENT COMPANY ACT. No Obligor shall be or become an
investment company within the meaning of the Investment Company Act of 1940, as
amended, subject to regulation thereunder.
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SECTION 6.5. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead (as a defense or otherwise) or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law which would prohibit or forgive the Company from
paying all or any Obligations under the Financing Documents, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Agreement; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law.
SECTION 6.6. TAXES. The Company shall, and shall cause each of its
Subsidiaries to, pay prior to delinquency all material taxes, assessments, and
governmental levies except as contested in good faith and by appropriate
proceedings.
SECTION 6.7. LIMITATION ON RESTRICTED PAYMENTS. (I) The Company shall
not, and shall not cause or permit any Restricted Subsidiary to, directly or
indirectly,
(i) declare or pay any dividend or any other distribution on any
Equity Interests of the Company or any Restricted Subsidiary or make any
payment or distribution to the direct or indirect holders of Equity
Interests (in their capacity as such) of the Company or any Restricted
Subsidiary (other than any dividends, distributions and payments made to
the Company or any Restricted Subsidiary and dividends or distributions
payable to any Person solely in Qualified Equity Interests);
(ii) redeem any Equity Interests of the Company or any
Restricted Subsidiary (other than any such Equity Interests owned by the
Company or any Restricted Subsidiary);
(iii) redeem or make any principal payment on, prior to any
scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Subordinated Indebtedness (other than any Subordinated
Indebtedness held by the Company or any Restricted Subsidiary); or
(iv) make any Investment (other than Permitted Investments)
(any of the foregoing (other than an exception thereto), a "RESTRICTED
PAYMENT"), unless
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(a) no Default shall have occurred and be continuing at the time of or
after giving effect to such Restricted Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to incur $1.00 of additional Indebtedness under Section
6.8(a); and
(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments (including the fair market value of
any non-cash Restricted Payment) declared or made on or after the Closing Date
(excluding any Restricted Payment described in clauses (ii), (iii), (iv) or (v)
of the next paragraph) does not exceed an amount equal to the sum of the
following (the "BASKET"):
(1) 50% of Consolidated Net Income (or 100% of Consolidated Net
Loss) for the period (treated as one accounting period) commencing on
the first day of the fiscal quarter in which the Closing Date occurs and
ending on the last day of the most recent fiscal quarter immediately
preceding the date of such Restricted Payment; PLUS
(2) the aggregate net cash proceeds received by the Company
either (x) as capital contributions to the Company after the Closing
Date or (y) from the issue and sale (other than to a Subsidiary of the
Company) of Qualified Equity Interests after the Closing Date (other
than any issuance and sale of Qualified Equity Interests financed,
directly or indirectly, using funds (i) borrowed from the Company or any
of its Subsidiaries until and to the extent such borrowing is repaid or
(ii) contributed, extended, guaranteed or advanced by the Company or any
of its Subsidiaries (including in respect of any employee stock
ownership or benefit plan)); PLUS
(3) the aggregate amount by which Indebtedness (other than any
Subordinated Indebtedness) of the Company or any Restricted Subsidiary
is reduced on the Company's consolidated balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company)
subsequent to the Closing Date into Qualified Equity Interests (less the
amount of any cash, or the fair value of property, distributed by the
Company or any Restricted Subsidiary upon such conversion or exchange);
PLUS
(4) in the case of the disposition or repayment of any
Investment that was treated as a Restricted Payment
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made after the Closing Date, an amount (to the extent not included in
the computation of Consolidated Net Income) equal to the lesser of: (x)
the return in cash of capital with respect to such Investment and (y)
the amount of such Investment that was treated as a Restricted Payment,
in either case, less the cost of the disposition of such Investment and
net of taxes; PLUS
(5) so long as the Designation thereof was treated as a
Restricted Payment made after the Closing Date, with respect to any
Unrestricted Subsidiary that has been redesignated as a Restricted
Subsidiary after the Closing Date in accordance with Section 6.13, the
Company's proportionate interest in an amount equal to the excess of (x)
the total assets of such Subsidiary, valued on an aggregate basis at the
lesser of book value and fair market value, over (y) the total
liabilities of such Subsidiary, determined in accordance with GAAP (and
provided that such amount shall not in any case exceed the Designation
Amount with respect to such Restricted Subsidiary upon its Designation);
MINUS
(6) with respect to each Subsidiary of the Company which has
been designated as an Unrestricted Subsidiary after the Closing Date in
accordance with Section 6.13, the greater of (x) $0 and (y) the
Designation Amount thereof (measured as of the Date of Designation);
PLUS
(7) $10.0 million.
(II) The foregoing provisions will not prevent (i) the payment of any
dividend or distribution on Equity Interests within 60 days after the date of
declaration of such dividend or distribution, if at the date of such
declaration, such dividend or distribution would comply with the provisions of
this Agreement; (ii) the redemption of any Equity Interests of the Company or
any Restricted Subsidiary in exchange for, or out of the net cash proceeds of
the substantially concurrent issue and sale (other than to a Subsidiary of the
Company) of, Qualified Equity Interests; (iii) any Investment to the extent that
the consideration therefor consists of Qualified Equity Interests; (iv) the
redemption of Subordinated Indebtedness made in exchange for, or out of the net
cash proceeds of, a substantially concurrent issue and sale (other than to a
Subsidiary) of, (x) Qualified Equity Interests or (y) a Permitted Refinancing of
such Subordinated Indebtedness; or (v) the redemption of any Equity Interests of
the Company held by directors, officers or employees of the Company or any of
its Subsidiaries upon their
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death, retirement or other termination not to exceed $1.0 million in the
aggregate in any calendar year; PROVIDED, HOWEVER, that any unused amount may be
used in the next succeeding (but not any subsequent) calendar year; PROVIDED,
FURTHER, HOWEVER, that (A) in the case of each of clauses (ii), (iii), (iv) and
(v), no Default shall have occurred and be continuing or would arise therefrom
and (B) no issuance of Qualified Equity Interests pursuant to clause (ii), (iii)
or (iv) shall increase the Basket.
SECTION 6.8. LIMITATION ON INCURRENCE OF INDEBTEDNESS. (a) The Company
shall not, and shall not cause or permit any Restricted Subsidiary to, directly
or indirectly, incur any Indebtedness; PROVIDED, HOWEVER, that so long as no
Default has occurred and is continuing or would result therefrom, the Company or
any Guarantor may incur Indebtedness if, at the time of such incurrence, the
ratio of Consolidated EBITDA to Consolidated Fixed Charges would be greater than
or equal to 2.0 to 1.0.
(b) The foregoing limitations of paragraph (a) of this covenant will not
apply to any of the following:
(i) the Notes and Permitted Refinancings thereof, and the Exchange
Notes;
(ii) Permitted Refinancings of (x) Indebtedness of the Company or any
Restricted Subsidiary to the extent outstanding on the date of this
Agreement (other than Indebtedness being refinanced in connection with the
Transactions and other than Indebtedness under the Senior Credit Facility),
reduced by the amount of any scheduled amortization payments or mandatory
prepayments actually made or (y) Indebtedness incurred pursuant to the
proviso in Section 6.8(a) or pursuant to clause (viii) below;
(iii) Indebtedness of the Company or any Restricted Subsidiary incurred
under the Senior Credit Facility in an aggregate amount (including the face
amount of all letters of credit) not to exceed $232.0 million at any time
outstanding, less the aggregate amount of any scheduled amortization
payments or mandatory prepayments actually made thereunder;
(iv) Purchase Money Indebtedness and Indebtedness represented by Capital
Lease Obligations of the Company or any Restricted Subsidiary incurred in
the ordinary course of business, and Permitted Refinancings thereof, in an
ag-
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gregate amount not to exceed $20.0 million at any time outstanding;
(v) (1) Indebtedness of any Restricted Subsidiary owed to and held by
the Company or any Restricted Subsidiary and (2) Indebtedness of the Company
owed to and held by any Restricted Subsidiary which is unsecured and
subordinated in right of payment to the payment and performance of the
Company's obligations under the Notes; PROVIDED, HOWEVER, that an incurrence
of Indebtedness that is not permitted by this clause (v) shall be deemed to
have occurred upon (x) any sale or other disposition of any Indebtedness of
the Company or any Restricted Subsidiary referred to in this clause (v) to
any Person other than the Company or any Restricted Subsidiary or (y) any
Restricted Subsidiary that holds Indebtedness of the Company or another
Restricted Subsidiary ceasing to be a Restricted Subsidiary;
(vi) Interest Rate Protection Obligations of the Company relating to
Indebtedness of the Company (which Indebtedness (x) bears interest at
fluctuating interest rates and (y) is otherwise permitted to be incurred
under this covenant); PROVIDED, HOWEVER, that the notional principal amount
of such Interest Rate Protection Obligations does not exceed the principal
amount of the Indebtedness to which such Interest Rate Protection
Obligations relate;
(vii) Indebtedness of the Company under Currency Agreements to the
extent relating to (x) Indebtedness of the Company and/or (y) obligations to
purchase assets, properties or services incurred in the ordinary course of
business of the Company or any Restricted Subsidiary; PROVIDED, HOWEVER,
that such Currency Agreements do not increase the Indebtedness or other
obligations of the Company and the Restricted Subsidiaries outstanding other
than as a result of fluctuations in foreign currency exchange rates or by
reason of fees, indemnities or compensation payable thereunder;
(viii) Indebtedness of any Foreign Subsidiary if, at the time of such
incurrence, the ratio of Consolidated EBITDA to Consolidated Fixed Charges
would be greater than or equal to 3.0 to 1.0 (for these purposes, references
to the Company or any Restricted Subsidiary in the definitions used to
calculate such ratio shall be to such Foreign Subsidiary and its
Subsidiaries (other than any Unrestricted Subsidiary)); and
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(ix) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate amount not to exceed at any time outstanding $20.0 million.
(c) For purposes of determining any particular amount of Indebtedness
under this covenant, Guarantees, Liens or obligations with respect to letters of
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included.
(d) Notwithstanding anything to the contrary herein, neither Newco nor
any other direct parent of Global shall incur any Indebtedness or conduct any
activity other than hold the Equity Interests of Global and activities
reasonably related thereto.
SECTION 6.9. LIMITATION ON LIENS. The Company shall not, and shall not
cause or permit any Restricted Subsidiary to, directly or indirectly, incur any
Lien (other than any Permitted Lien) of any kind against or upon any of their
respective properties or assets now owned or hereafter acquired, or any
proceeds, income or profits therefrom, unless contemporaneously therewith or
prior thereto, (i) in the case of any Lien securing an obligation that ranks
PARI PASSU with the Notes, effective provision is made to secure the Notes
equally and ratably with or prior to such obligation with a Lien on the same
collateral and (ii) in the case of any Lien securing an obligation that is
subordinated in right of payment to the Notes, effective provision is made to
secure the Notes with a Lien on the same collateral that is prior to the Lien
securing such subordinated obligation, in each case, for so long as such
obligation is secured by such Lien.
SECTION 6.10. LIMITATION ON ASSET SALES. (a) The Company shall not, and
shall not cause or permit any Restricted Subsidiary to, directly or indirectly,
make any Asset Sale, unless (x) the Company or such Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets sold or otherwise disposed of and
(y) at least 80% of such consideration consists of (i) cash or Cash Equivalents,
(ii) in the case of an Asset Sale of an industrial mining reserve, an industrial
mining reserve and (iii) any combination of the foregoing. The amount of any
Indebtedness (other than any Subordinated Indebtedness) of the Company or any
Restricted Subsidiary that is actually assumed by the transferee in such Asset
Sale and from which the Company and the Restricted Subsidiaries are fully
released shall be deemed to be cash for purposes of determining
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the percentage of cash consideration received by the Company or such Restricted
Subsidiary. Any Net Cash Proceeds from any Asset Sale that are not (x) invested
in Replacement Assets or (y) used to reduce Indebtedness under the Senior Credit
Facility (with a permanent concomitant reduction of commitments thereunder)
within 365 days of the consummation of such Asset Sale shall constitute "EXCESS
PROCEEDS" subject to disposition as provided below.
(b) When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company shall make an Offer to Purchase, from all Holders, that aggregate
principal amount of Notes as can be purchased with the Note Portion of Excess
Proceeds at a price in cash equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to any purchase date. To the extent that
the aggregate amount of principal and accrued interest of Notes validly tendered
and not withdrawn pursuant to an Offer to Purchase is less than the Excess
Proceeds, the Company may use such surplus for general corporate purposes. If
the aggregate amount of principal and accrued interest of Notes validly tendered
and not withdrawn by Holders thereof exceeds the amount of Notes that can be
purchased with the Note Portion of Excess Proceeds, Notes to be purchased will
be selected PRO RATA based on the aggregate principal amount of Notes tendered
by each Holder. Upon completion of an Offer to Purchase, the amount of Excess
Proceeds with respect to the applicable Asset Sale shall be reset to zero.
(c) In the event that any other Indebtedness of the Company that ranks
PARI PASSU with the Notes (the "OTHER DEBT") requires an offer to purchase to be
made to repurchase such Other Debt upon the consummation of an Asset Sale, the
Company may apply the Excess Proceeds otherwise required to be applied to an
Offer to Purchase to offer to purchase such Other Debt and to an Offer to
Purchase so long as the amount of such Excess Proceeds applied to purchase the
Notes is not less than the Note Portion of Excess Proceeds. With respect to any
Excess Proceeds, the Company shall make the Offer to Purchase in respect thereof
at the same time as the analogous offer to purchase is made pursuant to any
Other Debt and the Purchase Date in respect thereof shall be the same as the
purchase date in respect thereof pursuant to any Other Debt.
(d) For purposes of this covenant, "NOTE PORTION OF EXCESS PROCEEDS"
means (1) if no Other Debt is being offered to be purchased, the amount of the
Excess Proceeds and (2) if Other Debt is being offered to be purchased, the
amount of the
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Excess Proceeds equal to the product of (x) the Excess Proceeds and (y) a
fraction the numerator of which is the aggregate amount of all Notes tendered
pursuant to the Offer to Purchase related to such Excess Proceeds (the "NOTE
AMOUNT") and the denominator of which is the sum of the Note Amount and the
aggregate amount as of the relevant purchase date of all Other Debt tendered and
purchased pursuant to a concurrent offer to purchase such Other Debt made at the
time of such Offer to Purchase.
(e) In the event that the Company makes an Offer to Purchase the Notes,
the Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act, and any other applicable Federal or state securities laws and
regulations and any applicable requirements of any securities exchange on which
the Notes are listed.
SECTION 6.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The
Company shall not, and shall not cause or permit any Restricted Subsidiary to,
directly or indirectly, conduct any business or enter into any transaction or
series of related transactions with or for the benefit of any Affiliate, any
holder of 5% or more of any class of Equity Interests or any officer, director
or employee of the Company or any Restricted Subsidiary (an "AFFILIATE
TRANSACTION"), unless such Affiliate Transaction is (i) fair to the Company or
such Restricted Subsidiary, as the case may be, and (ii) on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than could reasonably be obtained at such time in a comparable transaction with
an unaffiliated third party. For Affiliate Transaction (or series of related
Affiliate Transactions that are similar or part of a common plan) involving an
amount or having a fair market value in excess of $5.0 million, the Company
shall deliver to the Holders an Officers' Certificate stating that a majority of
the Disinterested Directors has determined that the transaction satisfies the
above criteria and shall evidence such a determination by a Board Resolution
delivered to the Holders. For any Affiliate Transaction (or series of related
Affiliate Transactions that are similar or part of a common plan) involving an
amount or having a fair market value in excess of $10.0 million or if there
shall be no Disinterested Directors, the Company shall obtain a written opinion
from an Independent Financial Advisor to the effect that such transaction is
fair, from a financial point of view, to the Company or such Restricted
Subsidiary, as the case may be.
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(b) Notwithstanding the foregoing, the restrictions set forth in this
covenant shall not apply to (i) transactions exclusively between or among the
Company and one or more Wholly Owned Restricted Subsidiaries or exclusively
between or among Wholly Owned Restricted Subsidiaries; (ii) customary directors'
fees, indemnification and similar arrangements, employee salaries, bonuses or
employment agreements, compensation or employee benefit arrangements and
incentive arrangements with any officer, director or employee of the Company
entered into in the ordinary course of business; (iii) agreements (and
transactions pursuant to agreements) in effect on the date hereof and listed on
SCHEDULE 6.11, as such agreements are in effect on the date hereof or as
thereafter amended in a manner not materially adverse to the Holders; (iv) loans
and advances to officers, directors and employees of the Company or any
Restricted Subsidiary for travel, entertainment, moving and other relocation
expenses, in each case made in the ordinary course of business and consistent
with past business practices; and (v) any Restricted Payments permitted by this
Agreement.
SECTION 6.12. LIMITATION ON RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. (a) The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (x) pay dividends or make any other
distributions to the Company or any other Restricted Subsidiary on its Equity
Interests or with respect to any other interest or participation in, or measured
by, its profits, or pay any Indebtedness owed to the Company or any other
Restricted Subsidiary, (y) make loans or advances to, or guarantee any
Indebtedness or other obligations of, the Company or any other Restricted
Subsidiary or (z) transfer any of its properties or assets to the Company or any
other Restricted Subsidiary.
(b) The foregoing shall not prohibit (a) any encumbrance or restriction
existing under or by reason of any agreement in effect on the date hereof and
listed on SCHEDULE 6.12, as any such agreement is in effect on such date or as
thereafter amended but only if such encumbrance or restriction is no more
restrictive than in the agreement being amended; (b) any encumbrance or
restriction existing under or by reason of any agreement relating to any
Acquired Indebtedness; PROVIDED, HOWEVER, such encumbrance or restriction shall
not apply to any assets of the Company or any Restricted Subsidiary other than
the Restricted Subsidiary acquired or its assets; (c) customary provisions
contained in an agreement that has been entered into
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for the sale or disposition of all or substantially all of the Capital Stock or
assets of a Restricted Subsidiary; PROVIDED, HOWEVER that (x) such encumbrance
or restriction is applicable only to such Restricted Subsidiary or assets and
(y) such sale or disposition is made in accordance with Section 6.10; (d) any
encumbrance or restriction existing under or by reason of applicable law; (e)
customary provisions restricting subletting or assignment of any lease governing
any leasehold interest of any Restricted Subsidiary; (f) covenants in purchase
money obligations for property acquired in the ordinary course of business
restricting transfer of such property; or (g) covenants in security agreements
securing Indebtedness of a Restricted Subsidiary (to the extent that such Liens
were otherwise incurred in accordance with Section 6.9) that restrict the
transfer of property subject to such agreements.
SECTION 6.13. DESIGNATION OF UNRESTRICTED SUBSIDIARIES. (a) The Company
may designate any Subsidiary of the Company as an "Unrestricted Subsidiary"
under this Agreement (a "Designation") only if:
(i) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation;
(ii) at the time of and after giving effect to such Designation, the
Company could incur $1.00 of additional Indebtedness under Section 6.8(a);
and
(iii) the Company would be permitted to make an Investment (other than a
Permitted Investment) at the time of Designation (assuming the effectiveness
of such Designation) pursuant to Section 6.7(I) in an amount (the
"DESIGNATION AMOUNT") equal to the fair market value of the Company's
proportionate interest in the net worth of such Subsidiary on such date
calculated in accordance with GAAP.
All Subsidiaries of Unrestricted Subsidiaries shall be Unrestricted
Subsidiaries.
(b) The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, at any time (x) provide credit support
for, subject any of its properties or assets (other than the Equity Interests of
any Unrestricted Subsidiary) to the satisfaction of, or guarantee, any
Indebtedness of any Unrestricted Subsidiary (including any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be liable for any
Indebtedness of any Unrestricted
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Subsidiary or (z) be liable for any Indebtedness which provides that the holder
thereof may (upon notice, lapse of time or both) declare a default thereon or
cause the payment thereof to be accelerated or payable prior to its final
scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary.
(c) The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "REVOCATION") only if:
(i) no Default shall have occurred and be continuing
at the time of and after giving effect to such Revocation;
and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at such
time, have been permitted to be incurred for all purposes of this Agreement.
All Designations and Revocations must be evidenced by resolutions of the
Board of Directors of the Company, delivered to the Holders certifying
compliance with the foregoing provisions.
SECTION 6.14. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. The Company shall not sell, and shall not cause or
permit any Restricted Subsidiary, directly or indirectly, to issue or sell, any
Equity Interests of a Restricted Subsidiary, except (i) to the Company or a
Wholly Owned Restricted Subsidiary; (ii) the sale of all of the Equity Interests
of a Restricted Subsidiary in accordance with Section 6.10; (iii) in the case of
issuance of Equity Interests by a non-Wholly Owned Restricted Subsidiary if,
after giving effect to such issuance, the Company maintains its direct or
indirect percentage of beneficial and economic ownership of such non-Wholly
Owned Restricted Subsidiary; or (iv) as permitted by Section 6.16.
SECTION 6.15. CHANGE OF CONTROL.
(a) Following the occurrence of a Change of Control (the date of such
occurrence being the "CHANGE OF CONTROL DATE"), the Company shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Notes then
outstanding at a purchase price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Purchase Date.
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(b) On or before the Purchase Date, the Company shall (x) accept for
payment Notes or portions thereof which are to be purchased pursuant to an Offer
to Purchase under this Section 6.15, and (y) deposit at the payment office
established by the Company cash in U.S. dollars sufficient to pay the purchase
price of all Notes to be purchased. In the event of any Change of Control
occurring prior to the Conversion Date, on the Purchase Date, the Company shall
also pay to Purchaser in cash an amount equal to 2% of the aggregate principal
amount of Notes so accepted for payment, which shall be credited against any
placement fees or initial purchaser's discounts and commissions paid to
Purchaser in connection with the Permanent Financing (to the extent the proceeds
thereof are used to purchase Notes pursuant to an Offer to Purchase under this
Section 6.15).
(c) If the Company or any Restricted Subsidiary thereof has issued any
outstanding (1) Subordinated Indebtedness or (2) Preferred Equity Interests, and
the Company or such Restricted Subsidiary is required to make a change of
control offer or to make a distribution with respect to such Subordinated
Indebtedness or Preferred Equity Interests in the event of a change of control,
the Company shall not consummate any such offer or distribution with respect to
such Subordinated Indebtedness or Preferred Equity Interests until such time as
the Company shall have paid the Purchase Price in full to the Holders that have
accepted the Offer to Purchase pursuant to this Section 6.15 and shall otherwise
have consummated such Offer to Purchase. No Obligor shall issue Subordinated
Indebtedness or Preferred Equity Interests with change of control provisions
requiring the payment of such Indebtedness or Preferred Equity Interests prior
to the payment of the Notes in the event of a Change of Control under this
Agreement.
(d) The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes pursuant to an offer hereunder.
SECTION 6.16. LIMITATION ON PREFERRED EQUITY INTERESTS OF RESTRICTED
SUBSIDIARIES. The Company shall not permit any Restricted Subsidiary (other than
any Guarantor) to issue any Preferred Equity Interests or permit any Person
(other than the Company or one or more Wholly Owned Restricted Subsidiaries) to
hold any such Preferred Equity Interests.
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SECTION 6.17. ADDITIONAL GUARANTEES. If the Company or any Restricted
Subsidiary shall organize, acquire or otherwise invest in another Person that
becomes a Restricted Subsidiary, or any Restricted Subsidiary that is not
already a Guarantor shall become an obligor under the Senior Credit Facility or
shall acquire any material assets, then the Company shall cause such Restricted
Subsidiary to (i) execute and deliver to Purchaser and the Holders a Joinder
Agreement and, if requested by Purchaser or any Holder, a notation of Guarantee
and (ii) deliver to the Holders an opinion of counsel that such Joinder
Agreement has been duly authorized, executed and delivered by such Restricted
Subsidiary and constitutes a valid and legally binding obligation of such
Restricted Subsidiary, enforceable against it in accordance with its terms,
except that the enforcement thereof may be subject to (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (y) generally principles of
equity and the discretion of the court before which any proceeding therefor may
be brought. Notwithstanding the foregoing, (A) no Foreign Subsidiary (so long as
it is a Foreign Subsidiary) shall be required to become a Guarantor and (B) the
Acquired Entities (other than any Foreign Subsidiary) shall not be required to
become Guarantors until they are no longer Subsidiaries of a Foreign Subsidiary,
which condition the Company agrees to satisfy on or prior to the Conversion
Date; PROVIDED, HOWEVER, that the foregoing shall not apply to any obligor under
the Senior Credit Facility.
SECTION 6.18. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Company
shall not, and shall not permit any Restricted Subsidiary to, enter into any
Sale and Leaseback Transaction unless (i) the consideration received in such
Sale and Leaseback Transaction is at least equal to the fair market value of the
property sold, as determined, in good faith, by the Board of Directors of the
Company and evidenced by a Board Resolution, (ii) the Company could incur the
Attributable Indebtedness in respect of such Sale and Leaseback Transaction in
compliance with Section 6.8 and (iii) such Sale and Leaseback Transaction is
permitted by, and the proceeds thereof are applied in compliance with, Section
6.10 hereof.
SECTION 6.19. PAYMENTS FOR CONSENT. No ONC Entity shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Agreement or the Notes unless such consideration is offered to
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be paid or agreed to be paid to all Holders of the Notes which so consent, waive
or agree to amend in the time frame set forth in solicitation documents relating
to such consent, waiver or agreement.
SECTION 6.20. LEGAL EXISTENCE. Subject to Article VII hereof, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect (i) legal existence, and the corporate, partnership or
other existence of each Restricted Subsidiary, in accordance with the respective
organizational documents of each Restricted Subsidiary and the rights (charter
and statutory), licenses and franchises of the Company and the Restricted
Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Restricted Subsidiary if the preservation thereof is no
longer desirable in the conduct of the business of the Company and the
Restricted Subsidiaries, taken as a whole, and that the loss thereof could not
reasonably be expected to have a Material Adverse Effect.
SECTION 6.21. MAINTENANCE OF PROPERTIES; INSURANCE; COMPLIANCE WITH LAW:
CONDUCT OF BUSINESS. (a) The Company shall, and shall cause each Restricted
Subsidiary to, at all times cause all material properties used in the conduct of
their business to be maintained and kept in good condition, repair and working
order (reasonable wear and tear excepted and damage caused by casualty) and
supplied with all necessary equipment, and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereto.
(b) The Company shall, and shall cause each Restricted Subsidiary to,
maintain insurance in such amounts and covering such risks as are usually and
customarily carried with respect to similar facilities according to their
respective locations.
(c) The Company shall, and shall cause each of its Subsidiaries to,
comply with all statutes, laws, ordinances or government rules and regulations
to which they are subject, except as would not have a Material Adverse Effect.
(d) Notwithstanding anything to the contrary herein (including any
exceptions to any covenant), no Restricted Subsidiary (other than a Guarantor or
a Foreign Subsidiary) shall engage in any business or activity except as
incidental to its liquidation or dissolution.
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(e) The Company and the Restricted Subsidiaries shall not engage in any
business other than an Existing Business .
SECTION 6.22. REPORTS TO HOLDERS. The Company shall deliver to Purchaser
and the Holders, at the time of the filing of same with the Commission, copies
of the quarterly and annual reports and of the information, documents and other
reports, if any, which ONC is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may
not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission, to the extent
permitted, and provide Purchaser and the Holders with such quarterly and annual
reports and such information, documents and other reports specified in Sections
13 and 15(d) of the Exchange Act within the time periods specified therein. In
addition, for so long as any Notes remain outstanding, the Company shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d) (4)
under the Securities Act, and, to any beneficial holder of Notes, if not
obtainable from the Commission, information of the type that would be filed with
the Commission pursuant to the foregoing provisions, upon the request of any
such holder.
SECTION 6.23. USE OF PROCEEDS. (a) The proceeds from the issuance of the
Notes on the Closing Date shall be used, together with borrowings of up to
$215.0 million under the Senior Credit Facility, to (i) consummate the Global
Acquisition, (ii) repay existing Indebtedness of the Company and its
Subsidiaries (including the Acquired Entities) and (iii) pay related transaction
costs.
(b) No portion of the proceeds from the issuance of Notes shall be used
in any manner which might cause the issuance or the application of such proceeds
to violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation of the Board or to violate the Exchange Act, in each case as in
effect on the date or dates of such borrowing and such use of proceeds.
SECTION 6.24. PERMANENT FINANCING; RESALE. (a) Until the Conversion
Date:
(i) Each Obligor will take all actions which, in the reasonable
judgment of Purchaser, are necessary or desir-
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able to obtain Permanent Financing as soon as practicable through the
issuance of securities at such interest rates and terms as are then
prevailing for new issues of securities of comparable size and credit rating
in the United States capital markets. Without limiting the foregoing, each
Obligor agrees to fully cooperate and to cause its management to cooperate
with Purchaser and will furnish to, or cause to be furnished to, Purchaser
all information and data concerning the ONC Entities that Purchaser
reasonably deems appropriate, to assist Purchaser in a timely completion of
the Permanent Financing, and upon Purchaser's reasonable request, to (A)
promptly provide to Purchaser all financial and other information in its
possession with respect to the ONC Entities and the Transactions, (B) make
its senior officers available to Purchaser and its affiliates in connection
with the Permanent Financing, including making them available to assist in
the preparation of an offering document (including assistance in obtaining
industry data), to participate in due diligence sessions and, in the case of
the Company, to participate in a customary road show to market the
securities comprising the Permanent Financing and (C) prepare, and to cause
its Affiliates and advisors to prepare, an appropriate offering document
(which shall include, among other things, historical and pro forma financial
statements required under the Securities Act for an offering registered
under the Securities Act), and to assist Purchaser in preparing other
appropriate marketing materials, in each case to be used in connection with
the Permanent Financing. The amounts to be financed by the Permanent
Financing shall be as determined by the Company, but shall be in an amount
at least sufficient to repay or redeem the Notes in full in accordance with
their terms. The Company hereby covenants and agrees that the net proceeds
from the Permanent Financing shall be used to the extent required to redeem
in full the Notes in accordance with their terms.
(ii) The Company will enter into such agreements as in the reasonable
judgment of Purchaser or an Affiliate of Purchaser are customary in
connection with any such Permanent Financing, make such filings, if any,
under the Securities Act, the Exchange Act, the Trust Indenture Act of 1939
(if applicable) and state securities laws as in the reasonable judgment of
Purchaser or such Affiliate of Purchaser shall be required to permit
consummation of such Permanent Financing and take such steps as in the
reasonable judgment of Purchaser or such Affiliate are necessary to cause
such filings to become effective or in the rea-
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sonable judgment of Purchaser or such Affiliate are otherwise required to
consummate such Permanent Financing; PROVIDED, HOWEVER, that the Company
will not be obligated to qualify to do business as a foreign corporation in
any jurisdiction in which it is not then so qualified to facilitate the
Permanent Financing.
(iii) The Company acknowledges and agrees that the Permanent Financing
will be consummated, if at all, on the basis of documentation (including a
securities purchase agreement, indenture and registration rights agreement)
which, except to the extent the parties otherwise agree, shall embody the
term sheet attached to the Engagement Letter, to the extent the terms
thereof are reflected thereon, and will contain such other terms, provisions
and conditions as are customary in transactions of this type.
(b) Following the date which is 90 days after the Closing Date (or
beginning at such earlier time as the marketing effort in connection with the
Permanent Financing is abandoned), each Obligor agrees, upon Purchaser's
request, to (i) promptly provide to Purchaser all financial and other
information in its possession with respect to the ONG Entities and the
Transactions, (ii) make its senior officers available to Purchaser and its
affiliates in connection with the resale of Notes by Purchaser, including making
them available to assist in the preparation of an offering document (including
assistance in obtaining industry data), to participate in due diligence sessions
and, in the case of the Company, to participate in a customary road show to
market the Notes and (iii) prepare, and to cause its affiliates and advisors to
prepare, an appropriate offering document (which shall include, among other
things, historical and pro forma financial statements required under the
Securities Act for an offering registered under the Securities Act), and to
assist Purchaser in preparing other appropriate marketing materials, in each
case, to be used in connection with the resale of the Notes.
SECTION 6.25. RESTRICTIONS ON CERTAIN AMENDMENTS. Prior to the
Conversion Date, no Obligor shall, or cause or permit any of its Subsidiaries
to, amend, or suffer to be amended, any of their respective organizational
documents, the Senior Credit Facility (except to the extent as would not
materially adversely affect the Company's ability to make payments under the
Financing Documents), or any stockholder agreement to which any ONC Entity is a
party, except as contemplated by the Proxy Statement.
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ARTICLE VII
SUCCESSOR CORPORATION
SECTION 7.1. LIMITATION ON CONSOLIDATION, MERGER AND SALE OF ASSETS. (a)
No Obligor shall consolidate with or merge with or into (whether or not such
Obligor is the Surviving Person) any other Person and the Obligors shall not,
and shall not cause or permit any Restricted Subsidiary to, sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
property and assets of the Company and the Restricted Subsidiaries, taken as a
whole, to any Person or Persons in a single transaction or series of related
transactions, unless:
(i) (x) such Obligor shall be the Surviving Person;
(y) the Surviving Person (if other than such Obligor) shall be a
corporation organized and validly existing under the laws of the United
States of America or any State thereof or the District of Columbia, and
shall, in any such case, expressly assume, by an Assumption Agreement
executed and delivered to the Holders, all of the obligations of such
Obligor under the Financing Documents; or
(z) in the case of the Reorganization, (A) New ONC shall assume, by
an Assumption Agreement executed and delivered to the Holders, all of
the obligations of Original ONC under the Financing Documents and (B)
Original ONC shall become a Guarantor under the Financing Documents by
executing and delivering a Joinder Agreement to the Holders and shall
cease to be the "Company" under the Financing Documents;
(ii) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing; and
(iii) other than in the case of the Reorganization, immediately after
giving effect to such transaction, the Company or the Surviving Person (as
the case may be) could incur at least $1.00 of additional Indebtedness under
Section 6.8(a) (if the Company shall not be the Surviving Person, all
references to the Company and the Restricted Subsidiaries in the definitions
used to determine the ratio therein shall be to the Surviving Person and its
Sub-
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sidiaries after giving effect to such transaction (excluding any
Unrestricted Subsidiaries)).
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interests of which constitutes all or substantially all
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all the properties and assets of the Company.
(b) In connection with any consolidation, merger or transfer of assets
contemplated by this Section 7.1, the Company shall deliver, or cause to be
delivered, to the Holders, in form and substance reasonably satisfactory to the
Majority Holders, an Officers' Certificate and an opinion of counsel, each
stating that such consolidation, merger or transfer and the Assumption Agreement
and/or Joinder Agreement in respect thereto comply with this Section 7.1 and
that all conditions precedent herein provided for relating to such transaction
or transactions have been complied with. Such opinion of counsel shall also
state that each such Assumption Agreement and Joinder Agreement has been duly
authorized, executed and delivered by the applicable Obligor and constitutes a
valid and legally binding obligation of such Obligor, enforceable against it in
accordance with its terms, except that the enforcement thereof may be subject to
(x) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (y) generally
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
SECTION 7.2. SUCCESSOR PERSON SUBSTITUTED. In the event of any
transaction (other than a lease) described in and complying with the conditions
in Section 7.1(a) in which the Company is not the Surviving Person and the
Surviving Person is to assume all the Obligations of the Company under the
Financing Documents pursuant to a supplemental indenture, such Surviving
Person shall succeed to, and be substituted for, and may exercise every right
and power of, the Company and the Company shall be discharged from its
Obligations under the Financing Documents.
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ARTICLE VIII
LIMITATION ON TRANSFERS
SECTION 8.1. RESTRICTIONS ON TRANSFER. From and after their date of
issuance, none of the Notes shall be transferable except upon the conditions
specified in this Section 8.1 and in Sections 8.2 through 8.3, which conditions
are intended to ensure compliance with the provisions of the Securities Act in
respect of the Transfer of any of such Notes or any interest therein. Purchaser
will use its commercially reasonable efforts to cause any proposed transferee of
any Notes (or any interest therein) held by it to agree to take and hold such
Notes (or any interest therein) subject to the provisions and upon the
conditions specified in this Section 8.1 and in Sections 8.2 through 8.3.
Notwithstanding anything to the contrary herein, (i) on or prior to the
90th day after the Closing Date, Purchaser shall not Transfer any Notes other
than to any of its Affiliates and (ii) Purchaser shall not Transfer any Notes to
any Person that is not a financial institution or an investment fund thereof.
SECTION 8.2. RESTRICTIVE LEGENDS. Each Note shall (unless otherwise
permitted by the provisions of Section 8.3) include a legend in substantially
the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR
SOLD, UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE
AND THEN ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH
IN THE NOTE PURCHASE AGREEMENT DATED AS OF MAY 15, 1998, A COPY OF
WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE
OFFICE.
SECTION 8.3. NOTICE OF PROPOSED TRANSFERS. (a) Five Business Days prior
to any proposed Transfer (other than Transfers of Notes (i) registered under the
Securities Act, (ii) to an Affiliate of Purchaser, provided that any such
transferee shall agree to be bound by the terms of this Agreement or (iii) to be
made in reliance on Rule 144A) of any Notes, the Holder thereof shall give
written notice to the Company of such Holder's intention to effect such
Transfer, set-
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ting forth the manner and circumstances of the proposed Transfer, and shall be
accompanied by (i) an opinion of counsel reasonably satisfactory to the Company
addressed to the Company to the effect that the proposed Transfer of such Notes
may be effected without registration under the Securities Act, (ii) such
representation letters in form and substance reasonably satisfactory to the
Company to ensure compliance with the provisions of the Securities Act and (iii)
such letters in form and substance reasonably satisfactory to the Company from
each such transferee stating such transferee's agreement to be bound by the
terms of this Agreement. Such proposed Transfer may be effected only if the
Company shall have received such notice of transfer, opinion of counsel,
representation letters and other letters referred to in the immediately
preceding sentence, whereupon the Holder of such Notes shall be entitled to
Transfer such Notes in accordance with the terms of the notice delivered by the
Holder to the Company. Each certificate evidencing the Notes transferred as
above provided shall bear the legend set forth in Section 8.2 except that such
certificate shall not bear such legend if the opinion of counsel referred to
above is to the further effect that neither such legend nor the restrictions on
Transfer in Sections 8.1 through 8.3 are required in order to ensure compliance
with the provisions of the Securities Act.
(b) Five Business Days prior to any proposed Transfer of any Notes to be
made in reliance on Rule 144A, the Holder thereof shall give written notice to
the Company of such Holder's intention to effect such Transfer, setting forth
the manner and circumstances of the proposed Transfer and certifying that such
Transfer will be made (i) in full compliance with Rule 144A and (ii) to a
transferee that (A) such Holder reasonably believes to be a "qualified
institutional buyer" within the meaning of Rule 144A and (B) is aware that such
Transfer will be made in reliance on Rule 144A. Such proposed Transfer may be
effected only if the Company shall have received such notice of transfer and an
agreement from such transferee agreeing to be bound by the terms of this
Agreement, whereupon the Holder of such Notes may transfer them in accordance
with the terms of the notice delivered by the Holder to the Company. Each
certificate evidencing the Notes transferred as above provided shall bear the
legend set forth in Section 8.2.
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ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" occurs if
(1) the Company fails to pay any principal of the Notes when the same
becomes due and payable at maturity, upon acceleration, redemption or
otherwise (whether or not such payment is permitted by the provisions of
Article XI) ;
(2) the Company fails to pay any interest on any Note or any other
amount payable by the Company under any Financing Document when the same
becomes due and payable and such failure continues for a period of 30 days
(whether or not such payment is permitted by the provisions of Article XI);
(3) any Obligor fails to observe or perform any of the covenants set
forth in Section 6.7 (Limitation on Restricted Payments), 6.8 (Limitation on
Incurrence of Indebtedness), 6.10 (Limitation on Asset Sales), 6.15 (Change
of Control), 6.23 (Use of Proceeds) or 7.1 (Limitation on Consolidation,
Merger and Sale of Assets);
(4) any Obligor fails to observe or perform any other covenant in any
Financing Document for 60 days after written notice from the Holders of not
less than 25% in the aggregate principal amount of the Notes then
outstanding;
(5) any representation or warranty made or deemed made by any Obligor in
any Financing Document or which is contained in any certificate, document or
financial or other written statement furnished to Purchaser at any time
pursuant to any Financing Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made;
(6) default under any mortgage, indenture or other instrument or
agreement under which there may be issued or by which there may be secured
or evidenced Indebtedness of the Company or any Restricted Subsidiary,
whether such Indebtedness now exists or is hereafter incurred, which default
(x) is caused by a failure to pay when due principal
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or interest on such Indebtedness within the applicable express grace period,
(y) results in the acceleration of such Indebtedness prior to its express
final maturity or (z) results in the commencement of judicial proceedings to
foreclose upon, or to exercise remedies under applicable Law or applicable
security documents to take ownership of, the property or assets securing
such Indebtedness and, in each case, the principal amount of such
Indebtedness, together with any other Indebtedness with respect to which an
event described in clause (x), (y) or (z) has occurred and is continuing,
aggregates $10.0 million or more;
(7) the entry of a final judgment or judgments which can no longer be
appealed for the payment of money in excess of $10.0 million against the
Company or any Restricted Subsidiary and such judgment remains undischarged,
for a period of 60 consecutive days during which a stay of enforcement of
such judgment shall not be in effect;
(8) the Company or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(D) makes a general assignment for the benefit of its creditors, or
(E) generally is not paying its debts as they become due;
(9) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant Subsidiary
in an involuntary case,
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for all or substantially all of the property of the
Company or any Significant Subsidiary, or
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(C) orders the liquidation of the Company or any Significant
Subsidiary,
and the order or decree remains unstayed and in effect for 60 days;
(10) the Guarantee of any Significant Subsidiary ceases to be in full
force and effect or any such Guarantee is declared to be null and void and
unenforceable or any such Guarantee is found to be invalid or any of the
Guarantors denies in writing its liability under its Guarantee (other than
by reason of release of a Guarantor in accordance with the terms of this
Agreement) ; or
(11) on and after the Conversion Date, the Company shall not own all of
the Equity Interests of the Acquired Entities.
SECTION 9.2. ACCELERATION. If an Event of Default (other than an Event
of Default arising under Section 9.1(8) or (9) with respect to the Company)
occurs and is continuing, the Holders of not less than 25% in aggregate
principal amount of the Notes then outstanding may by written notice to the
Company declare to be immediately due and payable the entire principal amount of
all the Notes then outstanding plus accrued but unpaid interest to the date of
acceleration (plus, in the event of any such declaration following a Default
resulting from a willful action of any ONC Entity with the intent to avoid the
payment of any premium on the Notes, which declaration occurs on or after the
Conversion Date and (a) before the fifth anniversary of the Closing Date, a
premium (expressed as a percentage of principal amount) equal to the interest
rate per annum then being paid on the Notes, or (b) on or after the fifth
anniversary of the Closing Date, a premium (expressed as a percentage of
principal amount) equal to the then applicable redemption premium provided for
in Section 2.5(c)) and such amounts shall become immediately due and payable;
PROVIDED, HOWEVER, that after such acceleration but before a judgment or decree
based on such acceleration is obtained, the Majority Holders may rescind and
annul such acceleration and its consequences if all existing Events of Default,
other than the non-payment of accelerated principal, premium, if any, or
interest that has become due solely because of the acceleration, have been cured
or waived and if the rescission would not conflict with any judgment or decree.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto. In case an Event of Default specified in Section 9.1(8) or
(9) with respect to the Company occurs, the principal and interest
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amount with respect to all of the Notes shall be due and payable immediately
without any declaration or other act on the part of the Holders of the Notes.
SECTION 9.3. POWERS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent or subsequent assertion or employment of any other
appropriate right or remedy. Every power and remedy given hereunder or by law
may be exercised from time to time, and as often as shall be deemed expedient,
by the Holders.
SECTION 9.4. WAIVER OF PAST DEFAULTS AND EVENTS OF DEFAULT. Subject to
Sections 9.2, 9.5 and 12.2 hereof, the Majority Holders have the right to waive
any existing Default or compliance with any provision of any Financing Document.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Agreement; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto.
SECTION 9.5. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Agreement, the right of any Holder of a Note to receive
payment of principal of and interest of the Note on or after the respective due
dates therefor, or to bring suit for the enforcement of any such payment on or
after such respective dates, is absolute and unconditional and shall not be
impaired or affected without the consent of the Holder.
SECTION 9.6. RESTORATION OF RIGHTS AND REMEDIES. If any Holder has
instituted any proceeding to enforce any right or remedy under this Agreement
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to such Holder, then and in every case, subject to any
determination in such proceeding, the Company and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Holders shall continue as though no such
proceeding had been instituted.
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ARTICLE X
GUARANTEE OF NOTES
SECTION 10.1. GUARANTEE. Subject to the provisions of this Article X,
each Guarantor, by execution of this Agreement, jointly and severally,
unconditionally guarantees to each Holder (i) the due and punctual payment of
the principal of and interest on each Note, when and as the same shall become
due and payable, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal of and interest on the
Notes, to the extent lawful, and the due and punctual payment of all other
Obligations and due and punctual performance of all obligations of the Company
to the Holders all in accordance with the terms of such Note, this Agreement and
the Registration Rights Agreement, and (ii) in the case of any extension of time
of payment or renewal of any Notes or any of such other Obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, at stated maturity, by acceleration or
otherwise. Each Guarantor, by execution of this Agreement, agrees that its
obligations hereunder shall be absolute and unconditional, irrespective of, and
shall be unaffected by, any invalidity, irregularity or unenforceability of any
such Note or this Agreement, any failure to enforce the provisions of any such
Note, this Agreement or the Registration Rights Agreement, any waiver,
modification or indulgence granted to the Company with respect thereto by the
Holder of such Note, or any other circumstances which may otherwise constitute a
legal or equitable discharge of a surety or such Guarantor.
Each Guarantor hereby waives diligence, presentment, demand for payment,
filing of claims with a court in the event of merger or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest or
notice with respect to any such Note or the Indebtedness evidenced thereby and
all demands whatsoever, and will covenant that this Guarantee will not be
discharged as to any such Note except by payment in full of the principal
thereof and interest thereon. Each Guarantor hereby agrees that, as between such
Guarantor, on the one hand, and the Holders, on the other hand, (i) the maturity
of the Obligations guaranteed hereby may be accelerated as provided in Article
IX hereof for the purposes of this Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (ii) in the event of any declara-
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tion of acceleration of such Obligations as provided in Article IX hereof, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.
SECTION 10.2. EXECUTION AND DELIVERY OF GUARANTEES. A notation of
Guarantee on the Notes shall be executed on behalf of a Guarantor by the manual
or facsimile signature of an Officer of such Guarantor.
If an Officer of a Guarantor whose signature is on the Guarantee no
longer holds that office, such notation of Guarantee shall be valid
nevertheless.
SECTION 10.3. LIMITATION OF SUBSIDIARY GUARANTEES. The obligations of
each Guarantor are limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of such Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to its contribution obligations under this Agreement,
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent transfer under federal or state law. Each
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to a contribution from each other Guarantor in a pro rata amount based
on the Adjusted Net Assets of each Guarantor.
SECTION 10.4. RELEASE OF GUARANTOR. A Guarantor shall be released from
all of its obligations under its Guarantee if:
(i) all of the Capital Stock of such Guarantor owned by any Obligor has
been sold or otherwise disposed of in a transaction in compliance with
Sections 6.10 and 7.1 hereof; or
(ii) the Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Company or another
Guarantor in a transaction in compliance with Section 7.1 hereof;
and in each such case, such Guarantor has delivered to the Holders an Officers'
Certificate stating that all conditions precedent herein provided for relating
to such transactions have been complied with.
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SECTION 10.5. GUARANTEE OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR
INDEBTEDNESS. Each Guarantor covenants and agrees, and each Holder of Notes, by
its acceptance thereof, likewise covenants and agrees, that to the extent and in
the manner hereinafter set forth in this Article X, the Indebtedness represented
by the Guarantee and the payment of the principal of, premium, if any, and
interest on the Notes pursuant to the Guarantee by such Guarantor are hereby
expressly made subordinate and subject in right of payment as provided in this
Article X to the prior indefeasible payment and satisfaction in full in cash of
all Guarantor Senior Indebtedness of such Guarantor.
This Section 10.5 and the following Sections 10.6 through 10.10 shall
constitute a continuing offer to all Persons who, in reliance upon such
provisions, become holders of or continue to hold Guarantor Senior Indebtedness
of any Guarantor; and such provisions are made for the benefit of the holders of
Guarantor Senior Indebtedness of each Guarantor; and such holders are made
obligees hereunder and they or each of them may enforce such provisions.
SECTION 10.6. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC., OF A
GUARANTOR. In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, arrangement, reorganization or other similar
case or proceeding in connection therewith, relative to any Guarantor or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or (b)
any liquidation, dissolution or other winding-up of any Guarantor, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy
or (c) any general assignment for the benefit of creditors or any other
marshalling of assets or liabilities of any Guarantor, then and in any such
event:
(1) the holders of all Guarantor Senior Indebtedness of such Guarantor
shall be entitled to receive payment in full in cash of all amounts due on
or in respect of all such Guarantor Senior Indebtedness, before the Holders
of the Notes are entitled to receive or retain, pursuant to the Guarantee of
such Guarantor, any payment or distribution of any kind or character by such
Guarantor on account of any of its Obligations on its Guarantee;
(2) any payment or distribution of assets of such Guarantor of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders would be entitled but for the subordination
provi-
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sions of this Article X shall be paid by the liquidating trustee or agent
or other Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Guarantor Senior Indebtedness of such Guarantor or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Guarantor
Senior Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of such Guarantor Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full in cash of all such Guarantor Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to
the holders of such Guarantor Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of this
Section 10.6, the Holder of any Note shall have received any payment or
distribution of assets of such Guarantor of any kind or character, whether
in cash, property or securities, including, without limitation, by way of
set-off or otherwise, in respect of any of its Obligations on its Guarantee
before all Guarantor Senior Indebtedness of such Guarantor is paid in full
in cash, then and in such event such payment or distribution shall be paid
over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making
payment or distribution of assets of such Guarantor for application to the
payment of all such Guarantor Senior Indebtedness remaining unpaid, to the
extent necessary to pay all of such Guarantor Senior Indebtedness in full in
cash, after giving effect to any concurrent payment or distribution to or
for the holders of such Guarantor Senior Indebtedness.
The consolidation of a Guarantor with, or the merger of a Guarantor with
or into, another Person or the liquidation or dissolution of a Guarantor
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article VII hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of such Guarantor for the purposes of this
Article X if the Person formed by such consolidation or the surviving entity of
such merger or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation,
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merger, conveyance, transfer or lease, comply with the conditions set forth in
such Article VII hereof.
SECTION 10.7. SUSPENSION OF GUARANTEE OBLIGATIONS WHEN GUARANTOR SENIOR
INDEBTEDNESS IN DEFAULT. (a) Unless Section 10.6 hereof shall be applicable,
after the occurrence of a Payment Default with respect to any Designated Senior
Indebtedness which constitutes Guarantor Senior Indebtedness, no payment or
distribution of any assets or securities of any kind or character (including,
without limitation, cash, property and any payment or distribution which may be
payable or deliverable by reason of the payment of any other Indebtedness of
such Guarantor being subordinated to its Obligations on its Guarantee) may be
made by or on behalf of such Guarantor or any Subsidiary of such Guarantor,
including, without limitation, by way of set-off or otherwise, for or on account
of its Obligations on its Guarantee, and no holder or owner of any Notes shall
take or receive from any Guarantor or any Subsidiary of such Guarantor, directly
or indirectly in any manner, payment in respect of all or any portion of its
Obligations on its Guarantee following the delivery by the representative of the
holders of, for so long as there shall exist any Designated Senior Indebtedness
under or in respect of the Senior Credit Facility, the holders of Designated
Senior Indebtedness under or in respect of the Senior Credit Facility or,
thereafter, the holders of Designated Senior Indebtedness which constitutes
Guarantor Senior Indebtedness (in either such case, the "GUARANTOR
REPRESENTATIVE") to Purchasers on behalf of the Holders of written notice of (i)
the occurrence of a Payment Default on Designated Senior Indebtedness or (ii)
the occurrence of a Non-Payment Event of Default on such Designated Senior
Indebtedness and (in the case of this clause (ii)) the acceleration of the
maturity of Designated Senior Indebtedness in accordance with its terms, and in
any such event, such prohibition shall continue until such Payment Default is
cured, waived in writing or ceases to exist or such acceleration has been
rescinded or otherwise cured. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the following paragraph (b) , such Guarantor shall resume making any and all
required payments in respect of its Obligations under its Guarantee.
(b) Unless Section 10.6 hereof shall be applicable, upon the occurrence
of a Non-Payment Event of Default on Designated Senior Indebtedness guaranteed
by a Guarantor (which guarantee constitutes Guarantor Senior Indebtedness of
such Guarantor) , no payment or distribution of any assets of such Guarantor of
any kind or character (including, without limita-
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tion, cash, property and any payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of such Guarantor
being subordinated to its Obligations on its Guarantee) shall be made by such
Guarantor or any Subsidiary of any Guarantor, including, without limitation, by
way of set-off or otherwise, for or on account of any of its Obligations on its
Guarantee, and no holder or owner of any Notes shall take or receive from any
Guarantor (or any Restricted Subsidiary or Subsidiary of such Guarantor) ,
directly or indirectly in any manner, payment in respect of all or any portion
of its Obligations on its Guarantee for a period (a "GUARANTEE PAYMENT BLOCKAGE
PERIOD") commencing on the date of receipt by Purchasers on behalf of the
Holders of written notice from the Guarantor Representative of such Non-Payment
Event of Default, unless and until (subject to any blockage of payments that may
then be in effect under the preceding paragraph (a)) the earliest to occur of
the following events: (x) more than 179 days shall have elapsed since the date
of receipt of such written notice by Purchasers on behalf of the Holders, (y)
such Non-Payment Event of Default shall have been cured or waived in writing or
shall have ceased to exist or such Designated Senior Indebtedness shall have
been discharged or paid in full or (z) such Guarantee Payment Blockage Period
shall have been terminated by written notice to such Guarantor or Purchasers on
behalf of the Holders from the Guarantor Representative after which, in the case
of clause (x) , (y) or (z) , such Guarantor shall resume making any and all
required payments in respect of its Obligations on its Guarantee.
Notwithstanding any other provisions of this Agreement, no Non-Payment Event of
Default with respect to Designated Senior Indebtedness which existed or was
continuing on the date of the commencement of any Guarantee Payment Blockage
Period initiated by the Guarantor Representative shall be, or be made, the basis
for the commencement of a second Guarantee Payment Blockage Period initiated by
the Guarantor Representative, whether or not initiated within the Initial
Guarantee Blockage Period, unless such first Guarantor Non-Payment Event of
Default shall have been cured or waived for a period of not less than 90
consecutive days. In no event shall a Guarantee Payment Blockage Period extend
beyond 179 days from the date of the receipt by Purchasers on behalf of the
Holders of the notice referred to in this Section 10.7(b) or, in the event of a
Non-Payment Event of Default which formed the basis for a Payment Blockage
Period under Section 11.3(b) hereof, 179 days from the date of the receipt by
Purchasers of behalf of the Holders of the notice referred to in Section 11.3(b)
(the "INITIAL GUARANTEE BLOCKAGE PERIOD"). Any number of additional Guarantee
Payment Blockage Periods may be commenced during the Initial Guarantee Blockage
Period; PRO-
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VIDED, HOWEVER, that no such additional Guarantee Payment Blockage Period shall
extend beyond the Initial Guarantee Blockage Period. After the expiration of the
Initial Guarantee Blockage Period, no Guarantee Payment Blockage Period may be
commenced under this Section 10.7(b) and no Payment Blockage Period may be
commenced under Section 11.3(b) hereof until at least 180 consecutive days have
elapsed from the last day of the Initial Guarantee Blockage Period.
(c) In the event that, notwithstanding the foregoing, the Holder of any
Note shall have received any payment from a Guarantor prohibited by the
foregoing provisions of this Section 10.7, then and in such event such payment
shall be paid over and delivered forthwith to the Guarantor Representative
initiating the Guarantee Payment Blockage Period, in trust for distribution to
the holders of Guarantor Senior Indebtedness or, if no amounts are then due in
respect of Guarantor Senior Indebtedness, promptly returned to the Guarantor, or
as a court of competent jurisdiction shall direct.
SECTION 10.8. SUBROGATION TO RIGHTS OF HOLDERS OF GUARANTOR SENIOR
INDEBTEDNESS. Upon the payment in full of all amounts payable under or in
respect of all Guarantor Senior Indebtedness of a Guarantor, the Holders shall
be subrogated to the rights of the holders of such Guarantor Senior Indebtedness
to receive payments and distributions of cash, property and securities of such
Guarantor made on such Guarantor Senior Indebtedness until all amounts due to be
paid under the Guarantee shall be paid in full. For the purposes of such
subrogation, no payments or distributions to holders of Guarantor Senior
Indebtedness of any cash, property or securities to which Holders of the Notes
would be entitled except for the provisions of this Article X, and no payments
over pursuant to the provisions of this Article X to holders of Guarantor Senior
Indebtedness by Holders of the Notes, shall, as among each Guarantor, its
creditors other than holders of Guarantor Senior Indebtedness and the Holders of
the Notes, be deemed to be a payment or distribution by such Guarantor to or on
account of such Guarantor Senior Indebtedness.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article X shall have been applied,
pursuant to the provisions of this Article X, to the payment of all amounts
payable under Guarantor Senior Indebtedness, then and in such case, the Holders
shall be entitled to receive from the holders of such Guarantor Senior
Indebtedness at the time outstanding any payments or distributions received by
such holders of Guarantor
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Senior Indebtedness in excess of the amount sufficient to pay all amounts
payable under or in respect of such Guarantor Senior Indebtedness in full in
cash.
SECTION 10.9. GUARANTEE SUBORDINATION PROVISIONS SOLELY TO DEFINE
RELATIVE RIGHTS. The subordination provisions of this Article X are and are
intended solely for the purpose of defining the relative rights of the Holders
of the Notes on the one hand and the holders of Guarantor Senior Indebtedness on
the other hand. Nothing contained in this Article X or elsewhere in this
Agreement or in the Notes is intended to or shall (a) impair, as among each
Guarantor, its creditors other than holders of its Guarantor Senior Indebtedness
and the Holders of the Notes, the obligation of such Guarantor, which is
absolute and unconditional, to make payments to the Holders in respect of its
Obligations on its Guarantee in accordance with its terms; or (b) affect the
relative rights against such Guarantor of the Holders of the Notes and creditors
of such Guarantor other than the holders of the Guarantor Senior Indebtedness;
or (c) prevent the Holder of any Note from exercising all remedies otherwise
permitted by applicable law upon a Default or an Event of Default under this
Agreement, subject to the rights, if any, under this Article X of the holders of
Guarantor Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding-up, assignment for the benefit of creditors or
other marshaling of assets and liabilities of the Company referred to in Section
10.6 hereof, to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to such Holder, or (2)
under the conditions specified in Section 10.7 hereof, to prevent any payment
prohibited by such Section or enforce their rights pursuant to Section 10.7(c)
hereof.
The failure by any Guarantor to make a payment in respect of its
obligations on its Guarantee by reason of any provision of this Article X shall
not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
SECTION 10.10. APPLICATION OF CERTAIN ARTICLE XI PROVISIONS. The
provisions of Sections 11.6, 11.7 and 11.8 hereof shall apply, MUTATIS MUTANDIS,
to each Guarantor and their respective holders of Guarantor Senior Indebtedness
and the rights, duties and obligations set forth therein shall govern the
rights, duties and obligations of each Guarantor, the holders of Guarantor
Senior Indebtedness and the Holders with respect to the Guarantee and all
references therein to Article XI hereof shall mean this Article X.
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ARTICLE XI
SUBORDINATION OF NOTES
SECTION 11.1. NOTES SUBORDINATE TO SENIOR INDEBTEDNESS. The Company
covenants and agrees, and each Holder of Notes, by its acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article XI, the Indebtedness represented by the Notes and the
payment of the principal of, premium, if any, and interest on the Notes are
hereby expressly made subordinate and subject in right of payment as provided in
this Article XI to the prior indefeasible payment and satisfaction in full in
cash of all Senior Indebtedness.
This Article XI shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of or continue to hold Senior
Indebtedness; and such provisions are made for the benefit of the holders of
Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them may enforce such provisions.
SECTION 11.2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, arrangement, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, whether voluntary or involuntary or (b) any
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or (c) any
general assignment for the benefit of creditors or any other marshalling of
assets or liabilities of the Company, then and in any such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment and satisfaction in full in cash of all amounts due on or in respect
of all Senior Indebtedness, before the Holders of the Notes are entitled to
receive or retain any payment or distribution of any kind or character on
account of principal of, premium, if any, or interest on the Notes;
(2) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, by set-off or otherwise,
to which the Holders or Purchasers would be entitled but for the provi-
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sions of this Article XI shall be paid by the liquidating trustee or agent
or other Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Indebtedness or their representative or representatives or
to the trustee or trustees under any Agreement under which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full in cash of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution, or provision
therefor, to the holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of this
Section 11.2, the Holder of any Note shall have received any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, including, without limitation, by way of
set-off or otherwise, in respect of principal of, premium, if any, and
interest on the Notes before all Senior Indebtedness is paid in full in
cash, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full in cash, after giving effect to any concurrent
payment or distribution, or provision therefor, to or for the holders of
Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company with
or into, another Person or the liquidation or dissolution of the Company
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article VII hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of the Company for the purposes of this
Article XI if the Person formed by such consolidation or the surviving entity of
such merger or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation,
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merger, conveyance, transfer or lease, comply with the conditions set forth in
such Article VII hereof.
SECTION 11.3. SUSPENSION OF PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
(a) Unless Section 11.2 hereof shall be applicable, after the occurrence of a
Payment Default no payment or distribution of any assets or securities of any
kind or character (including, without limitation, cash, property and any payment
or distribution which may be payable or deliverable by reason of the payment of
any other Indebtedness of the Company being subordinated to the payment of the
Notes by the Company) may be made by or on behalf of the Company or any of its
Subsidiaries, including, without limitation, by way of set-off or otherwise, for
or on account of principal of, premium, if any, or interest on the Notes, or for
or on account of the purchase, redemption or other acquisition of the Notes, and
no holder or owner of any Notes shall take or receive from the Company or any of
its Subsidiaries, directly or indirectly in any manner, payment in respect of
all or any portion of Notes following the delivery by the representative of, for
so long as there shall exist any Designated Senior Indebtedness under or in
respect of the Senior Credit Facility, the holders of Designated Senior
Indebtedness under or in respect of the Senior Credit Facility or, thereafter,
the holders of Designated Senior Indebtedness (in either such case, the
"REPRESENTATIVE") to Purchasers on behalf of the Holders of written notice of
(i) the occurrence of a Payment Default on Designated Senior Indebtedness or
(ii) the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness and (in the case of this clause (ii)) the acceleration of the
maturity of Designated Senior Indebtedness in accordance with its terms, and in
any such event, such prohibition shall continue until such Payment Default is
cured, waived in writing or ceases to exist or such acceleration has been
rescinded or otherwise cured. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the following paragraph (b) , the Company shall resume making any and all
required payments in respect of the Notes, including any missed payments.
(b) Unless Section 11.2 hereof shall be applicable, upon the occurrence
of a Non-Payment Event of Default on Designated Senior Indebtedness, no payment
or distribution of any assets or securities of any kind or character (including,
without limitation, cash, property and any payment or distribution which may be
payable or deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Notes by the Company) shall be
made by or on be-
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half of the Company or any of its Subsidiaries, including, without limitation,
by way of set-off or otherwise, for or on account of any principal of, premium,
if any, or interest on the Notes or for or on account of the purchase,
redemption, defeasance or other acquisition of Notes, and no holder or owner of
any Notes shall take or receive from the Company or any of its Subsidiaries,
directly or indirectly in any manner, payment in respect of all or any portion
of the Notes, for a period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date
of receipt by Purchasers on behalf of the Holders of written notice from the
Representative of such Non-Payment Event of Default unless and until (subject to
any blockage of payments that may then be in effect under the preceding
paragraph (a)) the earliest to occur of the following events: (x) more than 179
days shall have elapsed since the date of receipt of such written notice by
Purchasers on behalf of the Holders, (y) such Non-Payment Event of Default shall
have been cured or waived in writing or shall have ceased to exist or such
Designated Senior Indebtedness shall have been discharged or paid in full or (z)
such Payment Blockage Period shall have been terminated by written notice to the
Company or Purchasers on behalf of the Holders from the Representative, after
which, in the case of clause (x), (y) or (z), the Company shall resume making
any and all required payments in respect of the Notes, including any missed
payments. Notwithstanding any other provisions of this Agreement, no Non-Payment
Event of Default with respect to Designated Senior Indebtedness which existed or
was continuing on the date of the commencement of any Payment Blockage Period
initiated by the Representative shall be, or be made, the basis for the
commencement of a second Payment Blockage Period initiated by the
Representative, whether or not within the Initial Blockage Period unless such
first Non-Payment Event of Default shall have been cured or waived for a period
of not less than 90 consecutive days. In no event shall a Payment Blockage
Period extend beyond 179 days from the date of the receipt by Purchasers on
behalf of the Holders of the notice referred to in this Section 11.3(b) (the
"INITIAL BLOCKAGE PERIOD"). Any number of additional Payment Blockage Periods
may be commenced during the Initial Blockage Period; PROVIDED, HOWEVER, that no
such additional Payment Blockage Period shall extend beyond the Initial Blockage
Period. After the expiration of the Initial Blockage Period, no Payment Blockage
Period may be commenced under this Section 11.3(b) and no Guarantee Payment
Blockage Period may be commenced under Section 10.7(b) hereof until at least 180
consecutive days have elapsed from the last day of the Initial Blockage Period.
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(c) In the event that, notwithstanding the foregoing, the Holder of any
Note shall have received any payment prohibited by the foregoing provisions of
this Section 11.3, then and in such event such payment shall be paid over and
delivered forthwith to the Representative initiating the Payment Blockage
Period, in trust for distribution to the holders of Senior Indebtedness or, if
no amounts are then due in respect of Senior Indebtedness, promptly returned to
the Company, or otherwise as a court of competent jurisdiction shall direct.
SECTION 11.4. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Upon the payment in full of all Senior Indebtedness, the Holders of the Notes
shall be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of, premium, if any and interest
on the Notes shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Holders of the Notes would be entitled
except for the provisions of this Article XI, and no payments over pursuant to
the provisions of this Article XI to the holders of Senior Indebtedness by
Holders of the Notes shall, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Notes, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article XI shall have been applied,
pursuant to the provisions of this Article XI, to the payment of all amounts
payable under the Senior Indebtedness of the Company, then and in such case the
Holders shall be entitled to receive from the holders of such Senior
Indebtedness at the time outstanding any payments or distributions received by
such holders of such Senior Indebtedness in excess of the amount sufficient to
pay all amounts payable under or in respect of such Senior Indebtedness in full
in cash.
SECTION 11.5. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article XI are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Agreement or in the Notes is intended to or shall
(a) impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders
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of the Notes, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Notes the principal of, premium, if
any, and interest on the Notes as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Notes and creditors of the Company other than the
holders of Senior Indebtedness; or (c) prevent the Holder of any Note from
exercising all remedies otherwise permitted by applicable law upon a Default or
an Event of Default under this Agreement, subject to the rights, if any, under
this Article XI of the holders of Senior Indebtedness (1) in any case,
proceeding, dissolution, liquidation or other winding-up, assignment for the
benefit of creditors or other marshaling of assets and liabilities of the
Company referred to in Section 11.2 hereof, to receive, pursuant to and in
accordance with such Section, cash, property and securities otherwise payable or
deliverable to such Holder, or (2) under the conditions specified in Section
11.3, to prevent any payment prohibited by such Section or enforce their rights
pursuant to Section 11.3(c) hereof.
The failure to make a payment on account of principal of, premium, if
any, or interest on the Notes by reason of any provision of this Article XI
shall not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
SECTION 11.6. NO WAIVER OF SUBORDINATION PROVISIONS. (a) No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Company
with the terms, provisions and covenants of this Agreement, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section
11.6, the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Holders of the Notes, without incurring
responsibility to the Holders of the Notes and without impairing or releasing
the subordination provided in this Article XI or the obligations hereunder of
the Holders of the Notes to the holders of Senior Indebtedness, do any one or
more of the following: (1) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agree-
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ment under which Senior Indebtedness is outstanding; (2) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (3) release any Person liable in any manner for the
collection or payment of Senior Indebtedness; and (4) exercise or refrain from
exercising any rights against the Company and any other Person; PROVIDED,
HOWEVER, that in no event shall any such actions limit the right of the Holders
of the Notes to take any action to accelerate the maturity of the Notes pursuant
to Article IX hereof or to pursue any rights or remedies hereunder or under
applicable laws if the taking of such action does not otherwise violate the
terms of this Agreement.
SECTION 11.7. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to in
this Article XI, the Holders shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Holders, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XI.
SECTION 11.8. NO SUSPENSION OF REMEDIES. Nothing contained in this
Article XI shall limit the right of the Holders of Notes to take any action to
accelerate the maturity of the Notes pursuant to Article IX or to pursue any
rights or remedies hereunder or under applicable law, subject to the rights, if
any, under this Article XI of the holders, from time to time, of Senior
Indebtedness.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. NOTICES. All notices, demands and other communications to
any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address set forth on the
signature pages
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hereof, or such other address as such party may hereafter specify for the
purpose to the other parties. Each such notice, demand or other communication
shall be effective (i) if given by telecopy, when such telecopy is transmitted
to the telecopy number specified on the signature pages hereof and receipt
thereof is confirmed by telephone or in writing, (ii) if given by mail, four
days after such communication is deposited in the mail with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in or pursuant to this Section.
SECTION 12.2. NO WAIVERS. (a) No failure or delay on the part of any
party in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.
(b) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Company and
the Majority Holders; PROVIDED, HOWEVER, that without the consent of each
Holder of any Note affected thereby, an amendment or waiver may not (i) reduce
the aggregate principal amount of Notes whose Holders must consent to an
amendment or waiver, (ii) reduce the rate or extend the time for payment of
interest on any Note, (iii) reduce the principal amount of or extend the stated
maturity of any Note or (iv) make any Note payable in money or property other
than as stated in such Note; PROVIDED, FURTHER, HOWEVER, that no such amendment
or waiver which affects the rights of Purchaser and its Affiliates otherwise
than solely in their capacities as Holders of Notes shall be effective with
respect to them without their prior written consent. In determining whether the
Holders of the requisite principal amount of Notes have concurred in any
direction, consent, or waiver as provided in any Financing Document, Notes which
are owned by any Obligor or by any Affiliate of any Obligor, shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; PROVIDED, HOWEVER, that, Notes so owned which have been pledged
in good faith shall not be disregarded if the pledgee establishes the pledgee's
right so to act with respect to the Notes and that the pledgee is not an obligor
or any Affiliate of any Obligor.
SECTION 12.3. INDEMNIFICATION. The Obligors agree, jointly and
severally, to indemnify and hold harmless Purchaser, its affiliates, and each
Person, if any, who controls Purchaser, or any of its affiliates, within the
meaning of the
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Securities Act or the Exchange Act (a "CONTROLLING PERSON"), and their
respective partners, agents, employees, officers and directors of Purchaser, its
affiliates and any such Controlling Person (each an "INDEMNIFIED PARTY" and
collectively, the "INDEMNIFIED PARTIES"), from and against any and all losses,
claims, damages, liabilities and expenses (including, as incurred, reasonable
costs of investigating, preparing or defending any such claim or action,
whether or not such Indemnified Party is a party thereto) relating to or arising
out of, or in connection with, any activities contemplated by any Financing
Document or any other services rendered in connection therewith, including, but
not limited to, losses, claims, damages, liabilities or expenses arising out of
or based upon any untrue statement or any alleged untrue statement of a material
fact or any omission or any alleged omission to state a material fact in any of
the disclosure or offering or confidential information documents (the
"DISCLOSURE DOCUMENTS") pertaining to any of the transactions or proposed
transactions contemplated therein, including any eventual refinancing or resale
of the Notes; PROVIDED, HOWEVER, that no Obligor will be responsible for any
claims, liabilities, losses, damages or expenses that are determined by final
judgment of a court of competent jurisdiction to result solely from such
Indemnified Party's gross negligence, willful misconduct or bad faith. The
Obligors jointly and severally, also agree that no Indemnified Party shall have
any liability for claims, liabilities, damages, losses or expenses, including
legal fees, incurred by any Obligor in connection with this Agreement unless
they are determined by final judgment of a court of competent jurisdiction to
result solely from such Indemnified Party's gross negligence, willful misconduct
or bad faith.
If any action shall be brought against an Indemnified Party with respect
to which indemnity may be sought against any Obligor under this Agreement, such
Indemnified Party shall promptly notify the Company in writing and the Company
shall, if requested by such Indemnified Party or if the Company desires to do
so, assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party and payment of all reasonable fees and
expenses. The failure to so notify the Company shall not affect any obligations
the Company may have to such Indemnified Party under this Agreement or otherwise
unless the Obligors are materially adversely affected by such failure. Such
Indemnified Party shall have the right to employ separate counsel in such action
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party, unless: (i) the
Company has failed to assume the de-
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fense and employ counsel reasonably satisfactory to such Indemnified Party or
(ii) the named parties to any such action (including any impleaded parties)
include such Indemnified Party and an Obligor, and such Indemnified Party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to an
Obligor, in which case, if such Indemnified Party notifies the Company in
writing that it elects to employ separate counsel at the expense of Obligors,
the Company shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party; PROVIDED, HOWEVER, that the
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
responsible hereunder for the reasonable fees and expenses of more than one such
firm of separate counsel, in addition to any local counsel, which counsel shall
be designated by Purchaser. The Obligors shall not be liable for any settlement
of any such action effected without the written consent of the Company (which
shall not be unreasonably withheld) and the Obligors, jointly and severally,
agree to indemnify and hold harmless each Indemnified Party from and against any
loss or liability by reason of settlement of any action effected with the
consent of the Company. In addition, no Obligor will, without the prior written
consent of Purchaser, settle or compromise or consent to the entry of any
judgment in or otherwise seek to terminate any pending or threatened action,
claim, suit or proceeding in respect to which indemnification or contribution
may be sought hereunder (whether or not any Indemnified Party is a party
thereto) unless such settlement, compromise, consent or termination includes an
express, unconditional release of Purchaser and the other Indemnified Parties,
satisfactory in form and substance to Purchaser, from all liability arising out
of such action, claim, suit or proceeding.
If for any reason the foregoing indemnity is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then in
lieu of indemnifying such Indemnified Party, the Obligors shall contribute to
the amount paid or payable by such Indemnified Party as a result of such claims,
liabilities, losses, damages, or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by Purchaser on the other from the transactions contemplated by this
Agreement or (ii) if the allocation provided by clause (i) is not permitted
under applicable law, in such proportion as is appropriate to reflect not only
the relative benefits received by the Company
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on the one hand and Purchaser on the other, but also the relative fault of the
Company and Purchaser as well as any other relevant equitable considerations.
Notwithstanding the provisions of this Section 12.3, the aggregate contribution
of all Indemnified Parties shall not exceed the amount of fees actually received
by Purchaser pursuant to this Agreement. It is hereby further agreed that the
relative benefits to the Company on the one hand and Purchaser on the other with
respect to the transactions contemplated hereby shall be deemed to be in the
same proportion as (x) the total value of the transactions contemplated hereby
bears to (ii) the fees paid to Purchaser with respect to the transactions
contemplated hereby. It is hereby further agreed that the relative fault of the
Company on the one hand and Purchaser on the other with respect to the
transactions contemplated hereby shall be determined by reference to, among
other things, whether any untrue or alleged untrue statement of material fact or
the omission or alleged omission to state a material fact related to information
supplied by the Company or by Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
The indemnification, contribution and expense reimbursement obligations
set forth in this Section 12.3 (i) shall be in addition to any liability the
Company may have to any Indemnified Party at common law or otherwise, (ii) shall
survive the termination of this Agreement and the other Financing Documents and
the payment in full of the Notes and (iii) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of
Purchaser or any other Indemnified Party.
SECTION 12.4. EXPENSES; DOCUMENTARY TAXES. The Obligors, jointly and
severally, agree to pay (i) all reasonable out-of-pocket expenses of Purchaser,
including fees and disbursements of counsel, in connection with any waiver or
consent hereunder or under any other Financing Document or any amendment hereof
or thereof and (ii) all out-of-pocket expenses of Purchaser and the Holders,
including fees and disbursements of their counsel, in connection with any
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom. In addition, the Company agree to pay any and all stamp, transfer and
other similar taxes, assessments or charges payable in connection with the
execution and delivery of any Fi-
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nancing Document or the issuance of Notes (other than any Note issued in a
Transfer) .
SECTION 12.5. PAYMENT. The Company agrees that, so long as Purchaser
shall own any Notes purchased by it from the Company hereunder, the Company will
make payments to Purchaser of all amounts due thereon by wire transfer by 11:00
a.m. on the date of payment to such account as is specified beneath Purchaser's
name on the signature page hereof or to such other account or in such other
similar manner as Purchaser may designate to the Company in writing.
SECTION 12.6. REGISTER. The Company shall keep at its principal office a
register (the "REGISTER") in which shall be entered the names and addresses of
the registered holders of the Notes and particulars of the respective Notes held
by them and of all transfers of such Notes. References to the "Holder" or
"Holders" shall mean the Person or Persons listed in the Register as the payee
of any Note. The ownership of the Notes shall be proven by the Register.
SECTION 12.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Company and upon Purchaser and their respective successors and
permitted assigns; PROVIDED, HOWEVER, that the Company shall not assign or
otherwise transfer its rights or obligations under this Agreement to any other
Person without the prior written consent of the Majority Holders. All provisions
hereunder purporting to give rights to Purchaser and its Affiliates or to
Holders are for the express benefit of such Persons.
SECTION 12.8. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
IN THAT STATE. EACH PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF
ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN
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ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12.9. INDEPENDENCE OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exception be deemed to permit any action or omission that would be in
contravention of applicable law.
SECTION 12.10. SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, is held by a court
of competent jurisdiction to be invalid, the remainder of this Agreement or the
application of such provision to other Persons or circumstances shall in no way
be affected thereby; PROVIDED, HOWEVER, that the parties shall negotiate in good
faith to replace the offending provision or application with a substitute
provision or application that will have substantially the same economic effect.
To the extent that it may effectively do so under applicable law, each party
hereby waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
SECTION 12.11. ENTIRE AGREEMENT; BENEFIT. This Agreement and the other
Financing Documents constitute the entire contract among the parties relating to
the subject matter hereof. Any previous agreement among the parties with respect
to the subject matter hereof is superseded by this Agreement and the other
Financing Documents. Nothing in any Financing Document is intended to confer
upon any Person (other than the parties thereto and any Indemnified Party) any
rights, remedies, obligations or liabilities under or by reason of the Financing
Documents.
SECTION 12.12. HEADINGS. Article and Section headings and the Tables of
Contents and Exhibits and Schedules are for convenience of reference only, are
not part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.
SECTION 12.13. COUNTERPARTS. This Agreement may be executed in any
number of counterparts each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument.
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SECTION 12.14. EFFECTIVENESS. This Agreement shall become effective
upon (i) execution and delivery of the signature pages hereof by the parties
hereto and (ii) payment by the Company to Purchaser of a commitment fee equal to
$1.0 million, which the Company agrees to pay on the earlier of the Closing Date
and the initial borrowing under the Senior Credit Facility.
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S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the dare first
above written.
COMPANY:
OGLEBAY NORTON COMPANY
By: David H. Kelsey
------------------------------------
Name: David H. Kelsey
Title: Vice President and
Chief Financial Officer
Address: 1100 Superior Avenue
Cleveland, OH 44114
Attention:
Telecopy: 216-861-2863
<PAGE> 113
S-2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
GUARANTORS:
OGLEBAY NORTON HOLDING COMPANY
ONCO INVESTMENT COMPANY
COLORADO SILICA SAND, INC.
OGLEBAY NORTON ENGINEERED
MATERIALS, INC.
OGLEBAY NORTON INDUSTRIAL
MINERALS, INC.
OGLEBAY NORTON INDUSTRIAL SANDS,
INC.
OGLEBAY NORTON LIMESTONE COMPANY
OGLEBAY NORTON TERMINALS, INC. -
d/b/a Cleveland Bulk Terminals
OGLEBAY NORTON ACQUISITION
COMPANY
By: /s/ Jeffery S. Gray
-----------------------------------
Name: Jeffery S. Gray
Title: Vice President
TEXAS MINING, LP
By: OGLEBAY NORTON INDUSTRIAL
SANDS, INC.
By: /s/ Jeffery S. Gray
-----------------------------------
Name: Jeffery S. Gray
Title: Vice President
Address: 1100 Superior Avenue
Cleveland, OH 44114
Attention:
Telecopy: 216-861-2863
<PAGE> 114
S-3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
PURCHASER:
CIBC OPPENHEIMER CORP.
By: /s/ Brian S. Gerson
Name: Brian S. Gerson
Title: Managing Director
425 Lexington Avenue
New York, New York 10017
Attention: Edward Levy
Telecopy: (212) 885-4998
Account Number and Bank for
Payment:
<PAGE> 1
Exhibit 10.4
SETTLEMENT AGREEMENT AND RELEASE
--------------------------------
1. PARTIES. The parties to this Settlement Agreement and Release (the
"Agreement") are Paul V. Gorman Jr. ("Gorman") and Oglebay Norton Company
("Oglebay Norton"). This Agreement is binding on and inures to the benefit of
Gorman's heirs, successors, and assigns. This Agreement releases Oglebay Norton
as well as its successors, assigns, divisions, parents, related or affiliated
companies, and any and all current or former officers, directors, shareholders,
members, employees (including any and all management and supervisory employees),
heirs, agents, and counsel (collectively "the Released Parties").
2. CONSIDERATION. As consideration for the promises in this Agreement,
Oglebay Norton agrees to continue to pay Gorman's base salary for twelve (12)
months from the date of the termination of his employment. Gorman's base salary
will be paid according to the Company's normal payroll schedule, and will be
subject to the usual deductions and withholdings as required by law or as
authorized by Gorman. Oglebay Norton agrees that for the twelve (12) months base
salary payments continue to Gorman, such payments shall be considered as wages
under the Oglebay Norton Company Pension Plan, the Incentive Savings Plan and
the Employee Stock Ownership Plan (ESOP), and that Gorman shall continue in such
programs, including Company paid Medical Insurance, Dental Insurance, and Life
Insurance until the last base salary payment is made to Gorman. Continued
medical coverage may thereafter be purchased by Gorman and/or his dependents
pursuant to COBRA. As further consideration, Oglebay Norton agrees to pay Gorman
a 1998 Performance Bonus in March 1999. Oglebay Norton and Gorman agree that the
Performance Bonus shall be $35,100. Gorman's Performance Bonus will be subject
to the usual deductions and withholdings required by law or as authorized by
Gorman. Oglebay Norton further agrees to pay
<PAGE> 2
Gorman eight (8) days of accrued but unused vacation time. Oglebay Norton agrees
that it will pay for outplacement services, as mutually agreed with Gorman,
until such time as Gorman is re-employed.
3. DEATH. In the event that Gorman dies prior to the last of the base
salary payments specified under Paragraph 2 are paid, Oglebay Norton shall then
make such remaining payments to Gorman's spouse, or if she predeceases him, to
his estate.
4. AGREEMENT. Gorman agrees to release and discharge forever the Released
Parties from all causes of action, claims, demands, costs and expenses which he
now has or may have from the beginning of time until the effective date of this
Agreement, whether known or unknown, on account of his employment with Oglebay
Norton. Gorman agrees to release and discharge all claims and demands including,
but not limited to, any contract or tort claim, or any claim of discrimination
on any basis including race, color, national origin, religion, sex, age,
disability or handicap arising under any federal, state or local statute,
ordinance, order, or law, including, but not limited to, Title VII of the Civil
Rights Act of 1964, 42 U.S.C. ss.2000e et seq., the Age Discrimination in
Employment Act, 29 U.S.C. ss.621 et. seq., the Americans with Disabilities Act,
42U.S.C. ss.12101 et seq., and any analogous Ohio anti-discrimination statute or
the common law of Ohio. Gorman further agrees that he is not a prevailing party
for the purposes of the attorney fee provisions of Title VII, the Age
Discrimination in Employment Act or any other statute or law and that he is
solely responsible for the payment of his own attorney's fees and costs, if any.
-2-
<PAGE> 3
6, ACKNOWLEDGMENTS. Gorman acknowledges that he has been advised to
consult with his attorney before executing this Agreement. Gorman further
acknowledges that he has had a reasonable period of time to read and consider
this Agreement before executing it (at least 45 days, if needed). Gorman further
acknowledges that the consideration given to him under this Agreement is in
addition to anything of value to which he may already be entitled from Oglebay
Norton.
7, RECEIPT OF DOCUMENTS. Gorman acknowledges that he has received and had
the opportunity to review Attachment A, which (1) identifies the individuals who
are covered by the severance program; (2) sets forth the eligibility factors and
time limits, if any, applicable to this severance program; and (3) lists the job
titles and ages of all individuals eligible or selected for the severance
program and the ages of all individuals in the same job classification or
organizational unit who are not eligible or selected for the severance program.
8, NON-ADMISSION. Gorman acknowledges, agrees and represents that Oglebay
Norton, in entering into this Agreement is not admitting to any liability or
violation of the law, contract or other agreement and that no promise or
inducement has been offered to Gorman except as set forth in this Agreement.
9. CONFIDENTIALIIY. Gorman agrees to keep the fact of and the terms of
this Agreement confidential and not to publicize, disclose or discuss its terms
with any persons other than his counsel in this matter, his spouse, children,
parents, siblings, tax advisors, or except as required by law. Gorman and
Oglebay Norton agree that Gorman may disclose to a prospective employer that
-3-
<PAGE> 4
this Agreement exists but that Gorman may not disclose the terms of the
Agreement. Gorman and Oglebay Norton agree not to make or utter any disparaging
remarks about the other.
10. APPLICABLE LAW, This Agreement shall be governed by, interpreted
under, and enforced in accordance with the laws of the State of Ohio.
11. REVOCATION/CANCELLATION. Gorman may revoke and cancel this Agreement
by providing written notice of revocation to Jeffrey S. Gray, Esq., Vice
President Corporate Development and General Counsel, 1100 Superior Avenue,
Cleveland, Ohio 44114, (216) 861-2399 (fax) which notice is received within
seven (7) days after his execution of this Agreement. If he does so revoke, this
Agreement will be null and void. This Agreement shall not become effective and
enforceable until after the expiration of this 7-day revocation period, after
such time, if there has been no revocation, the Agreement shall be fully
effective and enforceable.
12. FINAL AGREEMENT. All prior agreements and understandings, whether
written or oral, between Gorman and Oglebay Norton are replaced and superseded
by this Agreement and are no longer of any force and effect.
13. SEVERABILITY. If any provision of this Agreement is declared invalid
or unenforceable, the remaining portions of the Agreement shall not be affected
thereby and shall be enforced.
-4-
<PAGE> 5
14. COUNTERPARTS/EFFECTIVE DATE. This Agreement may be executed in
counterparts which, when taken together, form the entire Agreement executed as
of the latest date hereon.
AGREED TO: WITNESS:
/s/ Paul V. Gorman, Jr. /s/ Deborah A. Nixon
- ------------------------------ ----------------------------------
Paul V. Gorman Jr.
Date: August 6, 1998 Date: August 6, 1998
------------------------- ------------------------------
Oglebay Norton Company
By: /s/ John Lauer /s/ R. F. Walk
- ----------------------------- -----------------------------------
Its: Chairman, President & CEO
Date: August 5, 1998 Date: August 5, 1998
------------------------- ------------------------------
-5-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 20,574,000
<SECURITIES> 0
<RECEIVABLES> 46,096,754
<ALLOWANCES> 964,000
<INVENTORY> 22,584,212
<CURRENT-ASSETS> 103,448,119
<PP&E> 608,952,951
<DEPRECIATION> 209,524,501
<TOTAL-ASSETS> 592,944,950
<CURRENT-LIABILITIES> 57,554,823
<BONDS> 0
0
0
<COMMON> 7,253,332
<OTHER-SE> 114,811,664
<TOTAL-LIABILITY-AND-EQUITY> 592,944,950
<SALES> 43,317,952
<TOTAL-REVENUES> 78,034,015
<CGS> 28,180,793
<TOTAL-COSTS> 65,950,423
<OTHER-EXPENSES> 1,044,434
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,447,235
<INCOME-PRETAX> 7,363,981
<INCOME-TAX> 2,135,000
<INCOME-CONTINUING> 5,228,981
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,228,981
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.08
</TABLE>
<PAGE> 1
Exhibit 99
NEWS
FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION CONTACT:
ROCHELLE F. WALK,
SECRETARY AND DIRECTOR - CORPORATE AFFAIRS
(216) 861-8734
[email protected]
JOHN LAUER, OGLEBAY NORTON CHIEF EXECUTIVE OFFICER
AND PRESIDENT, NAMED CHAIRMAN;
LAUER OUTLINES STRATEGIC VISION TO SHAREHOLDERS
CLEVELAND, OHIO -- JULY 29, 1998 - John N. Lauer, president and chief
executive officer of Oglebay Norton Company (Nasdaq: OGLE) was elected to the
additional post of chairman at a Company Board of Directors meeting today,
succeeding R. Thomas Green, Jr., who is retiring after 33 years with the
Company.
In his comments at today's annual shareholder meeting, Lauer stated
that the Company is targeting a total enterprise value of $1 billion by the year
2000. "In a business such as ours, a one-billion-dollar enterprise value would
translate into approximately $600 million in sales and approximately $150
million in operating margin or EBITDA," said Lauer. EBITDA is defined as
earnings before interest, taxes, depreciation and amortization.
In response to a question, Lauer also noted that results for 1998
likely will not meet 1997's earning per share record of $3.37 (assuming
dilution). The previous year's results included a gain and other income from the
sale of marketable securities, the receipt of insurance proceeds and
significantly lower debt levels.
"From an operating standpoint, performance in the first half of 1998
was strong, resulting in the $1.08 earnings per share we reported today for the
first six months," said Lauer. "We are optimistic that operating performance in
the second half of 1998 will equal or exceed our first half, although debt
levels will be up substantially in comparison with last year's levels."
Lauer reported that debt as of June 30,1998 was approximately $300
million, of which nearly $250 million was incurred in the first half of 1998
related to three acquisitions - Colorado Silica Sand, the
<PAGE> 2
Port Inland operations and Global Stone Corporation.
Lauer told shareholders the Company is considering a public debt
offering later this year of approximately $160 million, the proceeds of which
will be used to reduce other existing debt.
"We are firmly on track to increasingly deliver enhanced shareholder
value across all three of our core operations - marine transportation,
industrial sands, and lime and limestone," said Lauer. "This is an important
strategic transition year for us, as we have already doubled annual revenues in
the first half."
In other actions at the annual meeting, shareholders:
- Approved the Oglebay Norton Company Director Fee Deferral Plan
- Approved the Performance Option Agreement with John Lauer
- Elected three directors -- Malvin Bank, William Bares and John
Weil -- to serve three-year terms expiring 2001.
Oglebay Norton is a Cleveland, Ohio-based company engaged in Great
Lakes marine transportation, material handling, and the mining and marketing of
industrial sands, limestone and lime. Oglebay serves the steel, oil and gas,
ceramic, chemical, glass, electric utility and construction industries. The
Company recorded revenues from continuing operations of $145 million in 1997.
Oglebay has nearly doubled its size in the first half of 1998 with the recent
acquisitions of Global Stone Corporation, Port Inland Limestone Company and
Colorado Silica Sand. Including these acquisitions, Oglebay Norton's pro forma
revenues for 1997 totalled more than $280 million.
The Company's website, located at WWW.OGLEBAYNORTON.COM, is updated
regularly with investor information.
CERTAIN STATEMENTS CONTAINED IN THIS RELEASE ARE "FORWARD-LOOKING" IN THAT THEY
REFLECT MANAGEMENT'S EXPECTATIONS AND BELIEFS FOR FUTURE PERFORMANCE IN 1998 AND
BEYOND WITH RESPECT TO ITS OPERATING SEGMENTS. FORWARD-LOOKING STATEMENTS ARE
NECESSARILY SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS, MANY OF WHICH ARE
OUTSIDE THE CONTROL OF THE COMPANY, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM SUCH STATEMENTS. WEATHER, OIL PRICES, STEEL PRODUCTION, GREAT
LAKES AND MID-ATLANTIC CONSTRUCTION ACTIVITY, THE CALIFORNIA ECONOMY AND
POPULATION GROWTH RATES IN THE SOUTHWESTERN UNITED STATES, ALL CAN IMPACT
REVENUES AND EARNINGS. IN THIS RELEASE, WORDS SUCH AS "BELIEVES," "EXPECTS" AND
"ANTICIPATES" ARE INDICATIVE OF FORWARD-LOOKING STATEMENTS.
<PAGE> 3
NEWS
FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION CONTACT:
ROCHELLE F. WALK,
SECRETARY AND DIRECTOR - CORPORATE AFFAIRS
(216) 861-8734
[email protected]
OGLEBAY NORTON REPORTS STRONG SECOND QUARTER
REVENUES AND EARNINGS COMPARED WITH
FIRST QUARTER 1998 AND SECOND QUARTER 1997
CLEVELAND, OHIO; JULY 29, 1998 ---Oglebay Norton Company (NASDAQ: OGLE) today
announced revenues increased 46% to $63,726,000 in the second quarter of 1998,
compared with $43,576,000 in the second quarter of 1997. Operating margin
(earnings before interest, taxes, depreciation and amortization) increased 58%
to $16,777,000, compared with $10,623,000 in the second quarter of 1997. Net
income increased 7% to $5,449,000 ($1.13 per share, assuming dilution) compared
with $5,108,000 ($1.06 per share, assuming dilution) in the same period one year
ago.
In the first half of 1998, revenues increased 38% to $78,034,000 from
$56,362,000 in the first half of 1997. Operating margin for the six-month period
was up 40% to $18,198,000, compared with $12,974,000 in the first half of 1997.
Net income for that period decreased 12% to $5,229,000 ($1.08 per share,
assuming dilution) compared with $5,961,000 ($1.23 per share, assuming dilution)
in the same period one year ago. This reduction in net income is due primarily
to the fact that in the first half of 1997 the Company recorded a gain and other
income of $1,272,000 ($.26 per share, assuming dilution) from the sale of
marketable securities and the receipt of insurance proceeds.
Marine Transportation revenues and operating margin for both the second
quarter and the first half of 1998 were improved over the same periods in 1997
as a result of strong customer demand, good operating conditions on the Great
Lakes, and lower fuel costs.
Revenues from Industrial Sands during the second quarter were above the
first quarter 1998, but were slightly lower than its record second quarter in
1997 due to reduced oil field demand. Industrial Sands' non-oil field service
business is strongly ahead of 1997.
1 of 3
<PAGE> 4
Oglebay Norton Company
Second Quarter, 1998 Revenue and Earnings
"Our overall operating performance for the second quarter of 1998 was
excellent," said John N. Lauer, President and Chief Executive Officer. "During
the second quarter we acquired two businesses, the Port Inland limestone
operations in Michigan and Global Stone Corporation. Port Inland is performing
ahead of second quarter 1997 results, more than meeting our expectations. Global
Stone is performing in accordance with management's pre-acquisition
expectations," he continued.
Global Stone Corporation is a Canadian-based lime, chemical limestone
and construction aggregates producer with annual revenues of approximately
US$125 million. It has operations in both the United States and Canada, and is
the sixth largest lime producer in the United States. Lauer noted that the
Company anticipates Global Stone to be accretive to earnings per share in 1999.
"The addition of these lime and limestone businesses fits well with our
strategic initiatives," continued Lauer. "Oglebay Norton is experienced in the
industrial minerals business and, with the consolidation underway in the lime
and limestone markets, there is an excellent opportunity for Oglebay Norton to
build a leadership position in the lime industry."
The Company also said that its Marine Transportation business continues
to have an outstanding year and anticipates that if normal weather conditions
persist through the second half of 1998 the division could deliver record
profits. Marine Transportation handles and transports bulk materials,
principally iron ore, coal and limestone.
The Industrial Sands business, with the acquisition of the Colorado
Silica Sand operations in March, 1998 and the strong performance of its
operations in Orange County, California, is likely to have its second-best
profit performance this year, despite the softness in its oil field related
business.
*******
In other action, Oglebay Norton Company's Board of Directors declared a
regular dividend of $.20 per share, payable September 30, 1998, to stockholders
of record on September 10, 1998.
Oglebay Norton Company is a Cleveland, Ohio-based company engaged in
Great Lakes marine transportation and services, the mining and marketing of
industrial sands and limestone, and the production and sale of lime. It serves
the steel, oil and gas, ceramic, chemical, glass, paper, electric utility and
construction industries. The Company recorded revenues from continuing
operations of $145 million for the year ended December 31, 1997. Oglebay Norton
2 of 3
<PAGE> 5
Oglebay Norton Company
Second Quarter, 1998 Revenue and Earnings
has nearly doubled its revenue base in the first half of 1998 with the recent
acquisitions of Global Stone Corporation, Port Inland Limestone Company and
Colorado Silica Sand Company. Including these acquisitions, Oglebay Norton's pro
forma Net Revenue for 1997 exceeds $280 million.
The Company's website, located at www.oglebaynorton.com, is updated
regularly with investor information.
CERTAIN STATEMENTS CONTAINED IN THIS RELEASE ARE "FORWARD-LOOKING" IN THAT THEY
REFLECT MANAGEMENT'S EXPECTATIONS AND BELIEFS FOR FUTURE PERFORMANCE IN 1998 AND
BEYOND WITH RESPECT TO ITS OPERATING SEGMENTS. FORWARD-LOOKING STATEMENTS ARE
NECESSARILY SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS, MANY OF WHICH ARE
OUTSIDE THE CONTROL OF THE COMPANY, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM SUCH STATEMENTS. WEATHER, OIL PRICES, STEEL PRODUCTION, GREAT
LAKES AND MID- ATLANTIC CONSTRUCTION ACTIVITY, THE CALIFORNIA ECONOMY AND
POPULATION GROWTH RATES IN THE SOUTHWESTERN UNITED STATES, ALL CAN IMPACT
REVENUES AND EARNINGS. IN THIS RELEASE, WORDS SUCH AS "BELIEVES", "EXPECTS" AND
"ANTICIPATES" ARE INDICATIVE OF FORWARD-LOOKING STATEMENTS.
##
3 of 3
<PAGE> 6
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Oglebay Norton Company and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
(000's except per share amounts) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES AND OPERATING REVENUES $ 63,726 $ 43,576 $ 78,034 $ 56,362
COSTS AND EXPENSES
Cost of goods sold and operating expenses 41,527 30,049 50,626 37,830
Depreciation and amortization 5,426 2,686 6,387 3,462
General, administrative and selling expenses 5,143 3,382 8,937 6,704
52,096 36,117 65,950 47,996
INCOME FROM OPERATIONS 11,630 7,459 12,084 8,366
Gain on sale of assets 29 31 44 793
Interest, dividends and other income 250 1,159 728 1,729
Interest expense (3,667) (649) (4,447) (1,194)
Other expense (558) (712) (1,045) (1,376)
-------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 7,684 7,288 7,364 8,318
Income taxes 2,235 2,104 2,135 2,382
-------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS 5,449 5,184 5,229 5,936
Income from discontinued operations (76) 25
-------- -------- -------- --------
NET INCOME $ 5,449 $ 5,108 $ 5,229 $ 5,961
======== ======== ======== ========
PER SHARE AMOUNTS
Basic:
Continuing operations $ 1.14 $ 1.08 $ 1.09 $ 1.23
Discontinued operations (.02) .01
-------- -------- -------- --------
Net income per share $ 1.14 $ 1.06 $ 1.09 $ 1.24
======== ======== ======== ========
Assuming dilution:
Continuing operations $ 1.13 $ 1.07 $ 1.08 $ 1.22
Discontinued operations (.01) .01
-------- -------- -------- --------
Net income per share $ 1.13 $ 1.06 $ 1.08 $ 1.23
======== ======== ======== ========
Average number of shares 4,764 4,800 4,764 4,808
Average number of shares adjusted to basic 4,775 4,800 4,777 4,808
Average number of shares assuming dilution 4,810 4,832 4,820 4,837
</TABLE>
