SECURITIES AND EXCHANGE
COMMISSION Washington,
D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
Commission file number 1-228
ZEMEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1031 13-5496920
(State of other (Primary standard (I.R.S.
employer jurisdiction of industrial
identification
incorporation or classification code number)
organization) number)
Canada Trust Tower, BCE Place, 161 Bay Street, Suite
3750 Toronto, Ontario, Canada M5J 2S1
(416) 365-8080
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive
offices)
Securities registered pursuant to Section 12(b) of the
Act
New York Stock Exchange
Capital Stock, $1.00 par value
Securities registered pursuant to Section 12(g) of the Act
National Association of Securities Dealers Automated
Quotation Warrants to Purchase Capital Stock
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 twelve months (or for such shorter period
that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for
the past 90 days.
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
The aggregate market value of registrant's voting
stock (Capital Stock, $1.00 par value) held by non-
affiliates as of March 9, 1995 (based on the closing sale
price of $10.625 on the New York Stock Exchange) was
$43,415,684.
As of March 9, 1995 there were 7,635,232 of the
registrant's Capital Stock, $1.00 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for the Year Ended December
31,
1994
Part II
Definitive Proxy Statement filed with the Commission
pursuant to Regulation 14A with respect to Annual Meeting
of Shareholders
Part III
FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS
AND
CROSS-REFERENCE SHEET
PART I
Page Item 1. Business
1
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security
Holders 6
Item 10. Executive Officers of the Registrant (A) 7
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters (B)
8
Item 6. Selected Financial Data (C) 8
Item 7. Management's Discussion and Analysis of
Financial Condition and
Results of Operation (D) 8
Item 8.
Financial Statements and Supplementary Data (E) 8
Item 9.
Changes in and Disagreements with Accountants on
Accounting and
Financial Disclosure 8
PART III
Item 10.
Directors of the Registrant (F) *
Item 11.
Executive Compensation(F) *
Item 12.
Security Ownership of Certain Beneficial Owners and
Management (F) *
Item 13.
Certain Relationships and Related Transactions (F) *
PART IV
Item 14.
Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 9
(A) Included
in Part
I
pursuant to Instruction 3 of Item 401(b) of Regulation S-
K.
(B) Information responsive to this Item
is set forth on page 13 of
registrant's Annual Report to
Shareholders for the year ended
December 31, 1994 (the "Annual Report
to Shareholders") and is
incorporated herein by reference.
The Annual Report to Shareholders is
included as Exhibit 13 to this Form
10-K Annual Report. The
Annual Report to
Shareholders, except for those
portions thereof which are expressly
incorporated by reference herein, is
furnished for the information of the
Commission and is not to be deemed
"filed" as part of this Form 10-K
report.
(C) Information responsive to this
Item is set forth on page 32 of the
Annual Report to Shareholders
and is
incorporated herein by reference.
(D) Information responsive to this
Item is set forth on pages 6 through 13
of the Annual Report to Shareholders
and is
incorporated herein by reference.
(E) Financial statements responsive
to this Item are set forth on
pages 15 through 31 of the Annual
Report to
Shareholders and are incorporated
herein by reference. The Supplementary
Schedule required by this Item is set
forth on page S-1 of this Form 10-K
Annual Report.
(F) Information responsive to this
Item is set forth in registrant's
definitive proxy statement to be
filed with the Commission pursuant to
Regulation 14A and in the Annual
Report to Shareholders on Page 30
(Note 15) and is incorporated herein
by reference.
PART I
ITEM 1. BUSINESS
General
Zemex Corporation (the "Corporation" or "Zemex"), a
Delaware corporation, was incorporated in 1985 as the
successor to Pacific Tin Corporation. Zemex is a
diversified industrial minerals and specialty materials
company. Its principal businesses are industrial
minerals and metal powders, which are used by a wide
range of industries. Major products include feldspar,
feldspathic minerals, kaolin, sand, mica, talc and iron
powders.
Feldspar, feldspathic minerals and certain grades
of
industrial sand are used in the manufacture of
bottles, jars, and other glass containers, fiberglass,
paints and plastics, and television picture
tubes. Kaolin and
feldspathic minerals are major raw materials for the
ceramic industry, and are incorporated in a variety of
products that include floor and wall tiles, dinnerware,
plumbing fixtures, glazes and electrical insulators.
Industrial sand is also used for filter, trap, filler,
beach, blasting and concrete applications. Mica is used
in a variety of applications such as partial or
complete substitution for asbestos in fire retardation,
friction materials, oil well drilling needs, caulking
and molding compounds, coatings and plasters and plastics.
Talc is used in the ceramics industry and as a filler in
a number of markets.
Zemex produces iron, steel and copper powders with
major application in the manufacture of precision metal
components by the powder metallurgy process. The largest
market is the automotive industry. Other markets
include the farm, garden, lawn equipment, hardware,
home appliances, hobby and business machine industries.
Iron powder replacement of asbestos in automotive brakes
is a growing market.
Zemex mines phlogopite mica in an open pit mining
operation in Suzor Township, Quebec, Canada,
approximately 200 miles north of Montreal, Quebec. The
ore is mined by standard, open pit methods and
delivered to a siding for ultimate transportation by
rail to the processing plant, which is located in
Boucherville, Quebec, a suburb of Montreal. Processing
of phlogopite mica involves milling, screening and
proprietary processing steps to produce products of
various size fractions which find ultimate use in a
variety of applications, such as partial or complete
substitution for asbestos in fire retardation, friction
materials, oil well drilling needs, caulking and
molding compounds, coatings, plasters and plastics. The
principal markets the Corporation serves are the
automobile, construction and oil drilling industries.
One of the most significant areas of use is in
technological plastic and high temperature plastic
applications, as phlogopite mica has a distinct
thermal stability advantage over competitive
materials. Zemex markets this product under the trade
names of Suzorite Mica and Suzorex.
In June 1994, Zemex invested $2 million in Alumitech,
Inc. ("Alumitech"), an aluminum dross reprocessor, in
exchange for an approximate 42% interest in that
company. In February 1995, Zemex exercised an option and
increased its ownership interest in Alumitech to 73%
in exchange for 412,500 common shares issued from
treasury. Alumitech has developed, patented and is
expanding its leading edge aluminum dross recycling
technology. The process transforms chloride-based drosses
received from primary and secondary aluminum producers
into a number of commercial components, including
ceramic type materials. Currently, competitive
processes landfill anywhere from 40%-75% of the volume
of dross received whereas Alumitech's recycling process
will virtually eliminate the need for landfill.
Alumitech has completed the physical modifications of
its new ceramic fiber line. Testing is anticipated
to be concluded by the second quarter of 1995, at
which time Alumitech should have a fully integrated
facility for recycling 100% of the aluminum dross feed.
Alumitech has the only known process for the
complete recycling of saltcake drosses; most other
processes landfill significant portions of the material
received while Alumitech's proprietary technology may
virtually eliminate landfill.
In September 1994, Zemex completed a public
offering, selling two million treasury shares to
institutions and private investors, raising net
proceeds of approximately $18.5 million to be used for
expansion, acquisitions, debt repayment and other general
corporate purposes.. The number of shares currently
outstanding is 7,635,232 or 8,819,530 on a fully diluted
basis.
On September 15, 1994, Zemex completed its purchase of
the assets of Greenback Industries, Inc., a copper
powder
producer, for $2.1 million. As the result of its
purchase of Greenback, the Corporation has the largest
capacity of non-ferrous metal powders in North America
and Zemex is the only full range supplier to the powdered
metallurgy markets.
In December 1994, the Corporation purchased the
talc operations of Whittaker, Clark & Daniels, Inc. Talc
is used in the ceramics industry as well as several
other markets within which Zemex has a strong
presence. It is the intention of the Corporation
to apply its proprietary technology to surface
modify talc and, as a result, introduce several new
value added products.
Industrial Minerals Segment
The industrial minerals segment consists of three of the
Corporation's wholly-owned subsidiaries, The Feldspar
Corporation ("TFC"), Suzorite Mica Products Inc.
("Suzorite") and Suzorite Mineral Products, Inc.
("SMP"). The products produced by TFC include
feldspar, silica, muscovite mica and kaolin clay.
Industries supplied include glass and ceramics. TFC's
operating plants are located in Florida, Georgia and
North Carolina. SMP produces talc which is used in
the ceramics, paint and paper industries. Its plants are
located in New York, North Carolina and Texas.
Suzorite produces a high grade phlogopite mica which has a
higher degree of thermal stability than other forms of
mica. The principal markets served by Suzorite are
the automobile, construction and oil drilling industries.
Its mine and processing plant are located in Quebec,
Canada.
Demand for these industrial minerals is related to the
pace of the general economy and is particularly related
to the automotive industry and to those created by
residential and commercial construction and remodeling.
Industrial minerals sales in 1994 totaled $30 million,
compared with $31 million in 1993. The slight
decline in 1994 sales resulted primarily from the
Corporation's sale of its Virginia aplite facility.
This business segment recorded the fourth straight year
of improved operating income before restructuring
charges, $3,865,000 in 1994, $2,424,000 in 1993,
$2,208,000 in 1992, and $754,000 in 1991, due to
increased sales and margins. Major efforts were made
in the area of cost reduction, continuous quality
improvement and the introduction of new value added
products.
During 1994 considerable efforts were put into
product development, market research, the design of
future cost saving capital projects and product
quality improvement systems. The Corporation expects
these efforts will bear fruit in the future.
Capital expenditures were $2,050,000 in 1994, $2,209,000
in 1993, and $814,000 in 1992. The 1994 expenditures
were to replace mining equipment, make mill modifications
to produce a new product and to sustain production
capacity. It is anticipated that 1995 capital
expenditures will be much higher due to a $14,000,000
expansion and automation project at the North Carolina
sodium feldspar facility.
Metal Powders Segment
Pyron Corporation and Pyron Metal Powders, Inc.,
wholly owned subsidiaries of Zemex that produce iron,
steel and copper powders, have operating plants located
in Niagara Falls, New York, Greenback, Tennessee and
Maryville, Tennessee. The largest use of metal powders
is in the fabrication of precision metal parts by
the powder metallurgy process. Powder metallurgy is
an efficient, economical process for the production of
numerous components for the automotive,
farm, garden, lawn equipment and
business machine industries. Key features of
powder metallurgy technology are low scrap ratios
and lower production costs than such other metal
working processes such as casting and forging.
In recent years, metal powder use in automotive and
rail braking systems has grown rapidly as a
replacement for asbestos, achieving better
performance and improving
environmental and health conditions. Metal powder is
also used in making welding rods, for cutting and
scarfing of steel ingots and billets, for the inspection
of oil field pipe and tubing, and in food supplements.
Sales of metal powders increased to $24.9 million in
1994 from $16.9 million in 1993 and from $12.6 million in
1992. Operating income increased to $2,202,000 from
$1,046,000 in 1993. The increase was due to higher
volumes of sponge and atomized products. Operating
income declined to $1,046,000 in 1993 from $1,313,000 in
1992. The decline in operating income during a time of
increasing sales was due to startup costs associated
with the atomization plant at Niagara Falls, New York.
Ligonier Powders, Inc. was renamed Pyron Metal Powders,
Inc. following its acquisition by the Corporation in
1992. In 1994, the Corporation purchased the assets
of Greenback Industries, Inc. It produces a range of
high quality copper and copper alloy powders from its
plants at Maryville and Greenback, Tennessee. These
products complement Pyron's iron and steel powder
products and are sold through Pyron's existing marketing
and sales organization.
At Pyron, sales of atomized iron and steel
products increased in 1993, however, due to technological
problems, the rate of increase was less than
anticipated. Late in 1993, the technical problems were
resolved and in 1994 the product rapidly gained
customer acceptance. Management expects this
facility, with its favorable cost structure, high
quality products and good geographic location, to
continue its rapid growth in profitability as its
sales increase in the future.
Late in 1993, the Corporation entered into an
agreement whereby it became the exclusive sales agent to
the powdered metal markets for powdered nickel produced in
Russia, making Pyron the second largest supplier of this
material to this market in North America. With its
extended product line, Pyron has become a valuable and
flexible supplier with a long term future in what
management believes to be a very promising industry.
Capital expenditures were $878,000 in 1994, $391,000
in 1993 and $235,000 in 1992. The 1994 expenditures
were primarily for the acquisition of the assets of
Greenback.
Raw Materials and Other Requirements
In recent years, the Corporation has not experienced
any substantial difficulty in obtaining its raw
materials
requirements (consisting of scrap metals) for the
metal powders segment, which is the segment that consumes,
rather than supplies, raw materials. No assurance can
be given that any shortages of these or other necessary
materials or equipment will not develop or that increased
prices will not adversely affect the Corporation's
business in the future.
Seasonality
The efficiency and productivity of the
Corporation's industrial minerals operations can be
affected by unusually severe winter weather conditions.
During the winter of 1994, there were several days of
production lost in North Carolina and New York but they
were not significant enough to adversely affect 1994
operating results.
Competition
All of the Corporation's products are sold in
highly competitive markets which are influenced by price,
product performance, customer location, service, foreign
competition, material substitution and general
economic conditions. The Corporation competes with other
companies active in industrial minerals and metal
powders. No material part of the Corporation's business
is dependent upon a single customer or upon very few
customers, the loss of any one of which would have a
material adverse impact on the Corporation.
Industrial mineral prices generally are not subject to
the price fluctuations typical of commodity metals.
Demand for industrial minerals is primarily related to
general economic conditions, particularly in the
automotive, housing and construction industries. In
the United States there are three major feldspathic
mineral producers including the Corporation and the
Corporation is the only North American producer of
phlogopite mica. Markets for industrial mineral products
are sensitive not only to service,
product performance and price, but to competitive price
pressures and transportation costs.
The Corporation is one of five North American producers
of metal powders. The market for metal powders is
affected primarily by product performance, consistency
of product quality and price. To some extent,
competition in the metal powders industry is affected by
imports of finished metal powder parts. Product
prices over the last several years have been strongly
influenced by costs of powder production.
Research and Development
The Corporation carries on an active program of
product development and improvement. Research and
development
expense was $315,000 in 1994, $371,000 in 1993 and
$280,000 in 1992.
Environmental Considerations
Laws and regulations currently in force which do or
may affect the Corporation's domestic operations
include the Federal Clean Air Act of 1970, the National
Environmental Policy Act of 1969, the Solid Waste
Disposal Act (including the Resource Conservation and
Recovery Act of 1976), the Toxic Substances Control
Act, CERCLA (superfund) and regulations under these
Acts, the environmental protection regulations of
various governmental agencies (e.g. the Bureau of
Land Management Surface Management Regulations, Forest
Service Regulations, and Department of Transportation
Regulations), laws and regulations with respect
to permitting of land use, various state and local laws
and regulations concerned with zoning, mining
techniques, reclamation of mined lands, air and water
pollution and solid waste disposal. The Corporation is
not aware of any adverse environmental problems or
issues.
Employees
The approximate number of Corporation employees as
of December 31, 1994 is set forth below:
Industrial Minerals 241
Metal Powders 149
Alumitech 100
Corporate 6
Total 496
Approximately 61 employees of the metal powder
operations are covered by a collective bargaining
agreement. The current three-year agreement expires
April 15, 1995. Approximately 12 employees of the
Suzorite mica operation are covered by a collective
bargaining agreement. The current agreement is for a
three-year term and expires January 12, 1997.
Approximately 45 employees at Alumitech are covered by a
collective bargaining agreement, expiring in May 1997.
The Corporation considers its labor relations to be good.
Foreign Operations
The Corporation's international operations are located
in Canada whose institutions and governmental policies
are similar to those of the United States. Although
there can be no assurance as to future conditions, the
Corporation has experienced no political activities,
social upheavals, currency restrictions or similar
factors which have had any material adverse effect to
date on the results of its operations or financial
condition.
The Corporation's industrial minerals and powder
metal operations sell their products internationally to
a wide variety of customers including the ceramic,
construction, and powder metallurgy industries. Export
sales in these two segments were less than 5% of total
sales.
ITEM 2. PROPERTIES
The industrial minerals segment has operations and mines
in Spruce Pine, North Carolina; Edgar, Florida;
Monticello, Georgia; Boucherville, Quebec; Suzor
Township, Quebec; Diana, New York; Murphy, North
Carolina; and Van Horn, Texas. This segment owns
approximately 208,000 square feet of office and plant
floor space. The mineral deposits at the mines
currently operated by the industrial minerals segment
are estimated by the Corporation to be at least 25 years,
except in the case of the mica mine in Suzor Township
where reserves are estimated to be in excess of 100
years and in the case of the Connecticut mine, where the
operation was shutdown as of December 31, 1991. The
Corporation estimates the Connecticut plant's reserves to
be less than 10 years. All of the Corporation's mining
properties are either owned or leased, with the leases
expiring from 1996 to 2018.
The metal powders segment has operations in Niagara
Falls, New York, Greenback, Tennessee and Maryville,
Tennessee. In Niagara Falls Pyron Corporation
utilizes approximately 96,000 square feet of office and
plant floor space which it leases from the Niagara
County Industrial Development Agency. The lease was
established as part of the Industrial Revenue Bond issue
entered into in November 1989 to finance the construction
of the Atomized Steel Powder plant. Lease payments are to
be sufficient to pay the debt service on the Bond. The
new facility incorporates approximately 16,000 square
feet of floor space and is adjacent to the existing
facility. The Maryville, Tennessee plant
utilizes approximately 23,000 square feet of office and
plant floor space. The Greenback facility is situated on
27.5 acres of land of which six acres is actively used
in the operations. General office space comprises
approximately 6,300 square feet.
There is approximately 66,500 square feet of
production/storage space and approximately 86,800
square feet.
The Corporation has talc operations in Diana, New
York; Murphy, North Carolina; and Van Horn, Texas. This
segment currently owns approximately 127,000 square feet.
All facilities are maintained in good operating condition.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
ITEM 10. EXECUTIVE AND OTHER OFFICERS OF THE REGISTRANT
Served in
Officer Position Age Position
Since
Peter Lawson-Johnston Chairman of
the Board of Directors 68
1975
Richard L. Lister President and Chief Executive Officer
56
1991
Allen J. Palmiere Vice President, Chief Financial
Officer 42
1993
and Assistant Secretary
Peter J. Goodwin Vice President and President of
44
1994
Suzorite Mineral Products, Inc.
Robert W. Morris Secretary and President of
53
1990
The Feldspar Corporation
G. Russell Lewis President, Metal Powders 65
1986
Patricia K. Moran Assistant Secretary-Treasurer
29
1995
There are no family relationships between the
officers listed above. The term of office of each
executive officer is until his respective successor
is elected and has qualified, or until his death,
resignation or removal. Officers are elected or
appointed by the Board of Directors annually at its first
meeting following the annual meeting of shareholders.
All officers have held their present positions for
at least five years except Messrs. Lister, Morris,
Palmiere, Goodwin and Ms. Moran.
Mr. Lister, who was elected to the Board of Directors on
May 30, 1991, assumed his duties as Vice Chairman of the
Board on July 23, 1991 and as President and Chief
Executive Officer on June 1, 1993. Mr. Lister was Vice
Chairman of Dundee Bancorp Inc. from October 1991 to May
1993 and prior to that was Chief Executive Officer of
Campbell Resources Inc. from 1981 to 1988 and Chairman
from 1988 to 1992.
Mr. Morris assumed the duties of President of The
Feldspar Corporation in October 1993. Prior to that
time, from January 1991 to October 1993, he was Vice
President , Treasurer and Chief Financial Officer and,
from June 1990 to December 1990, was Assistant to the
President. From February 1989 to June 1990, he was a
financial officer of American Trim Products.
Mr. Palmiere assumed the duties of Chief Financial
Officer on October 19, 1993. From April 1992 to October
1993 he was a self-employed consultant. From October 1990
to April 1991 he was the Chief Financial Officer and
Vice President of Breakwater Resources Ltd. and from May
1991 to April 1992 was the Chief Executive Officer of
Breakwater Resources Ltd. From August 1986 to September
1990 Mr. Palmiere was the Treasurer of Northgate
Exploration Ltd. and its associated companies.
Mr. Goodwin became a Vice President of the Company in
August 1994. From May 1993 to August 1994, Mr. Goodwin
was a selfemployed consultant. Mr. Goodwin was President
and Chief Executive Officer of Miller and Co. from August
1990 to May 1993. From 1987 to 1990, Mr. Goodwin was
Vice President and General Manager of Applied Industrial
Materials Corporation (AIMCOR).
Ms. Moran assumed the duties of Assistant
SecretaryTreasurer in February 1995 and has served
in various capacities with the Corporation since 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Information responsive to this Item is set forth on page
13 of registrant's Annual Report to Shareholders for the
year ended December 31, 1994 (the "Annual Report to
Shareholders") and is incorporated herein by reference.
The Annual Report to Shareholders is included as Exhibit
13 to this Form 10-K Annual Report. The Annual
Report to Shareholders, except for those portions thereof
which are expressly incorporated by reference herein, is
furnished for the information of the Commission and is
not to be deemed
"filed" as part of this Form 10-K report.
ITEM 6. SELECTED FINANCIAL DATA
Information responsive to this item is set forth on page
32 of the Annual Report to Shareholders and is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information responsive to this Item is set forth on pages
6 through 13 of the Annual Report to Shareholders and
is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements responsive to this Item are set
forth on pages 14 through 31 of the Annual Report to
Shareholders and are incorporated herein by reference.
The Supplementary Schedule required by this Item are set
forth on page S-1 of this Form 10-K Annual Report. See
Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On March 27, 1992, the accounting firm of Deloitte &
Touche was selected to replace the accounting firm of
Coopers & Lybrand as independent accountants for the
Corporation. The decision to change accountants was
approved by the Audit Committee of the Board of
Directors, by the full Board and the shareholders, and
occurred as a result of Dundee Bancorp Inc., the
Corporation's major shareholder through Avalon
Corporation, retaining the services of Deloitte & Touche
for several of its investments.
During the two most recent fiscal years, and the
interim period preceding the change in auditors, there
were no disagreements with the former accountants on any
matter of accounting principles or practices,
financial statement disclosure, or auditing scope
or procedure, which disagreements (if not resolved to
the satisfaction of the former accountants) would have
caused them to make reference in connection with their
report to the subject matter of the disagreements. The
accountants' report on the financial statements of the
Corporation for each of the past two years did not contain
any adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty or audit scope or
accounting
principles.
During the two most recent fiscal years, and the
subsequent interim periods, the Corporation (or
anyone on the Corporation's behalf) did not consult
the newly engaged accountants regarding either the
application of accounting principles to a specified
transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the
Corporation's financial statements.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
1. Financial Statements and Independent Auditor's Report
Filed as Part of this Report:
(a) Consolidated Balance Sheets at December
31, 1994 and 1993, which information is
incorporated by reference under Item 8 of this
report.
(b) Consolidated Statements of
Shareholders' Equity for the
three years ended December 31, 1994, which
information is incorporated by reference under Item 8 of
this report.
(c) Consolidated Statements of Income for
the three years ended December 31,
1994, which
information is incorporated by reference
under Item 8 of this report.
(d) Consolidated Statements of Cash Flows for
the three years ended December 31,
1994, which
information is incorporated by reference
under item 8 of this report.
(e) Notes to the Consolidated
Financial
Statements, which information is incorporated
by reference under Item 8 of this report.
(f) Independent Auditors' Report,
which
information is incorporated by reference
under Item 8 of this report.
2. Financial Statement Schedules and Independent
Auditors'
Report Files as part of this Report:
Schedule
Number Description
- Report of
Independent
Accountants
Schedule IX Valuation and
Qualifying
Accounts
and Reserves (page S-1)
All other financial statements and schedules not listed
have been omitted since the required information is
included in the consolidated financial statements or the
notes thereto, or is not applicable or required.
3. EXHIBITS
(3)(a) Certificate of Incorporation (Incorporated
by reference from Exhibit 4(a) of the
Corporation's Registration Statement on Form S-2,
Registration No. 33-7774, filed on August 5, 1986)
(3)(b) By-Laws (Incorporated by reference from Exhibit
3 of the Corporation's Quarterly Report on
Form 10-Q filed on May 13, 1988)
(3)(c) Amended and Restated Certificate of
Incorporation (Incorporated by reference from
Exhibit A of the Corporation's Definitive Proxy
Statement, filed on March 29, 1995)
(4)(a) Indenture of Trust dated as of
November 1, 1989 between Niagara County
Industrial Development Agency and The Bank of
New York as trustee for Pyron Corporation
(Incorporated by reference from Exhibit (4)(a) of
the Corporation's Annual Report on Form 10K filed
March 31, 1990)
(4)(b) Agency Mortgage and Security Agreement
dated as of November 1, 1989 from Pyron
Corporation and Niagara County Industrial
Development Agency to The Bank of New York
(Incorporated by reference from Exhibit (4)(b) of
the Corporation's Annual Report on Form 10K filed
March 31, 1990)
(4)(c) Letter of Credit Reimbursement Agreement
dated as of November 1, 1989 between Pyron
Corporation and Chemical Bank (Incorporated
by reference from
Exhibit (4)(c) of the Corporation's Annual Report
on Form 10-K filed March 31, 1990)
(4)(d) First Amendment to Letter of Credit
Reimbursement Agreement dated as of November 1,
1989 between Pyron Corporation and Chemical
Bank (Incorporated by reference from Exhibit
(4)(d) of the Corporation's Annual Report on Form
10-K filed March 31, 1990)
(4)(e) Second Amendment to Letter of Credit
Reimbursement Agreement dated as of March 15, 1995
between Pyron Corporation and Chemical Bank
(4)(f) Bank Mortgage and Security Agreement
dated as of November 1, 1989 from Pyron
Corporation and Niagara County Industrial
Development Agency to Chemical Bank
(Incorporated by reference from Exhibit (4)(e) of
the Corporation's Annual Report on Form 10-K
filed March 31, 1990)
(4)(g) Building Loan Agreement dated as of
November 1, 1989 between Chemical Bank and Pyron
Corporation (Incorporated by reference from
Exhibit (4)(f) of the Corporation's Annual
Report on Form 10-K filed March 31, 1990)
(4)(h) Security Agreement dated as of
November 1, 1989 between Pyron Corporation and
Chemical Bank (Incorporated by reference from
Exhibit (4)(g) of the Corporation's Annual
Report on Form 10-K filed March 31, 1990)
(4)(i) Corporate Guaranty dated as of November
1, 1989 from Zemex Corporation to Chemical Bank
(Incorporated by reference from Exhibit (4)(h)
of the Corporation's Annual Report on Form 10-K
filed March 31, 1990)
(4)(j) First Amendment to Corporate Guaranty
dated as of November 1, 1989 of Zemex
Corporation to Chemical Bank (Incorporated by
reference from Exhibit (4)(i) of the
Corporation's Annual Report on Form 10-K filed
March 31, 1990)
(4)(k) Second Amendment to Corporate Guaranty
dated as of March 14, 1991 of Zemex Corporation
to Chemical Bank (Incorporated by reference from
Exhibit (4)(j) of the Corporation's Annual
Report on Form 10-K filed March 31, 1991)
(4)(l) Third Amendment to Corporate Guaranty
dated as of February 25, 1992 of Zemex
Corporation to Chemical Bank(Incorporated by
reference from Exhibit (4)(m)
of the Corporation's Annual Report on Form 10-
K filed March 31, 1993)
(4)(m) Fourth Amendment to Corporate Guaranty
dated as of March 8, 1993 of Zemex Corporation
to Chemical Bank (Incorporated by reference from
Exhibit (4)(o) of the Corporation's Annual
Report on Form 10-K filed March 31, 1993)
(4)(n) Fifth Amendment to Corporate Guaranty
dated as of March 15, 1995 of Zemex Corporation
to Chemical Bank
(4)(o) Irrevocable Standby Letter of Credit between
Florida Gas Utility and The Feldspar
Corporation dated December 16, 1992
(Incorporated by reference from Exhibit (4)(q) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1993)
(4)(p) Loan and Security Agreement dated as of
March 15, 1995among Zemex Corporation and The
Feldspar
Corporation and NationsBank of Tennessee, N.A.
and Chemical Bank and NationsBank of Tennessee,
N.A., as Agent
*(10)(a) Key Executive Common Stock Purchase Plan
(Incorporated by reference from Exhibit (10)(b)
of the Corporation's Annual Report on Form 10-K
filed March 31, 1991)
(10)(b) Consent to Assignment of Lease and to
Agreement Sublease, and permission to Make
Payments dated November 7, 1978 each from Joberta
Enterprises, Inc. to NL Industries, Inc. and The
Feldspar Corporation (Incorporated by reference
from Exhibit 10(pp) to the Corporation's
Registration Statement on Form S2, Registration
No. 33-7774, filed on August 5, 1986)
(10)(c) Additional Lease Agreement dated as of
November 1, 1989 between Niagara County
Industrial Development Agency and Pyron
Corporation (Incorporated by reference from
Exhibit (10)(ll) of the Corporation's Annual Report
on Form 10-K filed March 31, 1990)
*(10)(d) Employment Agreement dated February 5, 1991
between Zemex Corporation and Robert W.
Morris (Incorporated by reference from Exhibit
(10)(ll) of the Corporation's Annual Report on
Form 10-K filed March 31, 1992)
*(10)(e) Option Agreement with Paul Carrolldated
September 17, 1991 (Incorporated by reference
from Exhibit (10)(ll) of the Corporation's Annual
Report on Form 10-K filed March 31, 1992)
*(10)(f)Option Agreement with Peter Lawson-Johnston
dated September 17, 1991 (Incorporated by
reference from Exhibit (10)(ll) of the
Corporation's Annual Report on Form 10-K filed
March 31, 1992)
*(10)(g) Option Agreement with John Donovan dated
September 17, 1991 (Incorporated by reference
from Exhibit (10)(ll) of the Corporation's Annual
Report on Form 10-K filed March 31, 1992)
*(10)(h) Subscription Agreement with Richard L.
Lister
dated November 26, 1991 (Incorporated by
reference from Exhibit (5)(a) of the
Corporation's Annual Report on Form 10-K filed
March 31, 1992)
(10)(I) Asset Purchase Agreement dated March 18, 1991
among Unimin Corporation, Purchaser; Zemex
Corporation, Seller and The Feldspar
Corporation, Operating Subsidiary (Incorporated
by reference from Exhibit (5)(a) of the
Corporation's Annual Report on Form 10K filed March
31, 1991)
(10)(j) Lease Agreement dated September 5, 1990 between
the State of Connecticut, Department of
Transportation andThe Feldspar Corporation
(Incorporated by reference from Exhibit (5)(b) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1991)
(10)(k) Ligonier Purchase Agreement and Second
Plan of
Reorganization dated March 2, 1992 among Pyron
Metal Powders, Inc., a wholly-owned subsidiary
of Zemex Corporation, Purchaser and Ligonier
Powders, Inc., Seller (Incorporated by
reference from Exhibit (5)(a) of the
Corporation's Annual Report on Form 10K filed March
31, 1993)
(10)(l) 1995 Stock Option Plan (Incorporated by
reference from Exhibit B of the Corporation's 1995
Definitive Proxy Statement, filed on March 29,
1995)
(10)(m) Stock Purchase Agreement dated August
10, 1993 between Zemex Corporation, Zemex
Canada Inc., an Ontario corporation and a
direct wholly-owned subsidiary of Zemex
Corporation, Dundee Bancorp Inc., an Ontario
corporation; and Dundee Bancorp International
Inc., a Delaware corporation, and a direct
wholly-owned subsidiary of Dundee Bancorp Inc.,
with respect to the acquisition of Suzorite Mica
Products Inc. (Incorporated by reference from
Exhibit (2) of the Corporation's Current Report
on Form 8-K filed September 7, 1993)
(10)(n) Capital Stock Purchase Warrant dated
September 14, 1993 issued to Dundee Bancorp
International Inc. pursuant to the Stock Purchase
Agreement referred to in 10(m). (Incorporated
by reference from Exhibit 4(a) of the
Corporation's Current Report on Form 8-K filed
September 7, 1993)
(10)(o) Registration Rights Agreement dated
September 14, 1993 between Zemex Corporation and
Dundee Bancorp International, Inc. (Incorporated
by reference from Exhibit 4(b) of the
Corporation's Current Report on Form 8-K filed
September 7, 1993)
(10)(p) Asset Purchase Agreement dated September
3, 1993 between U.S. Silica Company, The
Feldspar Corporation and Zemex Corporation with
respect to the sale of the Virginia Aplite
facility (Incorporated by reference from Exhibit
10(at) of the Corporation's Annual Report on Form
10-K filed March 31, 1994)
(10)(q) Stock Purchase Agreement dated November
15, 1993 between Americo Malay Mineral Company
and Zemex Corporation with respect to the sale
of 2,500,002 common shares of Perangsang
Pasifik Senderian Berhad, a corporation
organized and existing under the laws of the
Federal Republic of Malaysia (Incorporated by
reference from Exhibit 10(au) of the
Corporation's Annual Report on Form 10-K filed
March 31, 1994)
(10)(r) Suzorite Mining Lease dated August 25,
1975 between the Province of Quebec and
Marietta Resources International Ltd.
(Incorporated by reference from Exhibit 10(av) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1994)
(10)(s) 1994 Employee Stock Purchase Plan
(Incorporated by reference as Exhibit A to the
Corporation's Proxy Statement filed May 6, 1994)
(10)(t) Stockholders Agreement dated June 10,
1994 among Alumitech, Inc., Clarion Capital
Corporation, DCC Equities Limited and Moshe
Dan Yerushalmi, Dan Hocevar and Terrance
Hogan and Zemex Corporation (Incorporated by
reference as Exhibit 10(ax) to the Corporation's
Registration Statement on Form S-1, Registration
No. 33-82638, filed on August 22, 1994)
(10)(u)Asset Purchase Agreement dated December 7,
1994 between Whittaker, Clark & Daniels, Inc.,
Clark Minerals, Inc., Cherokee Minerals, Inc. and
Pioneer Talc Company and Suzorite Mineral Products,
Inc. and Zemex Corporation
(13) 1994 Annual Report to Shareholders
(22) Subsidiaries of the Registrant
(24)(a) Consent of Deloitte & Touche
The Corporation will furnish copies of these documents
to requesting shareholders upon payment of $10.80 per
document.
* Management contract or compensatory plan or
arrangement.
EXHIBIT 22
Subsidiaries of the Registrant
The subsidiaries listed below are wholly-owned and all
are consolidated in the financial statements.
State or Country
in Which
Subsidiary Name
Incorporated
or Organized
The Feldspar Corporation North
Carolina
Pyron Corporation New York
Pyron Metal Powders, Inc.
Delaware
Suzorite Mica Products Inc.
Ontario, Canada
Suzorite Mineral Products, Inc.
Delaware
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ZEMEX CORPORATION
By: /s/ RICHARD
L. LISTER
Dated: March 24, 1995 Richard
L.
Lister
President &
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report is signed below by the
following persons on behalf of the registrant and in the
capacities and on the dated indicated:
Title
Date
/s/ PETER LAWSON-JOHNSTON Chairman of the Board and
Director
Peter Lawson-Johnston
/s/ RICHARD L. LISTER President and Chief Executive
Officer
Richard L. Lister and Director (Principal
Executive Officer)
Director
Paul A. Carroll
/s/ MORTON A. COHEN Director
Morton A. Cohen
/s/ JOHN M. DONOVAN Director
John M. Donovan
/s/ THOMAS B. EVANS, JR. Director
Thomas B. Evans, Jr.
Title
Date
Director
Ned Goodman
/s/ PATRICK H. O'NEILL Director
Patrick H. O'Neill
/s/ WILLIAM J. VANDEN HEUVEL Director
William J. vanden Heuvel
/s/ ALLEN J. PALMIERE Vice President, Chief Financial
Officer and
Allen J. Palmiere and Assistant Secretary
(Principal Financial
and Accounting Officer)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of Zemex Corporation
We have audited the consolidated financial statements
of Zemex Corporation and Subsidiaries as of December 31,
1994 and for the year then ended, and have issued our
report thereon dated February 15, 1995; such consolidated
financial statements and report are included in your
1994 Annual Report to Shareholders and are incorporated
herein by reference. Our audit also included the
consolidated
financial statement schedules of Zemex Corporation, listed
in Item 14. This consolidated financial statement schedule
is the responsibility of the Corporation's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, such consolidated financial statement
schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE
Toronto, Ontario
March 30, 1995
ZEMEX CORPORATION
And Subsidiaries
SCHEDULE IX - VALUATION AND QUALIFYING ACCOUNTS
AND RESERVES
For the Year Ended December 31,
Column A Column B Column C Column D Column E
Column
F
Addition
Balance s
Balance
at Charged Other
At
End
Description Beginnin to Costs Additions Deduction
of
g and s
Period
of Expenses
Period
1994
Reserves
Repairs _ _ _ _
_
Employee $ _ _ $
_
Severance 80,000 $255,000 _ 80,000
$549,00
Other 482,000 188,000
0
Allowance for 85,000 _
Uncollectable 371,000 42,000
414,000
Accounts
1993
Reserves
Repairs $381,000 _ $381,000 (a
Employee 308,000 _ _ 686,000 )
_
Severance 420,000 $458,000 _ 32,000
$80,000
Other 94,000 (b
482,000
)
Allowance for 241,000 _ 98,000
Uncollectable 228,000
371,000
Accounts
1992
Reserves
Repairs $244,000 $185,000 _ $48,000 (d
$381,00
Employee 286,000 22,000 _ _ )
0
Severance 561,000 95,000 _ 236,000
308,000
Other
420,000
Allowance for 430,000 101,000 _ 290,000
Uncollectable (c
241,000
Accounts )
(a) PPSB sold in 1993.
(b) Severance expense during 1993.
(c) Uncollectable accounts written off, less recoveries.
(d) Payments made for repair of dredge.
S-1
AMENDED AND RESTATED
CORPORATE GUARANTY
RECITALS
NIAGARA COUNTY INDUSTRIAL DEVELOPMENT AGENCY (Niagara
County, New York), a public benefit corporation of the State of
New York having its principal office at 59 Park Avenue, Room 237,
Lockport, New York 14094 (the "Issuer"), acquired, constructed
and equipped a certain industrial development facility located in
Niagara County, New York (the "Facility") and leased the Facility
to Pyron Corporation, a New York corporation with offices at 5950
Packard Road, Niagara Falls, New York 14304 (the "Company"),
under a Lease Agreement dated as of November 1, 1989 (the "Lease
Agreement"); and
The Issuer financed, in part, the acquisition, construction
and equipping of the Facility by the issuance of its Industrial
Development Revenue Bonds (1989 Pyron Corporation Project) in the
aggregate principal amount of $7,650,000 (the "Bonds") pursuant
to an Indenture of Trust dated as of November 1, 1989 by and
between the Issuer and the Bank of New York, as trustee (the
"Trustee") (the "Indenture"); and
The Issuer secured the Bonds as provided in the Indenture by
granting a mortgage lien on and a security interest in the
Facility and assigning certain of the Issuer's rights under the
Lease Agreement, dated as of November 1, 1989, by and between the
Issuer and the Company to the Trustee pursuant to the Indenture;
and
The Bonds are further secured by an irrevocable five year
letter of credit (the "Letter of Credit") issued in favor of the
Trustee by Chemical Bank, a New York banking corporation (the
"Bank"). In connection with the issuance of the Letter of
Credit, the Company and the Bank entered into a Letter of Credit
Reimbursement Agreement dated as of November 1, 1989 (the
"Reimbursement Agreement").
To secure the obligations of the Company to the Bank under
the Reimbursement Agreement, including any amendments thereto (i)
the Issuer and the Company granted to the Bank a mortgage on and
security interest in certain real and personal property pursuant
to a Bank Mortgage and Security Agreement from the Company and
the Issuer to the Bank dated as of November 1, 1989 (the "Bank
Mortgage"), and (ii) the Company granted to the Bank a security
interest in all machinery, equipment and fixtures of the Company,
then owned or thereafter acquired, pursuant to a security
agreement dated as of November 1, 1989 from the Company to the
Bank (the "Security Agreement").
The Company is a wholly owned subsidiary of Zemex
Corporation, a Delaware corporation (the "Corporate Guarantor").
The Bank required, as a condition and as a further
inducement for it to enter into the transactions contemplated by
the Reimbursement Agreement and the Bonds, that the Corporate
Guarantor unconditionally provide its guaranty on the terms set
forth in a Guaranty Agreement given by the Corporate Guarantor
dated as of November 1, 1989.
The Bank and the Corporate Guarantor desire to amend and
restate the aforesaid Corporate Guaranty Agreement on the terms
hereinafter set forth:
AGREEMENT
In consideration of the premises, the Corporate Guarantor
does hereby, subject to the terms hereof, covenant and agree with
the Bank as follows (terms used herein but not defined shall have
the meanings ascribed thereto in the Reimbursement Agreement):
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE CORPORATE
GUARANTOR
The Corporate Guarantor hereby represents and warrants to
the Bank that:
Section 1.01. Due Organization and Qualification. The
Corporate Guarantor is a corporation duly organized, validly
existing and in good standing under the Laws of the State of
Delaware; each Participating Subsidiary is a corporation duly
organized, validly existing and in good standing under the Laws
of its state of incorporation, all as set forth in Exhibit A; the
Corporate Guarantor and each Participating Subsidiary have the
lawful power to own their properties and to engage in the
business they conduct, and each is duly qualified and in good
standing as a foreign corporation in the jurisdictions wherein
the nature of the business transacted by it or property owned by
it is both material and makes such qualification necessary; the
states in which the Corporate Guarantor and each Participating
Subsidiary are qualified to do business are set forth in Exhibit
A; the percentage of the Corporate Guarantor's ownership of the
outstanding stock of each Participating Subsidiary is as listed
in Exhibit A; and the addresses of all places of business of the
Corporate Guarantor and each Participating Subsidiary are as set
forth in Exhibit B;
Section 1.02. No Conflicting Agreement. Neither the
Corporate Guarantor nor any Participating Subsidiary is in
default with respect to any of its existing Indebtedness, and the
making and performance of this Corporate Guaranty will not
(immediately, or with the passage of time or the giving of
notice, or both):
a. Violate the charter or bylaw provisions of the
Corporate Guarantor or any Participating Subsidiary, or violate
any Laws, or result in a default under any material contract,
agreement, or instrument to which the Corporate Guarantor or any
Participating Subsidiary is a party or by which the Corporate
Guarantor or any Participating Subsidiary or its property is
bound; or
b. Result in the creation or imposition of any
security interest in, or lien or encumbrance upon, any of the
assets of the Corporate Guarantor or any Participating
Subsidiary, except in favor of the Bank;
Section 1.03. Capacity. The Corporate Guarantor and each
Participating Subsidiary have the power and authority to enter
into and perform this Corporate Guaranty, to incur the
Obligations herein provided for, and have taken all corporate
action necessary to authorize the execution, delivery, and
performance of this Corporate Guaranty;
Section 1.04. Binding Obligations. This Corporate Guaranty
is valid, binding, and enforceable in accordance with its terms
subject to the general principles of equity (regardless of
whether such question is considered in a proceeding in equity or
at law) and to applicable bankruptcy, insolvency, moratorium,
fraudulent or preferential conveyance and other similar laws
affecting generally the enforcement of creditors' rights;
Section 1.05. Litigation. Except as disclosed in Exhibit C
hereto, there is no pending or threatened order, notice, claim,
litigation, proceeding or investigation against or affecting the
Corporate Guarantor or any Participating Subsidiary, whether or
not covered by insurance, that would involve the payment of Two
Hundred Thousand Dollars ($200,000.00) or more if adversely
determined;
Section 1.06. Title. The Corporate Guarantor and its
Participating Subsidiaries have good and marketable title to all
of their respective material assets, subject to no security
interest, encumbrance or lien, or the claims of any other Person
except for Permitted Liens;
Section 1.07. Financial Statements. The Financial
Statements, including any schedules and notes pertaining thereto,
have been prepared in accordance with generally accepted
accounting principles consistently applied, and fully and fairly
present the financial condition of the Corporate Guarantor and
its Participating Subsidiaries at the dates thereof and the
results of operations for the periods covered thereby, and there
has been no Material Adverse Change in the financial condition or
business of the Corporate Guarantor and its Participating
Subsidiaries from December 31, 1993 to the date hereof;
Section 1.08. No Additional Indebtedness. As of the date
hereof, the Corporate Guarantor and its Participating
Subsidiaries had no Indebtedness of any nature, including, but
without limitation, liabilities for taxes and any interest or
penalties relating thereto, except to the extent reflected (in a
footnote or otherwise) and reserved against in the September 30,
1994 Financial Statements or as disclosed in or permitted by this
Corporate Guaranty; the Corporate Guarantor does not know, and
has no knowledge of any basis for the assertion against it or any
Participating Subsidiary as of the date hereof, of any material
Indebtedness of any nature not fully reflected and reserved
against in the September 30, 1994 Financial Statements;
Section 1.09. Taxes. Except as otherwise permitted herein,
the Corporate Guarantor and its Participating Subsidiaries have
filed all federal, state and local tax returns and other reports
they are required by Laws to file prior to the date hereof and
which are material to the conduct of their respective businesses,
have paid or caused to be paid all taxes, assessments and other
governmental charges that are due and payable prior to the date
hereof, and have made adequate provision for the payment of such
taxes, assessments or other charges accruing but not yet payable;
the Corporate Guarantor has no knowledge of any deficiency or
additional assessment in connection with any taxes, assessments
or charges not provided for on its books;
Section 1.10. Compliance with Laws. Except as otherwise
disclosed in Exhibit D hereto, or except to the extent that the
failure to comply would not materially interfere with the conduct
of the business of the Corporate Guarantor or any Participating
Subsidiary or have a Material Adverse Effect, the Corporate
Guarantor and its Participating Subsidiaries have complied with
all applicable Laws with respect to: (1) any restrictions, speci-
fications, or other requirement pertaining to services that the
Corporate Guarantor or any Participating Subsidiary performs; (2)
the conduct of their respective businesses; (3) the use,
maintenance, and operation of the real and personal properties
owned or leased by them in the conduct of their respective
businesses; and (4) health, safety, worker's compensation, and
equal employment opportunity;
Section 1.11 Environmental Compliance. Except as
otherwise disclosed in Exhibit H hereto, the Corporate Guarantor
and its Participating Subsidiaries and their respective assets
and operations are in compliance in all material respects with
all Environmental Laws. Except as has been disclosed on Exhibit
H, all plants, facilities and properties of the Corporate
Guarantor and its Participating Subsidiaries are and will be on
the date of Closing in a clean and healthful condition, free of
asbestos and of all contamination by Hazardous Materials and
other potentially harmful chemical or physical conditions,
including, without limitation, any contamination of the air,
soil, groundwater or surface waters associated with or adjacent
to such plants, facilities and properties; all storage tanks
(whether above or below ground) located in or on such plants,
facilities and properties are in sound condition, free or
corrosion or leaks that could allow or threaten the release of
any stored material; no Hazardous Materials are, or, to the best
of the Corporate Guarantor's knowledge, have been used, stored,
treated or disposed of in violation of applicable Laws and
regulations; and neither the Corporate Guarantor nor any
Participating Subsidiary is a defendant in any administrative or
judicial action alleging liability under the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), nor has the Corporate Guarantor or any
Participating Subsidiary received a notice that it is a
potentially responsible party under CERCLA or similar state Laws.
The foregoing representations and exceptions thereto shall in no
way diminish or abrogate the covenants made in Section 3.13.
Section 1.12. Full Disclosure. No representation or
warranty by the Corporate Guarantor or any Participating
Subsidiary contained herein or in any certificate or other docu-
ment furnished by the Corporate Guarantor or any Participating
Subsidiary pursuant to this Corporate Guaranty contains any
untrue statement of material fact or omits to state a material
fact necessary to make such representation or warranty not
misleading in light of the circumstances under which it was made;
Section 1.13. Consents. Each consent, approval or
authorization of, or filing, registration or qualification with,
any Person required to be obtained or effected by the Corporate
Guarantor or any Participating Subsidiary in connection with the
execution and delivery of this Corporate Guaranty or the
undertaking or performance of any obligation hereunder has been
duly obtained or effected;
Section 1.14. Existing Borrowings. All existing
Indebtedness: (1) for money borrowed; or (2) under any security
agreement or mortgage from the Corporate Guarantor or any
Participating Subsidiary is described in Exhibit E, unless the
same are less than $25,000.00 in amount;
Section 1.15. Material Contracts. Except as described on
Exhibit F hereto, the Corporate Guarantor and its Participating
Subsidiaries have no material lease, contract or commitment of
any kind (such as employment agreements; collective bargaining
agreements; powers of attorney; distribution arrangements; patent
license agreements; contracts for future purchase or delivery of
goods or rendering of services; bonus, pension and retirement
plans; or accrued vacation pay, insurance and welfare agreements)
which would be required to be listed as an Exhibit to the
Corporate Guarantor's Annual Report on Form 10-K; all parties
(including the Corporate Guarantor and Participating
Subsidiaries) to all such material leases, contracts and other
commitments to which the Corporate Guarantor or any Participating
Subsidiary is a party have to the best of Corporate Guarantor's
knowledge complied with the provisions of such leases, contracts
and other commitments; no party is in default under any provision
thereof; and no event has occurred which, but for the giving of
notice or the passage of time, or both, would constitute a
default;
Section 1.16. No Commissions. Neither the Corporate
Guarantor nor any Participating Subsidiary has made any agreement
or has taken any action which may cause anyone to become entitled
to a commission or finder's fee as a result of the making of the
Loans;
Section 1.17. ERISA. All Defined Benefit Pension Plans, as
defined in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), of the Corporate Guarantor and each
Participating Subsidiary meet, as of the date hereof, the minimum
funding standards of Section 302 of ERISA, and no Reportable
Event or Prohibited Transaction, as defined in ERISA, has
occurred with respect to any such Plan.
Section 1.18. Survival. All of the representations and
warranties set forth in Article I shall survive until all
Obligations are satisfied in full.
ARTICLE II
AGREEMENTS
Section 2.01. Guaranty of Payment.
a. The Corporate Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to the Bank (i) the
full and prompt payment of all amounts due and payable to the
Bank, directly or indirectly, under the Lease Agreement, the
Additional Lease Agreement and the Bank Mortgage (ii) the full
and prompt payment of all sums due and payable by the Company to
the Bank under the Reimbursement Agreement and the Security
Agreement, and (iii) the punctual performance of all other
obligations of any kind of the Company under the Reimbursement
Agreement, the Bank Mortgage or the Security Agreement. The
Corporate Guarantor hereby irrevocably and unconditionally agrees
that upon any default by the Company in the payment when due of
any sum payable by the Company to the Bank under the
Reimbursement Agreement, the Lease Agreement, the Additional
Lease Agreement, the Bank Mortgage or the Security Agreement
(such documents hereinafter collectively referred to as the
"Financing Documents") after the expiration of any applicable
grace period, the Corporate Guarantor will promptly pay such
sum.
b. All payments by the Corporate Guarantor shall be
paid in immediately available funds and in lawful money of the
United States of America.
c. Each and every default in payment of any amount due
the Bank under the Financing Documents shall give rise to a
separate cause of action hereunder, and separate suits may be
brought hereunder by the Bank as each cause of action arises.
Section 2.02. Obligations Unconditional. The obligations
of the Corporate Guarantor under this Corporate Guaranty shall be
absolute and unconditional and shall remain in full force and
effect until all sums required to be paid under Section 2.01
shall have been paid or provided for and until any obligation of
indemnification of the Bank under this Corporate Guaranty shall
have terminated, and such obligations shall not be affected,
modified or impaired by any state of facts or the happening from
time to time of any event, including, without limitation, any of
the following, whether or not with notice to or the consent of
the Corporate Guarantor:
a. the invalidity, irregularity, illegality or
unenforceability of, or any defect in, the Financing Documents or
any collateral security for any thereof;
b. any claim of immunity on behalf of the Issuer or
any other obligor or with respect to any Property of the Issuer
or of any other obligor;
c. any present or future law or order of any
government (de jure or de facto) or of any agency thereof
purporting to reduce, amend or otherwise affect any obligation of
the Issuer, the Company or any other obligor or to vary any terms
of payment;
d. the occurrence of any event described in Article IX
of the Reimbursement Agreement or Article V of this Guaranty;
e. the waiver, compromise, settlement, amendment,
consent to departure from, release or termination of any or all
of the respective obligations, covenants or agreements of the
Issuer or the Company under any of the Financing Documents
(except by payment in full of all obligations hereunder);
f. the transfer, assignment or mortgage, or the
purported or attempted transfer, assignment or mortgage of all or
any part of the interest of the Issuer or the Company in the
Facility, the Plant, or any other collateral security for the
obligations guaranteed hereunder, or any failure of or defect in
the title with respect to the interest of the Issuer or the
Company in the Facility or the Plant, or the termination of the
Lease Agreement or the Additional Lease Agreement;
g. the release, sale, exchange, surrender or other
change in any security for payment of the Bonds or any amounts
payable pursuant to the Reimbursement Agreement or any of the
Financing Documents;
h. the extension of the time for payment of any
principal or interest payable pursuant to the Reimbursement
Agreement or any part thereof owing or payable pursuant to the
Reimbursement Agreement or under this Corporate Guaranty or of
the time for performance of any other obligations, covenants or
agreements under or arising out of any of the Financing
Documents, or the extension or the renewal of any thereof;
i. the modification or amendment (whether material or
otherwise) of any obligation, covenant or agreement set forth in
any of the Financing Documents, or any one of them;
j. the taking of, or the omission to take, any of the
actions referred to in any of the Financing Documents, or any one
of them;
k. any failure, omission or delay on the part of the
Issuer, the Trustee or any other Person to enforce, assert or
exercise any right, power or remedy conferred on the Issuer, the
Trustee or such other Person in any of the Financing Documents,
or any one of them;
l. the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially
all the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition with
creditors or readjustment of, or other similar proceedings
affecting the Company, or its successors, or the Issuer or any of
the assets of any of them, or any allegation or contest of the
validity of any of the Financing Documents, or this Corporate
Guaranty, or any one of them, or the disaffirmance or attempted
disaffirmance of any of the Financing Documents or this Corporate
Guaranty, or any one of them, in any such proceedings;
m. the default or failure of the Corporate Guarantor
to perform fully any of its obligations set forth in this
Corporate Guaranty;
n. the assignment of the Lease Agreement or the
Additional Lease Agreement or the sublet of the Facility or the
Plant, in whole or in part; or
o. the discharge or release by the Bank of the
Corporate Guarantor from any obligation hereunder, in whole or in
part;
p. the failure of the Issuer or the Company to
maintain its corporate existence;
q. the failure of the Trustee to mitigate damages; or
r. the existence of any claim, set-off, defense or
other rights which the Corporate Guarantor may have at any time
against the Trustee (or any person for whom the Trustee may be
acting), the Bank (other than the defense of payment to the Bank
in accordance with the terms of this Corporate Guaranty) or any
other Person, whether in connection with the Reimbursement
Agreement, any Financing Document or any unrelated transaction;
provided, however, that nothing in this Section 2.02(r) shall
prevent the Corporate Guarantor from asserting any rights it may
have by separate suit;
s. any statement in any certificate or any other
document presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
such statement being untrue or inaccurate in any respect
whatsoever;
t. payment by the Bank under the Letter of Credit
against presentation of a draft or certificate which does not
comply with the terms of the Letter of Credit; provided, however,
that such payment shall not have constituted gross negligence or
willful misconduct on the part of the Bank; or
u. to the extent permitted by law, any other event,
action or circumstance that would, in the absence of this
paragraph, result in the release or discharge of the Corporate
Guarantor from the performance or observance of any obligation,
covenant or agreement contained in this Corporate Guaranty or
would otherwise constitute a legal or equitable discharge of the
Corporate Guarantor.
Section 2.03. Waivers by Corporate Guarantor. a. The
Corporate Guarantor hereby waives with respect to the
Reimbursement Agreement, the indebtedness thereunder, the
Financing Documents and this Corporate Guaranty, diligence;
presentment; demand of payment; filing of claims with a court in
the event of bankruptcy of any Person liable in respect of the
Reimbursement Agreement, the indebtedness thereunder or the
Financing Documents; any right to require a proceeding first
against any such Person; protest; notice of dishonor or
nonpayment of any such liabilities and any other notice and all
demands whatsoever. The Corporate Guarantor hereby waives notice
from the Bank of acceptance of, or notice and proof of reliance
on, the benefits of this Corporate Guaranty; provided, however,
that the foregoing provisions shall not be construed as a waiver
or modification, other than with respect to the Reimbursement
Agreement, the indebtedness thereunder, the Financing Documents,
and the guaranty of payment provided for herein, or of the
express obligations of the Bank under the Financing Documents or
this Corporate Guaranty, including, without limitation, express
obligations with respect to the giving of notice.
b. The obligations of the Corporate Guarantor
hereunder shall not be discharged except by full payment of all
Loans (as defined in the Reimbursement Agreement) interest
thereon and all other amounts due thereunder and hereunder.
Section 2.04. Other Security. The Bank may pursue its
rights and remedies under this Corporate Guaranty notwithstanding
(i) any other guaranty of or security for any Loan or the
obligations or liabilities of the Company under the Reimbursement
Agreement or the Financing Documents, and (ii) any action taken
or omitted to be taken by the Bank or any other Person to enforce
any of the rights or remedies under such other guaranty or with
respect to any other security.
Section 2.05. No Set-Off by the Corporate Guarantor. No
set-off, counterclaim, reduction or diminution of an obligation,
or any defense of any kind or nature (other than performance by
the Corporate Guarantor of its obligations hereunder) which the
Corporate Guarantor has or may have with respect to a claim under
this Corporate Guaranty, shall be available hereunder to the
Corporate Guarantor against the Bank.
ARTICLE III
AFFIRMATIVE COVENANTS
So long as the Expiration Date has not occurred and so long
as any amount is due or owing to the Bank under the Reimbursement
Agreement, unless the Bank shall otherwise consent in writing,
the Corporate Guarantor will comply with the following:
Section 3.01. Financial Statements and Reports. The
Corporate Guarantor will furnish the Bank:
a. As soon as reasonably practicable but in any event
within forty-five (45) days after the close of each
quarter-annual accounting period in each fiscal year of the
Corporate Guarantor and its Participating Subsidiaries the
following: (1) a consolidated statement of cash flows of the
Corporate Guarantor and its Participating Subsidiaries for such
quarter annual period; (2) consolidated and consolidating income
statements of the Corporate Guarantor and its Participating
Subsidiaries for such quarter-annual period; and (3) consolidated
and consolidating balance sheets of the Corporate Guarantor and
its Participating Subsidiaries as of the end of such
quarter-annual period--all in reasonable detail, subject to
year-end audit adjustments, and certified by the Corporate
Guarantor's president, vice president, chief financial officer,
or corporate controller to have been prepared in accordance with
generally accepted accounting principles consistently applied by
the Corporate Guarantor and its Participating Subsidiaries,
except for any inconsistencies explained in such certificate;
b. Within ninety (90) days after the close of each
fiscal year of the Corporate Guarantor and its Subsidiaries: (a)
consolidated statements of cash flows of the Corporate Guarantor
and its Subsidiaries for such fiscal year; (b) consolidated and
consolidating income statements of the Corporate Guarantor and
its Subsidiaries for such fiscal year; and (c) consolidated and
consolidating balance sheets of the Corporate Guarantor and its
Subsidiaries as of the end of such fiscal year--all in reasonable
detail, including all supporting schedules, notes and comments;
the consolidated statements and balance sheets shall be audited
by Deloitte & Touche or another independent certified public
accountant selected by Corporate Guarantor and reasonably
acceptable to the Bank, and certified by such accountants to have
been prepared in accordance with generally accepted accounting
principles consistently applied by the Corporate Guarantor and
its Subsidiaries, except for any inconsistencies explained in
such certificate, and the consolidating statements shall be
internally prepared by Corporate Guarantor's financial officer
and certified to the Bank as presenting fairly in all material
respects the financial condition of the Corporate Guarantor and
its Subsidiaries. The Bank shall have the right, from time to
time, to discuss the Corporate Guarantor's affairs directly with
the Corporate Guarantor's independent certified public
accountants after notice to the Corporate Guarantor and
opportunity of the Corporate Guarantor to be present at any such
discussions. In addition, if at anytime the assets, revenues and
net income of both the Corporate Guarantor and its Participating
Subsidiaries do not account for ninety percent (90%) or more of
the consolidated assets, consolidated revenues and consolidated
net income of the Corporate Guarantor and its Subsidiaries, then
within ninety (90) days after the close of each fiscal year, the
Corporate Guarantor shall also furnish to the Bank the following:
(a) consolidated statements of cash flows of the Corporate
Guarantor and its Participating Subsidiaries for such fiscal
year; (b) consolidated and consolidating income statements of the
Corporate Guarantor and its Participating Subsidiaries for such
fiscal year; and (c) consolidated and consolidating balance
sheets of the Corporate Guarantor and its Participating
Subsidiaries as of the end of such fiscal year--all in reasonable
detail, including all supporting schedules, notes and comments;
the consolidated statements and balance sheets shall be audited
by Deloitte & Touche or another independent certified public
accountant selected by the Corporate Guarantor and reasonably
acceptable to the Bank, and certified by such accountants to have
been prepared in accordance with generally accepted accounting
principles consistently applied by the Corporate Guarantor and
its Participating Subsidiaries, except for any inconsistencies
explained in such certificate, and the consolidating statements
shall be internally prepared by Corporate Guarantor's financial
officer and certified to the Bank as presenting fairly in all
material respects the financial condition of the Corporate
Guarantor and its Participating Subsidiaries;
c. As soon as reasonably practicable but in any event
within forty-five (45) days after the close of each quarter-
annual accounting period in each fiscal year of the Corporate
Guarantor and its Participating Subsidiaries, a certificate of
the president, vice president, chief financial officer or
corporate controller of the Corporate Guarantor stating that:
(i) such officer has individually reviewed the provisions of this
Corporate Guaranty; (ii) a review of the activities of the
Corporate Guarantor and its Participating Subsidiaries during
such year or quarter-annual period, as the case may be, has been
made by such officer or under such officer's supervision, with a
view to determining whether the Corporate Guarantor has fulfilled
all its obligations under this Corporate Guaranty; and (iii) to
the best of such officer's knowledge, the Corporate Guarantor has
observed and performed each undertaking contained in this
Corporate Guaranty and is not in default in the observance or
performance of any of the provisions hereof or, if the Corporate
Guarantor shall be so in default, specifying all such defaults
and events of which he may have knowledge. Such certificate
shall further set forth (i) actual intercompany advances as
compared to the limitations set forth in Sections 4.04 and 4.12,
(ii) the current amount of Adjusted Surplus Capital including the
current and cumulative amounts of Restricted Payments, and (iii)
the financial ratios and covenants set forth in Section 3.16
including without limitation all antecedent calculations and the
source of any information that was used in such calculations;
d. Within thirty (30) days after the end of each
month, income statements and balance sheets of each of the
Participating Subsidiaries compared to budget for the prior month
in form satisfactory to the Bank.
e. Promptly after the sending or making available or
filing of the same, copies of all correspondence, reports, proxy
statements and financial statements that the Corporate Guarantor
sends or makes available to its stockholders and all registration
statements and reports that the Corporate Guarantor files with
the Securities and Exchange Commission or any successor Person;
and
f. Immediately upon receipt of the same by Corporate
Guarantor or any Participating Subsidiary, copies of all final
management letters and any other reports which are submitted to
the Corporate Guarantor or any of its Participating Subsidiaries
by its independent accountants in connection with any annual or
interim audit of the Records of the Corporate Guarantor or its
Participating Subsidiaries by such accountants.
Section 3.02. Good Condition. The Corporate Guarantor and
its Participating Subsidiaries will maintain their respective
Inventory, Equipment, Facility Realty and other properties in
good condition and repair (normal wear and tear excepted), and
will pay and discharge or cause to be paid and discharged when
due, the cost of repairs to or maintenance of the same, and will
pay or cause to be paid all rental or mortgage payments due on
such Equipment or Facility Realty. The Corporate Guarantor
hereby agrees that, in the event it or any Participating
Subsidiary fails to pay or cause to be paid any such payment, the
Bank may do so and be reimbursed by the Corporate Guarantor
therefor.
Section 3.03. Insurance. The Corporate Guarantor and its
Participating Subsidiaries will maintain, or cause to be
maintained, public liability insurance and fire and extended
coverage insurance on all assets owned by them, all in such form
and amounts as are consistent with industry practices and with
such insurers as may be satisfactory to the Bank. Such policies
shall name the Bank as loss payee under a standard mortgagee loss
payee clause and as an additional insured, as its interests may
appear, and shall contain a provision whereby they cannot be
cancelled except after thirty (30) days' written notice to the
Bank. The Corporate Guarantor will furnish to the Bank such
evidence of insurance as the Bank may require. The Corporate
Guarantor hereby agrees that, in the event it or any
Participating Subsidiary fails to pay or cause to be paid the
premium on any such insurance, the Bank may do so and be
reimbursed by the Corporate Guarantor therefor. The Bank is
hereby appointed the Corporate Guarantor's attorney-in-fact
(without requiring the Bank to act as such) to endorse any check
which may be payable to the Corporate Guarantor to collect such
returned or unearned premiums or the proceeds of such insurance,
and any amounts so collected may be applied by the Bank toward
satisfaction of any of the Obligations.
Section 3.04. Taxes. The Corporate Guarantor and its
Participating Subsidiaries will pay or cause to be paid when due,
all taxes, assessments and charges or levies imposed upon them or
on any of their property or which any of them is required to
withhold or pay over, except where contested in good faith by
appropriate proceedings with adequate security therefor having
been set aside in a manner satisfactory to Bank. The Corporate
Guarantor and each Participating Subsidiary shall pay or cause to
be paid all such taxes, assessments, charges or levies forthwith
whenever foreclosure on any lien that attaches (or security
therefor) appears imminent.
Section 3.05. Records and Inspection. The Corporate
Guarantor and its Participating Subsidiaries will, when requested
so to do, make available any of their Records for inspection by
duly authorized representatives of the Bank, and will furnish the
Bank any information regarding their business affairs and
financial condition within a reasonable time after written
request therefor.
Section 3.06. Maintenance of Existence and Business. The
Corporate Guarantor and its Participating Subsidiaries will take
all necessary steps to renew, keep in full force and effect, and
preserve their corporate existence, good standing, and
franchises, and will comply in all material respects with all
present and future Laws applicable to them in the operation of
their mining and materials businesses. The Corporate Guarantor
and its Participating Subsidiaries will preserve, renew and keep
in full force and effect all material contracts, Mineral Leases,
governmental licenses, authorizations, consents and approvals,
rights, privileges and franchises necessary or desirable in the
normal course of business.
Section 3.07. Ordinary Course. The Corporate Guarantor and
its Participating Subsidiaries will keep accurate and complete
Records of their Accounts, Inventory and Equipment, consistent
with sound business practices. The Corporate Guarantor and its
Participating Subsidiaries will collect their Accounts and sell
their Inventory only in the ordinary course of business.
Section 3.08. Copies of Tax Returns. Within ten (10) days
of the Bank's request therefor, the Corporate Guarantor will
furnish the Bank with copies of federal income tax returns filed
by the Corporate Guarantor.
Section 3.09. Payment of Indebtedness. The Corporate
Guarantor and its Participating Subsidiaries will pay when due
(or within applicable grace periods) all Indebtedness for
borrowed money (whether direct or indirect, including Guarantee
Obligations) due any Person, except when the amount thereof is
being contested in good faith by appropriate proceedings and with
adequate security therefor being set aside in a manner
satisfactory to the Bank. If default is made by the Corporate
Guarantor or any Participating Subsidiary in the payment of any
principal (or installment thereof) of, or interest on, any such
Indebtedness, the Bank shall have the right, in their discretion,
to pay such interest or principal for the account of the
Corporate Guarantor or such Participating Subsidiary and be
reimbursed by the Corporate Guarantor therefor.
Section 3.10. Notice of Litigation. The Corporate
Guarantor and its Participating Subsidiaries will give immediate
notice to the Bank of: (1) any litigation or proceeding in which
any of them is a party if an adverse decision therein would
require them to pay over more than Two Hundred Thousand Dollars
($200,000.00) or deliver assets the value of which exceeds such
sum (if such claim is not considered to be covered by insurance)
or pay over more than One Million Dollars ($1,000,000.00) (if
such claim is considered to be covered by insurance); and (2) the
institution of any other suit or proceeding involving any of
them, or the overt threat thereof, that might materially and
adversely affect their operations, financial condition, property,
business, or the Collateral.
Section 3.11. Notice to Bank of Default or Prepayment. The
Corporate Guarantor and its Participating Subsidiaries will
notify the Bank immediately if any of them becomes aware of the
occurrence of any Event of Default or of any fact, condition or
event that only with the giving of notice or passage of time or
both, could become an Event of Default, or of the failure of the
Corporate Guarantor or any Participating Subsidiary to observe
any of their respective undertakings hereunder. The Corporate
Guarantor will immediately notify the Bank in writing if a
default occurs under the Zemex Note. In addition, the Corporate
Guarantor will notify the Bank immediately if a prepayment is
made on the Zemex Note.
Section 3.12. Notice of Name Change or Location. The
Corporate Guarantor and its Participating Subsidiaries will
notify the Bank thirty (30) days in advance of any change in (i)
the name of the Corporate Guarantor or any Participating
Subsidiary, (ii) the location of any Collateral, (iii) the
location of any of their places of business or (iv) of the
establishment of any new, or the discontinuance of any existing,
place of business.
Section 3.13. Environmental Compliance.
a. Corporate Guarantor and its Participating
Subsidiary will (1) employ, and cause each of its Participating
Subsidiaries to employ, in connection with its use, if any, of
all real property (including without limitation the Facility
Realty), appropriate technology and compliance procedures and
will maintain compliance with any applicable Environmental Laws,
(2) obtain and maintain, and cause each of its Participating
Subsidiaries to obtain and maintain, any and all material permits
required by applicable Environmental Laws in connection with its
or its Participating Subsidiaries' operations and (3) dispose of,
and cause each of its Participating Subsidiaries to dispose of,
any and all Hazardous Materials only at facilities and with
carriers reasonably believed to possess valid permits under RCRA,
if applicable, and any applicable state and local Environmental
Laws. The foregoing covenants shall apply to the properties and
operations covered by the environmental audit reports listed in
Exhibit H. The Corporate Guarantor shall use its best efforts,
and cause each of its Participating Subsidiaries to use its best
efforts, to obtain all certificates required by law to be
obtained by the Corporate Guarantor and its Participating
Subsidiaries from all contractors employed by the Corporate
Guarantor or any of its Participating Subsidiaries in connection
with the transport or disposal of any Hazardous Materials.
b. In the event that the Bank has reason to believe
that any Corporate Guarantor or Participating Subsidiary has
failed to comply with any material Environmental Laws, or there
exists a threat of material harm to the environment or Persons,
the Bank or its agents shall have the right, but no obligation,
at any time during business hours and upon reasonable written
notice, to enter upon the Facility Realty or any other property
operated by a Corporate Guarantor or Participating Subsidiary and
conduct or cause to be conducted an Environmental Phase I audit
(or an update of any audit completed in connection with the
execution of this Agreement) at Corporate Guarantor's sole
expense and if such Phase I audit (or update) recommends further
testing, then the Bank or its agent may require, but shall not be
obligated to require, upon reasonable written notice, such
further testing at Corporate Guarantor's sole expense. The Bank
or its agent shall use their best efforts to invoke and maintain
all applicable privileges over all audit information generated
pursuant to this provision.
Section 3.14. Notice of Environmental Action. If the
Corporate Guarantor or any of its Participating Subsidiaries
shall:
a. receive written notice that any material violation
of any Environmental Laws may have been committed or is about to
be committed by the Corporate Guarantor or any of its
Participating Subsidiaries;
b. receive written notice that any administrative or
judicial complaint or order has been filed or is about to be
filed against the Corporate Guarantor or any of its Participating
Subsidiaries alleging any material violation of any Environmental
Laws or requiring the Corporate Guarantor or any of its
Participating Subsidiaries to take any action in connection with
the release or threatened release of Hazardous Materials or solid
waste into the environment; or
c. receive written notice from a federal, state,
foreign or local governmental agency or private party alleging
that the Corporate Guarantor or any of its Participating
Subsidiaries is liable or responsible for costs in excess of
$25,000 associated with the response to cleanup, stabilization or
neutralization of any environmental activity;
then it shall provide the Bank with a copy of such notice within
ten (10) Business Days of the Corporate Guarantor's or such
Participating Subsidiary's receipt thereof. Subject to the right
of the Corporate Guarantor or any Participating Subsidiary to
contest in good faith any such actions or proceedings, the
Corporate Guarantor and/or any Participating Subsidiary shall as
promptly as possible resolve, cure and/or have dismissed with
prejudice any such actions or proceedings, to the reasonable
satisfaction of the Bank. The Corporate Guarantor shall
reasonably monitor compliance with Environmental Laws by any and
all owners or operators of the real property owned or leased by
the Corporate Guarantor or any Participating Subsidiary.
Section 3.15. ERISA Compliance. The Corporate Guarantor
and its Participating Subsidiaries will: (1) fund all their
Defined Benefit Pension Plans in accordance with no less than the
minimum funding standards of Section 302 of ERISA and Section 412
of the Internal Revenue Code; (2) furnish the Bank, promptly
after the filing of the same, with copies of all reports or other
statements filed with the United States Department of Labor or
the Internal Revenue Service with respect to all such Plans; and
(3) promptly advise the Bank of the occurrence of any Reportable
Event or Prohibited Transaction with respect to any such Plan.
Section 3.16. Financial Ratios. Unless the Bank otherwise
agree in writing, the Corporate Guarantor and its Participating
Subsidiaries will maintain the following financial ratios and
covenants:
a. Current Ratio. A ratio of Current Assets to
Current Liabilities of not less than 1.50 to 1.00 at all times.
b. Funded Debt to Capital. A ratio of Funded Debt to
Capital of not more than 0.40 to 1.00 at all times.
c. Funded Debt to Cash Flow. At the end of each
fiscal quarter, a ratio of Funded Debt to Cash Flow for the four
(4) quarters just ended of not greater than 4.0 to 1.0 from the
date hereof to September 29, 1995, not greater than 3.5 to 1.0
from and including September 30, 1995 to September 29, 1996, and
not greater than 3.0 to 1.0 from and including September 30, 1996
and at each quarter end thereafter.
d. Debt Service Coverage. At the end of each fiscal
quarter, a Debt Service Coverage Ratio computed for the four (4)
quarters just ended of not less than 1.25 to 1.00 from the date
hereof to September 29, 1996 and not less than 1.35 to 1.00 at
September 30, 1996 and at each quarter end thereafter.
e. Profitability. At the end of each fiscal quarter,
Net Income for the four (4) quarters just ended and Consolidated
Net Income for the four (4) quarters just ended of not less than
One Dollar ($1.00) in each case.
ARTICLE IV
NEGATIVE COVENANTS
The Corporate Guarantor hereby covenants and agrees that, so
long as the Expiration Date has not occurred and so long as any
amount is due or owing to the Bank under the Reimbursement
Agreement, unless otherwise consented to in writing by the Bank:
Section 4.01. Merger or Reorganization. Neither the
Corporate Guarantor nor any Participating Subsidiary will enter
into any merger, consolidation, reorganization or
recapitalization; provided, The Feldspar Corporation or any
Participating Subsidiary may merge into the Corporate Guarantor
or into any Participating Subsidiary (but not a Nonparticipating
Subsidiary) provided the Bank is given not less than thirty (30)
days prior written notice thereof and provided the surviving
entity is a Corporate Guarantor or a Participating Subsidiary
which is a party to this Corporate Guaranty.
Section 4.02. Sale of Assets. Neither the Corporate
Guarantor nor any Participating Subsidiary will sell, transfer,
lease or otherwise dispose of all or any material part of its
assets; provided, however, Corporate Guarantor and its
Participating Subsidiaries may in the ordinary course of business
sell assets with a combined net book value of up to One Million
Dollars ($1,000,000.00) per fiscal year, or may replace damaged
or worn Equipment with Equipment of similar value and use. In
addition, provided there is no Event of Default or Unmatured
Default in existence hereunder and that portion of the sales
price to be paid in cash at least equals or exceeds the net book
value of the assets to be sold, the Bank agrees that The Feldspar
Corporation may sell all or substantially all of its Spruce Pine,
North Carolina assets, its Monticello, Georgia assets, its Edgar,
Florida or Johnson Florida assets, and/or Pyron Metal Powders,
Inc., Suzorite Mica Products Inc. Les Produits Mica Suzorite Inc.
or Suzorite Mineral Products, Inc. may sell all or substantially
all of its (their) assets.
Section 4.03. Encumbrances. Neither the Corporate
Guarantor nor any Participating Subsidiary will: (1) mortgage,
pledge, grant or permit to exist a security interest in or lien
upon any of its assets of any kind, now owned or hereafter
acquired, except for Permitted Liens, or (2) covenant or agree
with any other Person (other than the Bank) not to mortgage,
pledge, or grant a security interest in or a lien upon their
assets.
Section 4.04. Debts and Other Obligations. Neither the
Corporate Guarantor nor any Participating Subsidiary will incur,
create, assume, or permit to exist any Indebtedness except: (1)
the Loans; (2) existing Indebtedness as set forth in Exhibit E;
(3) trade Indebtedness incurred in the ordinary course of
business; (4) contingent Indebtedness permitted by Section 4.09;
(5) Indebtedness, including Permitted Acquisition Indebtedness,
secured by Permitted Liens; (6) Indebtedness owed by any
Participating Subsidiary of the Corporate Guarantor to a
Corporate Guarantor or by a Corporate Guarantor to any
Participating Subsidiary of the Corporate Guarantor, provided
that if any such Indebtedness is evidenced by a document or
instrument, the same is pledged pursuant to an appropriate pledge
agreement; (7) Mineral Leases incurred in the ordinary course of
business and other lease obligations permitted by Section 4.05;
(8) Indebtedness assumed or incurred in connection with a
Permitted Acquisition and payable to parties other than the
seller or the seller's owners provided the aggregate outstanding
amount of such Indebtedness does not exceed at any time Two
Million Five Hundred Thousand Dollars ($2,500,000.00); and (9)
Loan Agreement Indebtedness.
Section 4.05. Leases. The Corporate Guarantor and its
Participating Subsidiaries will not pay, in an aggregate amount
in any fiscal year (commencing with the current fiscal year),
lease obligations in excess of $1,000,000.00; as used in this
paragraph, the term "lease" means an operating lease other than a
Mineral Lease which is not reflected on a consolidated balance
sheet of the Corporate Guarantor and its Participating
Subsidiaries and should not be so reflected under generally
accepted accounting principles consistently applied.
Section 4.06. Untrue Certificate. Neither the Corporate
Guarantor nor any Participating Subsidiary will furnish the Bank
or any Bank any certificate or other document that will contain
any untrue statement of material fact or that will omit to state
a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished.
Section 4.07. Margin Stock. Neither the Corporate
Guarantor nor any Participating Subsidiary will directly or
indirectly apply any part of the proceeds of the Loans to the
purchasing or carrying of any "margin stock" within the meaning
of Regulation U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings
thereunder.
Section 4.08. Sale-Leaseback. Neither the Corporate
Guarantor nor any Participating Subsidiary will enter into any
sale-leaseback transaction.
Section 4.09. Guarantee Obligation. Neither the Corporate
Guarantor nor any Participating Subsidiary will create, incur,
suffer to exist a Guarantee Obligation or otherwise become liable
for any obligation of any other Person or any Nonparticipating
Subsidiary, except: (1) the endorsement of commercial paper for
deposit or collection in the ordinary course of business, (2)
guarantees of Permitted Acquisition Indebtedness, (3) the
guaranty by a Participating Subsidiary of the indebtedness of
Pyron Corporation under the Reimbursement Agreement, (4) the
guaranty by a Participating Subsidiary of the Loan Agreement
Indebtedness, (5) guarantees of Nonparticipating Subsidiary
obligations not to exceed, in the aggregate for all
Nonparticipating Subsidiaries, the sum of Two Million Five
Hundred Thousand and No/100 Dollars ($2,500,000.00), and (6)
leases with the Corporate Guarantor or a Participating Subsidiary
permitted under Section 4.05.
Section 4.10. Dividends and Distributions. The Corporate
Guarantor will not declare or pay any cash dividends, or make any
other cash payment or other distribution of an asset on account
of its capital stock.
Section 4.11. Redemptions and Capital Stock. The Corporate
Guarantor will not redeem, purchase or retire any of its capital
stock.
Section 4.12. Prepayments. Neither the Corporate Guarantor
nor any Participating Subsidiary will prepay any Subordinated
Indebtedness, or Indebtedness for borrowed money other than the
Obligations, or enter into or modify any agreement as a result of
which the terms of payment of any of the foregoing Indebtedness
are modified to accelerate or increase payments.
Section 4.13. Subsidiary. Neither the Corporate Guarantor
nor any Participating Subsidiary will form any Subsidiary, make
any investment in or make any loan in the nature of any
investment to any Person, except for: (1) any Permitted
Investments, (2) the formation of a Subsidiary in connection with
making a Permitted Acquisition which qualifies as such under
Section 4.16 below, (3) advances by the Corporate Guarantor to
Participating Subsidiaries of the Corporate Guarantor, and (4)
advances by Participating Subsidiaries of the Corporate Guarantor
to the Corporate Guarantor.
Section 4.14. Loans and Advances. Neither the Corporate
Guarantor nor any Participating Subsidiary will make any loan or
advance to any officer, shareholder, director or employee of a
Corporate Guarantor or any Subsidiary, except for temporary
advances in the ordinary course of business not to exceed Five
Hundred Thousand Dollars ($500,000.00) in the aggregate and loans
to key employees to purchase treasury stock of the Corporate
Guarantor under The Key Employee Stock Purchase Plan.
Section 4.15. Investments. Neither the Corporate Guarantor
nor any Participating Subsidiary will purchase or otherwise
invest in or hold securities, non-operating real estate
(excluding mineral reserves) outside the normal course of
business, or other non-operating assets, except: (1) Permitted
Investments; (2) the present investment in any such assets,
including existing Participating Subsidiaries; and (3) operating
assets that hereafter become non-operating assets.
Section 4.16. Acquisitions. Neither the Corporate
Guarantor nor any Participating Subsidiary will acquire the stock
of, or all or substantially all of the assets of, any Person
without the prior written consent of the Bank; provided however,
with respect to any permitted acquisition (hereinafter a
"Permitted Acquisition"), the Corporate Guarantor may acquire
either all of the stock or assets of such Person and any
Participating Subsidiary may acquire the assets of or merge with
such Person (provided the Participating Subsidiary is the
surviving entity) without obtaining the Bank's approval if: (A)
Not less than ten (10) Business Days prior to entering into a
binding agreement to make any Permitted Acquisition, Corporate
Guarantor shall submit to the Bank the following information :
a. A copy of the signed letter of intent and a
current draft of the acquisition agreement with any prepared
exhibits, including seller financing documents;
b. A written description of the company to be
acquired, including location and type of mining operations, key
management, and real estate assets (including legal descriptions
of any owned real estate), if any;
c. If applicable, historical financial statements of
the Permitted Acquisition for the prior two years and the most
recent interim statement;
d. Copy of acquisition analysis done by Corporate
Guarantor preparatory to making the Permitted Acquisition;
(B) the Permitted Acquisition Price does not exceed Ten Million
Dollars ($10,000,000.00), of which no more than Five Million
Dollars ($5,000,000.00) is payable in cash at the closing of the
Permitted Acquisition or within one hundred eighty (180) days
thereafter; (C) the business of the Permitted Acquisition is in
the mining, manufacturing or processing of either powdered
metals, mica, feldspar, ceramic clays, other industrial minerals
or metal waste recycling and is located in the United States or
Canada; (D) environmental Phase I audits of the real properties
owned by the Permitted Acquisition company conducted within six
(6) months prior to the closing of the acquisition (or material
substantially similar thereto in the opinion of the Bank)
indicate environmental risks and/or exposures for which the
estimated costs to fully remedy and clean-up are less than Four
Hundred Thousand Dollars ($400,000.00), and copies of such are
provided to the Bank; (E) no Event of Default or Unmatured
Default has occurred hereunder and not been cured, or would
otherwise occur as a result of or in connection with the
Permitted Acquisition, whether immediately or on a projected
basis; and (F) whether or not the Bank have been requested to
disburse funds, if such Permitted Acquisition is to become a
party hereto and a Participating Subsidiary, the Corporate
Guarantor must pledge or cause to be pledged to the Bank for the
benefit of the Bank a first priority lien on the outstanding
stock, if any, of the Permitted Acquisition and a first priority
lien, if available, but in no event less than a second priority
lien on all of the Inventory, Accounts, Chattel Paper, Documents,
Instruments and General Intangibles of the Permitted Acquisition;
and (G) if Adjusted Surplus Capital is not positive or, as a
result of such acquisition is not positive, the Person or assets
being acquired must be a Participating Subsidiary or become a
Participating Subsidiary immediately following the acquisition to
qualify as a Permitted Acquisition. Unless the Permitted
Acquisition is to become a Nonparticipating Subsidiary, the Bank
shall be given not less than fifteen (15) Business Days written
notice prior to the closing of any such acquisition to prepare
all necessary documentation, and the legal structure of the Loans
following any Permitted Acquisition must be satisfactory to the
Bank and the Bank's counsel.
Section 4.17. Capital Expenditures. Other than in
connection with funding Permitted Acquisitions and the 1995
expansion at Spruce Pine, North Carolina by The Feldspar
Corporation, neither the Corporate Guarantor nor any
Participating Subsidiary will make or incur Capital Expenditures
without the prior approval of the Bank if such Capital
Expenditures exceed, in the aggregate, Five Million Dollars
($5,000,000.00) for the fiscal year ending December 31, 1995, and
Four Million Dollars ($4,000,000.00) for the fiscal year ending
December 31, 1996 and for each fiscal year thereafter.
Section 4.18. Affiliate Transactions. Except as described
on Exhibit F hereto, Corporate Guarantor will not, and will not
permit any of its Participating Subsidiaries 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 (other than any Participating Subsidiary which is
wholly owned by Corporate Guarantor, on terms that are less
favorable to the Corporate Guarantor or its Participating
Subsidiaries than those that would be obtainable at the time from
any Person who is not an Affiliate. Notwithstanding the
foregoing, Corporate Guarantor will not, and will not permit any
of its Participating Subsidiaries to: (1) pay or incur any
obligation to pay any management fee, consulting fee, service fee
or similar fee or charge to any Affiliate or (2) enter into any
transaction with an Affiliate where the amount to be paid,
whether immediately or over time, exceeds Five Hundred Thousand
Dollars ($500,000.00) in the aggregate. In addition, the
Corporate Guarantor and Suzorite Mica Products Inc. Les Produits
Mica Suzorite Inc. will not modify the Zemex Note so as to extend
the term or reduce the interest rate without prior written
consent of the Banks, nor will the Corporate Guarantor or
Suzorite Mica Products Inc. Les Produits Mica Suzorite Inc.
release or allow to be released any collateral for the Zemex
Note.
Section 4.19. Restricted Payment Negative Covenants.
Notwithstanding the provisions of Sections 4.9 through 4.19 above
(collectively, the "Restricted Payment Negative Covenants"),
provided there is no Event of Default or Unmatured Default in
existence under this Corporate Guaranty and except as hereinafter
set forth, the Corporate Guarantor or any Participating
Subsidiary may, without the consent or approval of the Bank, make
or incur one or more Restricted Payments in connection with
taking actions which would otherwise violate one or more of the
Restricted Payment Negative Covenants and such action and/or
payment will not cause an Event of Default or Unmatured Default
hereunder if, after such Restricted Payment(s) are made or
incurred, the level of Adjusted Surplus Capital remains positive
as evidenced by the reports required by Section 3.1(c) above;
provided, the foregoing shall not apply to Subsection 4.09(4)
which is not intended to be a Restricted Payment Negative
Covenant.
ARTICLE V
EVENTS OF DEFAULT
Section 5.01. Nature of Events. An "Event of Default"
shall exist if any of the following occurs:
a. Payment. The Corporate Guarantor fails to perform
or observe any covenant or undertaking contained in Article II of
this Corporate Guaranty.
b. Covenants. The Corporate Guarantor fails to
perform or observe any covenant or undertaking contained in
Article IV of this Corporate Guaranty or fails to perform any
other covenant or undertaking contained in this Corporate
Guaranty for a period of thirty (30) days.
c. Warranties or Representations. Any warranty,
representation or other statement by or on behalf of or with
respect to the Corporate Guarantor contained in this Corporate
Guaranty shall have been false or misleading in any material
respect when made.
d. If the Corporate Guarantor or any of its
Subsidiaries shall (i) default in the payment of an amount in
excess of $100,000 of (A) principal of or interest on any
Indebtedness, (B) for the deferred purchase price of any property
or assets, (C) for any capitalized lease obligation, or (D) on
any such obligation guaranteed by the Corporate Guarantor or any
of its Subsidiaries or in respect of which any of them is
otherwise contingently liable, in each case beyond the period of
grace, if any, provided in the instrument or agreement under
which the same was created or (ii) default in the observance or
performance of any other term, condition or agreement contained
in any such Indebtedness or in any instrument or agreement
evidencing, securing or relating thereto if the effect thereof is
to cause, or permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to
cause, such Indebtedness to become due prior to its stated
maturity; or
e. If the Corporate Guarantor or any of its
Subsidiaries commences any case, proceeding or other action
relating to it in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up, arrangement, composition,
readjustment of its debts, or for any other relief, under any
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other
similar act or law, of any jurisdiction, domestic or foreign, now
or hereafter existing, or any action by the Corporate Guarantor
or any of its Subsidiaries indicating its consent to, approval
of, or acquiescence in, any such proceeding; the application by
the Corporate Guarantor or any of its Subsidiaries for a
receiver, custodian or trustee of it or for all or a substantial
part of its property; the making by the Corporate Guarantor or
any of its Subsidiaries of a general assignment for the benefit
of creditors; or the inability or the admission by the Corporate
Guarantor or any of its Subsidiaries in writing of its inability
to pay its debts as they mature; or
f. Commencement of any case, proceeding or the taking
of other action against the Corporate Guarantor or any of its
Subsidiaries in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up, arrangement, composition or
readjustment of its debts, or any other relief, under any
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other
similar act or law, of any jurisdiction, domestic or foreign, now
or hereafter existing; or the appointment of a receiver,
custodian or trustee of the Corporate Guarantor or any of its
Subsidiaries or for all or a substantial part of any of their
property; or the issuance of a warrant of attachment, execution,
distraint, or similar process, against any substantial part of
the property of the Corporate Guarantor or any of its
Subsidiaries; and the continuance of any such events for 60 days
undismissed, unbonded or undischarged; or
g. There shall be entered against the Corporate
Guarantor or any Subsidiary of the Corporate Guarantor one or
more judgments or decrees involving in the aggregate a liability
of $100,000 or more and all such judgments or decrees shall not
have been vacated, discharge, or stayed within 60 days from the
entry thereof; or
h. The Corporate Guarantor shall become an
"investment company" within the meaning of the Investment Company
Act of 1940, as the same may be amended from time to time; or
i. (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975
of the Code) involving any Plan of the Corporate Guarantor or any
of its Subsidiaries, (ii) any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any such Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to
administer to or terminate, any such Plan, which Reportable Event
or institution of proceedings is, in the reasonable opinion of
the Bank, likely to result in the termination of such Plan for
purposes of Title IV of continuance of such Reportable Event
unremedied for ten days after notice of such Reportable Event
pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement
thereof, as the case may be, (iv) any such Plan shall terminate
for purposes of Title IV of ERISA, or (v) any other event or
condition shall occur or exist with respect to any such Plan or
having consequences under ERISA; and in each case in clauses (i)
through (v) above, such event or condition could subject the
Corporate Guarantor or any of its Subsidiaries to any tax,
penalty or other liability material in relation to the business,
operations, property or financial or other condition of the
Corporate Guarantor and its Subsidiaries taken as a whole;
j. The occurrence and continuance of an "Event of
Default" as defined in the Reimbursement Agreement other than as
a result of the failure of a party thereto other than the Company
to perform any obligation on such party's part to be performed,
provided, however, that if such "Event of Default" shall be cured
or annulled pursuant to the provisions of the Reimbursement
Agreement, as applicable, it shall no longer constitute an Event
of Default hereunder; or
k. The occurrence and continuance of an "Event of
Default" as defined in the Loan Agreement; provided, however,
that if such "Event of Default" shall be cured or annulled
pursuant to the provisions of the Loan Agreement, as applicable,
it shall no longer constitute an Event of Default hereunder.
Section 5.02. Default Remedies. If any Event of Default
has occurred and is not waived by the Bank, the Bank may proceed
to enforce the provisions hereof and to exercise any other
rights, powers and remedies available to the Bank. The Bank, in
its sole discretion, shall have the right to proceed first and
directly against the Corporate Guarantor under this Corporate
Guaranty without proceeding against or exhausting any other
remedies which it may have and without resorting to any other
security held by the Issuer, the Trustee or the Bank.
Section 5.03. Remedies; Waiver and Notice. a. No remedy
herein conferred upon or reserved to the Bank is intended to be
exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Corporate Guaranty or now or
hereafter existing at law or in equity or by statute.
b. No delay or omission by the Bank to exercise any
right or power accruing upon the occurrence of any Event of
Default hereunder shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right or power
may be exercised from time to time and as often as may be deemed
expedient.
c. In order to entitle the Bank to exercise any
remedy reserved to it, in this Corporate Guaranty, it shall not
be necessary for the Bank to give any notice except as may be
expressly required in this Corporate Guaranty.
d. In the event any provision contained in this
Corporate Guaranty should be breached by any party and thereafter
duly waived by the other party so empowered to act, such waiver
shall be limited to the particular breach so waived and shall not
be deemed to waive any other breach hereunder.
e. No waiver, amendment, release or modification of
this Corporate Guaranty shall be established by conduct, custom
or course of dealing.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Obligations Arise on Issuance of Letter of
Credit. The obligations of the Corporate Guarantor hereunder
shall arise absolutely and unconditionally when the Letter of
Credit shall have been issued by the Bank.
Section 6.02. Successors and Assigns. This Corporate
Guaranty shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
Section 6.03. Notices. All communications under this
Corporate Guaranty shall be in writing and shall be deemed given
when delivered, and, if delivered by mail, shall be mailed by
registered or certified first class, postage prepaid, and
addressed as follows:
To the Company:
Pyron Corporation
5950 Packard Road
Niagara Falls, New York 14094
Attn: President
To the Corporate Guarantor:
Zemex Corporation
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750
Toronto, Ontario M5J 251
Attn: Chief Financial Officer
Facsimile: (416) 365-8094
To the Bank:
Chemical Bank
2300 Main Place Tower
Buffalo, New York 14202
Attention: Account Officer for Pyron Corporation
Facsimile: (716) 843-4939
Any of the persons mentioned above to whom notice may be given
may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates and
other communications can be sent.
Section 6.04. Entire Understanding; Counterparts. This
Corporate Guaranty constitutes the entire agreement and
supersedes all prior agreements and understandings, both written
and oral, among the parties hereto with respect to the subject
matter hereof and may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 6.05. Partial Invalidity. The invalidity or
unenforceability of any one or more phrases, sentences, clauses
or sections in this Corporate Guaranty or the application thereof
shall not affect the validity or enforceability of the remaining
portions of this Corporate Guaranty or any part thereof.
Section 6.06. No Waiver; Cumulative Remedies. No failure
to exercise or delay in exercising, on the part of the Bank, any
right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided
by law.
Section 6.07. Survival of Representations and Warranties.
All representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto
shall survive the execution and delivery of this Corporate
Guaranty and any Financing Document until this Corporate Guaranty
is no longer in effect and all of the amounts owing hereunder
shall have been paid in full.
Section 6.08. Payment of Expenses and Taxes. The Corporate
Guarantor agrees (a) to pay or reimburse the Bank for all its
costs and expenses incurred in connection with the enforcement
of, or the preservation of, any rights under the Corporate
Guaranty or the Financing Documents or in seeking any advice with
respect thereto, including fees and expenses of counsel to the
Bank, (b) to pay and indemnify and hold the Bank harmless from
any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp and
other taxes, if any which may be payable or determined to be
payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any
amendment or modification of or any waiver or consent under or in
respect of, this Corporate Guaranty or the Financing Documents
and (c) to pay, indemnify and hold the Bank harmless from and
against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements or any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance an
administration of this Corporate Guaranty or any Related Document
except to the extent caused by (i) the Bank's willful misconduct
or gross negligence in determining whether documents presented
under the Letter of Credit comply with the terms of the Letter of
Credit (it being understood that any such noncompliance in any
immaterial respect shall not be deemed willful misconduct or
gross negligence of the Bank) or (ii) the Bank's willful failure
to pay under the Letter of Credit after presentation to it by the
Trustee (or any successor Trustee to whom the Letter of Credit
has been transferred in accordance with its terms) of a sight
draft and certificate strictly complying with the terms and
conditions of the Letter of Credit. The agreements in this
Section 6.08 shall survive the payment of all indebtedness of the
Corporate Guarantor hereunder and the termination of this
Corporate Guaranty.
Section 6.09. Severability. Any provision of this
Corporate Guaranty which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability
or nonauthorization without invalidating the enforceability or
authorization of such provision in any other jurisdiction.
Section 6.10. Governing Law. This Corporate Guaranty and
the rights and obligations of the parties under this Corporate
Guaranty shall be governed by , and construed and interpreted in
accordance with the law of the State of New York.
Section 6.11. JURY TRIAL WAIVER. THE CORPORATE GUARANTOR
HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ITS RIGHTS OR THE
RIGHTS OF THE BANK HEREUNDER OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED (OR WHICH MAY IN THE FUTURE BE
DELIVERED) IN CONNECTION WITH THIS CORPORATE GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE CORPORATE GUARANTOR AGREES
THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
Section 6.12. Confidentiality of Certain Information. The
Bank shall hold all Confidential Information obtained pursuant to
the requirements of this Corporate Guaranty, the Reimbursement
Agreement or any Company Related Document which has been
identified as such by the Corporate Guarantor in accordance with
customary procedures of the Bank for handling confidential
information of this nature and in accordance with safe and sound
banking practices. In any event, the Bank may make disclosure to
its examiners, affiliates, outside auditors, counsel and other
professional advisors in connection with this Corporate
Guarantor, the Reimbursement Agreement or any Company Related
Document or as reasonably required by any bona fide transferee or
participant in connection with the contemplated transfer of any
rights of the Bank in any indebtedness of the Corporate Guarantor
to the Bank hereunder or participation therein or as required or
requested by any governmental agency or representative thereof or
pursuant to legal process; provided that, unless specifically
prohibited by applicable law or court order, the Bank shall
notify the Corporate Guarantor promptly of any request by any
governmental agency or representative thereof (other than any
such request in connection with an examination of the financial
condition of the Bank by such governmental agency) for disclosure
of any such non-public information and shall exercise its best
efforts to permit the Corporate Guarantor to respond to such
notice prior to disclosure of such information; and further
provided that in no event shall the Bank be obligated or required
to return any materials furnished by the Corporate Guarantor.
Section 6.13. Date for Reference Purposes Only. Although
this Corporate Guaranty is dated as of the date first above
written for convenience, the actual date of execution hereof by
the Corporate Guarantor, and the effective date hereof, is the
date set forth under the signature of its duly authorized officer
hereinbelow.
Section 6.14. Accounting Terms. Unless otherwise specified
in this Corporate Guaranty, (a) all accounting terms used in this
Corporate Guaranty shall be interpreted, and all accounting
determinations under this Corporate Guaranty or in any
certificate, report or other documents made or delivered pursuant
to this Corporate Guaranty shall be made, and all financial
statements required to be delivered under this Corporate Guaranty
shall be prepared in accordance with GAAP, and (b) all
determinations of compliance with the covenants set forth in
Section 3.16 shall be made in accordance with GAAP.
Section 6.15. Definitions. Terms not otherwise defined
herein or in the Lease Agreement shall have the same meanings as
used in Appendix A attached hereto and made a part hereof.
IN WITNESS WHEREOF, the Corporate Guarantor have caused this
Corporate Guaranty to be duly executed by its duly authorized
officer and its corporate seal to be hereunto affixed as of March
15, 1995.
Zemex Corporation
SEAL By:/s/ Allen J. Palmiere
Vice President
Date: March 15, 1995
Accepted:
CHEMICAL BANK
By/s/ Daniel J. Zimmer
Vice President
Date: March 15, 1995
STATE OF TENNESSEE)
: ss
COUNTY OF DAVIDSON)
On this 15th day of March, 1995, before me personally
came ALLEN J. PALMIERE, to me known, who, being by me duly sworn,
did depose and say that he resides in Toronto, Ontario, Canada;
that he is Vice President of Zemex Corporation, the corporation
described in the foregoing Corporate Guaranty; and he
acknowledged to me that he executed the same by and under the
authority of the Board of Directors of said corporation.
/s/ Carol A. Wilson
Notary Public
APPENDIX A
DEFINITIONS
As used herein:
"Accounts", "Chattel Paper", "Contract Rights", "Documents",
"Equipment", "Fixtures", "General Intangibles", "Goods",
"Instruments" and "Inventory" shall have the same respective
meanings as are given to those terms in the UCC.
"Capital Expenditure Loans", "Loan Termination Date",
"Revolving Loans", "Working Capital Loans" and "Working Capital
Loan Termination Date" shall have the same respective meanings as
are given those terms in the Loan Agreement.
"Adjusted Surplus Capital" means Surplus Capital less the
cumulative amount of all Restricted Payments made or incurred
after September 30, 1994 plus the sum of: (A) all net cash
proceeds received by the Corporate Guarantor after September 30,
1994 from the sale of its stock and/or the exercise of its stock
options and warrants, (B) twenty-five percent (25%) of Net Income
for each fiscal year ending on and after December 31, 1995, and
(C) all cash dividends hereafter paid by Nonparticipating
Subsidiaries to the Corporate Guarantor or a Participating
Subsidiary.
"Affiliates" means as to any Person (A) any Person which,
directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with such
Person, or (B) any Person who is a director or executive officer
(i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (A) above. For purposes
of this definition, "control" of a Person shall mean the power,
direct or indirect, (i) to vote or direct the voting of more than
ten percent (10%) of the outstanding shares of voting stock of
such Person, or (ii) to direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise. In no event shall the Bank be deemed to be an
Affiliate of the Corporate Guarantor.
"Bank" means Chemical Bank and its successors and assigns.
"Business Day" means any day on which the state banks and
national banking associations in Nashville, Tennessee and
Buffalo, New York are open for the conduct of ordinary business.
"Capital" means, as to both the Corporate Guarantor and its
Participating Subsidiaries at any time of determination, the sum
of their Funded Debt and Shareholders' Equity as shown on a
consolidated balance sheet of the Corporate Guarantor and its
Participating Subsidiaries, less Intangible Assets,
Nonparticipating Subsidiary Advances, all Guarantee Obligations
incurred by the Corporate Guarantor or any Participating
Subsidiary for or on behalf of any Nonparticipating Subsidiary or
other Person, and all amounts due to a Corporate Guarantor or
Participating Subsidiary from any Affiliate (including without
duplication from any Nonparticipating Subsidiary).
"Capital Expenditures" means all amounts paid by the Corpor-
ate Guarantor and its Participating Subsidiaries in connection
with the purchase of property, plant, machinery, equipment or
other similar expenditures (including capital leases of any of
the foregoing) which would be required to be capitalized and
shown on the balance sheet of Corporate Guarantor and its
Participating Subsidiaries in accordance with generally accepted
accounting principles consistently applied.
"Cash Flow" means, as to both the Corporate Guarantor and
its Participating Subsidiaries, the aggregate of their: (A)
Earnings Before Interest and Taxes, (B) amortization; and (C)
depreciation; all as shown by the consolidated statement of
operations of the Corporate Guarantor and its Participating
Subsidiaries, calculated in accordance with generally accepted
accounting principles consistently applied.
"Change of Control" means the occurrence, after the date of
this Corporate Guaranty, of (i) any Person or two or more Persons
acting in concert acquiring beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended), directly
or indirectly, of securities of the Corporate Guarantor (or other
securities convertible into such securities) representing 51% or
more of the combined voting power of all securities of the
Corporate Guarantor entitled to vote in the election of
directors; or (ii) commencing after the date of this Corporate
Guaranty, individuals who at the beginning of this Corporate
Guaranty were directors of the Corporate Guarantor ceasing for
any reason to constitute a majority of the Board of Directors of
the Corporate Guarantor unless the Persons replacing such
individuals were nominated by the Board of Directors of the
Corporate Guarantor; or (iii) any Person or two or more Persons
acting in concert acquiring by contract or otherwise, or entering
into a contract or arrangement which upon consummation will
result in its or their acquisition of, or control over,
securities of the Corporate Guarantor (or other securities
convertible into such securities) representing 51% or more of the
combined voting power of all securities of the Corporate
Guarantor entitled to vote in the election of directors.
"Closing" means the valid execution and delivery of the
Corporate Guaranty to the Bank.
"Consolidated Net Income" means, for any particular fiscal
period, the net earnings (or net loss) of the Corporate Guarantor
and its Subsidiaries (whether Participating or Nonparticipating),
determined in accordance with generally accepted accounting
principles consistently applied, excluding however (A) any gains
(or losses) resulting from the sale or write-up of assets, and
(B) any other extraordinary or non-recurring gains.
"Corporate Guaranty" means that Amended and Restated
Corporate Guaranty Agreement of the Corporate Guarantor initially
dated _______________, 1995 in favor of the Bank with respect to
the Reimbursement Agreement, as the same may be further amended
and/or modified from time to time.
"Current Assets" means, at any time, all assets that, in
accordance with generally accepted accounting principles con-
sistently applied, are classified as current assets on a balance
sheet of the Corporate Guarantor and its Participating
Subsidiaries.
"Current Liabilities" means, at any time, all liabilities
that, in accordance with generally accepted accounting principles
consistently applied, are classified as current liabilities on a
balance sheet of the Corporate Guarantor and its Participating
Subsidiaries.
"Debt Service" means for any given period, the sum of the
amounts due from both the Corporate Guarantor and its
Participating Subsidiaries for (A) Interest Expense, (B) Letter
of Credit Fees, and (C) the pro forma current maturities portion
of Long-Term Liabilities for the succeeding four quarter period,
excluding however all amounts due under the Working Capital Loan
and also excluding in 1999 the balloon installments due at the
Loan Termination Date of the Revolving Loans and Capital
Expenditure Loans.
"Debt Service Coverage Ratio" means, as to the Corporate
Guarantor and its Participating Subsidiaries, for any period of
determination, that ratio consisting of the difference between
Cash Flow less the sum of cash taxes paid and Two Million Dollars
($2,000,000.00), divided by Debt Service.
"Earnings Before Interest and Taxes" means, for any period
of determination, the net earnings (or net loss) of both the
Corporate Guarantor and its Participating Subsidiaries exclusive
of all write-ups, gains (or losses) from sales of assets, or
other extraordinary or nonrecurring gains whether of a cash or
noncash nature, but after all expenses and other proper charges
other than Interest Expense and taxes, determined for any period
in accordance with generally accepted accounting principles
consistently applied.
"Eligible Assignee" means (A) a commercial bank organized
under the laws of the United States, or any State thereof, and
having a combined capital and surplus of at least
$300,000,000.00; (B) a commercial bank organized under the laws
of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political
subdivision of any such country, and having a combined capital
and surplus of at least $300,000,000.00, provided that such bank
is acting through a branch or agency located in the United
States; and (C) any Affiliate of the Bank; (D) any Federal
Reserve Bank. Bank.
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) and the
Superfund Amendments and Reauthorization Act (SARA); the Resource
Conservation and Recovery Act (RCRA); the Emergency Planning and
Community Right to Know Act; the Clean Water Act (Federal Water
Pollution Control Act); the Safe Drinking Water Act; the Clean
Air Act; the Surface Mining Control and Reclamation Act; the
Coastal Zone Management Act; the Noise Control Act; the
Occupational Safety and Health Act; the Toxic Substances Control
Act (TSCA); the Federal Insecticide, Fungicide and Rodenticide
Act (FIFRA); any so-called "Superfund" or "Superlien" law; or any
other federal, state or local statute, law, ordinance, code,
rule, regulation, order, decree or other requirements of any
governmental body regulating, relating to or imposing liability
or standards of conduct concerning any Hazardous Materials or
toxic or dangerous chemical, waste, substance or material.
"Environmental Indemnity Agreement" means the Environmental
Indemnity Agreement of the Corporate Guarantor and the
Participating Subsidiaries given to NationsBank of Tennessee,
N.A. and the Bank pursuant to the Loan Agreement.
"Facility Realty" shall mean the land described in the
Description of Facility Realty in the Appendices to the
Indenture, the Lease Agreement and the Bank Mortgage (as the
rights or interests therein or appertaining thereto, together
with all structures, buildings, foundations, related facilities,
fixtures (other than trade fixtures) and other improvements now
or at any time made, erected or situated thereon (including the
improvements made pursuant to Section 2.1 of the Lease Agreement)
and all replacements, improvements, extensions, substitutions,
restorations,repairs or additions thereto; but excluding,
however, any real property or interest therein released pursuant
to Section 6.4 of Lease Agreement.
"Financial Statements" means the consolidated balance sheets
of the Corporate Guarantor as of December 31, 1993, March 31,
1994, June 30, 1994 and September 30, 1994 and statements of
income and shareholders equity of the Corporate Guarantor for the
years or months ended on such dates.
"Fixed Assets" means, at any time, all tangible, fixed
assets which are, in accordance with generally accepted
accounting principles consistently applied, classified as
property, plant and equipment on a balance sheet of the Corporate
Guarantor and its Participating Subsidiaries.
"Funded Debt" means at any date, with respect to the
Corporate Guarantor and its Participating Subsidiaries, all of
the following obligations (without duplication) of Corporate
Guarantor and its Participating Subsidiaries as of such date:
(a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations to pay the deferred purchase
price of property, except trade accounts payable arising in the
ordinary course of business, (d) all obligations as lessee under
capitalized leases, (e) all obligations to purchase securities or
other property which arise out of or in connection with the sale
of the same or substantially similar securities or property, such
as bankers acceptances or similar instruments, (f) all non-
contingent obligations to reimburse any bank or other person in
respect of amounts paid under a letter of credit or similar
instrument, (g) all debt of others secured by a lien on any asset
of Corporate Guarantor and its Participating Subsidiaries,
whether or not such debt is assumed, and (h) all debt of others
guaranteed by Corporate Guarantor and/or its Participating
Subsidiaries.
"Guarantee Obligation" means with respect to any Person, any
contract, agreement or understanding of such Person pursuant to
which such Person guarantees, or in effect guarantees, any
Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, including, without
limitation, agreements (a) to purchase such Indebtedness or any
asset constituting security therefor, (b) to advance or supply
funds for the purchase or payment of such Indebtedness or to
maintain net worth or working capital or other balance sheet
conditions, or otherwise to advance or make available funds for
the purchase or payment of such Indebtedness, (c) to purchase an
asset or service primarily for the purpose of assuring the holder
of such Indebtedness of the ability of the primary obligor to
make payment of the Indebtedness, or (d) otherwise to assure the
holder of the Indebtedness of the primary obligor against loss
with respect thereto; provided, however, that such term shall not
include the endorsement by Corporate Guarantor or a Subsidiary of
negotiable instruments or documents for deposit or collection in
the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable,
in which case the amount of such Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Bank in good
faith.
"Hazardous Materials" means any hazardous, toxic or danger-
ous chemical, substance, waste or material defined as such in any
of the Environmental Laws, and petroleum, petroleum products,
oil, asbestos and PCB's.
"Indebtedness" means, as to the Corporate Guarantor or any
Participating Subsidiary, all items of indebtedness, obligation
or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including
without limitation:
(A) All indebtedness guaranteed, directly or
indirectly, in any manner, or endorsed (other than for collection
or deposit in the ordinary course of business) or discounted with
recourse;
(B) All indebtedness in effect guaranteed, directly or
indirectly, through agreements, contingent or otherwise: (1) to
purchase such indebtedness; or (2) to purchase, sell or lease (as
lessee or lessor) property, products, materials or supplies or to
purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such indebtedness or to assure the
owner of the indebtedness against loss; or (3) to supply funds to
or in any other manner invest in the debtor;
(C) All indebtedness secured by (or for which the
holder of such indebtedness has a right, contingent or otherwise,
to be secured by) any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance upon property
owned or acquired subject thereto, whether or not the liabilities
secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of
facilities, goods or services under leases that, in accordance
with generally accepted accounting principles consistently
applied, should not be reflected on the Corporate Guarantor's or
any Participating Subsidiary's balance sheet.
"Intangible Assets" means, at any time, goodwill, covenants
not to compete, capitalized financing and transaction costs, and
any surplus resulting from any write-up of assets subsequent to
December 31, 1993 as shown on a balance sheet of both the
Corporate Guarantor and its Participating Subsidiaries.
"Interest Expense" means, with respect to the Corporate
Guarantor and its Participating Subsidiaries for any period, the
gross interest expenses of both the Corporate Guarantor and its
Participating Subsidiaries for such period determined in
accordance with generally accepted accounting principles
consistently applied as shown on their income statement.
"Laws" means all ordinances, statutes, rules, regulations,
orders, injunctions, writs or decrees of any government or
political subdivision or agency thereof, or any court or similar
entity established by any thereof.
"Letter of Credit Facility" means that Letter of Credit
issued by the Bank for the account of Pyron Corporation to The
Bank of New York, as Trustee for Seven Million Six Hundred Fifty
Thousand Dollars ($7,650,000.00) in original principal amount of
Niagara County Industrial Development Agency Industrial
Development Revenue Bonds (1989 Pyron Corporation Project),
pursuant to the Reimbursement Agreement.
"Letter of Credit Fees" means those fees paid from time to
time by Pyron Corporation to Chemical Bank for the Letter of
Credit Facility plus any other fees paid by the Corporate
Guarantor or any Participating Subsidiary to a bank for the
issuance or continuation of any other letter of credit.
"Liabilities" means all Indebtedness that, in accordance
with generally accepted accounting principles consistently
applied, which are classified as liabilities on a balance sheet
of the Corporate Guarantor and its Participating Subsidiaries.
"Loan" means any funds which any Bank has advanced or will
advance to the Corporate Guarantor pursuant to this Corporate
Guaranty, and "Loans" means all such advances by the Bank.
"Loan Agreement" means the Loan and Security Agreement among
the Corporate Guarantor, The Feldspar Corporation, the
Participating Subsidiaries, NationsBank of Tennessee, N.A. and
the Bank dated March , 1995, as amended, restated or modified
from time to time.
"Loan Agreement Indebtedness" means all Indebtedness of the
Corporate Guarantor and/or The Feldspar Corporation to
NationsBank of Tennessee, N.A. and the Bank pursuant to the Loan
Agreement.
"Loan Documents" means this Corporate Guaranty, the Notes,
and the Collateral Documents, or any other document executed or
delivered by or on behalf of the Corporate Guarantor or any
Participating Subsidiary evidencing or securing the Obligations.
"Long-Term Liabilities" means Liabilities less the portion
thereof that constitutes Current Liabilities.
"Material Adverse Change" means a material adverse change in
the business or conditions (financial or otherwise) or in the
results of operations of the Corporate Guarantor and its
Participating Subsidiaries (unless otherwise indicated), taken as
a whole as reasonably determined by the Bank.
"Material Adverse Effect" means, when referring to the
taking of an action or the omission to take an action, that such
action, if taken, or omission, would have a material adverse
effect on the business, condition (financial or otherwise) or
results of operations of the Corporate Guarantor and its
Participating Subsidiaries (unless otherwise indicated), taken as
a whole as reasonably determined by the Bank.
"Mineral Lease" means an operating lease of real property
for the purpose mining minerals and ore in which the rent (and/or
royalties) payable thereunder to the lessor is contingent in
whole or in part on the quantity of minerals and ore mined by the
lessee from the leased site.
"Net Income" means, for any particular fiscal period, the
net earnings (or net loss) of the Corporate Guarantor and its
Participating Subsidiaries, determined in accordance with
generally accepted accounting principles consistently applied,
excluding however (A) any gains (or losses) resulting from the
sale or write-up of assets, and (B) any other extraordinary or
non-recurring non-cash gains.
"Net Cash Sales Proceeds" mean the cash received by any
Corporate Guarantor or Participating Subsidiary at the closing of
any sale of assets (including proceeds received at closing, if
any, from non-compete agreements, consulting agreements or earn-
out agreements) after deducting normal and routine closing costs
and fees paid at or about closing to third party service
providers engaged by the applicable Corporate Guarantor or
Participating Subsidiary to directly facilitate the sale, such as
attorneys, surveyors, environmental engineers and consultants,
and brokers unaffiliated with any Corporate Guarantor, Subsidiary
or Affiliate thereof.
"Nonparticipating Subsidiary" means any Subsidiary which, at
any time of determination, is either not a party hereto or, if a
party, whose outstanding assets and stock have not been pledged
to NationsBank of Tennessee, N.A. for the benefit of NationsBank,
of Tennessee, N.A. and the Bank pursuant to the Loan Agreement.
"Nonparticipating Subsidiary Advances" means any advances of
any kind made (regardless of the form, whether equity or debt,
cash or property) by the Corporate Guarantor or a Participating
Subsidiary to a Nonparticipating Subsidiary, whether such
advances are to fund the purchase price of any Person that will
upon the completion of the acquisition become a Nonparticipating
Subsidiary, to fund working capital advances, or otherwise.
"Obligations" means, respectively, all of the obligations of
the Corporate Guarantor and, to the extent applicable, of Pyron
Corporation:
(A) To pay as and when due all amounts described in
Section 2.01(a) of this Corporate Guaranty whether now existing
or hereafter incurred, matured or unmatured, direct or
contingent, joint or several, including any extensions,
modifications, and renewals thereof and substitutions therefor;
(B) To pay as and when due all amounts owed by Pyron
Corporation to Chemical Bank under the Reimbursement Agreement
and by the Corporate Guarantor under the Corporate Guaranty
whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint or several, including any extensions,
modifications, and renewals thereof and substitutions therefor;
and
(C) To reimburse the Bank, on demand, for all of the
Bank's reasonable out-of-pocket expenses and costs, including the
reasonable fees and expenses of its counsel, in connection with
the preparation, administration, amendment, modification, or
enforcement of this Corporate Guaranty and the documents required
hereunder, including, without limitation, any proceeding brought
or threatened to enforce payment of any of the obligations
referred to in the foregoing paragraphs (A) and (B), or any suits
or claims against any Bank whatsoever as a result of such Bank's
execution of this Corporate Guaranty and making of its Loan.
"Participating Subsidiary" individually means any one of the
following corporations, and "Participating Subsidiaries" means
all such corporations jointly and severally:
(A) Pyron Corporation, a New York corporation
(B) Pyron Metal Powders, Inc., a Delaware corporation
(C) Suzorite Mica Products Inc. Les Produits Mica Suzorite
Inc., an Ontario corporation
(D) Suzorite Mineral Products, Inc., a Delaware corporation
(E) The Feldspar Corporation, a North Carolina corporation.
"Permitted Acquisition" means any business, enterprise or
operation of any Person which is the subject of an acquisition
permitted under Section 4.16.
"Permitted Acquisition Indebtedness" means purchase money
indebtedness incurred by the Corporate Guarantor or any
Participating Subsidiary in connection with the purchase of a
Permitted Acquisition approved by the Bank pursuant to Section
4.16 that:
(A) Is owed to the seller or the seller's owners; and
(B) Is not cross-defaulted with and is not more
restrictive in its terms and conditions than the Obligations
secured hereby, in the reasonable judgment of the Bank.
In addition, it shall include such other indebtedness to third
parties, whether assumed or not, as has otherwise been approved
by the Bank pursuant to Section 4.16 or not prohibited by Section
4.04.
"Permitted Acquisition Price" means the aggregate purchase
price of any Permitted Acquisition, including without limitation
the value of any stock, notes, assumed debt, amounts allocated to
non-compete agreements and the minimum amounts reasonably
expected to be paid under any earn-out agreements.
"Permitted Investments" means all expenditures made and all
liabilities incurred (contingent or otherwise) by any Corporate
Guarantor or any Participating Subsidiary for:
(A) obligations issued or guaranteed as to principal
and interest by the United States of America and having a
maturity of not more than twelve (12) months from the date of
purchase;
(B) certificates of deposit, issued by banks organized
under the laws of the United States of America or any State
thereof and foreign subsidiaries of such banks, having a rating
of not less than A or its equivalent by Standard & Poor's
Corporation, or its successor;
(C) commercial paper or finance company paper which is
rated not less than prime-one or A-1 or their equivalents by
Moody's Investor Services, Inc. or Standard & Poor's Corporation
or their successors;
(D) repurchase agreements related to an investment of
the type described in Clause (A) above, provided that the
counter-party thereto is a government securities dealer
designated by the Federal Reserve Bank of New York as a
"Reporting Dealer" and whose financial statements indicate that
it has a capital of at least $50,000,000.00 and that the
investment which is the subject of such repurchase agreement
shall be at all times during the term of the repurchase agreement
in the possession of the Corporate Guarantor (or the Bank) or the
interest of such Corporate Guarantor therein shall be
appropriately recorded in accordance with the United States
Federal Regulations regarding Book Entry Treasury Securities; and
(E) Permitted Acquisitions.
"Permitted Liens" means:
(A) Liens in favor of the Bank;
(B) Security interests in assets (not stock) granted
to secure (1) Permitted Acquisition Indebtedness, provided that
in the case of an acquisition the purchase is either permitted by
Section 4.16 or not otherwise prohibited herein or (2) equipment
notes and capitalized leases granted to secure not more than the
amount of the purchase price financed thereby, provided that the
purchase is permitted by Section 4.17 and the additional amount
incurred in any fiscal year does not exceed Two Million Five
Hundred Thousand Dollars ($2,500,000.00);
(C) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business that are not yet due
and payable;
(D) Pledges or deposits made in the ordinary course of
business to secure payment of workmen's compensation, or to
participate in any fund in connection with workmen's
compensation, unemployment insurance, old-age pensions or other
social security programs;
(E) Liens of mechanics, materialmen, warehousemen,
carriers, or other like liens, securing obligations incurred in
the ordinary course of business that are not yet due and payable;
(F) Good faith pledges or deposits made in the
ordinary course of business to secure performance of bids,
tenders, contracts (other than for the repayment of borrowed
money) or leases, not in excess of ten percent (10%) of the
aggregate amount due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business;
(G) Encumbrances consisting of zoning restrictions,
easements or other restrictions on the use of real property, none
of which materially impairs the use of such property by the
Corporate Guarantor or any Participating Subsidiary in the
operations of its business, and none of which is violated in any
material respect by existing or proposed structures or land use;
(H) Existing liens set forth or described on Exhibit
E, attached hereto and made a part hereof, and renewals thereof;
(I) Landlord's liens on Fixtures retained in any
lease;
(J) The following, if the validity or amount thereof
is being contested in good faith by appropriate and lawful
proceedings, so long as levy and execution thereon have been
stayed and continue to be stayed; if Corporate Guarantor or any
Participating Subsidiary has posted such security as may be
required by Laws or as is reasonably satisfactory to Bank; and if
the following do not, in the aggregate, materially detract from
the value of the properties of the Corporate Guarantor or any
Participating Subsidiary taken as a whole, or materially impair
the use thereof in the operation of their respective businesses:
(1) Claims or liens for taxes, assessments or
charges due and payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and
defects of title to, real or personal property, including any
attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen,
warehousemen, carriers, or other like liens; and
(4) Adverse judgments on appeal;
(K) Liens granted pursuant to the Loan Agreement.
"Person" means any individual, corporation, partnership,
association, joint-stock company, estate, trust, unincorporated
organization, joint venture, court or government or political
subdivision or agency thereof.
"Records" means correspondence, memoranda, tapes, books,
discs, paper, magnetic storage and other documents or information
of any type, whether expressed in ordinary or machine language.
"Reimbursement Agreement" means that Letter of Credit
Reimbursement Agreement executed by Pyron Corporation in
connection with the Letter of Credit Facility, originally dated
November 1, 1989 as amended, modified and restated from time to
time.
"Restricted Payments" means the sum of all payments made,
incurred or guaranteed as to payment by Corporate Guarantor or
any Participating Subsidiary on or after September 30, 1994 which
would violate any of the covenants contained in Sections 4.09
through 4.18 but for the application of Section 4.19.
"Shareholders' Equity" means, at any time, the accounts
required to be set forth in a balance sheet of the Corporate
Guarantor and its Participating Subsidiaries, prepared in
accordance with generally accepted accounting principles
consistently applied, including, but not limited to: (A) the par
or stated value of all outstanding capital stock; (B) capital
surplus, including additional paid-in capital; (C) retained
earnings, (D) cumulative foreign currency translation
adjustments, and (E) treasury stock, less (F) notes receivable
from stockholders.
"Subordinated Indebtedness" means all Indebtedness incurred
at any time by the Corporate Guarantor or any Participating
Subsidiary, the repayment of which is subordinated to the Loans
and the Loan Agreement Indebtedness in form and manner
satisfactory to the Bank. All existing Subordinated
Indebtedness is so specified in Exhibit G attached hereto.
"Subsidiary" means any corporation of which fifty percent
(50%) or more of the outstanding voting securities shall, at the
time of determination, be owned directly, or indirectly through
one or more intermediaries, by the Corporate Guarantor (including
Nonparticipating Subsidiaries, whether or not a party to this
Corporate Guaranty, unless the context otherwise specifies), and
"Subsidiaries" means all such corporations together with each of
the Guarantors, if different.
"Surplus Capital" means the amount of Eleven Million Seven
Hundred Forty-Five Thousand Dollars ($11,745,000), consisting of
the stockholders' equity of the Corporate Guarantor as of
September 30, 1994 (i.e., $50,614,000), less the sum of: (A) its
stockholders equity as of December 31, 1993 (i.e., $26,530,000),
(B) the amount of existing investments in Nonparticipating
Subsidiaries (i.e., $2,133,000), (C) Seven Million Dollars
($7,000,000.00), and (D) Net Income for the period commencing
January 1, 1994 through September 30, 1994 (i.e. $3,206,000).
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York, as it may be amended from
time to time; provided that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or
non-perfection of a security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or
effect of perfection or non-perfection.
"Unmatured Default" means an event which but for the lapse
of time or the giving of notice, or both, would constitute an
Event of Default.
"Working Capital" means those funds used for general
corporate purposes in the ordinary course of business, but
excluding the costs of the acquisition of any Person, permitted
or otherwise, and the costs of Capital Expenditures.
"Zemex Note" means that Promissory Note in the original
principal amount of CDN$7,500,000.00 dated December 21, 1994
payable on demand to the Corporate Guarantor by Suzorite Mica
Products Inc. Les Produits Mica Suzorite Inc., as successor-in-
interest to Zemex Canada Inc., the original maker.
The definitions in this Appendix A shall apply equally to
both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Corporate Guaranty unless the context shall
otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be
construed in accordance with generally accepted accounting
principles, as in effect from time to time.
AMENDED AND RESTATED CORPORATE GUARANTY AGREEMENT
EXHIBITS
A Corporate Matters [I] - 1.01
B Addresses [J] - 1.01
C Litigation and Claims [K] - 1.05
D Compliance with Laws [D] - 1.10
E Existing Indebtedness and Liens [E] - 1.14, 4.04, "Existing
Liens"
F Material Leases, Contracts and Commitments [M] - 1.15, 4.18
G Subordinated Indebtedness [D] - "Subordinated Debt"
H Environmental Disclosurers
[Add date to definition of Loan Agreement]
SECOND AMENDMENT
TO
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
BETWEEN
PYRON CORPORATION
AND
CHEMICAL BANK
THIS AMENDMENT to the Letter of Credit Reimbursement
Agreement dated as of November 1, 1989, dated March 15, 1995, is
entered into between PYRON CORPORATION, a corporation organized
and existing under the laws of the State of New York (the
"Company"), and CHEMICAL BANK, a banking corporation organized
and existing under the laws of the State of New York (the
"Bank").
RECITALS
The Company and the Bank entered into a Letter of Credit
Reimbursement Agreement dated as of November 1, 1989, as amended
by the First Amendment to Letter of Credit Reimbursement
Agreement dated as of March 19, 1990 (the "Reimbursement
Agreement"), and now desire to amend certain provisions thereof
on the terms and conditions hereinafter set forth.
AGREEMENT
In consideration of the premises, the mutual covenants
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually
acknowledged, the Company and the Bank agree as follows:
1. The definition of Corporate Guaranty in Section 1.01 is
hereby amended to read as follows:
"Corporate Guaranty" shall mean the Amended and
Restated Corporate Guaranty dated as of March 15, 1995,
as may be amended from time to time, from the Corporate
Guarantor to the Bank."
2. The definiton of "Loan Agreement" is hereby added to
Section 1.01 to read as follows:
"Loan Agreement" shall mean the Loan and Security
Agreement made as of the 15th day of March, 1995, by
and among Zemex Corporation, a Delaware corporation,
The Feldspar Corporation, a North Carolina corporation,
Pyron Corporation, a New York corporation, Pyron Metal
Powders, Inc., a Delaware corporation, Suzorite Mica
Products, Inc., an Ontario corporation, Suzorite
Mineral Products, Inc., a Delaware corporation,
NationsBank of Tennessee, N.A. and Chemical Bank."
3. Section 2.03(a) of the Reimbursement Agreement with
respect to fees shall be amended to read as follows:
Section 2.03. Fees.
. . .
(a) A letter of credit fee, payable quarterly in
arrears on the last Business Day of each calendar
quarter commencing with a payment on the first such
date following the Date of Issuance for the period of
time from the Date of Issuance to the Expiration Date
at a rate equal to 1.00% per annum in excess of the
Applicable Letter of Credit Fee Margin on the Letter of
Credit Amount; provided, however, that within ten (10)
days after the end of each calendar quarter the actual
fee due with respect to such calendar quarter shall be
calculated by the Bank on the average daily amount of
the Letter of Credit Amount during such calendar
quarter taking into account the amount of any
reduction and reinstatement of the Principal Component
or Interest Component, as defined in the Letter of
Credit and (i) in the event that any overpayment of
the Letter of Credit fee has been made with respect to
such calendar quarter, then the excess amount paid
shall be credited against the Letter of Credit fee
payable in respect of the next succeeding calendar
quarter (unless the quarter in respect of which the fee
was paid was the last calendar quarter with respect to
which any such fee is payable hereunder, in which case
the Bank shall remit the excess to the Company promptly
following calculation of the actual fee), and (ii) in
the event that an underpayment of the Letter of Credit
fee has been made with respect to such calendar
quarter, then the difference between the amount paid
and the amount owed shall be paid together with the
Letter of Credit fees payable in respect of the next
succeeding calendar quarter (unless the quarter in
respect of which the fee was paid was the last calendar
quarter with respect to which any such fee is payable
hereunder, in which case the Company shall remit the
deficiency to the Bank promptly following calculation
of the actual fee). "Applicable Letter of Credit Fee
Margin" means one percent (1.0%) per annum; provided
however, that during any fiscal quarter of the Borrower
where the Borrower shall have satisfied the Funded Debt
to Capital ratio test indicated in the table below,
then the Applicable Letter of Credit Fee Margin for the
Effective Period (as defined below) shall be the
percentage rate per annum set forth opposite the
appropriate test in the table below:
Funded Debt to Capital Applicable Letter of
Credit Fee Margin
Equal to or Greater than 35% 1.00%
per annum
Equal to or Greater than 25% and Less Than 35% .05%
per annum
Less than 25% .00%
per annum
The Funded Debt to Capital ratio shall be computed as
set forth in Section 3.16(b) of the Corporate Guaranty,
and the Applicable Letter of Credit Rate Margin shall
be confirmed by the Bank on the basis of quarter-annual
financial statements of the Corporate Guarantor
delivered to the Bank pursuant to Section 3.01(a) of
the Corporate Guaranty and year end financial
statements delivered pursuant to Section 3.01(b) of the
Corporate Guaranty. The "Effective Period" shall be
the period commencing on the first business day of the
first month following delivery to the Bank of the
financial statements of the Corporate Guarantor
pursuant to Section 3.01(a) and 3.01(b) of the
Corporate Guaranty, which financial statements indicate
that the applicable test set forth above has been
satisfied for the preceding fiscal quarter, and ending
on the date that is three months after such
commencement date except for the third and fourth
fiscal quarters of each year, where the ending date
shall be four months after the commencement date and
two months after the commencement date, respectively.
At the end of any Effective Period, the Applicable
Letter of Credit Fee Margin shall automatically become
one percent (1%) per annum unless at or prior to such
time the next Effective Period shall have commenced.
4. Sections 7.03, 7.04, 7.07, 7.09, 7.11, 7.14, 8.02,
8.03, 8.04, 8.05, 8.06, 8.07, 8.08 and 8.09 of the Reimbursement
Agreement are hereby deleted.
5. Section 7.05 is amended to read as follows:
Section 7.05 Notice of Lawsuits, Material
Adverse Changes, Etc. Promptly inform the Bank of each
of the following promptly after the Company knows or
has reason to know:
(a) of the commencement of which it has knowledge,
of any action, suit, claim, counterclaim or proceeding
against or any audit or investigation by any
governmental or regulatory body of it which questions
the validity of this Reimbursement Agreement, any
Related Document or any other agreement or instrument
required hereunder, or any action taken or to be taken
pursuant to any of the foregoing; or
(b) of any representation or warranty in this
Reimbursement Agreement which was or has proven to be
incorrect in any material respect on or as of the date
made or deemed made.
6. Section 9.01(l) is hereby added to read as follows:
Section 9.01 Events of Default.
. . .
(l) The occurance and continuance of an Event of
Default under the Loan Agreement:
7. The notification addresses set forth in Section 10.02
are hereby amended to read as follows:
To the Company:
Pyron Corporation
5950 Packard Road
Niagara Falls, New York 14094
Attn: President
Copy to the Corporate Guarantor:
Zemex Corporation
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750
Toronto, Ontario M5J 251
Attn: Chief Financial Officer
Facsimile: (416) 365-8094
To the Bank:
Chemical Bank
2300 Main Place Tower
Buffalo, New York 14202
Attention: Account Officer for Pyron
Corporation
Facsimile: (716) 843-4939
8. The Company hereby represents and warrants to the Bank
as follows:
(a) Corporate Existence. The Company and its Guaranty
Subsidiaries are duly organized, validly existing and in
good standing under the laws of the respective jurisdictions
of their incorporation, have the corporate power to own
their assets and to transact the businesses in which they
are currently engaged, and are duly qualified as foreign
corporations and in good standing under the laws of each
jurisdiction where their ownership or lease of property or
the conduct of their business requires such qualification
except in jurisdictions where the failure to become so
qualified, in any case or in the aggregate, would not have a
material adverse effect on the business, operations, assets
or financial condition of the Company and its Guaranty
Subsidiaries taken as a whole.
(b) Corporate Power; Authorization; Enforceable
Obligations. The Company has the corporate power, authority
and legal right to make, deliver and perform this
Reimbursement Agreement Amendment has taken all necessary
corporate action to authorize the borrowings on the terms
and conditions of this Reimbursement Agreement as heretofore
and herein and to authorize its execution, delivery and
performance of this Reimbursement Agreement Amendment. No
consent of any Person (including, without limitation,
stockholders or creditors of the Company), and no consent,
license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration
with, any governmental authority which has not been obtained
is required on the part of the Company in connection with
its borrowings hereunder or with the execution, delivery or
performance by the Company, or the validity or
enforceability against the Company of this Reimbursement
Agreement Amendment; provided, however, that no
representation or warranty is made as to any state
securities or "Blue Sky" laws. This Reimbursement Agreement
Amendment has been executed and delivered by a duly
authorized officer of the Company and constitutes the legal,
valid and binding obligations of the Company.
c. No Legal Bar to Loans. The execution, delivery
and performance of this Reimbursement Agreement Amendment
and will not constitute a violation by the Company of any
provision of any existing law or regulation, or of any
order, judgment, award or decree of any court, arbitrator or
governmental authority, or of the Certificate of
Incorporation or By-Laws of the Company or any of its
Subsidiaries, or of any securities issued by the Company or
any of its Subsidiaries, or of any mortgage, indenture or
lease, or any material contract or other material agreement,
instrument or undertaking to which the Company or any of its
Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their respective assets may be
bound, and will not result in, or require, the creation or
imposition of any Lien on any of the property, assets or
revenues of the Company pursuant to the provisions of any
such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking except as contemplated
hereby or by any of the Company Related Documents; provided,
however, that no representation or warranty is made as to
any state securities or "Blue Sky" laws.
d. No Default. No Event of Default specified in
Article IX of the Reimbursement Agreement, nor any event
which, upon notice or lapse of time or both, would
constitute such an Event of Default, has occurred and is
continuing.
9. Except as specifically amended by the terms hereof, the
Reimbursement Agreement shall remain in full force and effect in
accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed on the date first above written.
ATTEST: PYRON CORPORATION
By:/s/ Patricia Mora By:/s/ Allen J. Pamiere
Assistant Secretary Vice President
[SEAL]
CHEMICAL BANK
By:
Daniel J. Zimmer,
Vice President
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 15, 1995
AMONG
ZEMEX CORPORATION AND
THE FELDSPAR CORPORATION
AND
NATIONSBANK OF TENNESSEE, N.A.,
AND CHEMICAL BANK
AND
NATIONSBANK OF TENNESSEE, N.A., AS AGENT
ZEMEX CORPORATION AND
THE FELDSPAR CORPORATION
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 15, 1995
TABLE OF CONTENTS
Paragraph Number Page
I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
II. THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1 The Revolving Loan Commitments . . . . . . . . . . . 17
2.2 The Capital Expenditure Loan Commitments . . . . . . 18
2.3 The Working Capital Loan Commitment. . . . . . . . . 20
2.4 Borrowing Notices, Interest Rates and Payments of
Interest 21
2.5 Facility Fee . . . . . . . . . . . . . . . . . . . . 23
2.6 Nonusage Fee . . . . . . . . . . . . . . . . . . . . 23
2.7 Agent's Fee. . . . . . . . . . . . . . . . . . . . . 24
2.8 Reduction of Commitment. . . . . . . . . . . . . . . 24
2.9 Alternate Rate of Interest . . . . . . . . . . . . . 24
2.10 Change in Circumstances. . . . . . . . . . . . . . . 24
2.11 Change in Legality . . . . . . . . . . . . . . . . . 26
2.12 Optional Prepayment - Premiums in Certain Events . . 27
2.13 Payment to the Agent . . . . . . . . . . . . . . . . 28
III. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 28
3.1 Documents Required for the Closing . . . . . . . . . 28
3.2 Requirements for all Subsequent Disbursements. . . . 31
3.3 Legal Matters. . . . . . . . . . . . . . . . . . . . 31
IV. COLLATERAL SECURITY . . . . . . . . . . . . . . . . . . . 31
4.1 Composition of the Collateral. . . . . . . . . . . . 31
4.2 Rights in Property Held by the Banks . . . . . . . . 31
4.3 Rights in Property of the Borrower . . . . . . . . . 32
4.4 Rights in Property of Certain Participating
Subsidiaries 32
4.5 Rights and Property of Suzorite Mica.. . . . . . . . 33
4.6 Priority of Liens. . . . . . . . . . . . . . . . . . 33
4.7 Financing Statements . . . . . . . . . . . . . . . . 33
4.8 Negotiation of Zemex Note. . . . . . . . . . . . . . 34
4.9 Collection of Receivables. . . . . . . . . . . . . . 34
4.10 Mortgagees' and Landlords' Waivers; Georgia Processing
Plant 34
V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 35
5.1 Due Organization and Qualification . . . . . . . . . 35
5.2 No Conflicting Agreement . . . . . . . . . . . . . . 35
5.3 Capacity . . . . . . . . . . . . . . . . . . . . . . 36
5.4 Binding Obligations. . . . . . . . . . . . . . . . . 36
5.5 Pledged Stock. . . . . . . . . . . . . . . . . . . . 36
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . 36
5.7 Title. . . . . . . . . . . . . . . . . . . . . . . . 36
5.8 Financial Statements . . . . . . . . . . . . . . . . 36
5.9 No Additional Indebtedness . . . . . . . . . . . . . 36
5.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 37
5.11 Compliance with Laws . . . . . . . . . . . . . . . . 37
5.12 Environmental Compliance . . . . . . . . . . . . . . 37
5.13 Full Disclosure. . . . . . . . . . . . . . . . . . . 37
5.14 Consents . . . . . . . . . . . . . . . . . . . . . . 38
5.15 Existing Borrowings. . . . . . . . . . . . . . . . . 38
5.16 Material Contracts . . . . . . . . . . . . . . . . . 38
5.17 Zemex Note . . . . . . . . . . . . . . . . . . . . . 38
5.18 No Commissions . . . . . . . . . . . . . . . . . . . 38
5.19 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 38
5.20 Survival . . . . . . . . . . . . . . . . . . . . . . 38
VI. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 39
6.1 Use of Proceeds. . . . . . . . . . . . . . . . . . . 39
6.2 Financial Statements and Reports . . . . . . . . . . 39
6.3 Good Condition . . . . . . . . . . . . . . . . . . . 41
6.4 Insurance. . . . . . . . . . . . . . . . . . . . . . 41
6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 41
6.6 Records and Inspection . . . . . . . . . . . . . . . 41
6.7 Maintenance of Existence and Business. . . . . . . . 41
6.8 Ordinary Course. . . . . . . . . . . . . . . . . . . 42
6.9 Copies of Tax Returns. . . . . . . . . . . . . . . . 42
6.10 Payment of Indebtedness. . . . . . . . . . . . . . . 42
6.11 Notice of Litigation . . . . . . . . . . . . . . . . 42
6.12 Notice to Banks of Default or Prepayment . . . . . . 42
6.13 Notice of Name Change or Location. . . . . . . . . . 42
6.14 Environmental Compliance . . . . . . . . . . . . . . 43
6.15 Notice of Environmental Action . . . . . . . . . . . 43
6.16 ERISA Compliance . . . . . . . . . . . . . . . . . . 44
6.17 Financial Ratios . . . . . . . . . . . . . . . . . . 44
VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 45
7.1 Merger or Reorganization . . . . . . . . . . . . . . 45
7.2 Sale of Assets . . . . . . . . . . . . . . . . . . . 45
7.3 Encumbrances . . . . . . . . . . . . . . . . . . . . 46
7.4 Debts and Other Obligations. . . . . . . . . . . . . 46
7.5 Leases . . . . . . . . . . . . . . . . . . . . . . . 46
7.6 Untrue Certificate . . . . . . . . . . . . . . . . . 46
7.7 Margin Stock . . . . . . . . . . . . . . . . . . . . 46
7.8 Sale-Leaseback . . . . . . . . . . . . . . . . . . . 47
7.9 Guarantee Obligation . . . . . . . . . . . . . . . . 47
7.10 Dividends and Distributions. . . . . . . . . . . . . 47
7.11 Redemptions and Capital Stock. . . . . . . . . . . . 47
7.12 Prepayments. . . . . . . . . . . . . . . . . . . . . 47
7.13 Subsidiary . . . . . . . . . . . . . . . . . . . . . 47
7.14 Loans and Advances . . . . . . . . . . . . . . . . . 47
7.15 Investments. . . . . . . . . . . . . . . . . . . . . 47
7.16 Acquisitions . . . . . . . . . . . . . . . . . . . . 47
7.17 Capital Expenditures . . . . . . . . . . . . . . . . 49
7.18 Affiliate Transactions . . . . . . . . . . . . . . . 49
7.19 Restricted Payment Negative Covenants. . . . . . . . 49
VIII. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 50
8.1 Events of Default. . . . . . . . . . . . . . . . . . 50
8.2 Acceleration . . . . . . . . . . . . . . . . . . . . 51
8.3 Remedies . . . . . . . . . . . . . . . . . . . . . . 52
IX. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . 53
9.1 Authorization. . . . . . . . . . . . . . . . . . . . 53
9.2 Standard of Care . . . . . . . . . . . . . . . . . . 53
9.3 No Waiver of Rights. . . . . . . . . . . . . . . . . 54
9.4 Payments . . . . . . . . . . . . . . . . . . . . . . 54
9.5 Indemnification. . . . . . . . . . . . . . . . . . . 54
9.6 Exculpation. . . . . . . . . . . . . . . . . . . . . 54
9.7 Credit Investigation . . . . . . . . . . . . . . . . 55
9.8 Resignation. . . . . . . . . . . . . . . . . . . . . 55
9.9 Proration of Payments. . . . . . . . . . . . . . . . 55
9.10 No Liability For Errors. . . . . . . . . . . . . . . 56
9.11 Offset . . . . . . . . . . . . . . . . . . . . . . . 56
X. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 56
10.1 Construction . . . . . . . . . . . . . . . . . . . . 56
10.2 Further Assurance. . . . . . . . . . . . . . . . . . 57
10.3 Enforcement and Waiver by the Banks. . . . . . . . . 57
10.4 Expenses of the Banks. . . . . . . . . . . . . . . . 57
10.5 Notices. . . . . . . . . . . . . . . . . . . . . . . 57
10.6 Waiver and Release . . . . . . . . . . . . . . . . . 58
10.7 Indemnification. . . . . . . . . . . . . . . . . . . 59
10.8 Participations and Assignments . . . . . . . . . . . 59
10.9 Applicable Laws. . . . . . . . . . . . . . . . . . . 59
10.10Binding Effect, Assignment and Entire Agreement. . . 59
10.11Severability . . . . . . . . . . . . . . . . . . . . 59
10.12Counterparts . . . . . . . . . . . . . . . . . . . . 59
10.13Venue. . . . . . . . . . . . . . . . . . . . . . . . 60
10.14Confidentiality. . . . . . . . . . . . . . . . . . . 60
10.15Waiver of Jury Trial . . . . . . . . . . . . . . . . 60
SCHEDULE OF EXHIBITS
EXHIBIT
A Form of Notes
B Capital Expenditure Draw Request Form
C Existing Indebtedness and Liens
D Subordinated Indebtedness
E Real Property
F Form of Stock Pledge Agreement
G Form of Guaranty and Suretyship Agreements
H Form of Opinion Letters
I Corporate Matters
(States of Incorporation and Qualification; Stock
Ownership)
J Addresses
K Litigation and Claims
L Compliance with Laws
M Material Leases, Contracts and Commitments
N Environmental Disclosures
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of the 15th
day of
March, 1995, by and among Zemex Corporation, a Delaware
corporation, and The Feldspar
Corporation, a North Carolina corporation, jointly and severally
(individually and collectively,
the "Borrower"); the Guarantors, jointly and severally, as such
term is defined herein; each of
the undersigned Banks; and NationsBank of Tennessee, N.A. (the
"Agent"), individually and
as Agent for such Banks.
W I T N E S S E T H:
WHEREAS, Borrower has requested the Banks to lend up to
the sum of Twenty-
Five Million Dollars ($25,000,000.00), initially on a revolving
basis and then converting in part
to a reducing revolver and in part to a term loan, and the Banks
are willing to do so upon the
terms and conditions hereinafter set forth; and
WHEREAS, Pyron Corporation is a party to a Letter of
Credit Reimbursement
Agreement (as hereinafter defined) with Chemical Bank, and
NationsBank of Tennessee, N.A.
desires to participate with Chemical Bank in its Letter of Credit
Facility (as hereinafter defined)
provided, among other things, that the Letter of Credit Facility
and this Loan and Security
Agreement are cross-defaulted and cross-collateralized;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants
and obligations herein contained, and each intending to be
legally bound hereby, the parties
agree as follows:
SECTION I. DEFINITIONS
As used herein:
"Accounts", "Chattel Paper", "Contract Rights",
"Documents", "Equipment",
"Fixtures", "General Intangibles", "Goods", "Instruments" and
"Inventory" shall have the
same respective meanings as are given to those terms in the UCC.
"Adjusted Surplus Capital" means Surplus Capital less
the cumulative amount
of all Restricted Payments made or incurred after September 30,
1994 plus the sum of: (A) all
net cash proceeds received by Zemex Corporation after September
30, 1994 from the sale of its
stock and/or the exercise of its stock options and warrants, (B)
twenty-five percent (25%) of Net
Income for each fiscal year ending on and after December 31,
1995, and (C) all cash dividends
hereafter paid by Nonparticipating Subsidiaries to the Borrower
or a Participating Subsidiary.
"Affiliates" means as to any Person (A) any Person
which, directly, or indirectly
through one or more intermediaries, controls, is controlled by,
or is under common control with
such Person, or (B) any Person who is a director or executive
officer (i) of such Person, (ii) of
any Subsidiary of such Person or (iii) of any Person described in
clause (A) above. For
purposes of this definition, "control" of a Person shall mean the
power, direct or indirect, (i)
to vote or direct the voting of more than ten percent (10%) of
the outstanding shares of voting
stock of such Person, or (ii) to direct or cause the direction of
the management and policies of
such Person whether by contract or otherwise. In no event shall
any of the Banks be deemed
to be Affiliates of the Borrower.
"Agent" means NationsBank of Tennessee, N.A. in its
capacity as agent for the
Banks pursuant to Section IX hereof, and not in its individual
capacity as a Bank, and any
successor Agent appointed pursuant to Section IX.
"Agreement" means this Loan and Security Agreement, as
it may be amended,
restated, renewed or extended from time to time.
"Applicable LIBO Rate Margin" means two and one-quarter
percent (2.25%)
per annum; provided however, that during any fiscal quarter of
the Borrower where the
Borrower shall have satisfied the Funded Debt to Capital ratio
test indicated in the table below,
then the Applicable LIBO Rate Margin for the Effective Period (as
defined below) shall be the
percentage rate per annum set forth opposite the appropriate test
in the table below:
Funded Debt to Capital Applicable LIBO Rate
Margin
Equal to or Greater than 35% 2.25% per annum
Equal to or Greater than 25% and Less Than 35% 1.75% per annum
Less than 25% 1.25% per annum
The Funded Debt to Capital ratio shall be computed as set forth
in Paragraph 6.17(B), and the
Applicable LIBO Rate Margin shall be confirmed by the Agent on
the basis of quarter-annual
financial statements of the Borrower delivered to the Banks
pursuant to Paragraph 6.2(A) and
year end financial statements delivered pursuant to Paragraph
6.2(B). The "Effective Period"
shall be the period commencing on the first Business Day of the
first month following delivery
to the Agent of the financial statements of the Borrower pursuant
to Paragraphs 6.2(A) and
6.2(B), which financial statements indicate that the applicable
test set forth above has been
satisfied for the preceding fiscal quarter, and ending on the
date that is three months after such
commencement date except for the third and fourth fiscal quarters
of each year, where the
ending date shall be four months after the commencement date and
two months after the
commencement date, respectively. At the end of any Effective
Period, the Applicable LIBO
Rate Margin shall automatically become two and one-quarter
percent (2.25%) per annum unless
at or prior to such time the next Effective Period shall have
commenced.
"Applicable Prime Rate Margin" means one-quarter of one
percent (0.25%) per
annum; provided however, that during any fiscal quarter of the
Borrower where the Borrower
shall have satisfied the Funded Debt to Capital ratio test
indicated in the table below, the
Applicable Prime Rate Margin for the Effective Period (as defined
below) shall be the
percentage rate per annum set forth opposite the appropriate test
in the table below:
Funded Debt to Capital Applicable Prime
Rate Margin
Equal to or Greater than 35% 0.25% per annum
Equal to or Greater than 25% and Less Than 35% 0.00% per annum
Less than 25% 0.00% per annum
The Funded Debt to Capital ratio shall be computed as set forth
in Paragraph 6.17(B), and the
Applicable Prime Rate Margin shall be confirmed by the Agent on
the basis of the quarter-
annual financial statements of the Borrower delivered to the
Banks pursuant to Paragraph 6.2(A)
and year end financial statements delivered pursuant to Paragraph
6.2(B). The "Effective
Period" shall be the period commencing on the first Business Day
of the first month following
delivery to the Agent of the financial statements of the Borrower
pursuant to Paragraphs 6.2(A)
and 6.2(B), which financial statements indicate that the
applicable test set forth above has been
satisfied for the preceding fiscal quarter, and ending on the
date that is three months after such
commencement date except for the third and fourth fiscal quarters
of each year, where the
ending date shall be four months after the commencement date and
two months after the
commencement date, respectively. At the end of any Effective
Period, the Applicable Prime
Rate Margin shall automatically become one-quarter of one percent
(0.25%) per annum unless
at or prior to such time the next Effective Period shall have
commenced.
"Bank" means each Bank listed on the signature pages of
this Agreement and their
respective successors and assigns, and "Banks" means all of such
Banks collectively.
"Business Day" means any day on which the state banks
and national banking
associations in Nashville, Tennessee and Buffalo, New York are
open for the conduct of
ordinary business; provided however, that when used in connection
with determining the LIBO
Rate or notices in connection therewith, the term "Business Day"
shall also exclude any day on
which banks are not open for dealings in U.S. Dollar deposits in
the London Interbank Market.
"Capital" means, as to both the Borrower and its
Participating Subsidiaries at any
time of determination, the sum of their Funded Debt and
Shareholders' Equity as shown on a
consolidated balance sheet of the Borrower and its Participating
Subsidiaries, less Intangible
Assets, Nonparticipating Subsidiary Advances, all Guarantee
Obligations incurred by the
Borrower or any Participating Subsidiary for or on behalf of any
Nonparticipating Subsidiary
or other Person, and all amounts due to a Borrower or
Participating Subsidiary from any
Affiliate (including without duplication from any
Nonparticipating Subsidiary).
"Capital Expenditure Loan" means that nonrevolving
construction/term loan
described in Paragraph 2.2.
"Capital Expenditure Loan Commitment" means, as to any
Bank, the obligation
of such Bank to make Capital Expenditure Loans in an amount not
to exceed the amount set
forth in Paragraph 2.2.
"Capital Expenditure Loan Commitment Percentage" means,
as to any Bank
at any time, the percentage of the aggregate Capital Expenditure
Loan Commitments then
constituted by such Bank's Capital Expenditure Loan Commitment.
"Capital Expenditure Loan Commitment Termination Date"
means
December 31, 1995.
"Capital Expenditures" means all amounts paid by the
Borrower and its
Participating Subsidiaries in connection with the purchase of
property, plant, machinery,
equipment or other similar expenditures (including capital leases
of any of the foregoing) which
would be required to be capitalized and shown on the balance
sheet of Borrower and its
Participating Subsidiaries in accordance with generally accepted
accounting principles
consistently applied.
"Cash Flow" means, as to both the Borrower and its
Participating Subsidiaries,
the aggregate of their: (A) Earnings Before Interest and Taxes,
(B) amortization; and (C)
depreciation; all as shown by the consolidated statement of
operations of the Borrower and its
Participating Subsidiaries, calculated in accordance with
generally accepted accounting principles
consistently applied.
"Change of Control" means the occurrence, after the
date of this Agreement, of
(i) any Person or two or more Persons acting in concert acquiring
beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities
Exchange Act of 1934, as amended), directly or indirectly, of
securities of Zemex Corporation
(or other securities convertible into such securities)
representing 51% or more of the combined
voting power of all securities of Zemex Corporation entitled to
vote in the election of directors;
or (ii) commencing after the date of this Agreement, individuals
who at the beginning of this
Agreement were directors of Zemex Corporation ceasing for any
reason to constitute a majority
of the Board of Directors of Zemex Corporation unless the Persons
replacing such individuals
were nominated by the Board of Directors of Zemex Corporation; or
(iii) any Person or two or
more Persons acting in concert acquiring by contract or
otherwise, or entering into a contract
or arrangement which upon consummation will result in its or
their acquisition of, or control
over, securities of Zemex Corporation (or other securities
convertible into such securities)
representing 51% or more of the combined voting power of all
securities of Zemex Corporation
entitled to vote in the election of directors.
"Closing" means the valid execution and delivery of the
Notes, the Agreement,
and Collateral Documents to the Agent, or as the Banks otherwise
direct.
"Collateral" has the meaning set forth in Paragraph
4.1.
"Collateral Documents" means the documents specified in
Paragraphs 3.1 (B)
through (G).
"Commitment Percentage" means, as to any Bank at any
time, the percentage
of the Total Commitments then constituted by such Bank's
Commitments.
"Commitments" means the Revolving Loan Commitments, the
Capital
Expenditure Loan Commitments, and the Working Capital Commitment.
"Consolidated Net Income" means, for any particular
fiscal period, the net
earnings (or net loss) of the Borrower and its Subsidiaries
(whether Participating or
Nonparticipating), determined in accordance with generally
accepted accounting principles
consistently applied, excluding however (A) any gains (or losses)
resulting from the sale or
write-up of assets, and (B) any other extraordinary or non-
recurring gains.
"Current Assets" means, at any time, all assets that,
in accordance with generally
accepted accounting principles consistently applied, are
classified as current assets on a balance
sheet of the Borrower and its Participating Subsidiaries.
"Current Liabilities" means, at any time, all
liabilities that, in accordance with
generally accepted accounting principles consistently applied,
are classified as current liabilities
on a balance sheet of the Borrower and its Participating
Subsidiaries.
"Debt Service" means for any given period, the sum of
the amounts due from
both the Borrower and its Participating Subsidiaries for (A)
Interest Expense, (B) Letter of
Credit Fees, and (C) the pro forma current maturities portion of
Long-Term Liabilities for the
succeeding four quarter period, excluding however all amounts due
under the Working Capital
Loan and also excluding in 1999 the balloon installments due at
the Loan Termination Date of
the Revolving Loans and Capital Expenditure Loans.
"Debt Service Coverage Ratio" means, as to the Borrower
and its Participating
Subsidiaries, for any period of determination, that ratio
consisting of the difference between
Cash Flow less the sum of cash taxes paid and Two Million Dollars
($2,000,000.00), divided
by Debt Service.
"Earnings Before Interest and Taxes" means, for any
period of determination,
the net earnings (or net loss) of both the Borrower and its
Participating Subsidiaries exclusive
of all write-ups, gains (or losses) from sales of assets, or
other extraordinary or nonrecurring
gains whether of a cash or noncash nature, but after all expenses
and other proper charges other
than Interest Expense and taxes, determined for any period in
accordance with generally
accepted accounting principles consistently applied.
"Eligible Assignee" means (A) a commercial bank
organized under the laws of
the United States, or any State thereof, and having a combined
capital and surplus of at least
$300,000,000.00; (B) a commercial bank organized under the laws
of any other country which
is a member of the Organization for Economic Cooperation and
Development (the "OECD"),
or a political subdivision of any such country, and having a
combined capital and surplus of at
least $300,000,000.00, provided that such bank is acting through
a branch or agency located in
the United States; (C) any Bank and any Affiliate of a Bank or
Lender; and (D) any Federal
Reserve Bank.
"Environmental Laws" means the Comprehensive
Environmental Response,
Compensation, and Liability Act (CERCLA) and the Superfund
Amendments and
Reauthorization Act (SARA); the Resource Conservation and
Recovery Act (RCRA); the
Emergency Planning and Community Right to Know Act; the Clean
Water Act (Federal Water
Pollution Control Act); the Safe Drinking Water Act; the Clean
Air Act; the Surface Mining
Control and Reclamation Act; the Coastal Zone Management Act; the
Noise Control Act; the
Occupational Safety and Health Act; the Toxic Substances Control
Act (TSCA); the Federal
Insecticide, Fungicide and Rodenticide Act (FIFRA); any so-called
"Superfund" or "Superlien"
law; or any other federal, state or local statute, law,
ordinance, code, rule, regulation, order,
decree or other requirements of any governmental body
regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous
Materials or toxic or dangerous
chemical, waste, substance or material.
"Eurodollar Liabilities" has the meaning assigned to
that term in Regulation D
of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Loan" means any Loan which bears interest
based on the LIBO
Rate.
"Eurodollar Rate Reserve Percentage" means the reserve
percentage applicable
during any Eurodollar Loan Interest Period (or if more than one
such percentage shall be so
applicable, the daily average of such percentages for those days
in such Interest Period during
which any such percentage shall be so applicable) under
regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any
successor) for determining the
maximum reserve requirement (including, without limitation, any
emergency, supplemental or
other marginal reserve requirement) for Banks with respect to
liabilities or assets consisting of
or including Eurodollar Liabilities having a term equal to such
Interest Period.
"Event of Default" has the meaning set forth in
Paragraph 8.1.
"Financial Statements" means the consolidated balance
sheets of Zemex
Corporation as of December 31, 1993, March 31, 1994, June 30,
1994 and September 30, 1994
and statements of income and shareholders equity of Zemex
Corporation for the years or months
ended on such dates.
"Financing Statements" means any one or more filings
made pursuant to the
UCC to perfect the security interests in the Collateral granted
to Banks pursuant to Section IV
hereof.
"Fixed Assets" means, at any time, all tangible, fixed
assets which are, in
accordance with generally accepted accounting principles
consistently applied, classified as
property, plant and equipment on a balance sheet of the Borrower
and its Participating
Subsidiaries.
"Floating Rate Loan" means any Loan which bears
interest based on the Prime
Rate.
"Funded Debt" means at any date, with respect to the
Borrower and its
Participating Subsidiaries, all of the following obligations
(without duplication) of Borrower and
its Participating Subsidiaries as of such date: (a) all
obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations
to pay the deferred purchase price of property, except trade
accounts payable arising in the
ordinary course of business, (d) all obligations as lessee under
capitalized leases, (e) all
obligations to purchase securities or other property which arise
out of or in connection with the
sale of the same or substantially similar securities or property,
such as bankers acceptances or
similar instruments, (f) all non-contingent obligations to
reimburse any bank or other person in
respect of amounts paid under a letter of credit or similar
instrument, (g) all debt of others
secured by a lien on any asset of Borrower and its Participating
Subsidiaries, whether or not
such debt is assumed, and (h) all debt of others guaranteed by
Borrower and/or its Participating
Subsidiaries.
"Guarantee Obligation" means with respect to any
Person, any contract,
agreement or understanding of such Person pursuant to which such
Person guarantees, or in
effect guarantees, any Indebtedness of any other person (the
"primary obligor") in any manner,
whether directly or indirectly, including, without limitation,
agreements (a) to purchase such
Indebtedness or any asset constituting security therefor, (b) to
advance or supply funds for the
purchase or payment of such Indebtedness or to maintain net worth
or working capital or other
balance sheet conditions, or otherwise to advance or make
available funds for the purchase or
payment of such Indebtedness, (c) to purchase an asset or service
primarily for the purpose of
assuring the holder of such Indebtedness of the ability of the
primary obligor to make payment
of the Indebtedness, or (d) otherwise to assure the holder of the
Indebtedness of the primary
obligor against loss with respect thereto; provided, however,
that such term shall not include the
endorsement by Borrower or a Subsidiary of negotiable instruments
or documents for deposit
or collection in the ordinary course of business. The amount of
any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or
determinable amount of the primary obligation in respect of which
such Guarantee Obligation
is made and (b) the maximum amount for which such guaranteeing
person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such
primary obligation and the maximum amount for which such
guaranteeing person may be liable
are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as
determined by the Banks in good faith.
"Guarantor" individually means any one of the
Participating Subsidiaries, and
"Guarantors" means all such corporations jointly and severally.
"Hazardous Materials" means any hazardous, toxic or
dangerous chemical,
substance, waste or material defined as such in any of the
Environmental Laws, and petroleum,
petroleum products, oil, asbestos and PCB's.
"Indebtedness" means, as to the Borrower or any
Participating Subsidiary, all
items of indebtedness, obligation or liability, whether matured
or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including
without limitation:
(A) All indebtedness guaranteed, directly or
indirectly, in any manner,
or endorsed (other than for collection or deposit in the ordinary
course of business) or discounted
with recourse;
(B) All indebtedness in effect guaranteed,
directly or indirectly, through
agreements, contingent or otherwise: (1) to purchase such
indebtedness; or (2) to purchase, sell
or lease (as lessee or lessor) property, products, materials or
supplies or to purchase or sell
services, primarily for the purpose of enabling the debtor to
make payment of such indebtedness
or to assure the owner of the indebtedness against loss; or (3)
to supply funds to or in any other
manner invest in the debtor;
(C) All indebtedness secured by (or for which the
holder of such
indebtedness has a right, contingent or otherwise, to be secured
by) any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance
upon property owned or acquired
subject thereto, whether or not the liabilities secured thereby
have been assumed; and
(D) All indebtedness incurred as the lessee of
facilities, goods or
services under leases that, in accordance with generally accepted
accounting principles
consistently applied, should not be reflected on the Borrower's
or any Participating Subsidiary's
balance sheet.
"Intangible Assets" means, at any time, goodwill,
covenants not to compete,
capitalized financing and transaction costs, and any surplus
resulting from any write-up of assets
subsequent to December 31, 1993 as shown on a balance sheet of
both the Borrower and its
Participating Subsidiaries.
"Interest Expense" means, with respect to the Borrower
and its Participating
Subsidiaries for any period, the gross interest expenses of both
the Borrower and its Participating
Subsidiaries for such period determined in accordance with
generally accepted accounting
principles consistently applied as shown on their income
statement.
"Interest Payment Date" shall mean, as to any Loan, the
last day of the Interest
Period applicable to such Loan and, in addition, in the case of a
Eurodollar Loan with an
Interest Period of six (6) months' duration or longer, each day
which is three (3) months, or a
whole multiple thereof, after the first day of such Interest
Period and the last day of such Interest
Period.
"Interest Period" shall mean: (a) as to any Eurodollar
Loan, the period
commencing on the date of such Eurodollar Loan and ending on the
numerically corresponding
day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that
is 1, 2, 3, 6 or 12 months thereafter, as the Borrower may elect,
and (b) as to any Floating Rate
Loan, the period commencing on the date of such Loan and ending
on the earliest of (i) the next
succeeding April 1, July 1, October 1 or January 1, and (ii) the
Loan Termination Date, as
applicable; provided, however, that (x) if any Interest Period
would end on a day that shall not
be a Business Day, such Interest Period shall be extended to the
next succeeding Business Day
unless, with respect to Eurodollar Loans only, such next
succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall
end on the next preceding
Business Day and (y) no Interest Period with respect to any Loan
shall end later than the Loan
Termination Date. Interest shall accrue from and including the
first day of an Interest Period
to but excluding the last day of such Interest Period.
"Interest Rate and Foreign Exchange Contracts" means
interest rate and foreign
exchange swap agreements, interest rate cap agreements, interest
rate collar agreements, interest
rate and foreign exchange insurance and other agreements or
arrangements designed to provide
protection against fluctuations in interest rates and currency
exchange rates.
"Laws" means all ordinances, statutes, rules,
regulations, orders, injunctions,
writs or decrees of any government or political subdivision or
agency thereof, or any court or
similar entity established by any thereof.
"Letter of Credit Facility" means that Letter of Credit
issued by Chemical Bank
for the account of Pyron Corporation to The Bank of New York, as
Trustee for Seven Million
Six Hundred Fifty Thousand Dollars ($7,650,000.00) in original
principal amount of Niagara
County Industrial Development Agency Industrial Development
Revenue Bonds (1989 Pyron
Corporation Project), pursuant to the Letter of Credit
Reimbursement Agreement.
"Letter of Credit Fees" means those fees paid from time
to time by Pyron
Corporation to Chemical Bank for the Letter of Credit Facility
plus any other fees paid by the
Borrower or any Participating Subsidiary to a bank for the
issuance or continuation of any other
letter of credit.
"Letter of Credit Liabilities" means, as of any date of
determination, the sum
of (a) the maximum aggregate liability of Chemical Bank under the
Letter of Credit Facility, and
(b) the aggregate amount of drawings under the Letter of Credit
Facility for which Chemical
Bank has not been reimbursed by Pyron Corporation.
"Letter of Credit Reimbursement Agreement" means that
Letter of Credit
Reimbursement Agreement executed by Pyron Corporation in
connection with the Letter of
Credit Facility, originally dated November 1, 1989 as amended,
modified and restated from time
to time.
"Letter of Credit Reimbursement Agreement Guaranty"
means that Amended
and Restated Guaranty and Suretyship Agreement of Zemex
Corporation initially dated
March 15, 1995 in favor of Chemical Bank with respect to the
Letter of Credit Reimbursement
Agreement, as the same may be further amended and/or modified
from time to time.
"Liabilities" means all Indebtedness that, in
accordance with generally accepted
accounting principles consistently applied, which are classified
as liabilities on a balance sheet
of the Borrower and its Participating Subsidiaries.
"LIBO Rate" means, with respect to any Eurodollar Loan
for any Interest Period,
the interest rate per annum (rounded upwards, if necessary, to
the next higher 1/100 of 1%) at
which dollar deposits approximately equal in principal amount to
such Eurodollar Loan and with
a maturity comparable to such Interest Period are offered to
first-class banks in immediately
available funds in the London Interbank Market for Eurodollars at
approximately 12:00 noon,
Nashville time, on the date two (2) Business Days prior to the
commencement of such Interest
Period, as determined by the Agent pursuant to the TELERATE
Reporting System.
"Loan" means any funds which any Bank has advanced or
will advance to the
Borrower pursuant to this Agreement, and "Loans" means all such
advances by all Banks.
"Loan Documents" means this Agreement, the Notes, and
the Collateral
Documents, or any other document executed or delivered by or on
behalf of the Borrower or
any Participating Subsidiary evidencing or securing the
Obligations.
"Loan Termination Date" means, with respect to
Revolving Loans and Capital
Expenditure Loans, January 1, 2000, unless extended in writing by
the Banks in their sole
discretion, and in the case of the Working Capital Loan only
means the Working Capital Loan
Termination Date.
"Long-Term Liabilities" means Liabilities less the
portion thereof that constitutes
Current Liabilities.
"Majority Banks" means those Banks (at least two Banks)
having sixty-six and
two-thirds (66 2/3%) percent or more of the aggregate unpaid
principal amount of the
outstanding Loans and the Letter of Credit Liabilities, or, if no
such amounts are then
outstanding, Banks having at least sixty-six and two-thirds (66
2/3%) percent of the
Commitments.
"Material Adverse Change" means a material adverse
change in the business or
conditions (financial or otherwise) or in the results of
operations of the Borrower and its
Participating Subsidiaries (unless otherwise indicated), taken as
a whole as reasonably
determined by the Majority Banks.
"Material Adverse Effect" means, when referring to the
taking of an action or
the omission to take an action, that such action, if taken, or
omission, would have a material
adverse effect on the business, condition (financial or
otherwise) or results of operations of the
Borrower and its Participating Subsidiaries (unless otherwise
indicated), taken as a whole as
reasonably determined by the Majority Banks.
"Mineral Lease" means an operating lease of real
property for purpose of mining
minerals and ore in which the rent (and/or royalties) payable
thereunder to the lessor is
contingent in whole or in part on the quantity of minerals and
ore mined by the lessee from the
leased site.
"Net Income" means, for any particular fiscal period,
the net earnings (or net
loss) of the Borrower and its Participating Subsidiaries,
determined in accordance with generally
accepted accounting principles consistently applied, excluding
however (A) any gains (or losses)
resulting from the sale or write-up of assets, and (B) any other
extraordinary or non-recurring
non-cash gains.
"Net Cash Sales Proceeds" mean the cash received by any
Borrower or
Participating Subsidiary at the closing of any sale of assets
(including proceeds received at
closing, if any, from non-compete agreements, consulting
agreements or earn-out agreements)
after deducting normal and routine closing costs and fees paid at
or about closing to third party
service providers engaged by the applicable Borrower or
Participating Subsidiary to directly
facilitate the sale, such as attorneys, surveyors, environmental
engineers and consultants, and
brokers unaffiliated with any Borrower, Subsidiary or Affiliate
thereof.
"Nonparticipating Subsidiary" means any Subsidiary
which, at any time of
determination, is either not a party hereto or, if a party, whose
outstanding assets and stock have
not been pledged to the Agent for the benefit of the Banks in the
manner prescribed in
Section IV hereof.
"Nonparticipating Subsidiary Advances" means any
advances of any kind made
(regardless of the form, whether equity or debt, cash or
property) by the Borrower or a
Participating Subsidiary to a Nonparticipating Subsidiary,
whether such advances are to fund the
purchase price of any Person that will upon the completion of the
acquisition become a
Nonparticipating Subsidiary, to fund working capital advances, or
otherwise.
"Note" means a promissory note substantially in the
form of Exhibit A attached
hereto, duly executed and delivered to any Bank by Borrower and
payable to the order of a Bank
in the amount of one or more of its Commitments, including any
amendment, modification,
renewal, extension, or replacement thereof, and "Notes" means the
Notes payable to each of the
Banks collectively.
"Obligations" means, respectively, all of the
obligations of the Borrower and, to
the extent applicable, of Pyron Corporation:
(A) To pay the principal of and interest on the
Notes in accordance with
the terms thereof and to satisfy all of the Borrower's other
liabilities to the Banks hereunder,
whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint
or several, including any extensions, modifications, and renewals
thereof and substitutions
therefor;
(B) To pay as and when due all amounts owed by
Pyron Corporation
to Chemical Bank under the Letter of Credit Reimbursement
Agreement and by Zemex
Corporation under the Letter of Credit Reimbursement Agreement
Guaranty;
(C) To repay to the Banks all amounts advanced by
the Banks hereunder
on behalf of the Borrower, including, but without limitation,
amounts owed under Interest Rate
and Foreign Exchange Contracts to one or more of the Banks,
advances for overdrafts, principal
or interest payments to prior secured parties, mortgagees, or
lienors, or for taxes, levies,
insurance, rent, repairs to or maintenance or storage of any of
the Collateral; and
(D) To reimburse the Banks, on demand, for all of
the Agent's and each
Banks' reasonable out-of-pocket expenses and costs, including the
reasonable fees and expenses
of its counsel, in connection with the preparation or enforcement
of this Agreement and the doc-
uments required hereunder, including, without limitation, any
proceeding brought or threatened
to enforce payment of any of the obligations referred to in the
foregoing paragraphs (A) and (B),
or any suits or claims against any Bank whatsoever as a result of
such Bank's execution of this
Agreement and making of its Loan; provided, the expenses and
attorneys' fees of only the
Agent's counsel shall be reimbursed in connection with the
administration, amendment,
modification or waiver of this Agreement and the other Loan
Documents.
"Participating Subsidiary" individually means any one
of the following
corporations, and "Participating Subsidiaries" means all such
corporations jointly and
severally:
(A) Pyron Corporation, a New York corporation
(B) Pyron Metal Powders, Inc., a Delaware corporation
(C) Suzorite Mica Products Inc. Les Produits Mica
Suzorite Inc., an Ontario
corporation
(D) Suzorite Mineral Products, Inc., a Delaware
corporation
"Permitted Acquisition" means any business, enterprise
or operation of any
Person which is the subject of an acquisition permitted under
Paragraph 7.16.
"Permitted Acquisition Indebtedness" means purchase
money indebtedness
incurred by the Borrower or any Participating Subsidiary in
connection with the purchase of a
Permitted Acquisition approved by the Banks pursuant to Paragraph
7.16 that:
(A) Is owed to the seller or the seller's owners;
and
(B) Is not cross-defaulted with and is not more
restrictive in its terms
and conditions than the Obligations secured hereby, in the
reasonable judgment of the Banks.
In addition, it shall include such other indebtedness to third
parties, whether assumed or not, as
has otherwise been approved by the Banks pursuant to Paragraph
7.16 or not prohibited by
Paragraph 7.4.
"Permitted Acquisition Price" means the aggregate
purchase price of any
Permitted Acquisition, including without limitation the value of
any stock, notes, assumed debt,
amounts allocated to non-compete agreements and the minimum
amounts reasonably expected
to be paid under any earn-out agreements.
"Permitted Investments" means all expenditures made and
all liabilities incurred
(contingent or otherwise) by any Borrower or any Participating
Subsidiary for:
(A) obligations issued or guaranteed as to
principal and interest by the
United States of America and having a maturity of not more than
twelve (12) months from the
date of purchase;
(B) certificates of deposit, issued by banks
organized under the laws
of the United States of America or any State thereof and foreign
subsidiaries of such banks,
having a rating of not less than A or its equivalent by Standard
& Poor's Corporation, or its
successor;
(C) commercial paper or finance company paper
which is rated not less
than prime-one or A-1 or their equivalents by Moody's Investor
Services, Inc. or Standard &
Poor's Corporation or their successors;
(D) repurchase agreements related to an
investment of the type
described in Clause (A) above, provided that the counter-party
thereto is a government securities
dealer designated by the Federal Reserve Bank of New York as a
"Reporting Dealer" and whose
financial statements indicate that it has a capital of at least
$50,000,000.00 and that the
investment which is the subject of such repurchase agreement
shall be at all times during the
term of the repurchase agreement in the possession of the
Borrower (or the Agent) or the interest
of such Borrower therein shall be appropriately recorded in
accordance with the United States
Federal Regulations regarding Book Entry Treasury Securities; and
(E) Permitted Acquisitions.
"Permitted Liens" means:
(A) Liens in favor of the Agent for the benefit
of the Banks;
(B) Security interests in assets (not stock)
granted to secure (1)
Permitted Acquisition Indebtedness, provided that in the case of
an acquisition the purchase is
either permitted by Paragraph 7.16 or not otherwise prohibited
herein or (2) equipment notes
and capitalized leases granted to secure not more than the amount
of the purchase price financed
thereby, provided that the purchase is permitted by Paragraph
7.17 and the additional amount
incurred in any fiscal year does not exceed Two Million Five
Hundred Thousand Dollars
($2,500,000.00);
(C) Liens for taxes, assessments, or similar
charges, incurred in the
ordinary course of business that are not yet due and payable;
(D) Pledges or deposits made in the ordinary
course of business to
secure payment of workmen's compensation, or to participate in
any fund in connection with
workmen's compensation, unemployment insurance, old-age pensions
or other social security
programs;
(E) Liens of mechanics, materialmen,
warehousemen, carriers, or other
like liens, securing obligations incurred in the ordinary course
of business that are not yet due
and payable;
(F) Good faith pledges or deposits made in the
ordinary course of
business to secure performance of bids, tenders, contracts (other
than for the repayment of
borrowed money) or leases, not in excess of ten percent (10%) of
the aggregate amount due
thereunder, or to secure statutory obligations, or surety,
appeal, indemnity, performance or other
similar bonds required in the ordinary course of business;
(G) Encumbrances consisting of zoning
restrictions, easements or other
restrictions on the use of real property, none of which
materially impairs the use of such
property by the Borrower or any Participating Subsidiary in the
operations of its business, and
none of which is violated in any material respect by existing or
proposed structures or land use;
(H) Existing liens set forth or described on
Exhibit C, attached hereto
and made a part hereof, and renewals thereof;
(I) Landlord's liens on Fixtures retained in any
lease;
(J) The following, if the validity or amount
thereof is being contested
in good faith by appropriate and lawful proceedings, so long as
levy and execution thereon have
been stayed and continue to be stayed; if Borrower or any
Participating Subsidiary has posted
such security as may be required by Laws or as is reasonably
satisfactory to Banks; and if the
following do not, in the aggregate, materially detract from the
value of the properties of the
Borrower or any Participating Subsidiary taken as a whole, or
materially impair the use thereof
in the operation of their respective businesses:
(1) Claims or liens for taxes, assessments
or charges due and
payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and
defects of title
to, real or personal property, including any attachment of
personal or real property or other legal
process prior to adjudication of a dispute on the merits;
(3) Claims or liens of mechanics,
materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal.
"Person" means any individual, corporation,
partnership, association, joint-stock
company, estate, trust, unincorporated organization, joint
venture, court or government or
political subdivision or agency thereof.
"Pledged Stock" means the stock and other interests
pledged pursuant to the Stock
Pledge Agreement described in Paragraph 3.1.
"Pledgor" means the owner of the Pledged Stock as set
forth in the Stock Pledge
Agreement.
"Prime Rate" means that rate announced by NationsBank
of Tennessee, N.A.
from time to time as the NationsBank Prime Rate. No
representation is made herein that the
NationsBank Prime Rate is the lowest rate at which any Bank will
lend to its customers.
"Records" means correspondence, memoranda, tapes,
books, discs, paper,
magnetic storage and other documents or information of any type,
whether expressed in ordinary
or machine language.
"Restricted Payments" means the sum of all payments
made, incurred or
guaranteed as to payment by Borrower or any Participating
Subsidiary on or after September 30,
1994 which would violate any of the covenants contained in
Paragraphs 7.9 through 7.18 but
for the application of Paragraph 7.19.
"Revolving Loan" means Loans made pursuant to Paragraph
2.1.
"Revolving Loan Commitment" means, as to any Bank, the
obligation of such
Bank to make Revolving Loans in an amount not to exceed the
amount set forth in
Paragraph 2.1.
"Revolving Loan Commitment Percentage" means as to any
Bank at any time,
the percentage of the aggregate Revolving Loan Commitments then
constituted by such Bank's
Revolving Loan Commitment.
"Shareholders' Equity" means, at any time, the accounts
required to be set forth
in a balance sheet of the Borrower and its Participating
Subsidiaries, prepared in accordance with
generally accepted accounting principles consistently applied,
including but not limited to: (A)
the par or stated value of all outstanding capital stock; (B)
capital surplus, including additional
paid-in capital; (C) retained earnings, (D) cumulative foreign
currency translation adjustments
and (E) treasury stock, less (F) notes receivable from
stockholders.
"Subordinated Indebtedness" means all Indebtedness
incurred at any time by the
Borrower or any Participating Subsidiary, the repayment of which
is subordinated to the
Obligations in form and manner satisfactory to the Banks. All
existing Subordinated
Indebtedness is so specified in Exhibit D attached hereto.
"Subsidiary" means any corporation of which fifty
percent (50%) or more of the
outstanding voting securities shall, at the time of
determination, be owned directly, or indirectly
through one or more intermediaries, by the Borrower (including
Nonparticipating Subsidiaries,
whether or not a party to this Agreement, unless the context
otherwise specifies), and
"Subsidiaries" means all such corporations together with each of
the Guarantors, if different.
"Surplus Capital" means the amount of Eleven Million
Seven Hundred Forty-
Five Thousand Dollars ($11,745,000), consisting of the
stockholders' equity of Zemex
Corporation as of September 30, 1994 (i.e., $50,614,000), less
the sum of: (A) its stockholders
equity as of December 31, 1993 (i.e., $26,530,000), (B) the
amount of existing investments in
Nonparticipating Subsidiaries (i.e., $2,133,000), (C) Seven
Million Dollars ($7,000,000.00), and
(D) Net Income for the period commencing January 1, 1994 through
September 30, 1994 (i.e.
$3,206,000).
"Term Loans" means those Capital Expenditure Loans and,
if applicable, any
Revolving Loans and Working Capital Loans, which are converted to
a term loan or term loans
pursuant to Section II.
"Total Commitments" means the aggregate of the several
Commitments of the
Banks in the principal amount of up to Twenty-Five Million
Dollars ($25,000,000.00) as set
forth in Section II of this Agreement.
"UCC" means the Uniform Commercial Code as in effect on
the date hereof in
the State of Tennessee, as it may be amended from time to time;
provided that if by reason of
mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of a
security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in
a jurisdiction other than Tennessee, "UCC" means the Uniform
Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or
effect of perfection or non-perfection.
"Unmatured Default" means an event which but for the
lapse of time or the
giving of notice, or both, would constitute an Event of Default.
"Working Capital" means those funds used for general
corporate purposes in the
ordinary course of business, but excluding the costs of the
acquisition of any Person, permitted
or otherwise, and the costs of Capital Expenditures.
"Working Capital Bank" means NationsBank of Tennessee,
N.A.
"Working Capital Commitment" means the commitment of
the Working Capital
Bank to make Working Capital Loans to the Borrower in the
aggregate principal amount not to
exceed Five Million Dollars ($5,000,000.00).
"Working Capital Loan" means Loans made pursuant to
Paragraph 2.3.
"Working Capital Loan Termination Date" means June 30,
1996, unless
extended in writing by NationsBank of Tennessee, N.A. in its sole
discretion.
"Zemex Note" means that Promissory Note in the original
principal amount of
CDN $7,500,000.00 dated December 21, 1994 payable on demand to
Zemex Corporation by
Suzorite Mica Products Inc. Les Produits Mica Suzorite Inc., as
successor-in-interest to Zemex
Canada Inc., the original maker.
The definitions in this Section I shall apply equally
to both the singular and plural
forms of the terms defined. Whenever the context may require,
any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words
"include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise
require. Except as otherwise expressly provided herein, all
terms of an accounting or financial
nature shall be construed in accordance with generally accepted
accounting principles, as in
effect from time to time.
SECTION II. THE LOANS
2.1 The Revolving Loan Commitments. (A) Subject to
the terms and
conditions of and relying on the representations, warranties and
covenants contained in this
Agreement, through the day prior to the Loan Termination Date,
each Bank agrees to fund
severally but not jointly to the Borrower the amount set out
below their names, which for all of
the Banks shall be initially an aggregate maximum principal
amount of up to Ten Million Dollars
($10,000,000.00). The Revolving Loan Commitments of the Banks
shall reduce by an aggregate
of Five Hundred Thousand Dollars ($500,000.00) commencing March
31, 1997 and each
quarter-annual period thereafter, as set forth in the following
schedule:
Initial Commitment and
Commitment Reduction Dates
NationsBank
Chemical Bank
Revolving Loan
Commitments
Date of Agreement
$5,000,000
$5,000,000
$10,000,000
April 1, 1997
$4,750,000
$4,750,000
$9,500,000
July 1, 1997
$4,500,000
$4,500,000
$9,000,000
October 1, 1997
$4,250,000
$4,250,000
$8,500,000
January 1, 1998
$4,000,000
$4,000,000
$8,000,000
April 1, 1998
$3,750,000
$3,750,000
$7,500,000
July 1, 1998
$3,500,000
$3,500,000
$7,000,000
October 1, 1998
$3,250,000
$3,250,000
$6,500,000
January 1, 1999
$3,000,000
$3,000,000
$6,000,000
April 1, 1999
$2,750,000
$2,750,000
$5,500,000
July 1, 1999
$2,500,000
$2,500,000
$5,000,000
October 1, 1999
$2,250,000
$2,250,000
$4,500,000
Loan Termination Date
-0-
-0-
-0-
The Revolving Loans shall be evidenced by the (i) Five Million
Dollars ($5,000,000.00) Note
of Borrower to NationsBank of Tennessee, N.A., and (ii) the Five
Million Dollars
($5,000,000.00) Note of Borrower to Chemical Bank, which Notes
are substantially in the form
set forth in Exhibit A-1 attached hereto, with each Note payable
in accordance with its terms.
The Borrower may obtain Loans, repay without penalty or premium
except as set forth in
Paragraph 2.12 below and reborrow hereunder, from the date of
this Agreement up to the day
prior to the Loan Termination Date, the then available Revolving
Loan Commitments or any
lesser sum which is in the minimum amount of Two Hundred Fifty
Thousand Dollars
($250,000.00) and in an integral multiple of Fifty Thousand
Dollars ($50,000.00) if in excess
thereof; provided, however, Borrower may not borrow more than two
(2) times in any calendar
month. Each advance of the Revolving Loans hereunder shall be
made by each Bank ratably
in accordance with its respective Revolving Loan Commitment
Percentage of such advance.
(B) Revolving Loan advances may be used by the
Borrower for
Permitted Acquisitions, Working Capital, and other general
corporate purposes; provided
however, the Banks shall have no obligation to fund if the
conditions precedent in Paragraph 3.2
below have not been satisfied.
(C) The failure of any Bank to make any advances
hereunder pursuant
to its Revolving Loan Commitment shall not relieve any other Bank
of its obligation, if any,
hereunder to make its advances pursuant to its Revolving Loan
Commitment. However, no
Bank shall be responsible for any other Bank's failure or refusal
to make any advances pursuant
to such other Bank's Revolving Loan Commitment.
(D) All outstanding principal and interest on
each such Revolving Loan
shall be due and payable in full in a balloon installment on the
Loan Termination Date. In
addition, all outstanding principal in excess of the then
available Revolving Loan Commitment
shall be due on the Commitment Reduction Date applicable thereto
and otherwise on demand.
2.2 The Capital Expenditure Loan Commitments. (A)
Subject to the terms and
conditions of and relying on the representations, warranties and
covenants contained in this
Agreement, for a period ending on the Capital Expenditure Loan
Commitment Termination
Date, each Bank agrees to fund severally but not jointly to the
Borrower, on a non-revolving
basis, the amount set out beside their names, which for all of
the Banks shall be the aggregate
maximum principal amount of up to Ten Million Dollars
($10,000,000.00). The maximum
Capital Expenditure Loan Commitment of each of the Banks and its
respective Capital
Expenditure Loan Commitment Percentage are as follows:
Capital
Expenditure
Capital Expenditure LoanLoan
Commitment
Bank Commitment Amount Percentage
NationsBank of Tennessee, N.A. $ 5,000,000 50%
Chemical Bank $ 5,000,000 50%
TOTAL COMMITMENTS $10,000,000 100%
The Capital Expenditure Loans shall be evidenced by the (i) Five
Million Dollars
($5,000,000.00) Note of Borrower to NationsBank of Tennessee,
N.A., and (ii) the Five Million
Dollars ($5,000,000.00) Note of Borrower to Chemical Bank, which
Notes are substantially in
the form set forth in Exhibit A-2 attached hereto, with each Note
payable in accordance with its
terms. The Borrower may obtain Loans in any sum which is in the
minimum amount of Two
Hundred Fifty Thousand Dollars ($250,000.00) and in an integral
multiple of Fifty Thousand
Dollars ($50,000.00) if in excess thereof; provided, however,
Borrower may not borrow more
than two (2) times in any calendar month. Each advance of the
Capital Expenditure Loans
hereunder shall be made by each Bank ratably in accordance with
its respective Capital
Expenditure Loan Commitment Percentage of such advance.
(B) Capital Expenditure Loan advances shall be
used by the Borrower
solely for Renovation Costs (as hereinafter defined) associated
with renovating and expanding
the feldspar production facility in Spruce Pine, North Carolina;
provided, however, the Banks
shall have no obligation to fund if the conditions precedent in
Paragraph 3.2 below have not
been satisfied. Furthermore, it shall be a condition precedent
to the Banks funding the initial
draw hereunder that the following conditions be satisfied:
(1) Borrower shall have submitted to each of
the Banks a budget
for the renovation of the Spruce Pine feldspar facility approved
by each Borrower's board of
directors showing total costs for the renovation of not less than
Ten Million Dollars
($10,000,000.00) nor more than Fourteen Million Dollars
($14,000,000.00) (the "Renovation
Costs"); and
(2) Borrower shall have submitted evidence
satisfactory to the
Banks that The Feldspar Corporation has paid for the first Two
Million Five Hundred Thousand
($2,500,000.00) of budgeted Renovation Costs out-of-pocket (the
"Renovation Equity"). The
initial draw request, as well as each subsequent draw request,
shall be submitted on the Capital
Expenditure Draw Request Form attached hereto as Exhibit B, which
form shall be completed
and signed by a Borrower. Borrower shall not be entitled to draw
for or request reimbursement
for its Renovation Equity; provided, upon final completion of all
improvements contemplated
by the Renovation Costs budget, if savings are realized such that
the final Renovation Costs are
less than Twelve Million Five Hundred Thousand Dollars
($12,500,000.00), then the Borrower
may in its final draw request (which must be made prior to April
1, 1996) include a request for
reimbursement of a portion of its Renovation Equity equal to that
amount by which $12,500,000
exceeds the final expended Renovation Costs, but not to exceed in
any event a maximum of Two
Million Five Hundred Thousand Dollars ($2,500,000.00).
(C) The failure of any Bank to make any advances
hereunder pursuant
to its Capital Expenditure Loan Commitment shall not relieve any
other Bank of its obligation,
if any, hereunder to make its advances pursuant to its Capital
Expenditure Loan Commitment.
However, no Bank shall be responsible for any other Bank's
failure or refusal to make any
advances pursuant to such other Bank's Capital Expenditure Loan
Commitment.
(D) On the Capital Expenditure Loan Commitment
Termination Date,
the outstanding balance of the Capital Expenditure Loans shall be
permanently converted to non-
revolving Term Loans. Commencing April 1, 1996, the outstanding
balance of such Term
Loans shall be payable in equal quarter-annual installments of
principal in the aggregate amount
of Two Hundred Seventy-Seven Thousand Seven Hundred Seventy-Seven
and 78/100 Dollars
($277,777.78) each, said installments to be applied pro rata to
the Notes of each Bank. Interest
as hereinbelow set forth shall continue to be due and payable on
the principal balance from time
to time outstanding. All outstanding principal and interest on
each such Term Loan shall be due
and payable in full in a balloon installment on the Loan
Termination Date.
2.3 The Working Capital Loan Commitment. (A) Subject
to the terms and
conditions of and relying on the representations, warranties and
covenants contained in this
Agreement, for a period ending on the day prior to the Working
Capital Loan Termination Date,
the Working Capital Bank agrees to fund to the Borrower the
amount set out below its name,
as follows:
Working Capital
Working Capital Loan Commitment
Bank Commitment Amount Percentage
NationsBank of Tennessee, N.A. $5,000,000 100%
The Working Capital Loans shall be evidenced by the Five Million
Dollars ($5,000,000.00) Note
of Borrower to the Working Capital Bank, which Note is
substantially in the form set forth in
Exhibit A-3 attached hereto, with the Note payable in accordance
with its terms. The Borrower
may obtain Loans, repay without penalty or premium and reborrow
hereunder, from the date
of this Agreement up to but not including the Working Capital
Loan Termination Date, either
the full amount of the Working Capital Loan Commitment or any
lesser sum which is in the
minimum amount of One Thousand Dollars ($1,000.00) and in an
integral multiple of One
Thousand Dollars ($1,000.00) if in excess thereof.
(B) Working Capital Loan advances may be used by
the Borrower for
Working Capital; provided, NationsBank of Tennessee, N.A. shall
have no obligation to fund
if the conditions precedent in Paragraph 3.2 below have not been
satisfied.
(C) On the Working Capital Loan Termination Date,
all outstanding
principal and interest on the Working Capital Loan shall be due
and payable.
2.4 Borrowing Notices, Interest Rates and Payments of
Interest.
(A) Loans made hereunder may be either Eurodollar
Loans, Floating
Rate Loans, or a combination thereof; provided, Eurodollar Loans
made under the Revolving
Loan Commitment or the Capital Expenditure Loan Commitment shall
be in the minimum
amount of $1,000,000.00 and shall be in an integral multiple of
$100,000.00, and Eurodollar
Loans made under the Working Capital Commitment shall be in the
minimum amount of
$250,000.00 and shall be in an integral multiple of $100,000.00.
(B) The Borrower shall give the Agent irrevocable
notice (a "Borrowing
Notice") not later than 10:00 a.m. Nashville time at least three
(3) Business Days prior to the
date of any requested disbursement of Eurodollar Loans and one
(1) Business Day prior to any
requested disbursement of Floating Rate Loans. Each Borrowing
Notice shall be written and
may be made by telecopier, telex or cable in addition to the
means set forth for giving notice
in Paragraph 10.5. Each Borrowing Notice shall specify the
funding source of the Loan, i.e.,
Revolving Loan, Capital Expenditure Loan, or Working Capital
Loan; the requested date of such
requested disbursement; the aggregate amount of such
disbursement; the type of Loan, i.e.,
Eurodollar or Floating Rate; and if a Eurodollar Loan, the
designated Interest Period. The
Agent shall promptly advise the other Banks of any Borrowing
Notice given pursuant to this
Section and each Bank's portion of the requested Loan. Not later
than noon (12:00 a.m.)
Nashville time on each disbursement date, and subject to the
terms and conditions hereof, Agent
will credit the proceeds of the Loans received by Agent from the
Banks to the Borrower's
deposit account with Agent. Each such Borrowing Notice shall
obligate the Borrower to accept
the Loan disbursement requested thereby.
(C) The Borrower shall have the right at any
time, on prior irrevocable
written or telex notice to the Agent not later than 10:00 a.m.,
Nashville time, three (3) Business
Days prior to the date of any requested conversion, to convert
any Floating Rate or Eurodollar
Loan into a Loan of another type, or to continue any Eurodollar
Loan for another Interest Period
(specifying in each case the Interest Period to be applicable
thereto), subject in each case to the
following:
(1) Each conversion or continuation shall be
made prorata
among the Banks in accordance with the respective principal
amounts of the Loan converted or
continued;
(2) No Eurodollar Loan shall be converted at
any time other
than at the end of the Interest Period applicable thereto;
(3) Each conversion shall be effected by
applying the proceeds
of the new Eurodollar and/or Floating Rate Loan, as the case may
be, to the Loan (or portion
thereof) being converted;
(4) The number of Eurodollar Loans
outstanding at one time
may not exceed seven (7); and
(5) No Interest Period may be selected for
any Eurodollar Loan
that would end later than a repayment date occurring on or after
the first day of such Interest
Period if the aggregate outstanding amount of Eurodollar Loans
with Interest Periods ending
prior to such repayment date plus the aggregate outstanding
amount of all Floating Rate Loans
is not equal to or greater than the principal amount(s) of the
Loan(s) to be paid on such
repayment date.
(D) Each notice pursuant to this Paragraph shall
be irrevocable and shall
refer to this Agreement and specify (1) the identity and
principal amount of the particular Loan
that the Borrower requests be converted or continued, (2) if such
notice requests conversion, the
date of such conversion (which shall be a Business Day), and (3)
if a Loan is to be converted
to a Eurodollar Loan or a Eurodollar Loan is to be continued, the
Interest Period with respect
thereto. In the event that the Borrower shall not give notice to
continue any Eurodollar Loan
for a subsequent period, such Eurodollar Loan (unless repaid)
shall automatically be converted
into a Floating Rate Loan. If the Borrower shall fail to specify
in any Borrowing Notice the
type of borrowing or, in the case of a Eurodollar Loan, the
applicable Interest Period, the
Borrower will be deemed to have requested a Floating Rate Loan.
If Agent reasonably believes
that any failure by Borrower to specify the type of borrowing or
the applicable Interest Period
shall have resulted from failure of communications equipment or
clerical error, then prior to
funding any such borrowing the Agent shall use reasonable efforts
to obtain confirmation from
Borrower of the contents of such Borrowing Notice; however, in
the absence of prompt
confirmation by Borrower which specifies the type of borrowing
and/or the applicable Interest
Period, the Borrower will be deemed to have requested a Floating
Rate Loan. Notwithstanding
anything to the contrary contained above, if an Event of Default
shall have occurred and be
continuing, no Eurodollar Loan may be continued and no Floating
Rate Loan may be converted
into a Eurodollar Loan.
(E) Interest shall be charged and paid on each
Loan from the date of
the initial advance thereunder until such Loan is paid or
converted as follows:
(1) For a Floating Rate Loan, at an annual
rate equal to the
Prime Rate plus the Applicable Prime Rate Margin, said rate to
change contemporaneously with
any change in the Prime Rate.
(2) For a Eurodollar Loan, at a rate equal
to the LIBO Rate plus
the Applicable LIBO Rate Margin.
(3) The Borrower shall pay to any Bank, if
and so long as such
Bank shall be required under regulations of the Board of
Governors of the Federal Reserve
System to maintain reserves with respect to liabilities or assets
consisting of or including
Eurodollar Liabilities, additional interest on the unpaid
principal amount of each Eurodollar
Loan, from the date of such advance until said principal amount
is paid in full, at an interest rate
per annum equal at all times to the remainder obtained by
subtracting (i) the LIBO Rate for the
Interest Period from (ii) the rate obtained by dividing the LIBO
Rate by a percentage equal to
100% minus the Eurodollar Rate Reserve Percentage for such
Interest Period, payable on each
date on which interest is payable. Such additional interest
shall be determined by such Bank
who shall notify Borrower thereof; however, such additional
interest shall be payable only if the
condition of Paragraph 2.10(C)(2) is satisfied.
(4) Interest for both Floating Rate Loans
and Eurodollar Loans
shall be computed on the basis of a 360-day year counting the
actual number of days elapsed,
and shall be due and payable without notice on each Interest
Payment Date.
(F) Notwithstanding the foregoing, upon the
occurrence of an Event
of Default interest shall be charged at the Default Rate as
defined and set forth in the Notes,
regardless of whether the Majority Banks have elected to exercise
any other remedies under
Section VIII hereof, including without limitation acceleration of
the maturity of the outstanding
principal of the Notes. All such interest shall be paid at the
time of and as a condition precedent
to the curing of any such default to the extent any right to cure
is given.
(G) All agreements herein made are expressly
limited so that in no
event whatsoever shall the interest and loan charges agreed to be
paid to the Banks for the use
of the money advanced or to be advanced pursuant to this
Agreement exceed the maximum
amounts collectible under applicable laws in effect from time to
time. If for any reason
whatsoever the interest or loan charges paid or contracted to be
paid in respect of the Loans
shall exceed the maximum amounts collectible under applicable
laws in effect from time to time,
then, ipso facto, the obligation to pay such interest and/or loan
charges shall be reduced to the
maximum amounts collectible under applicable laws in effect from
time to time, and any
amounts collected by the Banks that exceed such maximum amounts
shall be applied to the
reduction of the principal balance of the Loans and/or refunded
to Borrower so that at no time
shall the interest or loan charges paid or payable in respect of
the Loans exceed the maximum
amounts permitted from time to time by applicable law. This
provision shall control every other
provision herein and in any and all other agreements and
instruments now existing or hereafter
arising between Borrower and the Banks with respect to the Loans.
2.5 Facility Fee. A facility fee of One Hundred Fifty-
One Thousand One
Hundred Twenty-Two and 50/100 Dollars ($151,122.50) shall be due
and payable in full at
Closing to the Banks in the following amounts: NationsBank of
Tennessee, N.A., $88,061.25,
and Chemical Bank, $63,061.25.
2.6 Nonusage Fee. With respect to each of the
Revolving Loan Commitments,
the Capital Expenditure Loan Commitments, and the Working Capital
Commitment, from and
after the date hereof until the respective Commitment Termination
Date, the Borrower shall pay
to the Agent for the account of the Banks a nonusage fee of three-
eighths of one percent
(0.375%) per annum on the average daily undisbursed amount of
each of the Commitments
during each quarter-annual period or portion thereof. This
nonusage fee shall be payable
quarter-annually in arrears, on the first day of each January 1,
April 1, July 1, and October 1,
commencing April 1, 1995. Any accrued and unpaid nonusage fee on
any Commitment shall
be paid on its respective Commitment Termination Date.
2.7 Agent's Fee. An agent's fee of Twenty Thousand
Dollars ($20,000.00)
per annum shall be due and payable by Borrower to the Agent
annually commencing
December 31, 1995 and each December 31 thereafter.
2.8 Reduction of Commitment. The Borrower shall have
the right to reduce
the amount of the Total Commitments, at any time and from time to
time, in any integral
multiple of Two Hundred Fifty Thousand Dollars ($250,000.00),
which reduction shall, unless
otherwise agreed in writing, reduce each Bank's Commitment pro
rata in accordance with its
Commitment Percentage; provided, if the request for reduction is
made after the Capital
Expenditure Loan Commitment Termination Date and/or the Working
Capital Loan Termination
Date, then it shall reduce pro rata only those Commitments of
each Bank as are still outstanding.
Contemporaneously with each such reduction, the Borrower shall
repay to the Agent for the
account of each Bank in accordance with its respective Commitment
Percentage the amounts,
if any, by which the then outstanding principal balance of each
Note exceeds each Commitment
as so reduced. After each such reduction: (i) the Borrower
shall immediately pay the Agent
any nonusage fee provided for in Paragraph 2.6 with respect to
the amount by which the Total
Commitments are so reduced, but only with respect to the time any
such Commitment existed
and only to the extent not previously paid; (ii) the nonusage fee
provided for in Paragraph 2.6
shall be calculated with respect to the Total Commitments as so
reduced; and (iii) the Total
Commitments may not be increased without the written consent of
the Banks.
2.9 Alternate Rate of Interest.
(A) In the event, and on each occasion, that on
the date of
commencement of any Interest Period for a Eurodollar Loan, any
Bank shall have determined:
(1) That dollar deposits in the amount of
the requested principal
amount of such Eurodollar Loan are not generally available in the
London Interbank Market;
(2) That the rate at which such dollar
deposits are being offered
will not adequately and fairly reflect the cost to Bank of making
or maintaining such Eurodollar
Loan during such Interest Period; or
(3) That reasonable means do not exist for
ascertaining the
LIBO Rate,
such Bank shall, as soon as practicable thereafter, give written
or telephonic notice of such
determination to the Borrower. In the event of any such
determination, any request by the
Borrower for a Eurodollar Loan pursuant to Paragraph 2.4 shall,
until the circumstances giving
rise to such notice no longer exist, be deemed to be a request
for a Floating Rate Loan. Each
determination by a Bank hereunder shall be conclusive absent
manifest error.
2.10 Change in Circumstances.
(A) Notwithstanding any other provision herein,
if after the date of this
Agreement any change in applicable Laws or regulation or in the
interpretation or administration
thereof by any governmental authority charged with the
interpretation or administration thereof
(whether or not having the force of law) shall change the basis
of taxation of payments to a Bank
under any Eurodollar Loan made by a Bank or any other fees or
amounts payable hereunder
(other than taxes imposed on the overall net income of such Bank
by the country in which such
Bank is located, or by the jurisdiction in which such Bank has
its principal office, or by any
political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any
reserve requirement, special deposit, insurance charge (including
FDIC insurance on Eurodollar
deposits) or similar requirement against assets of, deposits with
or for the account of, or credit
extended by, such Bank or shall impose on such Bank or the London
Interbank Market any other
condition affecting this Agreement or Eurodollar Loans made by
such Bank, and the result of
any of the foregoing shall be to increase the cost to such Bank
of making or maintaining any
Eurodollar Loan or to reduce the amount of any sum received or
receivable by such Bank here-
under (whether of principal, interest or otherwise) in respect
thereof by an amount deemed by
such Bank to be material, then the Borrower will pay to such Bank
such additional amount or
amounts as will compensate such Bank for such additional costs of
reduction.
(B) If either:
(1) The introduction of, or any change in,
or in the
interpretation of, any United States or foreign law, rule or
regulation; or
(2) Compliance with any directive,
guidelines or request from
any central bank or other United States or foreign governmental
authority (whether or not having
the force of law) promulgated or made after the date hereof (but
excluding, however, any law,
rule, regulation, interpretation, directive, guideline or request
contemplated by or resulting from
the report dated July, 1988, entitled "International Convergence
of Capital Measurement and
Capital Standards" issued by the Basle Committee on Banking
Regulations and Supervisory
Practices),
affects or would affect the amount of capital required or
expected to be maintained by a Bank
(or any lending office of such Bank) or any corporation directly
or indirectly owning or
controlling such Bank (or any lending office of such Bank) based
upon the existence of this
Agreement, and such Bank shall have determined that such
introduction, change or compliance
has or would have the effect of reducing the rate of return on
Bank's capital or on the capital
of such owning or controlling corporation as a consequence of its
obligations hereunder
(including its Commitment) to a level below that which such Bank
or such owning or controlling
corporation could have achieved but for such introduction, change
or compliance (after taking
into account that Bank's policies or the policies of such owning
or controlling corporation, as
the case may be, regarding capital adequacy) by an amount deemed
by such Bank (in its sole
discretion) to be material, then, from time to time, the Borrower
shall pay to such Bank such
additional amount or amounts as will compensate such Bank for
such reduction attributable to
making, funding and maintaining its Commitment and Loans
hereunder.
(C) A certificate of any Bank setting forth such
amount or amounts as
shall be necessary to compensate such Bank (or its participating
banks or other entities pursuant
to Paragraph 10.8) as specified in paragraph (A) or (B) above, as
the case may be, shall be
delivered to the Borrower and shall be conclusive absent manifest
error; provided however, that
the Borrower shall be responsible for compliance herewith and the
payment of increased costs
only to the extent:
(1) Any change in Laws giving rise to
increased costs occurs
after the date of this Agreement;
(2) Such change in Laws or the application
thereof applies
generally to the banking industry and is not the result of one or
more of the Banks in this
Agreement having inadequate or substandard capital as determined
by its regulators; and
(3) The affected Bank gives notice of the
change giving rise to
increased costs within one hundred eighty (180) Business Days
after such Bank has, or with
reasonable diligence should have had, knowledge of the change, or
else such Bank can only
collect costs from and after the date of the notice.
Subject to the foregoing, the Borrower shall pay the affected
Bank the amount shown as due on
any such certificate within ten (10) days after its receipt of
such certificate.
(D) The protection of this Paragraph 2.10 shall
be available to each
Bank regardless of any possible contention of invalidity or
inapplicability of the law, regulation
or condition that shall have been imposed; provided, if a court
of competent jurisdiction (or a
final administrative proceeding which is not judicially
challenged) finally determines that such
law or regulation is invalid or unapplicable, then the protection
of this Paragraph shall not be
available.
2.11 Change in Legality.
(A) Notwithstanding anything to the contrary
herein contained, if any
change in any law or regulation or in interpretation thereof by
any governmental authority
charged with the administration or interpretation thereof shall
make it unlawful for any Bank to
make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated
hereby, then, by written notice to the Borrower, such Bank may:
(1) Declare that Eurodollar Loans will not
thereafter be made
by such Bank hereunder, whereupon the Borrower shall be
prohibited from requesting Eurodollar
Loans from such Bank hereunder unless such declaration is
subsequently withdrawn; and
(2) Require that all outstanding Eurodollar
Loans made by it be
converted to Floating Rate Loans, in which event (a) all such
Eurodollar Loans shall be
automatically converted to Floating Rate Loans as of the
effective date of such notice as
provided in paragraph (B) below and (b) all payments and
prepayments of principal that would
otherwise have been applied to repay the converted Eurodollar
Loans shall instead be applied
to repay the Floating Rate Loans resulting from the conversion of
such Eurodollar Loans.
(B) For purposes of this Paragraph 2.11, a notice
to the Borrower by
any Bank pursuant to (A) above shall be effective, if lawful, on
the last day of the then current
Interest Period; in all other cases, such notice shall be
effective on the date of receipt by the
Borrower.
2.12 Optional Prepayment - Premiums in Certain Events.
(A) The Borrower may, upon three (3) Business
Days' prior written
notice to the Agent, and upon payment of all premiums set forth
in subparagraph (D)
hereinbelow, prepay any outstanding Eurodollar Loans prior to any
Interest Payment Date for
such Eurodollar Loans, in whole or in part.
(B) The Borrower may at any time prepay any
outstanding Floating
Rate Loans in whole or in part without premium or penalty.
(C) Each notice of prepayment of any Eurodollar
Loan shall specify the
date and amount of such prepayment and the type of Loan (i.e.,
Revolving, Capital Expenditure,
Working Capital) to which it relates and shall be irrevocable.
The Agent shall promptly notify
the Banks of its receipt of a notice of prepayment. Each partial
prepayment of any Eurodollar
Loans shall be in an aggregate principal amount which is the
lesser of (1) the then outstanding
principal balance of the one or more Eurodollar Loans to be
prepaid, or (2) One Hundred
Thousand Dollars ($100,000.00) or an integral multiple thereof.
Interest on the amount prepaid
accrued to the prepayment date shall be paid on such date.
relevant Interest Payment Date for such borrowing,
Borrower shall pay to Agent for the account
of each Bank, in addition to all other payments then due and
owing the Banks, premiums which
shall be equal to an amount, if any, reasonably determined by
each Bank to be the difference
between the rate of interest then applicable to the relevant
Eurodollar Loan and the yield each
Bank receives upon reinvestment of so much of the relevant
Eurodollar Loans as is prepaid for
the remainder of the term of the relevant Eurodollar Loan or
Loans. Anything in this section
2.12(D) to the contrary notwithstanding, the premiums payable
upon any such prepayment shall
not exceed the amount, if any, reasonably determined by each Bank
to be the difference between
the rate of interest then applicable to the relevant Eurodollar
Loan and the yield that each Bank
could receive upon reinvestment in the "Floor Reinvestment" of so
much of the relevant
Eurodollar Loan as is prepaid for the remainder of the term of
the relevant Eurodollar Loan.
For purposes hereof, "Floor Reinvestment" shall mean an
investment for the time period from
the date of such prepayment to the end of the relevant Interest
Period applicable to such
Eurodollar Loan at an interest rate per annum equal to the
federal funds "offered" rate as
published in the Wall Street Journal on the date of such
prepayment. All determinations,
estimates, assumptions, allocations and the like required for the
determination of such premiums
shall be made by each Bank in good faith and shall be presumed
correct absent demonstrable
error.
2.13 Payment to the Agent.
(A) The Agent shall send the Borrower statements
of all amounts due
hereunder (or the Banks may in the case of Section 2.10 above),
which statements shall be
considered correct and conclusively binding on the Borrower
unless the Borrower notifies the
Agent to the contrary within one hundred eighty (180) days of its
receipt of any statement to
which it objects. All sums payable to the Banks hereunder shall
be paid directly to the Agent
for the account of each Bank in immediately available funds prior
to 12:00 noon, Nashville time,
on the date when such sums are due and payable. Any amounts
received by the Agent after
12:00 noon Nashville time on any Business Day shall be deemed to
have been received on the
next Business Day. Alternatively, at its sole discretion, the
Agent may charge against any
deposit account of the Borrower maintained with any of the Banks
all or any part of any amount
due pursuant to this Agreement.
(B) Each payment made to the Agent on the Notes
or for other sums
or fees due hereunder for the account of the Banks shall in like
funds be properly remitted by
the Agent to each Bank, no later than 2:00 p.m. Nashville time on
the date on which Agent
receives such payment; provided, payments made on the Working
Capital Note shall be remitted
solely to NationsBank of Tennessee, N.A.
SECTION III. CONDITIONS PRECEDENT
The obligation of the Banks to fund and/or continue
funding the Loans hereunder
is subject to the following conditions precedent:
3.1 Documents Required for the Closing. The Borrower
shall have delivered
to the Agent prior to the initial disbursement of the Loans the
following:
(A) The Notes;
(B) Deeds of Trust, Mortgages and/or Deeds to
Secure Debt
(collectively, the "Deeds of Trust") in favor of the Agent for
the benefit of the Banks with
respect to certain of the Borrower's and Guarantors' interest in
the real property described in
Exhibit E attached hereto and located in the States of North
Carolina, Georgia and New York
(the "Real Property");
(C) Stock Pledge Agreement (collectively the
"Stock Pledge
Agreement") in the form attached hereto as Exhibit F, including
Schedule I thereto, duly
executed by the Borrower, together with certificates representing
the shares pledged thereby,
duly endorsed in blank, and stock powers duly endorsed in blank;
(D) Duly executed Guaranty and Suretyship
Agreements (collectively
the "Guaranty and Suretyship Agreements") of the Guarantors, in
the form attached hereto as
Exhibit G;
(E) Duly executed Environmental Indemnity
Agreement of the Borrower
and the Guarantors with respect to all real property owned or
leased by any of them.
(F) The Financing Statements and mortgagee
waivers required by
Section IV;
(G) Amendment to the Letter of Credit
Reimbursement Agreement in
form and substance satisfactory to the Banks and Pyron;
(H) Title insurance policies from a company or
companies satisfactory
to Banks which shall bind such companies to insure the Deed(s) of
Trust as first priority liens
subject only to the Letter of Credit Facility lien in the State
of New York, such matters as the
Banks approve in writing, and other matters shown on Exhibit C.
Such title policy shall also
contain such other endorsements as the Banks may reasonably
require.
(I) Environmental Phase I reports with respect to
all real properties
owned or leased by Borrower or any Participating Subsidiary
(other than Zemex's headquarters
lease in Toronto, Canada and Feldspar's lease in Atlanta,
Georgia) in form and substance
satisfactory to the Banks.
(J) A copy of resolutions of each Borrower's
board of directors,
certified by the corporate secretary or assistant secretary of
each Borrower as of the date of
Closing, authorizing the execution, delivery and performance of
this Agreement, the Notes, the
Collateral Documents, and each other document to be delivered
pursuant hereto;
(K) A copy of resolutions of each Participating
Subsidiary's board of
directors, certified as of the date of Closing by the secretary
of each of such corporations,
authorizing the execution, delivery and performance of any
documents to be delivered by such
corporation pursuant to this Agreement, including without
limitation any of the Collateral
Documents.
(L) A copy, certified as of the most recent date
practicable, by the
applicable Secretaries of State of each Borrower's and
Participating Subsidiary's Charter,
together with a certificate dated the date of the Closing of each
Borrower's corporate secretary
to the effect that such certificates of incorporation have not
been amended since the date of the
aforesaid Secretary of State certifications;
(M) A copy of each Borrower's by-laws certified
by each Borrower's
secretary as of the date of the Closing;
(N) A copy of the by-laws of each Participating
Subsidiary certified by
each Participating Subsidiary's secretary as of the date of
Closing;
(O) A certificate dated the date of the Closing
of each Borrower's
corporate secretary as to the incumbency and signatures of the
officers of each Borrower
executing this Agreement, the Notes, the Collateral Documents,
and each other document to be
delivered pursuant hereto;
(P) A certificate dated the date of the Closing
of each Participating
Subsidiary's corporate secretary as to the incumbency and
signatures of the officers of each of
such corporation executing any document to be delivered pursuant
hereto, including without
limitation any of the Collateral Documents.
(Q) Certificates, as of the most recent dates
practicable, of the aforesaid
Secretary of State and the Secretary of State of each state in
which a Borrower is qualified as
a foreign corporation as to the good standing of such Borrower;
(R) Certificates, as of the most recent date
practicable, of the
Secretaries of State in each state where each Participating
Subsidiary is organized and/or
qualified to do business as a foreign corporation as to the good
standing of each such
Participating Subsidiary;
(S) A written opinion of Messrs. Davis, Graham &
Stubbs, L.L.C.,
the Borrower's counsel, dated the date of the Closing and
addressed individually to each Bank,
in the form attached hereto as Exhibit H-1 and otherwise
satisfactory to the Banks.
(T) The written opinions of Messrs. Smith, Lyons,
Torrance,
Stevenson & Mayer and Messrs. Langlois Robert, the Canadian
counsel for Zemex Corporation
and Suzorite Mica Products Inc. Les Produits Mica Suzorite Inc.,
dated the date of the Closing
and addressed individually to each Bank, in the form attached
hereto as collective Exhibit H-2
and otherwise satisfactory to the Banks.
(U) A certificate, dated the date of the Closing,
signed by the president,
vice president, chief financial officer, or corporate controller
of the Borrower and to the effect
that:
(1) The representations and warranties set
forth within Section V
are true as of the date of the Closing;
(2) No Event of Default hereunder, and no
event which, with
the giving of notice or passage of time or both, would become
such an Event of Default, has
occurred as of such date;
(3) All of the Collateral Documents are and
shall remain in full
force and effect.
(V) Copies of all documents evidencing the terms
and conditions of any
debt specified as Subordinated Indebtedness on Exhibit D in form
and substance satisfactory to
Banks;
(W) A Federal Reserve Form (or Forms) U-1, duly
completed and
executed by the Borrower and each Pledgor.
3.2 Requirements for all Subsequent Disbursements. At
the Closing, and as
an express condition precedent after Closing to each disbursement
of any Loan, each of the
following shall be true and correct:
(A) As of the date thereof, no Event of Default
has occurred and is
continuing, and no Unmatured Default is in existence;
(B) The disbursement will be used only as
permitted in Paragraph 2.1,
2.2 and/or 2.3;
(C) No Material Adverse Change has occurred since
the date of the
Financial Statements or the date of the Closing, as applicable;
and
(D) All of the Collateral Documents remain in
full force and effect, and
Borrower has provided or caused to be provided such additional
Collateral Documents as
required by Paragraph 7.16.
If any of the foregoing statements is not true and correct in the
judgment of the Banks, then the
Banks shall have no obligation to fund the requested
disbursement. In addition, on each
requested disbursement of a Revolving Loan or Capital Expenditure
Loan, the Borrower shall
deliver to the Agent a true and accurate certificate together
with (or included within) any
Borrowing Notice, dated the date on which a Revolving Loan or
Capital Expenditure Loan
disbursement is to be made, signed by the president, vice
president, chief financial officer, or
corporate controller of the Borrower and certifying to the
foregoing.
3.3 Legal Matters. At the time of the Closing and
thereafter, all legal matters
incidental to the Loans shall be satisfactory to Banks and their
counsel.
SECTION IV. COLLATERAL SECURITY
4.1 Composition of the Collateral. The property in
which a security interest
is granted pursuant to the provisions of Paragraphs 4.2, 4.3 and
4.4 is herein collectively called
the "Collateral." The Collateral, together with all of the
Borrower's and any Participating
Subsidiary's other property of any kind, both real and personal,
held by, assigned to, mortgaged
to or conveyed in favor of the Banks, shall stand as one general,
continuing collateral security
for all Obligations and may be retained by the Agent and/or Banks
until all Obligations have
been satisfied in full.
4.2 Rights in Property Held by the Banks. As security
for the prompt
satisfaction of all Obligations and all Guaranties of the
Obligations, the Borrower and each
Participating Subsidiary hereby assign, transfer and set over to
the Banks all of their right, title
and interest in and to, and grant the Banks a lien on and a
security interest in, all amounts that
may be owing from time to time by the Banks to the Borrower or
such Participating Subsidiary
in any capacity, including, but without limitation, any balance
or share belonging to the
Borrower or such Participating Subsidiary of any deposit or other
account with the Banks, which
lien and security interest shall be independent of any right of
set-off which the Banks may have.
4.3 Rights in Property of the Borrower. As further
security for the prompt
satisfaction of all Obligations and all Guaranties of the
Obligations, the Borrower hereby assigns
to the Banks by and through the Agent all of its respective
right, title and interest in and to, and
grants the Banks a lien upon and security interest in, all of the
following, wherever located,
whether now owned or hereafter acquired, together with all
substitutions, replacements,
improvements, accessions or appurtenances thereto, and proceeds
(including without limitation
insurance proceeds) thereof:
(A) Accounts;
(B) Chattel Paper;
(C) Contract Rights;
(D) Documents;
(E) Equipment;
(F) Fixtures;
(G) General Intangibles;
(H) Instruments, including without limitation the
Zemex Note and
security given by Suzorite Mica Products Inc.
Les Produits Mica
Suzorite Inc. to secure the Zemex Note;
(I) Inventory;
(J) The Real Property described in Exhibit E-1;
(K) The Pledged Stock; and
(L) All Records pertaining thereto or to any
other Collateral.
4.4 Rights in Property of Certain Participating
Subsidiaries. As further
security for the prompt satisfaction of all Obligations and all
Guaranties of the Obligations, each
Participating Subsidiary other than Suzorite Mica Products Inc.
Les Produits Mica Suzorite Inc.
hereby assigns to the Banks by and through the Agent all of their
respective right, title and
interest in and to, and grants the Banks a lien upon and security
interest in, all of the following,
wherever located, whether now owned or hereafter acquired,
together with all substitutions,
replacements, improvements, accessions or appurtenances thereto,
and proceeds (including
without limitation insurance proceeds) thereof:
(A) Accounts;
(B) Chattel Paper;
(C) Contract Rights;
(D) Documents;
(E) General Intangibles;
(F) Instruments;
(G) Inventory;
(H) The Real Property described in Exhibit E-2;
and
(I) All Records pertaining thereto or to any
other Collateral.
4.5 Rights and Property of Suzorite Mica. As further
security for the prompt
satisfaction of its Guaranty and Suretyship Agreement, Suzorite
Mica Products Inc. Les Produits
Mica Suzorite Inc. hereby assigns to the Banks by and through the
Agent all of its respective
right, title and interest in and to, and grants the Banks a lien
upon and security interest in all of
the following, wherever located, whether now owned or hereafter
acquired, together with all
substitutions, replacements, improvements, accessions or
appurtenances thereto, and proceeds
(including without limitation insurance proceeds) thereof:
(A) Accounts;
(B) Chattel Paper;
(C) Contract Rights;
(D) Documents;
(E) General Intangibles;
(F) Instruments;
(G) Inventory;
(H) All Records pertaining thereto or to any
other Collateral.
4.6 Priority of Liens. The foregoing liens shall be
first and prior liens except
for any Permitted Liens on assets which have priority or would
have priority by the operation
of Laws.
4.7 Financing Statements.
(A) The Borrower and each Participating
Subsidiary will:
(1) Join with the Agent in executing such
additional Financing
Statements (including amendments thereto and continuation
statements thereof) in form
satisfactory to the Banks as the Banks may specify;
(2) Pay or reimburse the Banks for all costs
and taxes of filing
or recording the same in such public offices as the Banks may
designate, and reimburse the
Banks for performing subsequent verification searches following
Closing in Tennessee, Texas,
North Carolina, New York, Pennsylvania, Georgia and Florida only;
and
(3) Take such other steps as the Banks may
direct, including the
noting of the Banks' lien on the Collateral and on any
certificates of title therefor all to perfect
the Banks' security interest in the Collateral.
(B) A carbon, photographic, or other reproduction
of this Agreement
shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu
thereof.
(C) To the extent lawful, the Borrower and each
Participating
Subsidiary hereby appoint the Agent as their attorney-in-fact
(without requiring the Agent to act
as such) to execute any Financing Statement in the name of the
Borrower or such Participating
Subsidiary, and to perform all other acts that the Agent deems
appropriate to perfect and
continue the Banks' security interest in, and to protect and
preserve, the Collateral.
4.8 Negotiation of Zemex Note. Simultaneously with
the execution of this
Agreement, Zemex Corporation has negotiated the Zemex Note to
Agent by endorsing the
Zemex Note to the order of Agent (without restriction or
qualification) and delivering the Zemex
Note together with all collateral documents securing the payment
of same to Agent on behalf of
the Banks. Agent shall retain possession of the Zemex Note to
perfect the security interest of
the Banks therein. Following the occurrence of any Event of
Default and for so long as such
Event of Default remains uncured, upon demand of the Majority
Banks the Agent may direct
the obligor of the Zemex Note to send all payments made under the
Zemex Note and to send
all notices pertaining to the Zemex Note or the collateral
securing payment of same directly and
exclusively to the Agent on behalf of the Banks as the Agent may
specify.
4.9 Collection of Receivables. Following the
occurrence of any Event of
Default and for so long as such Event of Default remains uncured,
upon demand of the Majority
Banks, Borrower and each Participating Subsidiary shall deposit
or cause to be deposited, all
checks, drafts, cash, and other remittances received in payment
of services rendered or inventory
sold or in payment or on account of its accounts, immediately
upon receipt thereof with Agent
in a special "lockboxed" bank account maintained with Agent, over
which the Majority Banks
alone have power of withdrawal. The funds in said special bank
account shall be held by the
Banks as security for all loans made hereunder and all other
Obligations of Borrower to the
Banks secured hereby. Said proceeds shall be deposited in
precisely the form received, except
for the endorsement of Borrower and each Participating Subsidiary
where necessary to permit
collection, which endorsement Borrower and each Participating
Subsidiary agree to make and
which Agent also hereby is irrevocably authorized to make on
their behalf. Pending such
deposit, Borrower and each Participating Subsidiary agree that
they will not commingle any such
checks, drafts, cash, and other remittances with any of their
funds or property, but will hold
them separate and apart therefrom and upon an express trust for
the Banks until deposit thereof
is made in the said special bank account. At least twice weekly,
Agent will apply the whole or
any part, as the Majority Banks deem appropriate, of the
collected funds on deposit in the said
special bank account against the principal and/or interest of any
loans made hereunder and/or
on Borrower's other Obligations secured hereby, the order and
method of such application to
be in the discretion of the Majority Banks. Any portion of said
funds on deposit in the special
bank account that the Majority Banks elect not to apply will be
paid over by Agent to Borrower.
4.10 Mortgagees' and Landlords' Waivers; Georgia
Processing Plant.
(A) At the request of the Majority Banks, the
Borrower will cause each
mortgagee of all real estate owned by the Borrower or any
Participating Subsidiary, and each
landlord of all premises leased by the Borrower or any
Participating Subsidiary, to execute and
deliver to the Agent instruments, in form and substance
satisfactory to the Banks, by which such
mortgagee or landlord waives its rights, if any, to any portion
of the Collateral located on such
premises, and agrees to provide Agent notice of and an
opportunity to cure any default by
Borrower or such Participating Subsidiary under such mortgage or
lease.
(B) Upon Borrower's either acquiring the
Monticello, Georgia land on
which its operating plant is located or upon Borrower's
renegotiating a new lease term for said
site, Borrower shall immediately notify each Bank and provide to
each Bank a copy of the
applicable deed and/or lease. Thereafter, Borrower agrees to
execute and deliver to the Agent
on behalf of the Banks a Georgia form of deed to secure debt in
the form previously delivered
to Bank on the other Monticello, Georgia property which deed to
secure debt will encumber
Borrower's fee simple and/or leasehold interest in the plant, as
applicable. Borrower agrees that
such deed to secure debt shall be delivered as soon as
practicable after Borrower resolves its title
issues by either acquiring fee simple title or executing a new
lease, but in no event later than
sixty (60) days after Borrower's acquisition of the fee simple
title and/or execution of a written
lease.
SECTION V. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement, the
Borrower and each
Participating Subsidiary jointly and severally represent and
warrant to each Bank as follows:
5.1 Due Organization and Qualification. Zemex
Corporation is a corporation
duly organized, validly existing and in good standing under the
Laws of the State of Delaware
and The Feldspar Corporation is a corporation duly organized,
validly existing and in good
standing under the Laws of the State of North Carolina; each
Participating Subsidiary is a
corporation duly organized, validly existing and in good standing
under the Laws of its state of
incorporation, all as set forth in Exhibit I; the Borrower and
each Participating Subsidiary have
the lawful power to own their properties and to engage in the
business they conduct, and each
is duly qualified and in good standing as a foreign corporation
in the jurisdictions wherein the
nature of the business transacted by it or property owned by it
is both material and makes such
qualification necessary; the states in which the Borrower and
each Participating Subsidiary are
qualified to do business are set forth in Exhibit I; the
percentage of the Borrower's ownership
of the outstanding stock of each Participating Subsidiary is as
listed in Exhibit I; and the
addresses of all places of business of the Borrower and each
Participating Subsidiary are as set
forth in Exhibit J;
5.2 No Conflicting Agreement. Neither the Borrower
nor any Participating
Subsidiary is in default with respect to any of its existing
Indebtedness, and the making and
performance of this Agreement, the Notes and the Collateral
Documents will not (immediately,
or with the passage of time or the giving of notice, or both):
(1) Violate the charter or bylaw provisions
of the Borrower or
any Participating Subsidiary, or violate any Laws, or result in a
default under any material
contract, agreement, or instrument to which the Borrower or any
Participating Subsidiary is a
party or by which the Borrower or any Participating Subsidiary or
its property is bound; or
(2) Result in the creation or imposition of
any security interest
in, or lien or encumbrance upon, any of the assets of the
Borrower or any Participating
Subsidiary, except in favor of the Banks;
5.3 Capacity. The Borrower and each Participating
Subsidiary have the power
and authority to enter into and perform this Agreement, the Notes
and the Collateral Documents,
as applicable, and to incur the Obligations herein and therein
provided for, and have taken all
corporate action necessary to authorize the execution, delivery,
and performance of this
Agreement, the Notes and the Collateral Documents;
5.4 Binding Obligations. This Agreement and the
Collateral Documents are,
and the Notes when delivered will be, valid, binding, and
enforceable in accordance with their
respective terms subject to the general principles of equity
(regardless of whether such question
is considered in a proceeding in equity or at law) and to
applicable bankruptcy, insolvency,
moratorium, fraudulent or preferential conveyance and other
similar laws affecting generally the
enforcement of creditors' rights;
5.5 Pledged Stock. The Pledgor owns the Pledged
Stock; the Pledged Stock
constitutes one hundred percent (100%) of the issued and
outstanding capital stock of the
respective issuers thereof; and the Pledged Stock has been duly
issued, is fully paid and
non-assessable, and is free of all claims, security interests,
liens, charges and encumbrances;
5.6 Litigation. Except as disclosed in Exhibit K
hereto, there is no pending
or threatened order, notice, claim, litigation, proceeding or
investigation against or affecting the
Borrower or any Participating Subsidiary, whether or not covered
by insurance, that would
involve the payment of Two Hundred Thousand Dollars ($200,000.00)
or more if adversely
determined;
5.7 Title. The Borrower and its Participating
Subsidiaries have good and
marketable title to all of their respective material assets,
including without limitation the
Collateral and the Real Property, subject to no security
interest, encumbrance or lien, or the
claims of any other Person except for Permitted Liens;
5.8 Financial Statements. The Financial Statements,
including any schedules
and notes pertaining thereto, have been prepared in accordance
with generally accepted
accounting principles consistently applied, and fully and fairly
present the financial condition of
the Borrower and its Participating Subsidiaries at the dates
thereof and the results of operations
for the periods covered thereby, and there has been no Material
Adverse Change in the financial
condition or business of the Borrower and its Participating
Subsidiaries from December 31, 1993
to the date hereof;
5.9 No Additional Indebtedness. As of the date
hereof, the Borrower and its
Participating Subsidiaries had no Indebtedness of any nature,
including, but without limitation,
liabilities for taxes and any interest or penalties relating
thereto, except to the extent reflected
(in a footnote or otherwise) and reserved against in the
September 30, 1994 Financial Statements
or as disclosed in or permitted by this Agreement; the Borrower
does not know, and has no
knowledge of any basis for the assertion against it or any
Participating Subsidiary as of the date
hereof, of any material Indebtedness of any nature not fully
reflected and reserved against in the
September 30, 1994 Financial Statements;
5.10 Taxes. Except as otherwise permitted herein, the
Borrower and its
Participating Subsidiaries have filed all federal, state and
local tax returns and other reports they
are required by Laws to file prior to the date hereof and which
are material to the conduct of
their respective businesses, have paid or caused to be paid all
taxes, assessments and other
governmental charges that are due and payable prior to the date
hereof, and have made adequate
provision for the payment of such taxes, assessments or other
charges accruing but not yet
payable; the Borrower has no knowledge of any deficiency or
additional assessment in
connection with any taxes, assessments or charges not provided
for on its books;
5.11 Compliance with Laws. Except as otherwise
disclosed in Exhibit L hereto,
or except to the extent that the failure to comply would not
materially interfere with the conduct
of the business of the Borrower or any Participating Subsidiary
or have a Material Adverse
Effect, the Borrower and its Participating Subsidiaries have
complied with all applicable Laws
with respect to: (1) any restrictions, specifications, or other
requirement pertaining to services
that the Borrower or any Participating Subsidiary performs; (2)
the conduct of their respective
businesses; (3) the use, maintenance, and operation of the real
and personal properties owned
or leased by them in the conduct of their respective businesses;
and (4) health, safety, worker's
compensation, and equal employment opportunity;
5.12 Environmental Compliance. The Borrower and its
Participating
Subsidiaries and their respective assets and operations are in
compliance in all material respects
with all Environmental Laws, except as may be disclosed on
Exhibit N. Except as has been
disclosed on Exhibit N, all plants, facilities and properties of
the Borrower and its Participating
Subsidiaries are and will be on the date of Closing in a clean
and healthful condition, free of
asbestos and of all contamination by Hazardous Materials and
other potentially harmful chemical
or physical conditions, including, without limitation, any
contamination of the air, soil,
groundwater or surface waters associated with or adjacent to
such plants, facilities and
properties except as otherwise disclosed in the Environmental
Indemnity Agreement; all storage
tanks (whether above or below ground) located in or on such
plants, facilities and properties are
in sound condition, free or corrosion or leaks that could allow
or threaten the release of any
stored material. No Hazardous Materials are, or, to the best of
Borower's knowledge, have
been used, stored, treated or disposed of in violation of
applicable Laws and regulations.
Neither the Borrower nor any Participating Subsidiary is a
defendant in any administrative or
judicial action alleging liability under the Comprehensive
Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), nor has
the Borrower or any
Participating Subsidiary received a notice that it is a
potentially responsible party under
CERCLA or similar state Laws. The foregoing representations and
exceptions thereto shall in
no way diminish or abrogate the covenants made in Paragrah 6.14.
5.13 Full Disclosure. No representation or warranty by
the Borrower or any
Participating Subsidiary contained herein or in any certificate
or other document furnished by
the Borrower or any Participating Subsidiary pursuant to this
Agreement contains any untrue
statement of material fact or omits to state a material fact
necessary to make such representation
or warranty not misleading in light of the circumstances under
which it was made;
5.14 Consents. Each consent, approval or authorization
of, or filing,
registration or qualification with, any Person required to be
obtained or effected by the Borrower
or any Participating Subsidiary in connection with the execution
and delivery of the Loan
Documents or the undertaking or performance of any obligation
thereunder has been duly
obtained or effected;
5.15 Existing Borrowings. All existing Indebtedness:
(1) for money borrowed;
or (2) under any security agreement or mortgage from the Borrower
or any Participating
Subsidiary is described in Exhibit C, unless the same are less
than $25,000.00 in amount;
5.16 Material Contracts. Except as described on
Exhibit M hereto, the
Borrower and its Participating Subsidiaries have no material
lease, contract or commitment of
any kind (such as employment agreements; collective bargaining
agreements; powers of attorney;
distribution arrangements; patent license agreements; contracts
for future purchase or delivery
of goods or rendering of services; bonus, pension and retirement
plans; or accrued vacation pay,
insurance and welfare agreements) which would be required to be
listed as an Exhibit to the
Borrower's Annual Report on Form 10-K; all parties (including the
Borrower and Participating
Subsidiaries) to all such material leases, contracts and other
commitments to which the Borrower
or any Participating Subsidiary is a party have to the best of
Borrower's knowledge complied
with the provisions of such leases, contracts and other
commitments; no party is in default under
any provision thereof; and no event has occurred which, but for
the giving of notice or the
passage of time, or both, would constitute a default;
5.17 Zemex Note. Zemex Corporation is the lawful
holder and owner of the
Zemex Note and is the beneficiary of the collateral securing the
payment of same, free and clear
of all liens and encumbrances except the lien of this Agreement.
The Zemex Note and the
collateral documents securing same are valid and binding
according to their terms, and the
indebtedness evidenced by the Zemex Note is not subject to any
defense or setoff. As of the
date of this Agreement, the principal balance outstanding under
the Zemex Note is Seven Million
Five Hundred Thousand Dollars (CDN $7,500,000.00).
5.18 No Commissions. Neither the Borrower nor any
Participating Subsidiary
has made any agreement or has taken any action which may cause
anyone to become entitled to
a commission or finder's fee as a result of the making of the
Loans;
5.19 ERISA. All Defined Benefit Pension Plans, as
defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), of
the Borrower and each
Participating Subsidiary meet, as of the date hereof, the minimum
funding standards of
Section 302 of ERISA, and no Reportable Event or Prohibited
Transaction, as defined in ERISA,
has occurred with respect to any such Plan.
5.20 Survival. All of the representations and
warranties set forth in Section V
shall survive until all Obligations are satisfied in full.
SECTION VI. AFFIRMATIVE COVENANTS
The Borrower does hereby covenant and agree with each
Bank that, so long as
any of the Obligations remain unsatisfied, it will comply, and it
will cause its Participating
Subsidiaries to comply, with the following covenants:
6.1 Use of Proceeds. The Borrower will use the
proceeds of each of the
respective Loans only for the purposes permitted in Paragraphs
2.1, 2.2 and 2.3, as applicable,
and will furnish the Agent such evidence as it may reasonably
require with respect to such use.
6.2 Financial Statements and Reports. The Borrower
will furnish the Banks:
(A) As soon as reasonably practicable but in any
event within forty-five
(45) days after the close of each quarter-annual accounting
period in each fiscal year of
Borrower and its Participating Subsidiaries the following: (1) a
consolidated statement of cash
flows of the Borrower and its Participating Subsidiaries for such
quarter annual period; (2)
consolidated and consolidating income statements of the Borrower
and its Participating
Subsidiaries for such quarter-annual period; and (3) consolidated
and consolidating balance sheets
of the Borrower and its Participating Subsidiaries as of the end
of such quarter-annual period--all
in reasonable detail, subject to year-end audit adjustments, and
certified by the Borrower's
president, vice president, chief financial officer, or corporate
controller to have been prepared
in accordance with generally accepted accounting principles
consistently applied by the Borrower
and its Participating Subsidiaries, except for any
inconsistencies explained in such certificate;
(B) Within ninety (90) days after the close of
each fiscal year of Zemex
Corporation and its Subsidiaries: (a) consolidated statements of
cash flows of Zemex
Corporation and its Subsidiaries for such fiscal year; (b)
consolidated and consolidating income
statements of Zemex Corporation and its Subsidiaries for such
fiscal year; and (c) consolidated
and consolidating balance sheets of Zemex Corporation and its
Subsidiaries as of the end of such
fiscal year--all in reasonable detail, including all supporting
schedules, notes and comments; the
consolidated statements and balance sheets shall be audited by
Deloitte & Touche or another
independent certified public accountant selected by Borrower and
reasonably acceptable to the
Banks, and certified by such accountants to have been prepared in
accordance with generally
accepted accounting principles consistently applied by Zemex
Corporation and its Subsidiaries,
except for any inconsistencies explained in such certificate, and
the consolidating statements shall
be internally prepared by Borrower's financial officer and
certified to each Bank as presenting
fairly in all material respects the financial condition of Zemex
Corporation and its Subsidiaries.
The Banks shall have the right, from time to time, to discuss the
Borrower's affairs directly with
the Borrower's independent certified public accountants after
notice to the Borrower and
opportunity of the Borrower to be present at any such
discussions. In addition, if at anytime the
assets, revenues and net income of both the Borrower and its
Participating Subsidiaries do not
account for ninety percent (90%) or more of the consolidated
assets, consolidated revenues and
consolidated net income of Zemex Corporation and its
Subsidiaries, then within ninety (90) days
after the close of each fiscal year, the Borrower shall also
furnish to the Banks the following:
(a) consolidated statements of cash flows of the Borrower and its
Participating Subsidiaries for
such fiscal year; (b) consolidated and consolidating income
statements of the Borrower and its
Participating Subsidiaries for such fiscal year; and (c)
consolidated and consolidating balance
sheets of the Borrower and its Participating Subsidiaries as of
the end of such fiscal year--all in
reasonable detail, including all supporting schedules, notes and
comments; the consolidated
statements and balance sheets shall be audited by Deloitte &
Touche or another independent
certified public accountant selected by the Borrower and
reasonably acceptable to the Banks, and
certified by such accountants to have been prepared in accordance
with generally accepted
accounting principles consistently applied by the Borrower and
its Participating Subsidiaries,
except for any inconsistencies explained in such certificate, and
the consolidating statements shall
be internally prepared by Borrower's financial officer and
certified to each Bank as presenting
fairly in all material respects the financial condition of the
Borrower and its Participating
Subsidiaries;
(C) As soon as reasonably practicable but in any
event within forty-five
(45) days after the close of each quarter-annual accounting
period in each fiscal year of the
Borrower and its Participating Subsidiaries, a certificate of the
president, vice president, chief
financial officer or corporate controller of the Borrower stating
that: (i) such officer has
individually reviewed the provisions of this Agreement; (ii) a
review of the activities of the
Borrower and its Participating Subsidiaries during such year or
quarter-annual period, as the case
may be, has been made by such officer or under such officer's
supervision, with a view to
determining whether the Borrower has fulfilled all its
obligations under this Agreement; and (iii)
to the best of such officer's knowledge, the Borrower has
observed and performed each
undertaking contained in this Agreement and is not in default in
the observance or performance
of any of the provisions hereof or, if the Borrower shall be so
in default, specifying all such
defaults and events of which he may have knowledge. Such
certificate shall further set forth (i)
actual intercompany advances as compared to the limitations set
forth in Paragraph 7.4 and 7.12,
(ii) the current amount of Adjusted Surplus Capital including the
current and cumulative amounts
of Restricted Payments, and (iii) the financial ratios and
covenants set forth in Paragraph 6.17,
including without limitation all antecedent calculations and the
source of any information that
was used in such calculations;
(D) Within thirty (30) days after the end of each
month, income
statements and balance sheets of The Feldspar Corporation and
each of the Participating
Subsidiaries compared to budget for the prior month in form
satisfactory to the Banks.
(E) Promptly after the sending or making
available or filing of the
same, copies of all correspondence, reports, proxy statements and
financial statements that the
Borrower sends or makes available to its stockholders and all
registration statements and reports
that the Borrower files with the Securities and Exchange
Commission or any successor Person;
and
(F) Immediately upon receipt of the same by
Borrower or any
Participating Subsidiary, copies of all final management letters
and any other reports which are
submitted to the Borrower or any of its Participating
Subsidiaries by its independent accountants
in connection with any annual or interim audit of the Records of
the Borrower or its
Participating Subsidiaries by such accountants.
6.3 Good Condition. The Borrower and its
Participating Subsidiaries will
maintain their respective Inventory, Equipment, Real Property and
other properties in good
condition and repair (normal wear and tear excepted), and will
pay and discharge or cause to
be paid and discharged when due, the cost of repairs to or
maintenance of the same, and will
pay or cause to be paid all rental or mortgage payments due on
such Equipment or Real
Property. The Borrower hereby agrees that, in the event it or
any Participating Subsidiary fails
to pay or cause to be paid any such payment, the Banks may do so
and be reimbursed by the
Borrower therefor.
6.4 Insurance. The Borrower and its Participating
Subsidiaries will maintain,
or cause to be maintained, public liability insurance and fire
and extended coverage insurance
on all assets owned by them, all in such form and amounts as are
consistent with industry
practices and with such insurers as may be satisfactory to the
Banks. Such policies shall name
the Banks as loss payees under a standard mortgagee loss payee
clause and as an additional
insured, as their interests may appear, and shall contain a
provision whereby they cannot be
cancelled except after thirty (30) days' written notice to the
Agent. The Borrower will furnish
to the Agent such evidence of insurance as the Banks may require.
The Borrower hereby agrees
that, in the event it or any Participating Subsidiary fails to
pay or cause to be paid the premium
on any such insurance, the Banks may do so and be reimbursed by
the Borrower therefor. The
Agent is hereby appointed the Borrower's attorney-in-fact
(without requiring the Agent to act
as such) to endorse any check which may be payable to the
Borrower to collect such returned
or unearned premiums or the proceeds of such insurance, and any
amounts so collected may be
applied by the Agent toward satisfaction of any of the
Obligations.
6.5 Taxes. The Borrower and its Participating
Subsidiaries will pay or cause
to be paid when due, all taxes, assessments and charges or levies
imposed upon them or on any
of their property or which any of them is required to withhold or
pay over, except where
contested in good faith by appropriate proceedings with adequate
security therefor having been
set aside in a manner satisfactory to Banks. The Borrower and
each Participating Subsidiary
shall pay or cause to be paid all such taxes, assessments,
charges or levies forthwith whenever
foreclosure on any lien that attaches (or security therefor)
appears imminent.
6.6 Records and Inspection. The Borrower and its
Participating Subsidiaries
will, when requested so to do, make available any of their
Records for inspection by duly
authorized representatives of the Banks, and will furnish the
Banks any information regarding
their business affairs and financial condition within a
reasonable time after written request
therefor.
6.7 Maintenance of Existence and Business. The
Borrower and its
Participating Subsidiaries will take all necessary steps to
renew, keep in full force and effect,
and preserve their corporate existence, good standing, and
franchises, and will comply in all
material respects with all present and future Laws applicable to
them in the operation of their
mining and materials businesses. The Borrower and its
Participating Subsidiaries will preserve,
renew and keep in full force and effect all material contracts,
Mineral Leases, governmental
licenses, authorizations, consents and approvals, rights,
privileges and franchises necessary or
desirable in the normal course of business.
6.8 Ordinary Course. The Borrower and its
Participating Subsidiaries will
keep accurate and complete Records of their Accounts, Inventory
and Equipment, consistent with
sound business practices. The Borrower and its Participating
Subsidiaries will collect their
Accounts and sell their Inventory only in the ordinary course of
business.
6.9 Copies of Tax Returns. Within ten (10) days of
any Bank's request
therefor, the Borrower will furnish the Banks with copies of
federal income tax returns filed by
the Borrower.
6.10 Payment of Indebtedness. The Borrower and its
Participating Subsidiaries
will pay when due (or within applicable grace periods) all
Indebtedness for borrowed money
(whether direct or indirect, including Guarantee Obligations) due
any Person, except when the
amount thereof is being contested in good faith by appropriate
proceedings and with adequate
security therefor being set aside in a manner satisfactory to the
Banks. If default is made by the
Borrower or any Participating Subsidiary in the payment of any
principal (or installment thereof)
of, or interest on, any such Indebtedness, the Banks shall have
the right, in their discretion, to
pay such interest or principal for the account of the Borrower or
such Participating Subsidiary
and be reimbursed by the Borrower therefor.
6.11 Notice of Litigation. The Borrower and its
Participating Subsidiaries will
give immediate notice to the Agent of: (1) any litigation or
proceeding in which any of them is
a party if an adverse decision therein would require them to pay
over more than Two Hundred
Thousand Dollars ($200,000.00) or deliver assets the value of
which exceeds such sum (if such
claim is not considered to be covered by insurance) or pay over
more than One Million Dollars
($1,000,000.00) (if such claim is considered to be covered by
insurance); and (2) the institution
of any other suit or proceeding involving any of them, or the
overt threat thereof, that might
materially and adversely affect their operations, financial
condition, property, business, or the
Collateral.
6.12 Notice to Banks of Default or Prepayment. The
Borrower and its
Participating Subsidiaries will notify each Bank immediately if
any of them becomes aware of
the occurrence of any Event of Default or of any fact, condition
or event that only with the
giving of notice or passage of time or both, could become an
Event of Default, or of the failure
of the Borrower or any Participating Subsidiary to observe any of
their respective undertakings
hereunder. Zemex Corporation will immediately notify the Banks
in writing if a default occurs
under the Zemex Note. In addition, Zemex Corporation will notify
the Banks immediately if
a prepayment is made on the Zemex Note.
6.13 Notice of Name Change or Location. The Borrower
and its Participating
Subsidiaries will notify each Bank thirty (30) days in advance of
any change in (i) the name of
the Borrower or any Participating Subsidiary, (ii) the location
of any Collateral, (iii) the location
of any of their places of business or (iv) of the establishment
of any new, or the discontinuance
of any existing, place of business.
6.14 Environmental Compliance.
(A) Borrower and its Participating Subsidiary
will (1) employ, and
cause each of its Participating Subsidiaries to employ, in
connection with its use, if any, of all
real property (including without limitation the Real Property),
appropriate technology and
compliance procedures and will maintain compliance with any
applicable Environmental Laws,
(2) obtain and maintain, and cause each of its Participating
Subsidiaries to obtain and maintain,
any and all material permits required by applicable Environmental
Laws in connection with its
or its Participating Subsidiaries' operations and (3) dispose of,
and cause each of its Participating
Subsidiaries to dispose of, any and all Hazardous Materials only
at facilities and with carriers
reasonably believed to possess valid permits under RCRA, if
applicable, and any applicable state
and local Environmental Laws. The foregoing covenants shall
apply to the properties and
operations covered by the environmental audit reports listed in
Exhibit N. The Borrower shall
use its best efforts, and cause each of its Participating
Subsidiaries to use its best efforts, to
obtain all certificates required by law to be obtained by the
Borrower and its Participating
Subsidiaries from all contractors employed by the Borrower or any
of its Participating
Subsidiaries in connection with the transport or disposal of any
Hazardous Materials.
(B) In the event that the Banks have reason to
believe that any Borrower
or Participating Subsidiary has failed to comply with any
material Environmental Laws, or there
exists a threat of material harm to the environment or Persons,
the Banks or their agents shall
have the right, but no obligation, at any time during business
hours and upon reasonable written
notice, to enter upon the Real Property or any other property
operated by a Borrower or
Participating Subsidiary and conduct or cause to be conducted an
Environmental Phase I audit
(or an update of any audit completed in connection with the
execution of this Agreement) at
Borrower's sole expense and if such Phase I audit (or update)
recommends further testing, then
the Banks or their agents may require, but shall not be obligated
to require, upon reasonable
written notice, such further testing at Borrower's sole expense.
The Banks or their agents shall
use their best efforts to invoke and maintain all applicable
privileges over all audit information
generated pursuant to this provision.
6.15 Notice of Environmental Action. If the Borrower
or any of its
Participating Subsidiaries shall:
(A) receive written notice that any material
violation of any
Environmental Laws may have been committed or is about to be
committed by the Borrower or
any of its Participating Subsidiaries;
(B) receive written notice that any
administrative or judicial complaint
or order has been filed or is about to be filed against the
Borrower or any of its Participating
Subsidiaries alleging any material violation of any Environmental
Laws or requiring the
Borrower or any of its Participating Subsidiaries to take any
action in connection with the release
or threatened release of Hazardous Substances or solid waste into
the environment; or
(C) receive written notice from a federal, state,
foreign or local
governmental agency or private party alleging that the Borrower
or any of its Participating
Subsidiaries is liable or responsible for costs in excess of
$25,000 associated with the response
to cleanup, stabilization or neutralization of any environmental
activity;
then it shall provide the Agent and each Bank with a copy of such
notice within ten (10)
Business Days of the Borrower's or such Participating
Subsidiary's receipt thereof. Subject to
the right of the Borrower or any Participating Subsidiary to
contest in good faith any such
actions or proceedings, the Borrower and/or any Participating
Subsidiary shall as promptly as
possible resolve, cure and/or have dismissed with prejudice any
such actions or proceedings, to
the reasonable satisfaction of the Banks. The Borrower shall
reasonably monitor compliance
with Environmental Laws by any and all owners or operators of
real property owned or leased
by a Borrower or any Participating Subsidiary.
6.16 ERISA Compliance. The Borrower and its
Participating Subsidiaries will:
(1) fund all their Defined Benefit Pension Plans in accordance
with no less than the minimum
funding standards of Section 302 of ERISA and Section 412 of the
Internal Revenue Code; (2)
furnish the Banks, promptly after the filing of the same, with
copies of all reports or other
statements filed with the United States Department of Labor or
the Internal Revenue Service with
respect to all such Plans; and (3) promptly advise the Banks of
the occurrence of any Reportable
Event or Prohibited Transaction with respect to any such Plan.
6.17 Financial Ratios. Unless the Majority Banks
otherwise agree in writing,
the Borrower and its Participating Subsidiaries will maintain the
following financial ratios and
covenants:
(A) Current Ratio. A ratio of Current Assets to
Current Liabilities of
not less than 1.50 to 1.00 at all times.
(B) Funded Debt to Capital. A ratio of Funded
Debt to Capital of not
more than 0.40 to 1.00 at all times.
(C) Funded Debt to Cash Flow. At the end of each
fiscal quarter, a
ratio of Funded Debt to Cash Flow for the four (4) quarters just
ended of not greater than 4.0
to 1.0 from the date hereof to September 29, 1995, not greater
than 3.5 to 1.0 from and
including September 30, 1995 to September 29, 1996, and not
greater than 3.0 to 1.0 from and
including September 30, 1996 and at each quarter end thereafter.
(D) Debt Service Coverage. At the end of each
fiscal quarter, a Debt
Service Coverage Ratio computed for the four (4) quarters just
ended of not less than 1.25 to
1.00 from the date hereof to September 29, 1996 and not less than
1.35 to 1.00 at September 30,
1996 and at each quarter end thereafter.
(E) Profitability. At the end of each fiscal
quarter, Net Income for the
four (4) quarters just ended and Consolidated Net Income for the
four (4) quarters just ended
of not less than One Dollar ($1.00) in each case.
SECTION VII. NEGATIVE COVENANTS
Borrower and each Participating Subsidiary hereby
covenant and agree that
without the prior written consent of the Majority Banks:
7.1 Merger or Reorganization. No Borrower or
Participating Subsidiary will
enter into any merger, consolidation, reorganization or
recapitalization; provided, The Feldspar
Corporation or any Participating Subsidiary may merge into Zemex
Corporation or into The
Feldspar Corporation or any Participating Subsidiary (but not a
Nonparticipating Subsidiary)
provided the Banks are given not less than thirty (30) days prior
written notice thereof and
provided the surviving entity is a Borrower or a Participating
Subsidiary which is a party to this
Agreement.
7.2 Sale of Assets. No Borrower or Participating
Subsidiary will sell, transfer,
lease or otherwise dispose of all or any material part of its
assets; provided, however, Borrower
and its Participating Subsidiaries may in the ordinary course of
business sell assets with a
combined net book value of up to One Million Dollars
($1,000,000.00) per fiscal year, or may
replace damaged or worn Equipment with Equipment of similar value
and use. In addition,
provided there is no Event of Default or Unmatured Default in
existence hereunder and that
portion of the sales price to be paid in cash at least equals or
exceeds the net book value of the
assets to be sold, the Banks agree that:
(A) The Feldspar Corporation may sell all or
substantially all of its
Spruce Pine, North Carolina assets free and clear of all liens
held by the Banks, provided that
simultaneously therewith: (1) the Borrower pays in full the
Capital Expenditure Loan; (2) not
less than one-half (50%) of the remaining Net Cash Sales
Proceeds, if any, are applied to the
Revolving Loans and Working Capital Loan pro rata in accordance
with the amount of the
Revolving Loan Commitment and the Working Capital Commitment,
with each such
Commitment to be permanently reduced by the amount so applied
(provided, if proceeds are
sufficient to more than payoff in full either Loan, then the
Commitments shall be reduced as
herein set forth but the excess proceeds shall be applied to that
Loan with an outstanding
balance); and (3) any purchase money notes or other instruments
arising from the sale are
pledged to the Banks hereunder on a first lien basis;
(B) the Pyron Corporation may sell all or
substantially all of its assets
free and clear of all liens held by the Banks, provided that
simultaneously therewith: (1) the
Borrower provides for the complete termination of the Letter of
Credit Facility; (2) not less than
one-half (50%) of the remaining Net Cash Sales Proceeds, if any,
are applied to the Revolving
Loans and the Working Capital Loan pro rata in accordance with
the then outstanding amount
of the Revolving Loan Commitment and the Working Capital
Commitment, with each such
Commitment to be permanently reduced by the amount so applied
(provided, if proceeds are
sufficient to more than payoff in full either Loan, then the
Commitments shall be reduced as
herein set forth but the excess proceeds shall be applied to that
Loan with an outstanding
balance); and (3) any purchase money notes or other instruments
arising from the sale are
pledged to the Banks hereunder on a first lien basis; and
(C) The Feldspar Corporation may sell all or
substantially all of its
Monticello, Georgia assets or its Edgar, Florida and/or Johnson,
Florida assets, and/or Pyron
Metal Powders, Inc., Suzorite Mica Products Inc. Les Produits
Mica Suzorite Inc. or Suzorite
Mineral Products Inc. may sell all or substantially all of its
(their) assets free and clear of all
liens held by the Banks, provided that simultaneously therewith:
(1) not less than one-half
(50%) of the Net Cash Sales Proceeds are applied to the Loans and
to permanently reduce the
Commitments as determined by the Banks in their discretion; and
(2) any purchase money notes
or other instruments arising from such a sale are pledged to the
Banks hereunder on a first lien
basis.
7.3 Encumbrances. No Borrower or Participating
Subsidiary will:
(1) mortgage, pledge, grant or permit to exist a security
interest in or lien upon any of its assets
of any kind, now owned or hereafter acquired, except for
Permitted Liens, or (2) covenant or
agree with any other Person (other than the Banks) not to
mortgage, pledge, or grant a security
interest in or a lien upon their assets.
7.4 Debts and Other Obligations. No Borrower or
Participating Subsidiary
will incur, create, assume, or permit to exist any Indebtedness
except: (1) the Loans;
(2) existing Indebtedness as set forth in Exhibit C; (3) trade
Indebtedness incurred in the
ordinary course of business; (4) contingent Indebtedness
permitted by Paragraph 7.9; (5)
Indebtedness, including Permitted Acquisition Indebtedness,
secured by Permitted Liens; (6)
Indebtedness owed by any Participating Subsidiary of the Borrower
to a Borrower or by a
Borrower to any Participating Subsidiary of the Borrower,
provided that if any such Indebtedness
is evidenced by a document or instrument, the same is pledged
pursuant to an appropriate pledge
agreement; (7) Mineral Leases incurred in the ordinary course of
business and other lease
obligations permitted by Paragraph 7.5; and (8) Indebtedness
assumed or incurred in connection
with a Permitted Acquisition and payable to parties other than
the seller or the seller's owners
provided the aggregate outstanding amount of such Indebtedness
does not exceed at any time
Two Million Five Hundred Thousand Dollars ($2,500,000.00).
7.5 Leases. The Borrower and its Participating
Subsidiaries will not pay, in
an aggregate amount in any fiscal year (commencing with the
current fiscal year), lease
obligations in excess of $1,000,000.00; as used in this
paragraph, the term "lease" means a an
operating lease other than a Mineral Lease which is not reflected
on a consolidated balance sheet
of the Borrower and its Participating Subsidiaries and should not
be so reflected under generally
accepted accounting principles consistently applied.
7.6 Untrue Certificate. No Borrower or Participating
Subsidiary will furnish
the Agent or any Bank any certificate or other document that will
contain any untrue statement
of material fact or that will omit to state a material fact
necessary to make it not misleading in
light of the circumstances under which it was furnished.
7.7 Margin Stock. No Borrower or Participating
Subsidiary will directly or
indirectly apply any part of the proceeds of the Loans to the
purchasing or carrying of any
"margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal
Reserve System, or any regulations, interpretations or rulings
thereunder.
7.8 Sale-Leaseback. No Borrower or Participating
Subsidiary will enter into
any sale-leaseback transaction.
7.9 Guarantee Obligation. No Borrower or
Participating Subsidiary will
create, incur, suffer to exist a Guarantee Obligation or
otherwise become liable for any
obligation of any other Person or any Nonparticipating
Subsidiary, except: (1) the endorsement
of commercial paper for deposit or collection in the ordinary
course of business, (2) guarantees
of Permitted Acquisition Indebtedness, (3) the guaranty by Zemex
Corporation of the Letter of
Credit Reimbursement Agreement, (4) guarantees of
Nonparticipating Subsidiary obligations not
to exceed, in the aggregate for all Nonparticipating
Subsidiaries, the sum of Two Million Five
Hundred Thousand and No/100 Dollars ($2,500,000.00), and (5)
leases with the Borrower or
a Participating Subsidiary permitted under Paragraph 7.5.
7.10 Dividends and Distributions. Zemex Corporation
will not declare or pay
any cash dividends, or make any other cash payment or other
distribution of an asset on account
of its capital stock.
7.11 Redemptions and Capital Stock. Zemex Corporation
will not redeem,
purchase or retire any of its capital stock.
7.12 Prepayments. No Borrower or Participating
Subsidiary will prepay any
Subordinated Indebtedness, or Indebtedness for borrowed money
other than the Obligations, or
enter into or modify any agreement as a result of which the terms
of payment of any of the
foregoing Indebtedness are modified to accelerate or increase
payments.
7.13 Subsidiary. No Borrower or Participating
Subsidiary will form any
Subsidiary, make any investment in or make any loan in the nature
of any investment to any
Person, except for: (1) any Permitted Investments, (2) the
formation of a Subsidiary in
connection with making a Permitted Acquisition which qualifies as
such under Paragraph 7.16
below, (3) advances by the Borrower to Participating Subsidiaries
of the Borrower, and (4)
advances by Participating Subsidiaries of the Borrower to the
Borrower.
7.14 Loans and Advances. No Borrower or Participating
Subsidiary will make
any loan or advance to any officer, shareholder, director or
employee of a Borrower or any
Subsidiary, except for temporary advances in the ordinary course
of business not to exceed Five
Hundred Thousand Dollars ($500,000.00) in the aggregate and loans
to key employees to
purchase treasury stock of Zemex Corporation under The Key
Employee Stock Purchase Plan.
7.15 Investments. No Borrower or Participating
Subsidiary will purchase or
otherwise invest in or hold securities, non-operating real estate
(excluding mineral reserves)
outside the normal course of business, or other non-operating
assets, except: (1) Permitted
Investments; (2) the present investment in any such assets,
including existing Participating
Subsidiaries; and (3) operating assets that hereafter become non-
operating assets.
7.16 Acquisitions. No Borrower or Participating
Subsidiary will acquire the
stock of, or all or substantially all of the assets of, any
Person without the prior written consent
of the Banks; provided however, with respect to any permitted
acquisition (hereinafter a
"Permitted Acquisition"), Zemex Corporation may acquire either
all of the stock or assets of
such Person and The Feldspar Corporation or any Participating
Subsidiary may acquire the assets
of or merge with such Person (provided the Participating
Subsidiary or The Feldspar
Corporation is the surviving entity) without obtaining the Banks'
approval if:
(A) Not less than ten (10) Business Days prior to
entering into a binding
agreement to make any Permitted Acquisition, Borrower shall
submit to each of the Banks the
following information: (1) A copy of the signed letter of intent
and a current draft of the
acquisition agreement with any prepared exhibits, including
seller financing documents; (2) A
written description of the company to be acquired, including
location and type of mining
operations, key management, and real estate assets (including
legal descriptions of any owned
real estate), if any; (3) If applicable, historical financial
statements of the Permitted Acquisition
for the prior two years and the most recent interim statement;
(4) Copy of acquisition analysis
done by Borrower preparatory to making the Permitted Acquisition;
(B) the Permitted Acquisition Price does not
exceed Ten Million Dollars
($10,000,000.00), of which no more than Five Million Dollars
($5,000,000.00) is payable in
cash at the closing of the Permitted Acquisition or within one
hundred eighty (180) days
thereafter;
(C) the business of the Permitted Acquisition is
in the mining,
manufacturing or processing of either powdered metals, mica,
feldspar, ceramic clays, other
industrial minerals or metal waste recycling and is located in
the United States or Canada;
(D) environmental Phase I audits of the real
properties owned by the
Permitted Acquisition company conducted within six (6) months
prior to the closing of the
acquisition (or material substantially similar thereto in the
opinion of the Banks) indicate
environmental risks and/or exposures for which the estimated
costs to fully remedy and clean-up
are less than Four Hundred Thousand Dollars ($400,000.00), and
copies of such are provided
to the Banks;
(E) no Event of Default or Unmatured Default has
occurred hereunder
and not been cured, or would otherwise occur as a result of or in
connection with the Permitted
Acquisition, whether immediately or on a projected basis; and
(F) whether or not the Banks have been requested
to disburse funds,
if such Permitted Acquisition is to become a party hereto and a
Participating Subsidiary, the
Borrower must pledge or cause to be pledged to the Agent for the
benefit of the Banks a first
priority lien on the outstanding stock, if any, of the Permitted
Acquisition and a first priority
lien, if available, but in no event less than a second priority
lien on all of the Inventory,
Accounts, Chattel Paper, Documents, Instruments, and General
Intangibles of the Permitted
Acquisition; and
(G) if Adjusted Surplus Capital is not positive
or, as a result of such
acquisition is not positive, the Person or assets being acquired
must be a Participating Subsidiary
or become a Participating Subsidiary immediately following the
acquisition to qualify as a
Permitted Acquisition. Unless the Permitted Acquisition is to
become a Nonparticipating
Subsidiary, the Banks shall be given not less than fifteen (15)
Business Days written notice prior
to the closing of any such acquisition to prepare all necessary
documentation, and the legal
structure of the Loans following any Permitted Acquisition must
be satisfactory to the Banks and
the Agent's respective counsel.
7.17 Capital Expenditures. Other than in connection
with funding Permitted
Acquisitions and the 1995 expansion at Spruce Pine, North
Carolina by The Feldspar
Corporation, neither the Borrower nor any Participating
Subsidiary will make or incur Capital
Expenditures without the prior approval of Majority Banks if such
Capital Expenditures exceed,
in the aggregate, Five Million Dollars ($5,000,000.00) for the
fiscal year ending December 31,
1995, and Four Million Dollars ($4,000,000.00) for the fiscal
year ending December 31, 1996
and for each fiscal year thereafter.
7.18 Affiliate Transactions. Except as described on
Exhibit M hereto, Borrower
will not, and will not permit any of its Participating
Subsidiaries 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 (other than any
Participating Subsidiary which is wholly owned by Borrower) on
terms that are less favorable
to the Borrower or its Participating Subsidiaries than those that
would be obtainable at the time
from any Person who is not an Affiliate. Notwithstanding the
foregoing, Borrower will not, and
will not permit any of its Participating Subsidiaries to: (1)
pay or incur any obligation to pay
any management fee, consulting fee, service fee or similar fee or
charge to any Affiliate or (2)
enter into any transaction with an Affiliate where the amount to
be paid, whether immediately
or over time, exceeds Five Hundred Thousand Dollars ($500,000.00)
in the aggregate. In
addition, Zemex Corporation and Suzorite Mica Products Inc. Les
Produits Mica Suzorite Inc.
will not modify the Zemex Note so as to extend the term or reduce
the interest rate without the
prior written consent of the Banks, nor will Zemex Corporation or
Suzorite Mica Products Inc.
Les Produits Mica Suzorite Inc. release or allow to be released
any collateral for the Zemex
Note.
7.19 Restricted Payment Negative Covenants.
Notwithstanding the provisions
of Paragraphs 7.9 through 7.18 above (collectively, the
"Restricted Payment Negative
Covenants"), provided there is no Event of Default or Unmatured
Default in existence under this
Agreement and except as hereinafter set forth, the Borrower or
any Participating Subsidiary
may, without the consent or approval of the Banks, make or incur
one or more Restricted
Payments in connection with taking actions which would otherwise
violate one or more of the
Restricted Payment Negative Covenants and such action and/or
payment will not cause an Event
of Default or Unmatured Default hereunder if, after such
Restricted Payment(s) are made or
incurred, the level of Adjusted Surplus Capital remains positive
as evidenced by the reports
required by Paragraph 6.2(C) above; provided, the foregoing shall
not apply to subparagraph
7.9(4), which is not intended to be a Restricted Payment Negative
Covenant; and provided
further, with respect to Paragraphs 7.13, 7.15 and 7.16, if any
borrowings are outstanding under
the Revolving Loans at such time, any cash investments in any
single entity or Nonparticipating
Subsidiary shall be limited under all circumstances to a maximum
of Five Million and
No/Dollars ($5,000,000.00) over any period of twelve (12)
consecutive months.
SECTION VIII. DEFAULT
8.1 Events of Default. The occurrence of any one or
more of the following
events shall constitute an "Event of Default" hereunder:
(A) The Borrower shall fail to pay within two (2)
days of the date when
due any installment of principal or interest payable hereunder,
or shall fail to pay within ten (10)
days of written notice any fee payable hereunder.
any of the financial covenants contained in
Paragraph 6.17.
(C) Any Borrower, Participating Subsidiary, or
Pledgor shall fail to
observe or perform any obligation or covenant to be observed or
performed by any of them,
jointly or severally, under any of the Loan Documents; provided,
however, if such failure is not
related to the payment of money, the breach of a financial
covenant contained in Paragraph 6.17,
or the breach of any negative covenant in Section VII, Borrower
shall have ten (10) days to cure
such failure before the Majority Banks and/or Agent exercise the
rights and remedies hereunder,
with such ten (10) day period commencing after notice of such
failure from the Agent or Banks.
(D) Any Borrower or Participating Subsidiary
shall fail to pay any
Indebtedness for borrowed money (whether direct or indirect,
including guarantees of borrowed
money due from Nonparticipating Subsidiaries) due any Person and
such failure shall continue
beyond any applicable grace period and shall equal or exceed,
either individually or in the
aggregate, Two Hundred Fifty Thousand Dollars ($250,000.00) in
amount.
(E) Any Borrower or Participating Subsidiary
shall suffer a Material
Adverse Effect from any event of default arising under any
agreement binding a Borrower or
such Participating Subsidiary.
(F) Any financial statement, representation,
warranty or certificate
made or furnished by any Borrower or Participating Subsidiary to
the Agent or any Bank in
connection with this Agreement or the Loans, or as inducement to
the Banks to enter into this
Agreement, or in any separate statement or document to be
delivered hereunder to the Agent or
any Bank, shall be materially false, incorrect, or incomplete
when made.
(G) Any Borrower or Participating Subsidiary
shall admit its inability
to pay its debts as they mature, or shall make an assignment for
the benefit of its or any of its
creditors.
(H) Proceedings in bankruptcy, or for
reorganization of any Borrower
or Participating Subsidiary, or for the readjustment of any of
their respective debts, under the
United States Bankruptcy Code, as amended, or any part thereof,
or under any other Laws,
whether state or federal, for the relief of debtors, now or
hereafter existing, shall be commenced
by any Borrower or Participating Subsidiary, or shall be
commenced against any Borrower or
Participating Subsidiary.
(I) A receiver or trustee shall be appointed for
any Borrower or
Participating Subsidiary or for any substantial part of their
respective assets, or any proceedings
shall be instituted for the dissolution or the full or partial
liquidation of any Borrower or
Participating Subsidiary, or any Borrower or Participating
Subsidiary shall discontinue business
or materially change the nature of its business.
(J) Any Borrower or Participating Subsidiary
shall suffer final
judgments for payment of money aggregating in excess of Two
Hundred Thousand Dollars
($200,000.00) and shall not discharge the same within a period of
thirty (30) days unless,
pending further proceedings, execution has been effectively
stayed.
(K) A judgment creditor of any Borrower or
Participating Subsidiary
shall obtain possession of any Collateral or other assets by any
means, including, but without
limitation, levy, distraint, replevin or self-help.
(L) Any obligee of Subordinated Indebtedness
shall fail to comply with
the subordination provisions of the instruments evidencing such
Subordinated Indebtedness.
(M) Pyron Corporation shall default under the
Letter of Credit Facility
or the Letter of Credit Reimbursement Agreement.
(N) Any Borrower or Participating Subsidiary
shall default in any other
Indebtedness (excluding the Obligations) owed to the Banks, or
any of them, or under any other
agreements for credit or borrowed money it may have with any
Bank, jointly or severally,
directly or indirectly, whether matured or unmatured.
(O) The occurrence of a Change of Control.
8.2 Acceleration. Upon the occurrence of any of such
Events of Default, the
Majority Banks may, at their option, immediately terminate the
obligation to make any further
advances under the respective Commitments and/or declare the
principal and interest accrued
on the Notes and all other Obligations to be immediately due and
payable, whereupon the same
shall become forthwith due and payable, without presentment,
demand, protest, or any notice
of any kind except as set forth above; provided, that in the case
of the Events of Default
specified in clause (G), (H) or (I) above with respect to
Borrower, without any notice to
Borrower or any act by Agent or the Banks, the Commitments shall
thereupon terminate and the
Notes and all other Obligations shall become immediately due and
payable without presentment,
demand, protest or other notice of any kind, all of which are
waived by the Borrower. In
addition, and regardless of whether the Notes have been
accelerated, the Majority Banks may
upon the occurrence of any Event of Default elect to charge
interest at the Default Rate set forth
in the Notes.
8.3 Remedies. After any acceleration, as provided for
in Paragraph 8.2, the
Banks shall have, in addition to the rights and remedies given it
by the Loan Documents, all
those allowed by all applicable Laws, including, but without
limitation, the UCC as enacted in
any jurisdiction in which any Collateral may be located. Without
limiting the generality of the
foregoing, the Banks may immediately, without demand of
performance and without other notice
(except as specifically required by the Loan Documents) or demand
whatsoever to the Borrower,
all of which are hereby expressly waived, and without
advertisement, sell at public or private
sale, in any manner and at any location authorized by Laws, or
otherwise realize upon, the
whole or, from time to time, any part of the Collateral, or any
interest which the Borrower may
have therein. After deducting from the proceeds of sale or
other disposition of the Collateral
all expenses (including all reasonable expenses for legal
services), the Banks shall apply such
proceeds toward the satisfaction of the Obligations. Any
remainder of the proceeds after
satisfaction in full of the Obligations shall be distributed as
required by applicable Laws. Notice
of any sale or other disposition shall be given to the Borrower
at least five (5) days before the
time of any intended public sale or of the time after which any
intended private sale or other
disposition of the Collateral is to be made, which the Borrower
hereby agrees shall be reasonable
notice of such sale or other disposition. The Borrower agrees to
assemble, or to cause to be
assembled, at its own expense, the Collateral at such place or
places as the Banks shall
designate. At any such sale or other disposition, the Banks may,
to the extent permissible under
applicable Laws, purchase the whole or any part of the
Collateral, free from any right of
redemption on the part of the Borrower, which right is hereby
expressly waived and released.
Without limiting the generality of any of the
rights and remedies conferred
upon the Banks under this Paragraph 8.3, the Banks may, to the
full extent permitted by
applicable Laws:
(A) Engage independent appraisers and field
examiners, reasonably
acceptable to the Borrower, to conduct appraisals and field
examinations of the real properties,
leasehold interest, fixtures, machinery, equipment, inventory and
accounts receivable owned by
Borrower and/or any of its Participating Subsidiaries, with all
of the reasonable costs of such
appraisals and field examinations to be paid by Borrower or, if
paid by the Banks, reimbursed
to the Banks by Borrower upon demand of the Banks. All such
field examinations and
appraisals shall be conducted in accordance with Agent's
guidelines for such appraisals and field
examinations at the time, and Borrower and each Participating
Subsidiary hereby agree that such
guidelines are reasonable;
(B) Enter upon the premises of the Borrower,
exclude therefrom the
Borrower, any Subsidiary or any Affiliate thereof, and take
immediate possession of the
Collateral, either personally or by means of a receiver appointed
by a court of competent
jurisdiction, using all necessary and lawful self-help to do so;
(C) At the Banks' option, use, operate, manage
and control the
Collateral in any lawful manner;
(D) Collect and receive all receivables, rents,
income, revenue,
earnings, issues and profits therefrom; and
(E) Maintain, repair, renovate, alter or remove
the Collateral as the
Banks may determine in their discretion.
SECTION IX. THE AGENT
This Section IX is between and among the Agent and the
Banks only. Neither
the Borrower nor any other creditor of the Borrower shall have
any rights under this section,
whether as a third party beneficiary or otherwise, and this
section may be amended by the Agent
and the Banks acting alone.
9.1 Authorization. Each Bank authorizes the Agent to
act on behalf of such
Bank or holder to the extent provided herein or in any document
or instrument delivered
hereunder or in connection herewith and signed by such Bank, and
to take such other action as
may be reasonably incidental thereto. The Agent shall be
considered as acting solely in an
administrative and ministerial capacity, not as trustee or other
fiduciary of the Banks. The
Agent shall not be construed as having any agency or fiduciary
relationship with the Borrower.
The Agent shall not have any duties or obligations to the Banks
other than those expressly
provided for herein. The Agent shall not be required to exercise
any discretion or take any
action, but shall be fully protected in so acting or in
refraining from acting, upon the instructions
of the Majority Banks (except as otherwise provided in Paragraph
10.3, for matters which
require the consent of all Banks), and such instructions shall be
binding upon all Banks and
holders of the Notes, and the Agent shall not be liable to any
party hereto for any consequence
of any such action or refraining from action. Notwithstanding
any instructions of the Majority
Banks, the Agent shall not be required to take any action that
exposes the Agent to personal
liability or that is contrary to any loan document or applicable
law.
9.2 Standard of Care. Neither the Agent nor any of
its officers, directors,
agents, employees or representatives shall be liable for any
action taken or omitted to be taken
by it or any of them under or in connection with this Agreement,
except for its or their own
gross negligence or willful misconduct. Without limitation of
the generality of the foregoing,
the Agent: (a) may treat the payee of any Notes as the holder
thereof and as a Bank hereunder
until the Agent receives written notice of the assignment or
transfer thereof signed by such payee
and in form satisfactory to the Agent (which notice shall be
binding on all parties hereto); (b)
may consult with legal counsel, independent public accountants
and other experts and advisors
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants,
experts or other advisors; (c)
makes no warranty or representation to any Bank and shall not be
responsible to any Bank for
any statements, warranties or representations made in or in
connection with this Agreement or
for any failure or delay in performance by the Borrower or any
Bank under this Agreement;
(d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any
of the terms, covenants or conditions of this Agreement; (e)
shall not be responsible to any Bank
for the due execution, legality, validity, enforceability,
perfection, collectability, genuineness,
sufficiency or value of this Agreement, the Notes, or any other
instrument or document
furnished pursuant thereto or for the accuracy or completeness of
any credit or other information
provided to the Banks; (f) shall incur no liability under or in
respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper party or
parties; and (g) shall incur no liability for relying upon any
matters of fact that might reasonably
be expected to be within the knowledge of the Borrower, upon a
certificate or other writing
signed by Borrower, or upon telephone communications with
Borrower which are reasonably
believed to be true and valid.
9.3 No Waiver of Rights. With respect to the Notes,
the Agent shall have the
same rights and powers hereunder as any other Bank and may
exercise the same as though it
were not the Agent, and the Agent may accept deposits from, and
generally engage in any kind
of business with, the Borrower.
9.4 Payments. The Agent shall use its best efforts to
deliver to each Bank on
the same day as received by Agent in immediately available funds
such Bank's pro rata share
of all payments received by the Agent for the benefit of the
Banks, but in the event Agent is
unable to deliver such payments to any Bank on the same day of
receipt, Agent agrees to pay
such Bank interest on the payment for each day the Agent is
unable to deliver the payments after
the date of its receipt based on the overnight federal funds rate
of interest. Any payment due
for any reason under this Agreement that is required to be made
on a date on which the Agent
is not open for business shall be extended until the next day on
which the Agent is open for the
transaction of business.
9.5 Indemnification. The Agent shall not be required
to do any act hereunder
or under any other document or instrument delivered hereunder or
in connection herewith or
take any action toward the execution or enforcement of the agency
hereby created, or to
prosecute or defend any suit in respect of this Agreement or the
Notes or to advance funds
hereunder upon the failure by any Bank to fund its pro rata share
of the Commitment hereunder,
unless ratably indemnified to its satisfaction (to the extent not
reimbursed by Borrower) by the
holders of the Notes against loss, cost, liability and expense
(including reasonable fees and
out-of-pocket expenses of counsel), claim, demand, action, loss
or liability (except such as result
from Agent's gross negligence or willful misconduct) that Agent
may suffer or incur in
connection with this Agreement or any action taken or omitted by
Agent hereunder. If any
indemnity furnished to the Agent for or against any loss, cost,
liability, and expense or for any
purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may
call for additional indemnity and not commence or cease to do the
acts indemnified against until
such additional indemnity is furnished. Each Bank agrees to
reimburse the Agent promptly upon
demand for such Bank's pro rata share of any expenses referred to
in Paragraph 10.4 incurred
by the Agent to the extent that the Agent is not reimbursed for
such expenses by the Borrower.
9.6 Exculpation. Neither Agent nor any of its
directors, officers, employees
or agents shall be liable for any action taken or not taken by it
in connection herewith (a) with
the consent or at the request of the Banks or Majority Banks, as
appropriate, or (b) in the
absence of its own gross negligence or willful misconduct.
Neither Agent nor any of its
directors, officers, employees or agents shall (i) be responsible
for any recitals, representations
or warranties contained in, or for the execution, validity,
genuineness, effectiveness or
enforceability of this Agreement, any Note or any other
instrument or document delivered
hereunder or in connection herewith, or (ii) be under any duty to
inquire into or pass upon any
of the foregoing matters, or to make any inquiry concerning the
performance by Borrower or
any other obligor of its obligations.
9.7 Credit Investigation. Each Bank acknowledges that
it has made such
inquiries and taken such care on its own behalf as would have
been the case had the
Commitment been granted and the Loan made directly by such Bank
to the Borrower. Each
Bank agrees and acknowledges that the Agent makes no
representations or warranties about the
creditworthiness of the Borrower or any other party to this
Agreement or with respect to the
legality, validity, sufficiency or enforceability of this
Agreement, the Notes or the value of any
security therefor and that each Bank has not entered into this
Agreement in reliance upon any
action, statement, representation, or warranty of any other Bank
or Agent. Each Bank agrees
that it will, independently and without reliance upon the Agent
or any other Bank and based on
such documents and information as it shall deem appropriate at
the time, continue to make its
own credit decisions in taking or not taking action under this
Agreement. Neither the Agent nor
any other Bank shall have any obligation whatsoever to make any
such credit analysis or
decisions for a Bank or to provide any credit or other
information with respect to the Borrower
now or in the future in the possession of the Agent or such other
Bank, except that the Agent
shall promptly forward to the Banks a copy of any notice received
by the Agent from the
Borrower of the occurrence of an Event of Default hereunder and
copies of all material
documents delivered to it by the Borrower pursuant to the terms
hereof.
9.8 Resignation. The Agent may resign at any time as
the Agent under this
Agreement by giving written notice thereof to the Banks and the
Borrower, which resignation
shall be effective upon a successor Agent's acceptance of its
appointment. Upon any such
resignation, the Majority Banks shall have the right to appoint a
successor Agent hereunder. If
no such successor Agent shall have been so appointed by the
Majority Banks, or Borrower shall
have reasonably rejected such appointment, within thirty (30)
days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under
the laws of the United
States of America or of any State thereof having assets of at
least One Billion and No/100
Dollars ($1,000,000,000.00) and which shall be reasonably
acceptable to the Borrower. Upon
the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and
obligations hereunder. After any retiring Agent's resignation as
an Agent hereunder, the
provisions of this Section IX shall inure to its benefit as to
any actions taken or omitted to be
taken by it while it was an Agent under the Loan Documents.
9.9 Proration of Payments. Except as may be provided
in other sections of
this Agreement, including Paragraphs 2.13(B) and 7.2, all other
funds received by Banks, or any
of them, with the exception of funds received by Chemical Bank
with respect to the Letter of
Credit Reimbursement Agreement; shall be allocated pro rata among
all Banks in proportion to
their respective outstanding Loan balances and unreimbursed
Letter of Credit drawings, if any;
provided, following the occurrence of an Event of Default
hereunder and the acceleration of the
Obligations, all funds received by the Banks thereafter shall,
unless the Banks otherwise agree,
be allocated in proportion to their respective outstanding Loan
balances and the Letter of Credit
Liabilities. If any Bank or other holder of any Notes shall
obtain any payment or other recovery
(whether voluntary, involuntary, by application of offset or
otherwise) on account of principal
of or interest on the Note then held by it in excess of its pro
rata share of payments and other
recoveries obtained by all Banks or other holders on account of
principal of and interest on the
Notes then held by them, such Bank or other holder shall purchase
from the other Banks or
holders such participation in the Notes held by them as shall be
necessary to cause such
purchasing Bank or other holder to share the excess payment or
other recovery ratably with each
of them; provided, however, if all or any portion of the excess
payment or other recovery is
thereafter recovered from such purchasing holder, the purchase
shall be rescinded and the
purchase price restored to the extent of such recovery, but
without interest. Notwithstanding
the foregoing, no Bank shall have any obligation to account for
or share any amount, property
or profit of any kind received by it for its own account arising
out of a banking or other
relationship with the Borrower apart from the obligations under
the Loan Documents.
9.10 No Liability For Errors. The Agent shall not be
liable for any error in
computing the amounts payable to any Bank in respect of any
amounts due to the Banks
hereunder or in making payment of such amounts. In the event of
an error in computing any
amount payable to any Bank or in the making of a payment, the
Agent, the Borrower and such
Bank shall, forthwith upon discovery of such error, make such
adjustment as shall be required
to correct such error, including the payment of interest on any
amounts that were incorrectly
paid or not paid from the date paid or of the date due to the
date returned or paid, all as the case
may be, at the average daily rate for the overnight sale of
federal funds by the Agent in effect
for such period.
9.11 Offset. In addition to and not in limitation of
all rights of offset that any
Bank or other holder of any Note may have under applicable Laws,
each Bank or other holder
of a Note shall, upon the occurrence of any Event of Default
described in this Agreement or in
the Note in question, have the right to appropriate and apply to
the payment of such Notes any
and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter with
such Bank or other holder; provided, however, all funds received
as a result of such offsets shall
be applied pro rata among the Banks in proportion to the Letter
of Credit Liabilities and the
respective outstanding Loan amounts. Each Bank agrees to notify
the Borrower and other Banks
immediately after the exercise by it of this right of offset.
SECTION X. MISCELLANEOUS
10.1 Construction. The provisions of this Agreement
shall be in addition to
those of any guaranty, pledge or security agreement, note or
other evidence of liability held by
the Banks, all of which shall be construed as complementary to
each other; provided, in the
event of any inconsistency, the provisions of this Agreement
shall control. Nothing herein
contained shall prevent the Banks from enforcing any or all other
notes, guaranties, pledge or
security agreements in accordance with their respective terms.
10.2 Further Assurance. From time to time, the
Borrower will execute and
deliver to the Banks such additional documents and will provide
such additional information as
the Banks may reasonably require to carry out the terms of this
Agreement and be informed of
the Borrower's operations, business and condition.
10.3 Enforcement and Waiver by the Banks. The Majority
Banks shall have
the sole and exclusive right to administer, amend, or modify the
Loan Documents, and are
hereby empowered to act for the Banks with regard to the
aggregate Commitments and the
documentation thereof as if said Majority Banks were the sole
lenders or extenders of credit
under the Loan Documents; provided, however, that it shall take
an affirmative vote of all Banks
to: (i) increase any of the several Commitments; (ii) decrease
any of the interest rates on the
Loans; (iii) extend any Commitment Termination Date or Loan
Termination Date on the
Revolving Loan or the Capital Expenditure Loan; (iv) reduce or
postpone the principal payments
due on any Term Loans; (v) postpone any payments of interest or
interest payment dates; (vi)
release any collateral; (vii) amend the definition of Majority
Banks; and (viii) amend this
Paragraph 10.3; and provided further, that with respect to the
Working Capital Loan,
NationsBank of Tennessee, N.A. shall have the sole right without
consulting any other Bank to
determine whether to extend from time to time the Working Capital
Loan Termination Date.
The Banks shall have the right at all times to enforce the
provisions of the Loan Documents in
strict accordance with the terms thereof, notwithstanding any
conduct or custom on the part of
the Banks and/or Agent in refraining from so doing at any time or
times. The failure of the
Banks at any time or times to enforce their rights under such
provisions, strictly in accordance
with the same, shall not be construed as having created a custom
in any way or manner contrary
to specific provisions of the Loan Documents or as having in any
way or manner modified or
waived the same. All rights and remedies of the Banks are
cumulative and concurrent and the
exercise of one right or remedy shall not be deemed a waiver or
release of any other right or
remedy.
10.4 Expenses of the Banks. The Borrower will, on
demand, reimburse the
Agent and the Banks for all out-of-pocket expenses, including the
reasonable fees and expenses
of legal counsel for the Agent and the Banks, incurred by the
Agent and the Banks in connection
with the preparation, administration, amendment, modification, or
enforcement of the Loan
Documents and the collection or attempted collection of the
Notes.
10.5 Notices. Any notices or consents required or
permitted by this Agreement
shall be in writing and shall be deemed delivered when delivered
in person, or when sent by
certified mail, postage prepaid, return receipt requested, by
overnight courier service, or by
facsimile to the address and/or telecopy number as follows,
unless such address or number is
changed by written notice hereunder:
(A) If to the Borrower:
Zemex Corporation
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750
Toronto, Ontario M5J 2S1
Attention: Chief Financial Officer
Telecopy: (416) 365-8094
(B) If to the Agent:
NationsBank of Tennessee, N.A., Agent
One NationsBank Plaza
Nashville, Tennessee 37239
Attention: Robert B. Weaver, Vice President
Telecopy: 749-4743 (615)
(C) If to the Banks:
NationsBank of Tennessee, N.A.
One NationsBank Plaza
Nashville, Tennessee 37239
Attention: Large Commercial Lending
Telecopy: 749-4743 (615)
Chemical Bank
2300 Main Place Tower
Buffalo, New York 14202
Attention: Zemex Corporation Account Officer
Telecopy: 716-843-4939
10.6 Waiver and Release. To the maximum extent
permitted by applicable
Laws, the Borrower and each Participating Subsidiary:
(A) Waive: (1) protest of all commercial paper at
any time held by the
Banks on which the Borrower or any Participating Subsidiary is in
any way liable; and (2) notice
and opportunity to be heard, after acceleration in the manner
provided in Paragraph 8.2, before
exercise by the Banks of the remedies of self-help, set-off, or
of other summary procedures
permitted by any applicable Laws or by any agreement with the
Borrower or any Participating
Subsidiary, and, except where required hereby or by any
applicable Laws, notice of any other
action taken by the Banks; and
(B) Release the Banks and their officers,
directors, attorneys,
employees, and agents from all claims for loss or damage caused
by any act or omission on the
part of any of them except for gross negligence, recklessness or
willful misconduct.
10.7 Indemnification. Borrower and each Participating
Subsidiary hereby
indemnify and hold the Banks and their officers, directors,
attorneys, employees and agents free
and harmless from and against any and all actions, causes of
action, suits, losses, liabilities and
damages, and expenses in connection therewith, including without
limitation counsel fees and
disbursements, incurred by the Banks or any of them as a result
of, or arising out of, or relating
to the execution, delivery, performance or enforcement of the
Loan Documents or any
instrument contemplated therein, except for any Bank's gross
negligence or willful misconduct.
If and to the extent that the foregoing undertaking may be
unenforceable for any reason,
Borrower and each Participating Subsidiary hereby agree to make
the maximum contribution to
the payment and satisfaction of such liabilities and costs
permitted under applicable Laws.
10.8 Participations and Assignments. Notwithstanding
any other provision of
this Agreement, the Borrower understands that any Bank may at any
time enter into participation
agreements with one or more participating banks whereby such Bank
will allocate certain
percentages of its Commitment to such bank or banks. The
Borrower acknowledges that, for
the convenience of all parties, this Agreement is being entered
into with the Banks only and that
Borrower's obligations hereunder are undertaken for the benefit
of, and as an inducement to, any
such participating bank as well as the Banks. In addition, any
Bank may assign to one or more
lenders all or a portion of its rights and obligations as a Bank
under this Agreement and the
other Loan Documents; provided, however, that prior thereto any
assigning Bank must obtain
the written consent of the Agent and the Borrower to the
assignee, which consent shall not be
unreasonably withheld if being made to an Eligible Assignee.
10.9 Applicable Laws. The Laws of the State of
Tennessee shall govern the
construction of this Agreement and the rights and remedies of the
parties hereto.
10.10Binding Effect, Assignment and Entire Agreement.
This Agreement shall
inure to the benefit of, and shall be binding upon, the
respective successors and permitted
assigns of the parties hereto. The Borrower has no right to
assign any of its rights or obligations
hereunder without the prior written consent of the Banks. This
Agreement and the documents
executed and delivered pursuant hereto constitute the entire
agreement between the parties, and
supersede all prior agreements and understandings among the
parties hereto. This Agreement
may be amended only by a writing signed on behalf of each party.
10.11Severability. If any provision of this Agreement
shall be held invalid
under any applicable Laws, such invalidity shall not affect any
other provision of this
Agreement that can be given effect without the invalid provision,
and, to this end, the provisions
hereof are severable.
10.12Counterparts. This Agreement may be executed by
the parties
independently in any number of counterparts, all of which
together shall constitute but one and
the same instrument which is valid and effective as if all
parties had executed the same
counterpart.
10.13Venue. It is agreed that venue for any action
arising in connection with
this Agreement or the Obligations secured hereby shall lie
exclusively with courts sitting in the
states of Tennessee and New York, unless the Banks and Agent
otherwise agree in writing.
10.14Confidentiality. Agent and the Banks, together
with their employees,
agents or representatives who have a reasonable need to know such
information, agree to treat
confidentially all information concerning Zemex Corporation and
its Subsidiaries or their assets
and operations obtained by Agent or the Banks or by any of
Agent's or the Banks' authorized
agents or representatives, which information is not (i) contained
in a report or other document
filed with a securities commission or regulatory authority, (ii)
distributed by Zemex Corporation
to its shareholders or (iii) otherwise available to the public
generally (other than by Agent's or
Banks' breach of these confidentiality obligations); provided,
however, that the foregoing
confidentiality restrictions shall not apply where Agent or the
Banks are required to disclose such
information due to a valid subpoena or court order or other
external bank regulatory reporting
requirements. These confidentiality obligations shall survive
the term of this Agreement by two
years.
10.15Waiver of Jury Trial. EACH PARTY HERETO,
INCLUDING THE
BORROWER, EACH SUBSIDIARY, THE BANKS, AND THE AGENT, HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT
PERMITTED BY APPLICABLE LAWS) ANY RIGHTS THEY MAY HAVE TO A TRIAL
BY JURY OF ANY DISPUTE ARISING UNDER, RELATING TO, OR CONNECTED
WITH
THIS AGREEMENT, THE COLLATERAL OR ANY OTHER AGREEMENT, INSTRUMENT
OR DOCUMENT CONTEMPLATED HEREBY OR DELIVERED IN CONNECTION
HEREWITH AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A
JUDGE SITTING WITHOUT A JURY. THIS PROVISION IS A MATERIAL
INDUCEMENT
FOR THE BANKS' AND THE AGENT ENTERING INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement
as of the day and year first above written.
AGENT BORROWER
NATIONSBANK OF TENNESSEE, N.A., ZEMEX CORPORATION
as Agent
BY: BY:
TITLE: TITLE:
BANKS THE FELDSPAR CORPORATION
NATIONSBANK OF TENNESSEE, N.A.
BY:
BY:
TITLE:
TITLE:
CHEMICAL BANK GUARANTORS AND PARTICIPATING
SUBSIDIARIES
PYRON CORPORATION
BY:
TITLE: BY:
TITLE:
PYRON METAL POWDERS, INC.
BY:
TITLE:
SUZORITE MICA PRODUCTS INC.
LES
PRODUITS MICA SUZORITE INC.
BY:
TITLE:
SUZORITE MINERAL PRODUCTS,
INC.
BY:
TITLE:
ASSET PURCHASE AGREEMENT
dated
as of December 7, 1994
between
WHITTAKER, CLARK & DANIELS, INC.
CLARK MINERALS, INC.,
CHEROKEE MINERALS, INC.
and
PIONEER TALC COMPANY
("Sellers")
and
SUZORITE MINERAL PRODUCTS, INC.
("Buyer")
and
ZEMEX CORPORATION
("Zemex")
TABLE OF CONTENTS
TO
ASSET PURCHASE AGREEMENT
Page
ARTICLE 1
SALE AND PURCHASE OF THE ASSETS OF THE
WCD TALC BUSINESS
1.1 Purchased Assets.. . . . . . . . . . . . . . . . . . . . .
2
(a) Real Property. . . . . . . . . . . . . . . . . . .
. 2
(b) Fixed Assets, Equipment Machinery and Other
Tangible Personal Property 2
(c) Leases.. . . . . . . . . . . . . . . . . . . . . .
. 2
(d) Inventory. . . . . . . . . . . . . . . . . . . . .
. 2
(e) Receivables. . . . . . . . . . . . . . . . . . . .
. 3
(f) Contracts and Other Agreements Relating to the
Business. 3
(g) Licenses, Permits. . . . . . . . . . . . . . . . .
. 3
(h) Brand and Trade Names; Know-How. . . . . . . . . .
. 3
(i) Prepayments. . . . . . . . . . . . . . . . . . . .
. 3
(j) Longhorn Stock.. . . . . . . . . . . . . . . . . .
. 3
(k) Other Purchased Assets.. . . . . . . . . . . . . .
. 3
1.2 Assumed Liabilities. . . . . . . . . . . . . . . . . . . .
4
1.3 Excluded Liabilities.. . . . . . . . . . . . . . . . . . .
4
(a) Intercompany Payables. . . . . . . . . . . . . . .
. 4
(b) Employee Liabilities.. . . . . . . . . . . . . . .
. 4
1.4 Title to the Purchased Assets: Documents of Conveyance.. .
4
ARTICLE 2
CLOSING
2.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . .
5
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price.. . . . . . . . . . . . . . . . . . . . . .
6
3.2 Payment to CMI, CHM and PTC and Adjustments of Cash Purchase
Price. 7
3.3 Payment to WCD of Stock Portion of Purchase Price. . . . .
7
3.4 Allocation of Purchase Price.. . . . . . . . . . . . . . .
7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
4.1 Representations and Warranties of Sellers. . . . . . . . .
7
(a) Organization of Sellers; Authorization.. . . . . .
. 7
(b) No Conflict. . . . . . . . . . . . . . . . . . . .
. 8
(c) Balance Sheet; Inventory; Accounts Receivable. . .
. 8
(d) Absence of Undisclosed Liabilities.. . . . . . . .
. 8
(e) Consents and Approvals of Governmental Bodies. . .
. 8
(f) Title to Real Property.. . . . . . . . . . . . . .
. 8
(g) Title to Personal Property.. . . . . . . . . . . .
. 9
(h) Contracts. . . . . . . . . . . . . . . . . . . . .
. 9
(i) Litigation.. . . . . . . . . . . . . . . . . . . .
. 9
(j) Compliance with Applicable Law.. . . . . . . . . .
. 9
(k) Environmental Matters; Permits.. . . . . . . . . .
. 9
(l) No Brokers and Finders.. . . . . . . . . . . . . .
. 10
(m) Absence of Change. . . . . . . . . . . . . . . . .
. 10
(n) Labor Matters. . . . . . . . . . . . . . . . . . .
. 10
(o) Benefit Plans. . . . . . . . . . . . . . . . . . .
. 10
(p) Breaches of Contracts. . . . . . . . . . . . . . .
. 11
(q) Investment Intent. . . . . . . . . . . . . . . . .
. 12
(r) Longhorn Shares. . . . . . . . . . . . . . . . . .
. 12
(s) Reclamation and Performance Bonds. . . . . . . . .
. 12
4.2 Representations and Warranties of Buyer and Zemex. . . . .
12
(a) Organization of Buyer; Authorization.. . . . . . .
. 12
(b) No Conflict. . . . . . . . . . . . . . . . . . . .
. 13
(c) Litigation.. . . . . . . . . . . . . . . . . . . .
. 13
(d) No Brokers or Finders. . . . . . . . . . . . . . .
. 13
(e) Consents and Approvals of Governmental Bodies. . .
. 13
(f) Capitalization; Issuance of Shares; Exemption from
Registration.. . . . . . . . . . . . . . . . . . . . .
. . . 13
ARTICLE 5
COVENANTS AND OTHER AGREEMENTS OF THE PARTIES. . . . 14
5.1 Continuity of Employment.. . . . . . . . . . . . . . . . .
14
5.2 Defined Benefits Plans.. . . . . . . . . . . . . . . . . .
14
5.3 Sales and Transfer Taxes; Prorations.. . . . . . . . . . .
15
5.4 New York Real Property Transfer Gains Tax. . . . . . . . .
15
5.5 Access to Information. . . . . . . . . . . . . . . . . . .
15
5.6 Transition.. . . . . . . . . . . . . . . . . . . . . . . .
16
5.7 Environmental Audit. . . . . . . . . . . . . . . . . . .
16
5.8 Noncompetition.. . . . . . . . . . . . . . . . . . . . . .
16
5.9 Temporary Accounting Assistance. . . . . . . . . . . . . .
17
5.10 Distribution Agreement. . . . . . . . . . . . . . . . . . 17
ARTICLE 6
THE ZEMEX SHARES
6.1 Restrictions on Transferability of Shares; Compliance with
Securities Act;
Registration Rights.. . . . . . . . . . . . . . . . . . . .
. 17
(a) Restrictions on Transferability. . . . . . . . . .
. 17
(b) Restrictive Legend.. . . . . . . . . . . . . . . .
. 17
(c) Notice of Proposed Transfer. . . . . . . . . . . .
. 18
(d) Registration Rights. . . . . . . . . . . . . . . .
. 18
6.2 Redemption of Shares.. . . . . . . . . . . . . . . . . . .
19
(a) Optional Redemption by Zemex; Redemption Price.. .
. 19
(b) Notice of Redemption.. . . . . . . . . . . . . . .
. 19
(c) Surrender and Payment. . . . . . . . . . . . . . .
. 19
6.3 Payment upon Sale in a Public Market.. . . . . . . . . . .
19
6.4 Payment upon Private Resale. . . . . . . . . . . . . . . .
19
6.5 Obligation to Sell upon Demand in Certain Circumstances. .
20
6.6 Escrow of Shares.. . . . . . . . . . . . . . . . . . . . .
20
6.7 Binding Effect.. . . . . . . . . . . . . . . . . . . . . .
21
ARTICLE 7
CONDITIONS TO CLOSING
7.1 General Conditions.. . . . . . . . . . . . . . . . . . . .
21
(a) No Prohibition. . . . . . . . . . . . . . . . . .
. 21
(b) Material Titles and Permits. . . . . . . . . . . .
. 21
7.2 Conditions to Sellers' Obligations.. . . . . . . . . . . .
21
(a) Buyer's Performance. . . . . . . . . . . . . . . .
. 21
(b) Representations and Warranties True; Officer's
Certificate. 21
(c) Payments and Assumption of Liabilities.. . . . . .
. 21
(d) Approval and Consents. . . . . . . . . . . . . . .
. 22
7.3 Conditions to Buyer's Obligations. . . . . . . . . . . . .
22
(a) Sellers' Performance.. . . . . . . . . . . . . . .
. 22
(b) Representations and Warranties True; Officer's
Certificate. 22
(c) Approvals and Consents.. . . . . . . . . . . . . .
. 22
(d) Opinion of Counsel of Sellers. . . . . . . . . . .
. 22
(e) Remedial Actions.. . . . . . . . . . . . . . . . .
. 22
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by Sellers.. . . . . . . . . . . . . . . .
22
8.2 Indemnification by Buyer.. . . . . . . . . . . . . . . . .
23
8.3 Limitations on Sellers' Indemnification. . . . . . . . . .
23
8.4 Cooperation. . . . . . . . . . . . . . . . . . . . . . . .
23
(a) Notice.. . . . . . . . . . . . . . . . . . . . . .
. 23
(b) Claims for Money Damages.. . . . . . . . . . . . .
. 23
(c) Claims for Environmental Work. . . . . . . . . . .
. 24
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . .
24
9.2 Entire Agreement; Incorporation; Subsequent Modifications.
26
9.3 Assignment; Binding Effect; Third Party Beneficiaries. . .
26
9.4 Expenses of Sale.. . . . . . . . . . . . . . . . . . . . .
27
9.5 Cooperation; Execution of Additional Documents.. . . . . .
27
9.6 Bulk Sales Waiver. . . . . . . . . . . . . . . . . . . . .
27
9.7 Counterparts.. . . . . . . . . . . . . . . . . . . . . . .
27
9.8 Interpretation and Governing Law, Jurisdiction and Service
of Process. 27
9.9 Severability.. . . . . . . . . . . . . . . . . . . . . . .
27
9.10 Definition of Affiliate.. . . . . . . . . . . . . . . . . 27
9.11 Press Releases. . . . . . . . . . . . . . . . . . . . . . 27
9.12 United States Dollars.. . . . . . . . . . . . . . . . . . 28
9.13 Survival of Covenants, Representations and Warranties.. . 28
LIST OF EXHIBITS
Exhibit A 11/30/94 Balance Sheet (Section 1.1(e))
Exhibit B Form of Bill of Sale, Assignment and Assumption
Agreement (Section 1.4)
Exhibit C Forms of Deeds (Section 1.4)
Exhibit D Purchase Price Allocation Schedule (Section 3.4)
Exhibit E Certificate of Buyer (Section 7.2(b))
Exhibit E-1 Certificate of Zemex (Section 7.2(b))
Exhibit F Form of Opinion of Counsel to Buyer (Section
7.2(e))
Exhibit G Certificate of Sellers (Section 7.3(b))
Exhibit H Form of Opinion of Counsel to Sellers (Section
7.3(d))
Exhibit I Form of Registration Rights Agreement (Sections
3.3 and 6.1(d))
Exhibit J Form of Distribution Agreement (Section 5.10)
LIST OF SCHEDULES
Schedule 1.1(a) Description of Real Property
Schedule 1.1(b) Fixed Assets and Equipment
Schedule 1.1(d) Inventory
Schedule 1.1(f) Material Contracts
Schedule 4.1(b) Conflicts with Agreements, Laws, Etc.
Schedule 4.1(d) Other Liabilities
Schedule 4.1(f) Liens
Schedule 4.1(i)(i) Pending Proceedings
Schedule 4.1(i)(ii) Materially Adverse Judgments, Orders or
Decrees
Schedule 4.1(j) Legal Violations
Schedule 4.1(k) Environmental Matters and Material Permits
Schedule 4.1(m) Adverse Changes
Schedule 4.1(o)(i) Employee Welfare Benefit Plans
Schedule 4.1(o)(ii) Employee Pension Benefit Plans
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is
entered into as of this 7th day of December, 1994 by and among
Suzorite Mineral Products, Inc., a Delaware corporation
("Buyer"), Zemex Corporation, a Delaware corporation ("Zemex")
and Whittaker, Clark & Daniels, Inc., a New Jersey corporation
("WCD"), Clark Minerals, Inc., a New York corporation ("CMI"),
Cherokee Minerals, Inc., a North Carolina corporation ("CHM"),
and Pioneer Talc Company, a Texas corporation ("PTC") (WCD, CMI,
CHM and PTC will sometimes hereafter be referred to individually
as a "Seller" and collectively as "Sellers") (such persons may be
referred to individually as a "Party" and collectively the
"Parties").
RECITALS
A. WCD is the owner of all the capital stock of CMI,
CHM and Longhorn Holdings, Inc., a Delaware corporation
("Longhorn"), and WCD is the indirect owner of all of the capital
stock of PTC. CMI is in the business of buying and processing
premium talc at facilities near Diana, New York (the "CMI
Business"). CHM is in the business of processing baryte at
facilities near Murphy, North Carolina (the "CHM Business"). PTC
is in the business of mining and processing talc on properties
owned or leased by Longhorn at facilities near Van Horne, Texas
(the "PTC Business"). (Collectively, the CMI, CHM and PTC
Businesses will be referred to as the "WCD Talc Business.")
B. Sellers desire to sell, and Buyer desires to
purchase, the assets related to the operation of the WCD Talc
Business and the capital stock of Longhorn, on the terms and
conditions set forth in this Agreement.
C. Buyer is the wholly-owned subsidiary of Zemex, and
Zemex is a party hereto for purposes of the stock portion of the
purchase price.
D. Buyer desires only to assume those certain of the
liabilities and obligations of Sellers relating to the WCD Talc
Business as more specifically set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and
of the mutual representations, warranties, covenants, agreements,
terms and conditions set forth below, the receipt and adequacy of
which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE ASSETS OF THE
WCD TALC BUSINESS
1.1 Purchased Assets. On the Closing Date (as defined
below) but effective for all purposes as of December 1, 1994 (the
"Effective Date") and subject to the terms and conditions of this
Agreement, Sellers shall sell, convey, grant, assign, transfer
and deliver to Buyer, and Buyer, shall buy, accept and receive
from Seller, all of Sellers' right, title and interest in and to
the following assets:
(a) Real Property. All real property and
interests, options or rights therein owned or leased by Sellers
and used in the conduct of the WCD Talc Business, and all plant,
warehouse, office facilities, buildings, easements, rights of way
and appurtenances thereon and thereto and other improvements and
fixtures attached to such real property, and specifically
including the condominium in Murphy, North Carolina which is
considered for purposes hereof as being part of the CHM Business
but which is owned by WCD (collectively, the "Real Property").
With respect to certain mineral rights included within the Real
Property underlying the PTC Business, title to same is held by
Longhorn, and pursuant to paragraph (j) below Buyer is purchasing
all of the issued and outstanding shares of capital stock of
Longhorn from WCD. All Real Property is identified as owned or
leased and described on Schedule 1.1(a) attached hereto.
(b) Fixed Assets, Equipment Machinery and Other
Tangible Personal Property. All fixed assets, equipment,
machinery, tools, supplies, furniture, leasehold improvements,
automobiles, trucks, non-inventoried stores and supplies, and
other miscellaneous tangible personal property (other than
fixtures) exclusively related to the WCD Talc Business or located
on the Real Property at the Effective Date (collectively, the
"Fixed Assets and Equipment"), and identified in Schedule 1.1(b)
attached hereto, which schedule constitutes (i) a reprint of the
WCD Talc Business's Fixed Assets Master Report for each of CMI,
CHM and PTC, and (ii) a more detailed description (including
serial numbers, as appropriate) of the more significant
individual Fixed Assets and Equipment (defined as being those
items of material value).
(c) Leases. All leases and subleases of personal
property or Fixed Assets and Equipment used in the conduct of the
WCD Talc Business, excluding, however, all intercompany leases or
leases with Windser, Inc. ("Windser") covering any such items, it
being understood that all such intercompany or Windsor leases are
being terminated in connection with the sale of the assets of the
WCD Talc Business pursuant to this Agreement, such that items
previously covered by any such intercompany or Windser leases are
included as a Fixed Asset and Equipment on Schedule 1.1(b) and
are being conveyed by Sellers free and clear of the obligations
under any such intercompany or Windser leases.
(d) Inventory. All inventories owned by CMI, CHM
or PTC and related to the WCD Talc Business as of the Effective
Date consisting of raw materials (including any stockpiled talc
or baryte), work-in-process, finished goods and supplies and
packaging materials employed in the conduct of the WCD Talc
Business ("Inventory"). All Inventory reflected on the November
30, 1994 balance sheet of the WCD Talc Business attached hereto
as Exhibit A (the "11/30/94 Balance Sheet") was included therein
on a consistent basis with prior inventory counts and is
identified in Schedule 1.1(d) attached hereto by product,
quantity, unit cost (on a per ton basis) and total extended value
of such Inventory items.
(e) Receivables. All accounts and notes
receivable, deposits, advances, and all other receivables that
relate to the conduct of the WCD Talc Business as of the
Effective Date, exclusive of any intercompany receivables shown
on the 11/30/94 Balance Sheet (the "Accounts Receivable").
(f) Contracts and Other Agreements Relating to
the Business. All rights of Sellers as of the Effective Date
under all contracts, licenses, leases, purchase and sale orders
and other agreements exclusively relating to the operation of WCD
Talc Business as of the Effective Date. Schedule 1.1(f) to this
Agreement contains a list of such contracts and other agreements
(other than purchase orders for products of the WCD Talc Business
which are expected to be performed within 90 days) to be
transferred to Buyer hereunder that, as of the Effective Date,
are material to the operation of the WCD Talc Business or provide
for the payment to or from Sellers of amounts in excess of
$25,000 per year (collectively, the "Material Contracts").
(g) Licenses, Permits. All federal, state, local
and other governmental licenses, permits, approvals and
authorizations that relate to the operation of the WCD Talc
Business as currently being operated, including those permits
listed on Schedule 4.1(k) (the "Material Permits"), subject to
any legal restrictions on transferability pertaining to such
Schedule 4.1(k) permits.
(h) Brand and Trade Names; Know-How. All right,
title and interest of Sellers and its affiliates in and to the
brand or trade names relating to the talc and baryte products
produced by the WCD Talc Business, including without limitation
the names of Clark Minerals, Cherokee Minerals, Pioneer Talc or
Rosa Blanca Talc, together with all of Sellers' know-how and
expertise, tangible and intangible, used in the conduct of the
WCD Talc Business as of the Effective Date. Buyer intends to
register the referenced trade or brand names following the
Closing Date. It is acknowledged that following the Closing Date
the Sellers intend to liquidate and dissolve CMI, CHM and PTC as
corporations and following such dissolutions Buyer shall, to the
extent consistent with applicable law, be free to use their
corporate names.
(i) Prepayments. Any security, utility or
similar deposits or prepaid expenses.
(j) Longhorn Stock. All of the Longhorn Shares
(as defined in Section 4.1(r)).
(k) Other Purchased Assets. All other assets of
Sellers relating to the WCD Talc Business and described on or
included in the 11/30/94 Balance Sheet, or located on the Real
Property, including without limitation books, records, customer
lists, pricing information, existing sales literature, plans,
operating manuals, and all other files, and data relating to the
WCD Talc Business or any of its assets.
Collectively, the assets described in paragraphs (a)
through (k) above are referred to hereinafter as the "Purchased
Assets."
1.2 Assumed Liabilities. At Closing but effective as
of the Effective Date, Sellers shall assign and delegate to
Buyer, and Buyer shall expressly assume and undertake to pay,
defend, discharge and perform in full when due the Assumed
Liabilities (as defined below) pursuant to this Agreement and the
General Assignment, Bill of Sale and Assumption Agreement
referred to in Section 1.4. For purposes hereof, "Assumed
Liabilities" shall mean all debts (excluding any bank debt owed
by WCD, CMI, CHM or PTC), liabilities, obligations, commitments
and contracts related to the operation of the WCD Talc Business
as of the Effective Date, including, without limitation all
accounts payable and accrued liabilities identified on the
11/30/94 Balance Sheet, all purchase commitments, reclamation
bonds (if any) and other obligations pertaining to the
reclamation of the Real Property following talc mining or talc or
baryte processing operations, sales orders, the obligation to
complete all work-in process, utility contracts, sales
representative orders, licenses, leases (excluding any
intercompany and Windser leases as described in Section 1.1(c)),
consulting agreements and other contracts (including the Material
Contracts) relating to the operation of the WCD Talc Business,
and all other undertakings and obligations relating thereto, and
the obligations of the Buyer arising under other provisions of
this Agreement which survive the Closing as defined below.
1.3 Excluded Liabilities. Notwithstanding anything to
the contrary contained in this Agreement, Buyer will not assume
or be liable for any of the following liabilities or obligations
of Sellers (the "Excluded Liabilities").
(a) Intercompany Payables. All liabilities and
obligations of any kind existing as of the Effective Date of a
nature characterized as an intercompany liability (including
where such intercompany liability is used in the calculation of
net intercompany payables or receivables, as the case may be) on
the 11/30/94 Balance Sheet or otherwise owed or owing by the CMI,
CHM, PTC or Longhorn to WCD or each other or any Affiliate
thereof (the "Intercompany Payables").
(b) Employee Liabilities. All liabilities and
obligations relating to employees of WCD, CMI, CHM or PTC
currently or formerly employed in the conduct of the WCD Talc
Business ("Employees") or consultants of the WCD Talc Business
relating to the services performed prior to the Effective Date
including, without limitation, compensation, wages, bonuses,
severance, incentives, deferred compensation, life insurance,
stock options, disability laws and premiums, worker's
compensation, unemployment compensation, retiree medical or death
benefits, employee welfare or retirement benefits, and
obligations or agreements to rehire or give preferential
treatment to laid off or terminated employees, whether any of the
foregoing are written, oral, funded, unfunded, matured or
contingent.
1.4 Title to the Purchased Assets: Documents of
Conveyance. At Closing but effective as of the Effective Date,
Sellers shall convey all of its right, title and interest in and
to the Purchased Assets to Buyer. Title to the purchased Assets
other than the Real Property shall be conveyed pursuant to a Bill
of Sale, Assignment and Assumption Agreement substantially in the
form attached hereto as Exhibit B, and by such other documents as
are reasonably acceptable to counsel for Sellers and counsel for
Buyer in accordance with the terms hereof. Title to the Real
Property (other than the Real Property owned or leased by
Longhorn) shall be conveyed pursuant to Deeds substantially in
the forms attached hereto as Exhibit C, which forms it is agreed
shall be substantially the same as those deeds utilized when the
Sellers originally acquired the Real Property, and by such other
documents as are reasonably acceptable to counsel for Sellers and
counsel for Buyer. Such instruments of conveyance shall warrant
title to the same extent as Sellers received when acquiring such
Real Property (but at a minimum shall warrant against
encumbrances created by Sellers), subject only to liens permitted
by Section 4.1(f). With respect to the Real Property owned or
leased by Longhorn, Longhorn and PTC shall take whatever steps
are required as of the Effective Date to terminate that certain
Agreement dated as of March 21, 1985, as amended, pursuant to
which PTC contracted to mine talc from the mineral properties
owned by Longhorn.
ARTICLE 2
CLOSING
2.1 Closing. The sale and purchase of the Purchased
Assets shall be effective as of the Effective Date and
consummated at a closing (the "Closing") to be held at the
offices of WCD, 1000 Coolidge Street, South Plainfield, New
Jersey 07080-1000, or at such other place as the Parties may
mutually agree, on the date of execution of this Agreement, which
unless otherwise mutually agreed shall be on December 7, 1994
(the "Closing Date"); provided, however, that the Closing shall
occur no later than December 30, unless the Parties shall
otherwise mutually agree in writing. The day of the Closing is
sometimes referred to herein as the "Closing Date." At the
Closing,
(a) Sellers will execute this Agreement and
deliver to Buyer:
(i) the Deeds referred to in Section 1.4;
(ii) the Bill of Sale, Assignment and
Assumption Agreement referred to in Section 1.4;
(iii) the Certificate referred to in
Section 7.3(b);
(iv) the opinion of counsel to Sellers
referred to in Section 7.3(e);
(v) UCC termination statements and other
applicable documentation necessary to release any interest of any
third party (including without limitation First Fidelity Bank) in
the Purchased Assets;
(vi) The Registration Rights Agreement
referred to in Section 6.1(d), executed by WCD;
(vii) the Distribution Agreement referred
to in Section 5.10, executed by WCD; and
(viii) the Longhorn Shares, together with
duly executed stock power covering such securities duly executed
by WCD.
(b) Buyer will execute this Agreement, cause
Zemex to do the same and deliver to Sellers:
(i) the Cash portion of the Purchase Price
referred to in Section 3.2;
(ii) the Stock Portion of the Purchase Price
(i.e., the Shares) referred to in Section 3.3;
(iii) the Bill of Sale, Assignment and
Assumption Agreement referred to in Section 1.4;
(v) the opinion of counsel to Buyer referred
to in Section 7.2(e);
(vi) the Registration Rights Agreement
referred to in Section 6.1(d), executed by Zemex; and
(vii) the Distribution Agreement referred
to in Section 5.10, executed by Buyer.
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price. The consideration for the
Purchased Assets shall be Buyer's assumption of the Assumed
Liabilities as provided in Section 1.3, plus the payment to
Sellers of Four Million Three Hundred Eighty-Eight Thousand and
Five Hundred and Fifty-Seven Dollars ($4,388,557) payable to CMI,
CHM and PTC in consideration for the assets of the WCD Talc
Business (the "Cash Portion of the Purchase Price"), plus 136,360
shares of Zemex stock to be issued and delivered as described in
Section 3.3 (the "Stock Portion of the Purchase Price") to WCD in
exchange for the Longhorn Shares. (Collectively, the Cash
Portion of the Purchase Price and the Stock Portion of the
Purchase Price are referred to as the "Purchase Price".)
3.2 Payment to CMI, CHM and PTC and Adjustments of
Cash Purchase Price. On the Closing Date, Buyer shall pay the
Cash Portion of the Purchase Price to Sellers by same day funds,
wire transferred for receipt prior to 1:00 p.m. Eastern Time on
the Closing Date, and directed to such accounts as Sellers shall
designate.
3.3 Payment to WCD of Stock Portion of Purchase Price.
Subject to the terms and conditions hereof (and specifically of
the terms of Article 6), Buyer and Zemex shall deliver at the
Closing an aggregate 136,360 shares of Common Stock (the
"Shares") to WCD in exchange for the Longhorn Shares, all of
which Shares shall have the rights, powers, preferences and
limitations set forth herein (including without limitation in
Article 6 hereof) and in Zemex's Certificate of Incorporation.
In connection with the Shares, the Sellers shall be granted
certain registration rights pursuant to the Registration Rights
Agreement to be entered into by Zemex and Sellers in
substantially the form of Exhibit I.
3.4 Allocation of Purchase Price. Sellers and Buyer
have determined an allocation of the Cash Portion of the Purchase
Price among the purchased Assets, using the allocation method
required by Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder, which
allocation schedule is attached hereto as Exhibit D. With
respect to the Shares, Sellers have advised Buyer and Zemex that
they desired the Shares be transferred and delivered to WCD.
Sellers and Buyer each agree to report the federal, state and
local income and other tax consequences of the transactions
contemplated herein, and in particular to report the information
required by Code Section 1060(b), in a manner consistent with
such allocation and will not take any position inconsistent
therewith upon examination of any tax return, in any refund
claim, in any litigation, investigation or otherwise. If Zemex
or Buyer are notified by the Internal Revenue Service of audit
and change to the valuation or allocation methodology employed
herein, Zemex and/or Buyer shall notify WCD and use its best
efforts to reasonably protect the interest of WCD in any such
audit or other investigation by such taxing authorities.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
4.1 Representations and Warranties of Sellers.
Sellers represent and warrant to Buyer and Zemex, as of the date
of this Agreement, with respect to the WCD Talc Business and
except as specifically modified and supplemented on the schedules
referred to herein and attached hereto (the "Disclosure
Schedules"), as follows:
(a) Organization of Sellers; Authorization.
WCD, CMI, CHM, PTC and Longhorn are corporations duly organized,
validly existing and in good standing under the laws of the
States of New Jersey, New York, North Carolina, Texas and
Delaware, respectively. Each Seller has full corporate power and
authority (i) to execute and deliver this Agreement, (ii) to
perform its obligations hereunder and (iii) to own, lease and
operate its properties and to carry on the WCD Talc Business as
now being conducted. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary
corporate action (including, but not limited to, approval by the
Board of Directors) of each Seller and this Agreement constitutes
a valid and binding obligation of each Seller enforceable in
accordance with its terms, except insofar as such enforceability
may be limited by the application of bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors'
rights generally and as limited by the availability of specific
performance and general principles of equity.
(b) No Conflict. Except for the matters set
forth in Schedule 4.1(b), neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby by Sellers will (i) violate any provision of
the certificate of incorporation or by-laws of any Seller, (ii)
violate, or be in conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation
or imposition of any encumbrance upon any of the Purchased Assets
under, any Material Contract, or (iii) violate any statute or law
or any judgment, decree, order, regulation or rule of any court
or other governmental body applicable to any Seller with respect
to any aspect of the WCD Talc Business.
(c) Balance Sheet; Inventory; Accounts
Receivable. Sellers have delivered to Buyer the 11/30/94 Balance
Sheet, which was prepared consistently with Seller's December 31,
1993 Balance Sheet for the WCD Talc Business and which presents
fairly in accordance with GAAP the assets and liabilities of the
WCD Talc Business as of such date. The values of obsolete or
substandard items of Inventory have been written down to
realizable market values or written off, or adequate reserves
therefore have been established on the 11/30/94 Balance Sheet.
The Accounts Receivable (as defined in Section 1.1(e), i.e.,
exclusive of intercompany receivables) of the Business shown on
the 11/30/94 Balance Sheet have been collected or are collectible
in the ordinary course of business net of the reserves identified
on the 11/30/94 Balance Sheet.
(d) Absence of Undisclosed Liabilities. Except
(i) as listed in Schedule 4.1(d), prior to the Closing Date the
Business has not incurred any liability or obligation (whether
accrued, absolute, contingent or otherwise) of a nature required
by GAAP to be reflected on a corporate balance sheet or disclosed
in the notes thereto which has not been discharged prior to the
date of this Agreement and which materially and adversely affects
the WCD Talc Business collectively or the CMI, CHM or PTC
Businesses individually.
(e) Consents and Approvals of Governmental
Bodies. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental body
is required in connection with the execution, delivery and
performance by Sellers of this Agreement or the consummation of
the transactions contemplated hereby.
(f) Title to Real Property. At Closing Buyer
will acquire good and marketable or insurable title to the Real
Property, free and clear of all mortgages, pledges, liens,
security interests, conditional sales agreements, encumbrances,
charges, limitations, exceptions or restrictions of any kind
("Liens"), except for: (i) Liens created by or arising through
Buyer; (ii) reservations, easements, conditions and any other
restrictions of record; zoning ordinances or other limitations
imposed by any authority having jurisdiction over real property;
taxes and assessments, both general and special, which create a
lien but are not yet due and payable; rights; claims,
encroachments or discrepancies in boundaries not shown by the
public records and any other facts which a correct survey and/or
inspection of the real property would disclose; and (iii) the
Liens listed in Schedule 4.1(f).
(g) Title to Personal Property. At Closing Buyer
will obtain good and marketable title to the Fixed Assets and
Equipment and Inventory, free and clear of all Liens except for:
(i) Liens created by or arising through Buyer; and (ii) the Liens
listed in Schedule 4.1(f).
(h) Contracts. All of the Material Contracts are
in full force and effect and, except as disclosed elsewhere in
this Agreement or the Disclosure Schedules, Sellers have no
knowledge of any default or condition which, with notice or the
lapse of time or both, would constitute a default, in any
material obligation of Sellers under any Material Contract, the
effect of which would materially and adversely affect the WCD
Talc Business collectively or the CMI, CHM or PTC Businesses
individually.
(i) Litigation. Except as provided in Schedule
4.1(i), there is no action, suit or proceeding (collectively, a
"Proceeding") by or before any court or governmental body pending
or, to the knowledge of Sellers, threatened, against any of the
WCD Talc Business or which questions or challenges the validity
of this Agreement or any action taken or to be taken by Sellers
pursuant to this Agreement or in connection with the transactions
contemplated hereby. Schedule 4.1(i) lists all pending
Proceedings against the WCD Talc Business or initiated by any of
the Sellers and pertaining to the WCD Talc Business against third
parties, except for Proceedings which seek only monetary relief
in an amount not exceeding $10,000 in any one Proceeding or group
of Proceedings which arise out of the same facts. Further,
except as listed in Schedule 4.1(i), Sellers are not subject to
any judgment, order or decree that reasonably may be expected to
have a material adverse effect on the WCD Talc Business
collectively or the WCD, CMI, CHM or PTC Businesses individually.
(j) Compliance with Applicable Law. The conduct
of the WCD Talc Business and the current uses to which the
Purchased Assets have been put are not in violation of any
material statute, ordinance, regulation, license or permit
except: (i) as listed on Schedule 4.1(j); and (ii) for violations
which would not, in the aggregate, have a material adverse effect
on the WCD Talc Business collectively or the CMI, CHM or PTC
Businesses individually.
(k) Environmental Matters; Permits.
(i) Except as indicated in Schedule 4.1(k),
to the best of Sellers' knowledge, information and belief, there
are no specific facts or circumstances that would indicate that
Sellers are not, or will not be prior to Closing, in substantial
compliance with all material Environmental Laws, nor that the
present condition of the WCD Talc Business or the Real Property,
or Sellers' present or past activities or manner of owning and
operating the WCD Talc Business or the Real Property (including
on-site or off-site disposal of waste or other materials on the
Real Property), gives rise to any liability to any person,
contingent or otherwise under Environmental Law which would
materially and adversely affect the WCD Talc Business
collectively or the CMI, CHM or PTC Businesses individually. For
purposes of this Agreement, "Environmental Law" shall mean any
presently effective federal, state or local statute, ordinance or
promulgated rule or regulation, any judicial or administrative
order (whether or not on consent) or judgment, and any provision
or condition of any permit, license or other operating
authorization relating to protection of the environment
(including wildlife), persons (including employees) or the public
welfare from actual or potential exposure (or the effects of
exposure) to any actual or potential release, discharge or
emission (whether past or present) of any chemical, raw material,
pollutant, contaminant, toxic or hazardous substance or
condition.
(ii) Schedule 4.1(k) also sets forth each
environmental permit, license, consent and authorization
(collectively, the "Material Permits") issued by or required by a
governmental entity to own or operate the WCD Talc Business as
now conducted by Sellers. Sellers have no reason to believe that
such Material Permits are not, renewable upon expiration or
subject to materially different terms upon either transfer or
renewal, or that Buyer will not be able to obtain new/replacement
permits upon proper application therefor following the Closing.
(l) No Brokers and Finders. Neither Sellers nor
any affiliate of WCD has incurred any liability for any brokerage
or finders fees or commissions or similar payments in connection
with any of the transactions contemplated hereby.
(m) Absence of Change. Since December 31, 1993,
except as listed in Schedule 4.1(m) or the other Schedules hereto
or as otherwise contemplated by this Agreement, (i) the WCD Talc
Business has been operated in the ordinary course of business in
a manner consistent with past practice; (ii) there has not been
any material adverse change in the Purchased Assets or in the
operations or financial condition of the WCD Talc Business; and
(iii) the WCD Talc Business has not incurred any damage or
destruction in the nature of a casualty loss, not covered by
insurance, that materially and adversely affects the WCD Talc
Business.
(n) Labor Matters. There are no collective
bargaining agreements in place governing the employees of the WCD
Talc Business, nor is any union organizing effort underway or
threatened with respect thereto. There are no labor disputes
pending or initiated between Sellers and any of their respective
employees except for disputes which do not have a material and
adverse effect on the WCD Talc Business collectively or the CMI,
CHM or PTC Businesses individually.
(o) Benefit Plans.
(i) Employee Welfare Benefit Plans.
Schedule 4.1(o)(i) lists Sellers' employee welfare benefit plans
relating to Employees as such term is defined in Section 3(l) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). With respect to each such plan, (i) the plan is in
material compliance with ERISA; (ii) the plan has been
administered in accordance with its governing documents; (iii)
neither the plan, nor any fiduciary with respect to the plan, has
engaged in any "prohibited transaction" as defined in Section 406
of ERISA other than any transaction subject to a statutory or
administrative exemption; (iv) except for the processing of
routine claims in the ordinary course of administration, there is
no material litigation, arbitration or disputed claim
outstanding; and (v) all premiums due on any insurance contract
through which the plan is funded have been paid or are current in
the normal course of business.
(ii) Employee Pension Benefit Plans. Other
than WCD's profit sharing plan (WCD's Profit Sharing Plan") as
listed on Schedule 4.1(o)(ii), Sellers have no "employee pension
benefit plans" relating to Employees, as such term is defined in
Section 3(2) of ERISA. With respect to each such plan listed on
Schedule 4.1(o)(ii): (A) the plan is qualified under Section
401(a) of the Code, and any trust through which the plan is
funded meets the requirements to be exempt from federal income
tax under Section 501(a) of the Code; (B) the plan is in material
compliance with ERISA; (C) the plan has been administered in
accordance with its governing documents as modified by applicable
law; (D) the plan has not suffered an "accumulated funding
deficiency" as defined in Section 412(a) of the Code; (E) the
plan has not engaged in, nor has any fiduciary with respect to
the plan engaged in, any "prohibited transaction" as defined in
Section 406 of ERISA or Section 4975 of the Code other than a
transaction subject to statutory or administrative exemption;
(F) the plan has not been subject to a "reportable event" (as
defined in Section 4043(b) of ERISA), the reporting of which has
not been waived by regulation of the Pension Benefit Guaranty
Corporation; (G) no termination or partial termination of the
plan has occurred within the meaning of Section 411(d)(3) of the
Code; (H) all contributions required to be made to the plan under
any applicable collective bargaining agreement have been made to
or on behalf of the plans (I) there is no material litigation,
arbitration or disputed claim outstanding; and (J) all applicable
premiums due to the Pension Benefit Guaranty Corporation for plan
termination insurance have been paid in full on a timely basis.
(iii) Employment and Non-Tax Qualified
Deferred Compensation Arrangements. CMI, CHM and PTC do not
maintain or contribute to any retirement or deferred compensation
arrangement entered into between any of such parties and any
current or former officer, consultant, director or employee of
the CMI, CHM, PTC or the WCD Talc Business that is not intended
to be a tax qualified arrangement under Section 401(a) of the
Code.
Contracts.
(q) Investment Intent. WCD represents and
warrants to the Buyer and Zemex that it is purchasing and will
purchase the Shares for its own account, with no present
intention of distributing or reselling the Shares or any part
thereof, and it is prepared to bear the economic risk of
retaining the Shares for an indefinite period, all without
prejudice, however, to its right at any time, in accordance with
this Agreement (and specifically subject to the provisions of
Article 6), lawfully to sell or otherwise dispose of all or any
part of the Shares held by it. WCD also represents and warrants
that it is an accredited investor, as such term is defined in
Rule 501 of Regulation D promulgated under the Securities Act.
WCD agrees that if, and to the extent, it elects to sell the
Shares, it will do so in compliance with the provisions and
requirements of the Securities Act and applicable state
securities laws.
(r) Longhorn Shares; Longhorn Tax Matters. WCD
is the owner of 2,000 shares of Common Stock, no par value, of
Longhorn (the "Longhorn Shares"), which constitute all of the
issued and outstanding capital stock of such company. All of the
Longhorn Shares are owned of record and beneficially by WCD.
None of the Longhorn Shares was issued or will be transferred
under this Agreement in violation of any preemptive or
preferential rights of any person. The authorized capital of
Longhorn consists of 3,000 shares of Common Stock, no par value,
of which only the aforementioned 2,000 shares are issued and
outstanding. WCD owns the Longhorn Shares, free and clear of any
liens, restrictions, security interests, claims, rights of
another, or encumbrances (it being acknowledged that WCD's pledge
of, and grant of a security interest in, the Longhorn Shares to
First Fidelity will be released on the Closing Date), and none of
the Longhorn Shares is subject to any outstanding option,
warrant, call or similar right of any other person to acquire the
same, and none of the Longhorn Shares is subject to any
restriction on transfer thereof except for restrictions imposed
by applicable federal and state securities laws. WCD has full
power and authority to convey good and marketable title to the
Longhorn Shares, free and clear of any mortgages, liens,
restrictions, security interests, claims, rights of another or
encumbrances. All tax returns of every kind (including income
taxes) relating to Longhorn that are due to have been filed in
accordance with any applicable law have been duly filed by
Longhorn or the Sellers; and all taxes shown to be due on such
returns have been paid in full.
(s) Reclamation and Performance Bonds. There
exist no reclamation and performance bonds in support of the
reclamation obligations of the WCD Talc Business, nor (to the
best of Seller's knowledge of the Closing Date) are any such
bonds required by law.
4.2 Representations and Warranties of Buyer and Zemex.
Buyer and Zemex represent and warrant to Sellers, as of the date
of this Agreement, as follows:
(a) Organization of Buyer; Authorization. Buyer
and Zemex are corporations duly organized, validly existing and
in good standing under the laws of Delaware, with full corporate
power and authority to execute and deliver this Agreement and to
perform their obligations hereunder. Buyer is (or, before the
Closing Date, will be) duly qualified to do business and in good
standing in the States of New York, North Carolina and Texas.
The execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action and this
Agreement constitutes a valid and binding obligation of Buyer and
Zemex, respectively, enforceable against them in accordance with
its terms, except insofar as such enforceability may be limited
by the application of bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights generally
and as limited by the availability of specific performance and
general principles of equity.
(b) No Conflict. Neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby by Buyer or Zemex will (a)
violate any provision of the certificate of incorporation or by-
laws (or other governing instrument) of Buyer or Zemex, (b)
violate, or be in conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under any agreement or commitment to which
Buyer or Zemex is party or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other
governmental body applicable to Buyer or Zemex.
(c) Litigation. There is no action, suit or
proceeding by or before any court or governmental body pending
or, to the knowledge of Buyer or Zemex, threatened against Buyer
or Zemex which challenges the validity of this Agreement or any
action taken or to be taken by Buyer or Zemex pursuant to this
Agreement or in connection with the transactions contemplated
hereby.
or finder's fees or commissions or similar
payments in connection with any of the transactions contemplated
hereby.
(e) Consents and Approvals of Governmental
Bodies. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental body
is required in connection with the execution, delivery and
performance by Buyer or Zemex of this Agreement or the
consummation of the transactions contemplated hereby.
(f) Capitalization; Issuance of Shares; Exemption
from
Registration.
(i) Capitalization.
(A) Zemex's authorized capital stock
consists of 10,000,000 shares of Common Stock, par value $1.00
(the "Common Stock"), of which 6,925,982 shares were issued and
outstanding as of September 30, 1994.
(B) On the date hereof, and other than
as described in the Zemex's financial statements or issued
pursuant to this Agreement or as previously disclosed to the
Sellers, there are no (x) outstanding subscriptions, options,
warrants, rights, convertible securities or other agreements or
commitments of any character obligating Zemex to purchase,
redeem, issue, transfer or deliver any shares of its capital
stock, or other equity security, and (y) no agreements or
understandings, written or oral, with any holder of securities of
Zemex, or holder of any obligation or right to acquire such
securities.
(C) On the date hereof, Zemex's Common
Stock is listed on the New York Stock Exchange under the symbol
"ZMX" and is current on its reporting requirements under the
Securities and Exchange Act of 1934, as amended.
(ii) Issuance of Shares. The issuance, sale
and delivery of the Shares in accordance with this Agreement has
been duly authorized by all necessary corporate action on the
part of Zemex and the Shares when so issued, sold and delivered
against payment therefor in accordance with this Agreement, when
issued upon such conversion, will be duly and validly issued,
fully paid and nonassessable.
(iii) Exemption from Registration.
Subject to the accuracy of the Sellers' representations in
Section 4.1(q) hereof, the offer, sale and issuance of the Shares
as contemplated by this Agreement is exempt from the registration
requirements of the Securities Act and the securities laws of any
state having jurisdiction with respect to the transactions
contemplated by this Agreement, and neither the Buyer, Zemex nor
anyone acting on their behalf has or will take any action that
would cause the loss of such exemption.
ARTICLE 5
COVENANTS AND OTHER AGREEMENTS OF THE PARTIES
5.1 Continuity of Employment. Buyer shall offer
continuity of employment to all individuals who are employees of
the WCD Talc Business as of the Closing Date (the "Rehired
Employees"), in equivalent positions, at the same salary or wage
levels for a reasonable period of time following the Closing, but
not less than 90 days following the Closing. Buyer will
indemnify and hold Sellers harmless from any cost or expense
arising from Buyer's breach of this provision including, without
limitation, claims for vacation pay and severance pay and
liabilities arising under the Worker Adjustment and Retraining
Notification Act, with respect to any Rehired Employee who is not
offered an equivalent position and salary level by Buyer or who
has accepted such an offer and who is later dismissed, laid off
or had his or her hours reduced by more than 50% by the Buyer
during such period for any reason other than for cause. Such
continuity of employment will require, among other things, that
Buyer recognize all prior continuous service with Sellers for
purposes of determining eligibility and vesting in applying any
of Buyer s employment policies and benefit programs.
5.2 Defined Benefits Plans. Except as provided in
Section 5.1, Sellers will retain sole responsibility for all
employment, retirement, pension, profit sharing, wage, incentive,
bonus, deferred compensation, life insurance, stock option,
disability, severance payments, health and welfare benefits, and
other benefits, if any, to which the Rehired Employees are
entitled up to and effective as of the Effective Date, and for
all workers compensation, unemployment compensation or disability
claims and insurance premiums which relate to the period of
employment by Sellers ending on or before the Effective Date
(collectively, the "Employee Plans"). As of the Effective Date,
Sellers shall terminate all Rehired Employees and shall pay such
Rehired Employees all wages and salary accrued as of such date
other than accrued vacation pay. Sellers intend to cause all
benefits due to such terminated Rehired Employees under WCD's
Profit Sharing Plan to become fully vested as of the Effective
Date to the extent allowed under the terms of WCD's Profit
Sharing Plan. Sellers may, subject to the terms of WCD's Profit
Sharing Plan, pay the balance of account balances in WCD's Profit
Sharing Plan to Rehired Employees. Sellers shall be responsible
for all benefits, and claims incurred prior to the Effective Date
under Sellers' Employee Plans and any other worker's compensation
or welfare benefit plans of Sellers. Buyer shall be responsible
for all benefits, and claims incurred on or after the Effective
Date under Buyer's benefit plans.
5.3 Sales and Transfer Taxes; Prorations. The Parties
shall cooperate in obtaining any available exemptions from sales,
use and transfer taxes. Except as provided in Section 5.4, all
real estate taxes, personal property taxes and utility charges
relating exclusively to the WCD Talc Business shall be prorated
as of the Closing and amounts owing to Sellers by Buyer, or to
Buyer by Sellers, resulting from such proration shall be settled
within 30 days after the Closing Date in the case of prepaid
taxes or expenses, or within 30 days after the date on which such
taxes or expenses are paid by Buyer, in the case of taxes or
expenses which are billed after the Closing. Prior to the
Closing, Sellers shall pay all expenses ordinarily paid in the
normal course of operating the WCD Talc Business, including
payroll, and shall be responsible for all FICA and administrative
payroll matters until the Effective Date.
5.4 New York Real Property Transfer Gains Tax.
Sellers and Buyer shall cooperate in filing all real property
transfer gains tax documentation required by the New York State
Department of Taxation and Finance in connection with the
transfer of the purchased Assets pertaining to the CMI Business,
and prior to the Closing Sellers shall have received and
delivered to Buyer a copy of the tentative assessment of the real
property transfer gains tax. Sellers shall be responsible for
payment of all real property transfer gains tax (including
interest and penalties) with respect to the transactions
contemplated hereby.
5.5 Access to Information. (a) For a reasonable
period following the Closing Date consistent with Buyer's record
retention policies as in effect or subsequently modified and, in
any case, for at least one year or such longer period as may be
required by any applicable law, Buyer will retain, at its sole
expense, the books, records and other data of the WCD Talc
Business transferred pursuant to Section 1.1(j) hereof.
Similarly, for a reasonable period following the Closing Date
consistent with Sellers' record retention policies as in effect
or subsequently modified and, in any case, for at least one year
or such longer period as may be required by any applicable law,
Sellers will retain, at its sole expense, any books, records or
other data relating to the WCD Talc Business retained by Sellers
at locations other than the Real Property. During such period,
each Party will afford to the other Party, its counsel and
accountants, during normal business hours, reasonable access to
such books, records and other data, including, without
limitation, the opportunity to copy such materials at the other
Party s sole expense. Following the expiration of such period,
the Party retaining such materials (the "Retaining Party") may
dispose of any such books, records and other data; provided,
however, that before disposing of any such materials, the
Retaining Party shall give the other Party at least 30 days
notice of its intent to dispose of such materials and the other
Party may, within such 30-day period, notify the Retaining Party
of its desire to obtain such materials. Following its receipt of
such notice from the other Party, the Retaining Party shall
permit the other Party, at the other party's sole expense, to
remove such materials.
(b) For a reasonable period following the Closing
and subject to restrictions imposed by law, Buyer and Sellers
shall each consult and cooperate with the other upon request, at
the requesting Party's sole expense, in connection with any
matter, claim, investigation or proceeding, involving an
independent third party with respect to the Party's respective
ownership or operation of or other involvement with the WCD Talc
Business, directly or indirectly, and as a part of such
obligation to cooperate, shall, without limitation, and subject
to any applicable privilege of confidentiality, allow reasonable
access to and use of the assets or other facilities of the WCD
Talc Business, provided, that such access and/or use shall not
interrupt the operations of the WCD Talc Business, and Sellers
shall allow Buyer reasonable access to and the assistance of all
managers or other consultants, employees or agents of the WCD
Talc Business.
5.6 Transition. Buyer and Sellers shall use their
best efforts to identify and make appropriate arrangements for
dealing with any transition problems which may be involved, in
the transfer of the WCD Talc Business to Buyer and Buyer's
commencement of operations of such business.
5.7 Environmental Audit. Buyer's counsel engaged a
consulting firm that has conducted an environmental audit of the
Real Property and the WCD Talc Business (the "Environmental
Audit"), which audit was substantially completed and delivered in
draft form on or about November 30, 1994 with respect to
environmental matters relating to the WCD Talc Business. Buyer
and Sellers agree to split the cost of the Environmental Audit on
a 50/50 basis, subject to a cap of $25,000 as to Sellers' half,
with payment of same to be check to Buyer's counsel's Agency
Account at Closing. A copy of the findings of the Environmental
Audit has been delivered to Buyer by Buyer's counsel.
5.8 Noncompetition. For and in consideration of the
payment by Buyer of the Purchase Price hereunder, Sellers
expressly covenants and agrees that for a period of five years
from the Closing Date, Sellers will not directly or indirectly,
without the prior written consent of the Buyer, (i) own any
interest in, manage, operate or control, finance, or participate
in the ownership, management, operation or control of, any entity
which is engaged in the business of extracting, processing or
producing talc or talc products for sale to the paint, chemical,
glass, cosmetics or other industry within 100 miles of the
location of the current locations of any of the WCD, CMI, CHM or
PTC Businesses, (ii) sell "dark" baryte products or talc to the
"ceramics industry" or the "filler industry," or (iii) attempt to
recapture any paint or plastics customers supplied by the WCD
Talc Business facilities as of the Closing Date. With respect to
premium talc produced by the Diana, New York facilities purchased
by Buyer from CMI, WCD has agreed to certain non-competition
terms pursuant to the Distribution Agreement. Notwithstanding
the foregoing, however, the parties acknowledge that talc
produced from various parts of the world contains individual
performance characteristics and have individual applications, and
from time to time customers of talc will change their sources of
talc solely on the basis of physical properties and without
influence or control by Buyer or WCD.
5.9 Temporary Accounting Assistance.
(a) Accounting; December 1994 Medical Insurance
Coverage. Buyer and Sellers agree that until January 31, 1995 or
such later date as the parties may mutually agree, WCD shall
continue to manage and perform all accounting functions with
respect to the WCD Talc Business, on terms and subject to such
conditions as the parties may mutually agree in a separate
written agreement.
(b) Medical Insurance. Notwithstanding anything
to the contrary in this Agreement, during the month of December,
1994, the parties agree that the Seller will assist Buyer with
extending existing medical insurance coverage for Rehired
Employees of the WCD Talc Business, at Buyer's expense, on the
following basis: (i) with respect to Rehired Employees of the
CMI Business, coverage will continue under CMI's Guardian medical
plan during December, 1994, and Buyer will reimburse CMI for the
actual cost of the premium for such month; and (ii) with respect
to CHM and PTC Rehired Employees, coverage will continue under
WCD's CIGNA medical insurance policy during December 1994, and
Buyer will reimburse WCD for the premium for such month at the
COBRA rate of 102% of the actual premium for such Rehired
Employees.
5.10 Distribution Agreement. In connection with this
Agreement and the transactions contemplated hereby, and as a
material inducement to Buyer to purchase the WCD Talc Business
generally and the CMI Business specifically, the parties agree to
enter, effective as of the Effective Date, the Distribution
Agreement in substantially the form as attached hereto as Exhibit
J.
ARTICLE 6
THE ZEMEX SHARES
6.1 Restrictions on Transferability of Shares;
Compliance with Securities Act; Registration Rights.
(a) Restrictions on Transferability. The Shares
shall not be transferable, except upon the conditions specified
in this Section 6.1. Sellers will cause any successor or
proposed transferee of its Shares to agree to take and hold such
securities subject to the conditions specified in this Section
6.1. Sellers acknowledge the restrictions upon their right to
transfer the Shares set forth in this Section 6.1.
(b) Restrictive Legend. For purposes hereof,
each certificate representing the Shares shall constitute
"Restricted Securities" (unless otherwise permitted or unless the
securities evidenced by such certificate shall have been
registered under the Securities Act) and shall be stamped or
otherwise imprinted with a legend in the following form (in
addition to any legend required under applicable state securities
laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY
NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
SATISFACTORY TO ZEMEX THAT SUCH REGISTRATION IS NOT REQUIRED.
THESE SECURITIES ARE SUBJECT TO, AND ARE TRANSFERABLE
ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF ARTICLE 6 OF THAT
CERTAIN ASSET PURCHASE AGREEMENT, DATED AS OF DECEMBER 7, 1994,
BETWEEN ZEMEX CORPORATION AND CERTAIN PARTIES DESCRIBED THEREIN
AS "SELLERS." A COPY OF THE ABOVE REFERENCED AGREEMENT IS ON
FILE AT THE OFFICES OF ZEMEX CORPORATION AT CANADA TRUST TOWER,
BCE PLACE, 161 BAY STREET, SUITE 3750, P.O. BOX 703, TORONTO,
ONTARIO, CANADA M5J 2S1."
Upon request of a holder of such a certificate, Zemex
shall remove the foregoing legend from the certificate or issue
to such holder a new certificate therefor free of any transfer
legend, if, with such request, Zemex shall have received the
opinion referred to in Section 6.1(c).
(c) Notice of Proposed Transfer.
(i) Notice. Prior to any proposed transfer
of any Restricted Securities, the holder thereof shall give
written notice to Zemex of such holder's intention to effect such
transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and
shall be accompanied by a written opinion of legal counsel
reasonably satisfactory to Zemex, addressed to Zemex and
reasonably satisfactory in form and substance to Zemex's counsel,
to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the
Securities Act, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered
by the holder to Zemex.
(ii) Certificate for Transferred Securities.
Each certificate evidencing the Restricted Securities transferred
as above provided shall bear the appropriate restrictive legend
set forth in Section 6.1(b) above, except that such certificate
shall not bear such restrictive legend if the opinion of counsel
referred to above is to the further effect that such legend is
not required in order to establish compliance with any provisions
of the Securities Act. Each transferee of Restricted Securities
shall agree with respect to those securities that remain
Restricted Securities to be bound by the terms of this Section
6.1(c).
(d) Registration Rights. WCD shall have such
registration rights with respect to the Shares as are set forth
in the Registration Rights Agreement in substantially the form as
attached hereto as Exhibit I, which the parties agree to enter
into effective as of the Closing Date.
6.2 Redemption of Shares. The Shares shall be subject
to the following right of redemption by Zemex:
(a) Optional Redemption by Zemex; Redemption
Price. Subject to the terms hereof, Zemex or its assignee(s),
may at its option elect to redeem all or any portion of the
shares Stock at any time after the date of this Agreement (the
"Issue Date") for a redemption price of $11.00 per share,
adjusted proportionately to reflect any stock dividends, stock
splits, reverse stock splits or stock combinations of Zemex which
have occurred since the Issue Date (the "Redemption Price"). The
provisions of this Section 6.1 shall terminate with respect to
any Shares that are sold in a Public Market by the holder thereof
in compliance with the terms of this Article 6. For purposes
hereof, "Public Market" for the Common Stock of Zemex shall mean
either (i) the New York Stock Exchange or the Toronto Stock
Exchange or (ii) any other national exchange, the NASDAQ National
Market System or any registered interdealer quotation system.
(b) Notice of Redemption. Not more than 60 nor
less than 15 days prior to any date fixed for redemption, notice
by first class mail, postage prepaid, certified or registered,
return receipt requested, shall be given to WCD that Zemex or its
assignee(s) desire to redeem, addressed to WCD at its last
address as shown on the records of Zemex (a "Redemption Notice").
Each Redemption Notice shall state (i) the date fixed for
redemption (the "Redemption Date"); (ii) the total number of
Shares to be redeemed; (iii) the total Redemption Price for all
shares; and (iv) the place or places where the Shares to be
redeemed are to be surrendered for payment of the Redemption
Price.
(c) Surrender and Payment. If redemption occurs
pursuant to this Section 6.1, on or after the date fixed for
redemption, WCD shall surrender the certificate evidencing such
Shares to Zemex and shall thereupon be entitled to receive
payment therefor.
6.3 Payment upon Sale in a Public Market. Should WCD
desire to sell the Shares in a Public Market (a "Public Sale"),
such holder shall give Zemex at least 10 days written notice of
such Public Sale including the proposed sale price of the Shares.
In the event that the sale price for the Shares to be sold in the
Public Sale (net of any customary brokerage commissions) exceeds
the Redemption Price, the holder of such Shares shall pay to
Zemex the amount, if any, by which the sale price for the Shares
to be sold in the Public Sale exceeds the Redemption Price upon
consummation of such Public Sale. Any such Public Sale shall be
effected in an orderly manner so as to maximize value and
minimize market price disruption over a 30-day period. In no
event will the Shares be released from the Escrow (as hereinafter
defined) until arrangements have been made reasonably
satisfactory to Zemex that such amount will be paid to Zemex upon
consummation of such sale.
6.4 Payment upon Private Resale.
(a) Should WCD desire to sell its Shares in a
private resale of the Shares (a "Private Sale"), WCD shall give
Zemex at least 10 days written notice of such Private Sale
including the proposed sale price of the Shares; provided,
however, that any dividend by WCD of the Shares to WCD's
shareholders (which dividend must comply with the provisions of
Section 6.1 regarding restrictions on transfer) shall not, for
the purposes of this Section 6.4, constitute a Private Sale;
provided, however (and consistent with Section 6.1), such WCD
shareholders shall be subject to the provisions of this Article 6
to the same extent as WCD was prior to the transfer. In the
event that the sale price for the Shares to be sold in the
Private Sale exceeds the Redemption Price, Zemex shall be paid
the amount, if any, by which the sale price for the Shares to be
sold in the Private Sale exceeds the Redemption Price upon
consummation of such Private Sale. In no event will such Shares
be released from the Escrow (as hereinafter defined) until
arrangements have been made reasonably satisfactory to Zemex that
such amount is paid to Zemex upon consummation of such sale.
(b) The ability of WCD to sell its Shares in a
Private Sale is conditioned upon (i) the purchase price for the
Shares to be sold in the Private Sale being equal to or exceeding
90% of the Public Market Price (as hereinafter defined) for
shares of Zemex Common Stock and (ii) such Private Sale being
made to a non-affiliate (as defined in Section 9.10) of WCD or
its shareholders. The "Public Market Price" shall mean the
average closing price of the Company's Common Stock on the New
York Stock Exchange over the last 10 trading days prior to the
date of the Private Sale.
6.5 Obligation to Sell upon Demand in Certain
Circumstances. If at any time while WCD remains holder of the
Shares, in the event that market price for Zemex Common Stock
shall exceed the Redemption Price for a period of at least five
trading days, Zemex shall have the right to require the holder of
the Shares to sell its Shares in such Public Market (to the
extent WCD may do so under applicable securities laws) or to a
private purchaser(s) identified by Zemex within 30 days of
Zemex's written notice demanding such sale (in either event, a
"Demand Sale"). Notwithstanding the foregoing, such Demand Sale
shall be conditioned upon (i) WCD's receipt of no less than the
Redemption Price for its Shares in such Demand Sale and (ii)
evidence that such Demand Sale is permissible under applicable
securities laws. In the event that the sale price for the Shares
to be sold in the Demand Sale (net of any customary brokerage
commissions) exceeds the Redemption Price, Zemex shall be paid
the amount, if any, by which the sale price for the Shares to be
sold in the Demand Sale exceeds the Redemption Price upon
consummation of such Demand Sale. In addition, if such Demand
Sale is conducted through the Public Market, any such sale shall
be effected in an orderly manner so as to maximize value and
minimize price disruption over a 30-day period. In no event will
the Shares be released from the Escrow (as hereinafter defined)
until arrangements have been made reasonably satisfactory to
Zemex that amount will be paid to Zemex. upon the consummation of
such sale.
6.6 Escrow of Shares. In order to secure the
obligations of WCD as the holders of the Shares under this
Article 6, the parties to this Agreement hereby agree to place
the shares into escrow (the "Escrow") with Davis, Graham &
Stubbs, L.L.C. (the "Escrow Agent"). Pursuant to the terms of the
Escrow, the Escrow Agent shall hold the Shares in the Escrow
until the earlier of (i) the date the Shares are redeemed by
Zemex or its assignee(s) in accordance with the provisions of
Section 6.1 above; (ii) the Shares are sold in a Public Market
after compliance with the provisions of Section 6.2 above; (iii)
the Shares in a Private Resale in compliance with the provisions
of Section 6.3 above; (iv) the sale of such Shares in a Demand
Sale in compliance with the provisions of Section 6.4 above; or
(v) upon a sale of all or substantially all of the capital stock
or assets of Zemex.
6.7 Binding Effect. The rights and duties of Zemex
under this Article 6 are expressly assignable by Zemex to its
successors and assigns. The provisions of this Article 6 shall
survive any sale, pledge, gift hypothecation or other transfer of
Shares by WCD until such time as the Shares are released from the
Escrow.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 General Conditions. The obligations of each Party
to effect the transactions contemplated by this Agreement shall
be subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) No Prohibition. No order, statute, rule,
regulation, executive order, injunction, stay, decree or
restraining order shall have been enacted, entered, promulgated
or enforced by any court of competent jurisdiction or
governmental or regulatory authority or instrumentality that
prohibits the consummation of the transactions contemplated
hereby, and no litigation or governmental proceeding seeking such
an order shall be pending or threatened.
(b) Material Titles and Permits. Transfer to
Buyer of all real property titles and environmental, processing
or mining permits material to the WCD Talc Business shall have
been completed to Buyer's and its counsel's reasonable
satisfaction; provided, however, to the extent a permit is non-
transferable, Seller shall assist Buyer in its application for
new/replacement permits.
7.2 Conditions to Sellers' Obligations. Sellers'
obligations to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment of the following
conditions, any of which may be waived by Sellers in WCD's sole
discretion:
(a) Buyer's Performance. Buyer shall have
performed, in all material respects, the obligations required
under this Agreement to be performed by it at or prior to the
Closing.
(b) Representations and Warranties True;
Officer's Certificate. Certificates of senior officers of Buyer
and Zemex certifying that the representations and warranties of
Buyer and Zemex (respectively) contained herein shall be true and
correct, in all material respects, at and as of the Closing Date,
and pertaining to corporate authority, etc., in substantially the
form attached hereto as Exhibit E, shall be delivered at Closing.
(c) Payments and Assumption of Liabilities.
Sellers shall have received from Buyer the Purchase Price as
provided in Sections 3.1, 3.2 and 3.3 and received the executed
General Assignment, Bill of Sale and Assumption Agreement as
required by Section 1.4.
(d) Approval and Consents. Sellers shall have
received all necessary consents, approvals and authorizations,
and achieved satisfaction of such third party requirements, as
are necessary to consummate the transactions contemplated hereby.
(e) Opinion of Counsel of Buyer. Sellers shall
have received an opinion of Davis, Graham & Stubbs, L.L.C.,
counsel to Buyer, dated as of the Closing Date, substantially in
the form attached hereto as Exhibit F.
7.3 Conditions to Buyer's Obligations. Buyer's
obligations to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment of the following
conditions, any of which may be waived by Buyer in its sole
discretion:
(a) Sellers' Performance. Sellers shall have
performed in all material respects, the obligations required
under this Agreement to be performed by it at or prior to the
Closing.
(b) Representations and Warranties True;
Officer's Certificate. A certificate of senior officers of
Sellers certifying that the representations and warranties of
Sellers contained herein shall be true and correct, in all
material respects, at and as of the Closing Date, and pertaining
to corporate authority, etc., substantially in the form attached
hereto as Exhibit G, shall be delivered at Closing.
(c) Approvals and Consents. Buyer shall have
received approval of its Board of Directors and all other
necessary consents, approvals and authorizations, and achieved
satisfaction of such third party requirements, as are necessary
to consummate the transactions contemplated hereby.
(d) Opinion of Counsel of Sellers. Buyer shall
have received an opinion of Apruzzese, McDermott, Mastro &
Murphy, P.C., counsel to Sellers, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit H.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by Sellers. Sellers collectively,
and WCD individually, agree that they will indemnify and save and
hold Buyer harmless from and against any claim, cost, expense,
damage' liability, loss or deficiency suffered or incurred by,
Buyer (including, without limitation, reasonable attorneys fees
and other reasonable costs and expenses incident to any suit,
action or proceeding) ("Damages") arising out of or resulting
from, and will pay Buyer on written demand the full amount of,
any sum which Buyer may pay or may become obligated to pay in
respect of (i) any inaccuracy in any representation or the breach
of any warranty made by Sellers pursuant to this Agreement
(subject to the time period set forth in Section 8.3), (ii) any
failure by Sellers duly to perform or observe any covenant or
condition in this Agreement on the part of Sellers to be
performed or observed, (iii) any noncompliance with the
provisions of any applicable bulk sales law or regulation, (iv)
any claim of breach of contract or warranty under any agreement
with a customer of the WCD Talc Business which is based upon any
action or omission of Sellers prior to the Closing Date.
8.2 Indemnification by Buyer. Buyer agrees that it
will indemnify and save and hold Sellers harmless from and
against any Damages arising out of or resulting from, and will
pay Sellers on written demand the fuller amount of, any sum which
Sellers may pay or may become obligated to pay in respect of (i)
any inaccuracy in any representation or the breach of any
warranty made by Buyer pursuant to this Agreement, (ii) any
failure by Buyer duly to perform or observe any covenant or
condition in this Agreement on the part of Buyer to be performed
or observed, and (iii) any Assumed Liability asserted against
Sellers. With respect to claims for indemnification under clause
(i) or (ii) of the preceding sentence, Buyer shall be obligated
to indemnify Sellers only with respect to Damages for which
Sellers has given Buyer notice on or prior to the date which is
six months following the Closing Date.
8.3 Limitations on Sellers' Indemnification. Sellers'
indemnification obligations for Damages hereunder (a) shall be
limited in amount to $2,000,000 in the aggregate and (b) shall
not apply to any claim for Damages until either (i) an individual
claim exceeds $25,000 or (ii) the aggregate of all such claims
total $50,000, in which latter event Sellers' indemnity
obligation shall apply to all such claims regardless of size.
Sellers shall be obligated to indemnify Buyer only with respect
to Damages for which Buyer has given Sellers notice on or prior
to the date which is eighteen months following the Closing Date
(the "Indemnification Period"), except that the indemnification
obligations of the Sellers with respect to representations and
warranties relating to Longhorn's taxes in Section 4.1(r) hereof
shall continue with respect to any tax year or period prior to
the Effective Date until the expiration of all applicable
statutory periods of limitations, after giving effect to any
waiver, mitigation or extension thereof. All claims made by
Buyer during the Indemnification Period shall be counted in
determining whether the $25,000 threshold has been achieved.
Sellers shall be obligated to indemnify Buyer hereunder only with
respect to Damages for which Buyer has given Sellers notice
within the Indemnification Period. Sellers' indemnification
obligation under this Agreement shall not be subject to the
$25,000 threshold or the $2,000,000 cap to the extent Buyer
asserts a claim for Damages arising out of the assertion against
Buyer of an Excluded Liability.
8.4 Cooperation.
(a) Notice. Sellers and Buyer will give prompt
written notice to the other of any assertion, claim or demand
which Buyer or Sellers discovers or of which notice is received
after the Closing and which might give rise to a claim by Buyer
against Sellers under Section 8.1 hereof, or by Sellers against
Buyer under Section 8.2 hereof, stating in reasonable detail the
nature, basis and amount thereof.
(b) Claims for Money Damages. In case of any
claim for money damages by a third party, any suit for money
damages, any claim for money damages by any governmental body, or
any legal, administrative or arbitration proceeding with respect
to which the indemnifying party may have liability for money
damages under the indemnity agreements contained in Section 8.1
or Section 8.2 hereof, the indemnifying party shall be entitled
to participate therein, and to the extent desired, to assume the
defense thereof, and after notice from the indemnifying party of
its election so to assume the defense thereof, the indemnifying
party will not be liable to the indemnified party for any legal
or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof, other than reasonable
costs of investigation, unless the indemnifying party does not
actually assume the defense thereof following notice of such
election. Buyer or Sellers shall make available to the other and
its attorneys and accountants, at all reasonable times, all books
and records relating to such suit, claim or proceeding, and Buyer
and Sellers will render to each other such assistance as may
reasonably be required of each other in order to insure proper
and adequate defense of any such suit, claim or proceeding.
Buyer and Sellers will not make any settlement of any claim which
might give rise to liability of the indemnifying party hereunder
for money damages under the indemnity agreement contained in
Section 8.1 or 8.2 hereof without the consent of the other which
consent shall not be unreasonably withheld. If the indemnifying
party shall desire and be able to effect a monetary compromise or
settlement of any such claim and the indemnified party shall
refuse to consent to such compromise or settlement (to the extent
it relates to money damages), then the liability of the
indemnifying party to the indemnified party with respect to
settlement of such claim shall be limited to the amount so
offered in compromise or settlement.
(c) Claims for Environmental Work. In the case
of any assertion, claim or demand by any governmental body
requiring the performance of investigatory, removal or remedial
work with respect to environmental conditions at the Real
Property for which Buyer may seek indemnification, Buyer shall
permit Sellers to conduct and control such work (at its sole
expense) in cooperation with Buyer (and subject to Buyer's
consent and approval, which shall not be unreasonably withheld),
and shall give Sellers access to the Real Property and to the
books and records of the WCD Talc Business as may reasonably be
required, consistent with Section 5.8 and will make available
relevant Employees as may be reasonably required.
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. Any notice, request or other
communication required or allowed under this Agreement shall be
in writing and shall be deemed given (a) upon personal delivery,
(b) when sent by telecopy, provided that receipt thereof is
confirmed verbally or by return telecopy (c) on the first
business day after receipted delivery to a courier service which
guarantees next- business-day delivery, under circumstances in
which such guaranty is applicable, or (d) on the earlier of
delivery or three business days after mailing by United States
certified mail, postage and fees prepaid, to the appropriate
Party at the address set forth below or to such other address as
the Party so notifies the other in writing. Any notice sent by
telecopy a]so shall be sent by certified mail, but shall be
deemed to have been given when the telecopy has been transmitted.
As to Buyer:
By Personal Delivery, Courier or Certified Mail:
Suzorite Mineral Products, Inc.
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750, P.O. Box 703
Toronto, Ontario M5J 2S1
CANADA
By Telecopier Transmission: (416) 365-8094
With a Copy to:
By Personal Delivery, Courier or Certified Mail:
Zemex Corporation
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750, P.O. Box 703
Toronto, Ontario M5J 2S1
CANADA
By Telecopier Transmission: (416) 365-8094
With a Copy to:
By Personal Delivery, Courier or Certified Mail:
Davis, Graham & Stubbs, L.L.C.
Attn: J. Hovey Kemp, Esq.
1225 New York Avenue, N.W.
Suite 1200
Washington, D.C. 20005
By Telecopier Transmission: (202) 293-4794
As to Sellers:
By Personal Delivery, Courier or Certified Mail:
Whittaker, Clark & Daniels, Inc.
1000 Coolidge Street
South Plainfield, NJ 07080-1000
By Telecopier Transmission: (800) 833-8139
With a Copy to:
By Personal Delivery, Courier or Certified Mail:
Appruzzese, McDermott, Mastro & Murphy, P.C.
Attn: Barry Marell
Somerset Hills Corporate Center
25 Independence Blvd.
P.O. Box 112
Somerset, NJ 07938
By Telecopier Transmission: (908) 647-1492
9.2 Entire Agreement; Incorporation; Subsequent
Modifications. This Agreement, together with all schedules
attached hereto, contain the entire agreement between the Parties
and supersede the July 21, 1994 letter of intent and all other
prior oral or written agreements between the Parties with respect
to the subject matter hereof, and no party shall be liable or
bound to the other in any manner by any warranties,
representations, covenants or agreements except as specifically
set forth herein or expressly required to be made pursuant
hereto. The inclusion of matters in any schedule to this
Agreement does not constitute an admission or agreement of the
Parties that the listed matter, or the dollar amount represented
by the listed matter, is material or defines materiality for
purposes of this Agreement. This disclosure of information on
any of the Schedules hereto shall constitute a disclosure of such
information on every other Schedule on which such information
might have been required in order to render such other schedule
materially true, correct or not misleading. No modification of
this Agreement shall be effective unless set forth in writing and
signed by all of the Parties hereto.
9.3 Assignment; Binding Effect; Third Party
Beneficiaries. Buyer shall not have the right to assign this
Agreement or delegate its duties hereunder without the prior
written consent of Sellers except that Buyer may assign this
Agreement and delegate its duties hereunder to any other
Affiliate of Zemex, as defined in Section 9.10. This Agreement
shall be binding upon, and inure to the benefit of, the Parties
and their respective successors and assigns. This Agreement
shall not benefit or create any right or cause of action in or on
behalf of any person other than the Parties.
9.4 Expenses of Sale. Each Party shall bear its own
direct and indirect expenses incurred in connection with the
negotiation and preparation of this Agreement and the
consummation and performance of the transactions contemplated
hereby. Without limitation, such expenses shall include the fees
and expenses of all attorneys, accountants and other
professionals incurred in connection herewith, including all fees
incurred by Buyer to investigate the WCD Talc Business (and
except as provided in Section 5.7 with respect to sharing the
costs of the Environmental Audit).
9.5 Cooperation; Execution of Additional Documents.
Each Party hereto shall cooperate fully with one another and
shall execute such other and further documents as may be
reasonably necessary or proper for the consummation of the
transactions contemplated by this Agreement.
9.6 Bulk Sales Waiver. Buyer hereby waives compliance
with the provisions of legislation which relate to the sale of
property in bulk in connection with the transfer of the Purchased
Assets to Buyer.
9.7 Counterparts. This Agreement may be executed in
one or more counterpart copies, and such fully executed copies
shall be considered an original which together shall constitute
one Agreement.
9.8 Interpretation and Governing Law, Jurisdiction and
Service of Process. This Agreement shall be construed as though
prepared by both Parties hereto. Captions at the beginning of
each section and each subsection are solely for the convenience
of the Parties and shall not modify the text of this Agreement.
This Agreement shall be construed and governed by the laws of the
State of New Jersey without giving effect to the principles of
conflicts of laws.
9.9 Severability. If any portion of this Agreement is
declared by a court of competent jurisdiction to be invalid or
unenforceable after all appeals have either been exhausted or the
time for any appeals to be taken has expired, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
9.10 Definition of Affiliate. For purposes hereof, an
affiliate of a Party shall include any person or entity now or in
the future controlling, controlled by or under common control
with a Party.
9.11 Press Releases. Except as provided below, prior
to the Closing, the Parties will consult with each other before
issuing any press releases or otherwise making any public
statements with respect to this Agreement and the transactions
contemplated hereby, and neither Party shall issue any such press
release nor make any such public statement without the prior
written consent of the other Party, except as may be required by
law or by obligations pursuant to any listing agreement with any
securities exchange applicable to the Party or to any affiliate
of the Party. Sellers reserves the right to notify its
distributors and customers prior to Closing of the impending sale
hereunder.
9.12 United States Dollars. All dollar amounts
referred to in this Agreement are in lawful money of the United
States of America.
9.13 Survival of Covenants, Representations and
Warranties. The representations and warranties of the Parties
contained in Article 4 shall survive the Closing until the date
which is eighteen months following the Closing Date (other than
the representations and warranties in Section 4.1(r) which shall
survive the Closing until the expiration of Seller's indemnity
with respect thereto as set forth in Section 8.3), after which
time the Parties shall be released from any and all liability in
connection with representations and warranties. As to the
covenants of the Parties contained in Article 5 such covenants
shall continue indefinitely, except as may be expressly stated
therein. Except as provided in Section 8.4 or as otherwise
expressly stated herein, the Parties agree that their sole remedy
for breach of any representation, warranty or covenant contained
herein are the indemnification rights provided in Article 9
herein.
IN WITNESS WHEREOF, each of the Parties have caused
this Agreement to be executed in their respective names
individually and by their respective corporate officers, duly
authorized, as of the day and year first above written.
SELLERS:
WHITTAKER CLARK & DANIELS, INC.
By:
Michael C. Argyelan
President
CLARK MINERALS, INC.
By:
Edwin C. Davenport
President
CHEROKEE MINERALS, INC.
By:
Edwin C. Davenport
President
PIONEER TALC COMPANY
By:
Edwin C. Davenport
President
BUYER:
SUZORITE MINERAL PRODUCTS, INC.
By:
Name: Peter J. Goodwin
Title: President
ZEMEX:
ZEMEX CORPORATION
By:
Name: Peter J. Goodwin
Title: Vice President
THIS WORK REQUEST/COVERSHEET MUST ACCOMPANY ALL EDITS
DATE:____________________________ TIME:_________________________
DOCUMENT #: W403469.8 AUTHOR: J. Hovey Kemp
DELIVER TO: _________________ AUTHOR #: 0147 EXT: 1029
SEC: 2022
CLIENT: Zemex/WCD Talc CLIENT #: 260052.0005
TITLE OF DOC: Asset Purchase Agreement
PLEASE PROVIDE US WITH A SPECIFIC TIME.
"ASAP" AND "RUSH" PREVENT US FROM REALISTICALLY PRIORITIZING YOUR
WORK.
PREFERRED DATE/ ABSOLUTE DATE/
TIME NEEDED:_____________________ TIME
NEEDED:_______________________
( ) NEW DOCUMENT
( ) REVISIONS
( ) COPY AND SAVE ORIGINAL DOCUMENT
#:_________________________________
( ) PRINT OUT ONLY
( ) DELETE FOOTER (DOCUMENT # AND DATE)
PAPER SIZE: PAPER TYPE: SPACING:
( ) 8-1/2 x 11 ( ) White ( ) Single
( ) 8-1/2 x 14 ( ) Firm Letterhead ( ) Double
( ) _______________ ( ) Pers. Letterhead ( ) Dbl-Spaced
Draft/
( ) ________________ Single-Spaced Final
( ) As Is
( ) ___________________
SPECIAL INSTRUCTIONS: (NOTE: WILL REQUIRE MORE TURNAROUND TIME)
( ) Chart OTHER:
( ) OCR
( ) Redlining
( ) Proportional
( ) Right Margin Justify
04:53 pm
Version #: 008
03/24/95
Done By: Veronica Term #/Dir: B Total Time: \
=================================================================
======
OPERATOR USE ONLY:
Pages Input: Pages Revised L/M/H: Pages Printed: Date Done:
___________ ___________________ _____________ _____________
NAME:_________________ NAME:_________________
NAME:__________________
START TIME:___________ START TIME:___________ START
TIME:____________
STOP TIME:____________ STOP TIME:____________ STOP
TIME:_____________
TOTAL TIME:___________ TOTAL TIME:___________ TOTAL
TIME:____________
ZEMEX CORPORATION
1994 ANNUAL REPORT
1994 Growth
Investment in Alumitech
Acquisition of Greenback
Acquisition of talc operations
successful public offering
raises $18.5 million
Earnings per share up 267%
Net income up 337%
1995 Objectives
Complete expansion programs currently in place for feldspar,
mica and metal powder facilities
Begin large scale commercial production at Alumitech
Increase international sales
Seek new acquisitions and
business opportunities
Financial Highlights
1994 1993
1992
Summary of Operations
Net Sales
$55,306,000$47,958,000$42,020,000 Income from
Continuing
Operations 6,250,0003,188,000 838,000
Net Income 6,250,0001,852,000
949,000 Capital Expenditures 3,077,000 2,670,000
1,049,000
Financial Position at
Year End
Working Capital $26,046,000 $9,288,000
$9,431,000 Shareholders' Equity
54,052,00026,530,00028,381,000
Per Common Share
Net Income $1.15 $.43 $.23
ShareholdersO Equity 7.54 5.85
6.32
Average Common Shares and
Common Share
Equivalents Outstanding 5,421,533 4,292,583 4,127,694
Common Shares Outstanding
at Year End 7,168,153 4,535,283
4,491,834
To Our Shareholders
Two years ago, Zemex redefined its corporate strategy to
focus on improving and expanding its core businesses,
acquiring new assets and pursuing new business
opportunities. To this end, the results for the year
ended December 31, 1994 reflect the initial success of
this new strategy: net income of $6.25 million or $1.15
per share, and a substantially strengthened balance
sheet.
The overall improvement in the operating results is due
to increased sales volumes and decreased operating costs
in
all segments, as well as the introduction of new value
added products and the contribution of new businesses
acquired in 1994. To maintain and increase the rate of
growth achieved in 1994, the CorporationOs existing
operating groups have implemented programs which will
generate substantial revenue in 1995 and beyond.
Projects currently underway to enhance production and
profitability in the industrial minerals group include:
an expansion and modernization of the sodium feldspar
facility in Spruce Pine, North Carolina scheduled to be
completed by the fourth quarter of 1995 which will
increase capacity by 130,000 tons, potentially add annual
incremental revenue of $8.5 millon and decrease operating
costs by approximately 10-15%;
a new, more modern and efficient potassium feldspar
mine to supply the processing facility in Monticello,
Georgia;
an expansion at the mica processing plant in
Boucherville, Quebec which will increase capacity by
approximately 12,000 tons or 45% and provide significant
revenue growth potential; and
the introduction of new surface modified specialty
products by the recently acquired talc group.
The metal powders group will also grow dramatically in
1995 and 1996.
The copper powder plant purchased in September 1994 is
anticipated to generate incremental revenue of
approximately $8 million in 1995, and the atomized steel
product line is showing signs that it will yield
substantial revenue growth in 1995. Plans for future
additional capacity are being designed to meet
anticipated volume requirements in 1996 and beyond. To
further strengthen our position as a major U.S. supplier
of metal powders, and to benefit our customer base, a
metal powder blending facility is being constructed in
St. Mary's, Pennsylvania, the heart of the powdered
metallurgical industry, and is scheduled for completion
in the second quarter of 1995.
In addition to the growth from the core businesses, Zemex
is very optimistic about its investment in Alumitech,
Inc. which, in February 1995, was increased from 42% to
73%. As a result of this increased ownership, AlumitechOs
operating results will be consolidated going forward. In
1995, this will have the effect of increasing revenues by
more than $10 million and contributing to the growth in
operating income. During 1995, Alumitech will focus on
optimizing its existing facility and bringing its process
to full commercial operation. After developing a constant
source of feed, the next phase of growth for Alumitech
will come from the construction of a large scale
integrated plant. Upon completion, it is anticipated that
such a facility would generate incremental revenues in
excess of $18 million per year.
The Corporation continues to aggressively pursue
acquisition opportunities. ZemexOs acquisition strategy
focuses on acquiring operations that are currently
profitable but have the potential for significant upside
when enhanced by the skills and market positions that the
Corporation currently possesses. Management is
continually
seeking new opportunities and evaluating potential
targets.
It is the objective of Zemex and its management team to
search out opportunities to improve the profitability of
the Corporation and to improve the return on assets
currently employed. The primary objective of management
is to continue and accelerate the rate of growth of the
Corporation. With this said, the strength of the
Corporation is our employees and it is for their efforts
and enthusiasm that we are most grateful.
Richard L. Lister
President and Chief Executive Officer
Peter Lawson-Johnston
Chairman of the Board
Corporate
Overview
Feldspar
100%
The Feldspar Corporation
has operating mines and
facilities at:
Spruce Pine, North Carolina
Edgar, Florida
Monticello, Georgia
Product Groups
North America's largest
producer of feldspathic
materials
producer of clay and high purity
silica
sands
Major Products
sodium feldspar
potassium feldspar
kaolin
silica sand
mica
Markets Served
Primary
plumbing fixtures
wall and floor tile
electric porcelain
wiring devices
dinnerware
specialty glass
Markets Served
End Use
housing sector
(new and renovation)
commercial and industrial
construction
electrical/power
transmission and
distribution
1994 Highlights
10% increase in revenue
from existing facilities
increased demand for
feldspar remains strong
resulting in significant
growth potential
commenced expansion
and modernization of
Spruce Pine plant
1994 Contribution to
Product Revenues
39.2%
$21,666,000
1995 Objectives
accelerate revenue growth rate
complete expansion program in fourth quarter
expand export sales
develop new lower cost mine at Georgia
facility
Talc and Mica
100%
Suzorite Mineral Products, Inc. has operating mines
and facilities at:
Suzor Township, Quebec
Boucherville, Quebec
Diana, New York
Murphy, North Carolina
Van Horn, Texas
Product Groups
North America's only
producer of phlogopite mica
producer of talc and baryte
products
Major Products
mica
talc
baryte
Markets Served
Primary
reinforced plastics
sound dampening
asbestos replacement
ceramics
fillers
Markets Served End Use
automotive
carpet
paint
plastics
fillers
1994 Highlights
14% increase in revenue
from mica sales
acquired talc operations
sustained record of
very high growth and
profitability
dominant supplier of phlogopite mica in North
America
1994 Contribution to
Product Revenues
15.8%
$8,712,000
1995 Objectives
increase export sales
expand mica processing
capacity by 45%
develop new markets for mica
develop new talc products by
applying
proprietary surface modification
technology
Subsidiary Unit
Metal Powders
100%
Pyron Corporation has
operating facilities at:
Niagara Falls, New York
Maryville, Tennessee
Greenback, Tennessee
St. Mary's, Pennsylvania
Product Groups
producer of iron, steel,
copper, tin and alloy
metal powders
Major Products
atomized steel
atomized iron
sponge iron
copper, tin and alloy powders
distributors of nickel powder, manganese
sulphide,
etc.
Markets Served
Primary
bushings, bearings,
complex parts
Markets Served End Use
automotive industry
small appliance industry
1994 Highlights
49% increase in revenue
acquired the assets of Greenback Industries, Inc.,
a
copper powder producer
achieved largest capacity of non-ferrous metal
powders in North America
increased market demand for atomized ferrous
products
1994 Contribution to
Product Revenues
45.0%
$24,928,000
1995 Objectives
increase sales of atomized ferrous products
by 65%
complete blending facility in St. Mary's, PA
introduce new copper based products
Subsidiary Unit
Alumitech
73%
Alumitech, Inc. has
operating facilities at:
Streetsboro, Ohio
Cleveland, Ohio
Product Groups
producer/recycler of metallic and non-metallic
materials from secondary aluminum drosses and saltcake
a unique and proprietary process for recycling waste
drosses into marketable commercial products
Major Products
secondary aluminum ingots
mixed salts
high temperature insulation
abrasives
Markets Served
Primary
secondary aluminum
industry
Markets Served End Use
refractory
insulation
aluminum
1994 Highlights
achieved profitable operations
acquired ceramic fiber production facility
developed ceramic fiber insulation using ONMPO
from
the patented process
1994 Contribution to
Product Revenues
1995 Objectives
Alumitech was accounted for on an equity basis in
1994
upscale process to large reliable commercial
operation
upgrade commercial production of NMP
design new large scale integrated plant for
construction in 1996
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following is a discussion and analysis of the
financial condition and results of operations of the
Corporation for the years ended December 31, 1994, 1993,
and 1992, and certain factors that may affect the
CorporationOs prospective financial condition and
results of operations. The following should be read in
conjunction with the Consolidated Financial Statements
and related notes thereto included elsewhere herein.
Overview
The Corporation is a diversified producer of specialty
materials for a variety of industrial applications. The
Corporation operates in two principal business segments:
(1) industrial minerals, which includes The Feldspar
Corporation, Suzorite Mica Products Inc. and Suzorite
Mineral Products, Inc.; and (2) powdered metals, which
includes Pyron Corporation and Pyron Metal Powders, Inc.
In 1993, the Board of Directors refocused the
strategic
direction of the Corporation. Since then, the
Corporation
has sold certain non-core assets, and has undertaken
several strategic acquisitions and investments. In 1993,
the Corporation sold its 70% interest in Perangsang
Pasifik Senderian Berhad (OPPSBO), a tin dredging
operation in Malaysia, and its Virginia aplite facility,
and acquired Suzorite Mica Products Inc. (OSuzoriteO).
During 1994, Zemex purchased the assets of Greenback
Industries, Inc., the talc operations of Whittaker,
Clark & Daniels, Inc. and invested in Alumitech, Inc., a
company with a patented process for recycling aluminum
dross.
As a result of this strategic redirection, the
CorporationOs net sales have increased from $42.0
million in
1992 to $55.3 million in 1994, an increase of 31.6%, and
the Corporation has increased earnings from $0.9 million
in 1992 to $6.25 million in 1994.
Basis of Presentation
The Corporations acquisition of Suzorite in 1993 was
accounted for as a pooling of interests. Accordingly,
the financial results of the Corporation in all prior
fiscal periods are presented as though the Corporation
had always owned Suzorite. The CorporationOs 70%
interest in PPSB, which was sold in 1993, has been
presented separately in the CorporationOs financial
statements as a discontinued operation.
Results of Operations
Year Ended December 31, 1994 Compared to Year Ended
December 31, 1993
Net Sales 1994 1993 Change
Change
Industrial
Minerals$30,378,000$31,104,000$(726,000)(2.3)% Metal
Powders 24,928,000 16,854,000 8,074,000 47.9%
$55,306,000 $47,958,000 $7,348,000
15.3%
The CorporationOs net sales for the year ended December
31, 1994 were $55.3 million, an increase of $7.3
million, or 15.3% from 1993. The increase was
primarily the result of increased sales of the
CorporationOs feldspar, phlogopite mica, and metal
powder products, offset in part by decreased sales
resulting from the sale of the Virginia aplite facility
in the fourth quarter of 1993.
Net sales in the industrial minerals segment for
the year ended December 31, 1994 were $30.4 million, a
decrease of $0.7 million, or 2.3%, compared to 1993.
However, net sales for 1993 included $4.1 million
attributable to the Virginia aplite facility. When this
amount is excluded from the 1993 results, net sales in
the industrial minerals segment during 1994 increased by
$3.4 million or 12.5% above 1993. This increase was
primarily due to increased demand for the CorporationOs
sodium feldspar and phlogopite mica products fueled by
growth in the construction and automotive sectors of the
U.S. economy, the introduction of new products and some
price increases.
Net sales in the metal powders segment for the year
ended December 31, 1994 were $24.9 million, an increase
of $8.1 million or 47.9% from 1993. The increase was
attributable primarily to increased market acceptance of
the CorporationOs new atomized powder products and
strong demand for sponge iron powder. The asset purchase
of Greenback Industries, Inc., a copper powder producer,
contributed $3 million in incremental revenue in 1994.
Cost of Goods Sold
Cost of goods sold for the year ended December 31, 1994
was $40.6 million, an increase of $3.8 million or 10.4%
from 1993. As a percentage of net sales, cost of goods
sold decreased to 73.3% for the year ended December 31,
1994 from 76.6% in 1993. The decrease was primarily due
to fixed cost absorption associated with higher volumes
and to improvements in product mix with the introduction
of new higher value-added products. In addition, 1993
included certain non-recurring engineering and product
development costs associated with the CorporationOs
introduction of its atomized metal powder product line.
Selling, General and Administrative Expense
Selling, general, and administrative expense (OSG&A
expenseO) for the year ended December 31, 1994 increased
by 4.2% from 1993 to $6.6 million. As a percentage of
net sales, SG&A expense decreased from 13.2% in 1993 to
11.9% in 1994, reflecting the benefit derived from
higher volumes.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization for the year
ended December 31, 1994 was $2.3 million, a decrease of
$0.1 million, virtually unchanged from 1993.
Operating Income
Operating income for the year ended December 31, 1994
was $5.8 million, an increase of $4.6 million, or 372%,
from 1993. The increase was due in part to the reasons
discussed above. In addition, operating income for 1993
included restructuring charges of $1.25 million.
Excluding such restructuring charges, the increase was
$3.4 million or 135% and operating income before
restructuring charges as a percentage of net sales
increased from 5.2% in 1993 to 10.6% in 1994.
Interest Expense, Net
Interest expense for the year ended December 31, 1994
decreased by 52.6% from $0.9 million in 1993 to $0.4
million in 1994, reflecting lower levels of indebtness.
More than 50% of the CorporationOs long term debt was
repaid from the proceeds raised in the September 1994
public offering.
Provision for Income Taxes
In 1994, the Corporation realized an income tax recovery
of $1.5 million as the result of an adjustment for the
realization of a tax benefit arising from loss
carryforwards for financial statement purposes in
accordance with SFAS 109. SFAS 109 requires the
recognition of the benefit of tax loss carryforwards
with an assessment as to whether a valuation allowance
should be established for deferred tax assets. The
recognition of the $1.5 million benefit was necessitated
primarily by revisions to the estimated future taxable
income during the CorporationOs tax loss carryforward
period.
As a result of the $1.5 million tax recovery, the
Corporation's provision for income taxes for the year
ended December 31, 1994 decreased to a recovery of $0.7
million from a provision of $0.5 million in 1993.
Net Income and Earnings Per Share
As a result of the factors discussed above, net income
for the year ended December 31, 1994 was $6.25 million,
an increase of $4.4 million from 1993. As the impact of
the income tax recovery is significant, the
CorporationOs earnings per share have been restated
below under two different scenarios: (i) without the
accelerated recognition of the benefit of previous
yearsO tax loss carryforwards (i.e. before application
of SFAS 109); and (ii) on a fully taxed basis (i.e. as
though the Corporation had no tax loss
carryforwards available).
1994 1993
1992
Pre-tax Income $5,579,000
$2,322,000
$1,373,000
Primary EPS, as reported $1.15
$0.43
$0.23
EPS, without accelerated
recognition of tax loss
carryforwards $0.88 $0.43
$0.23
EPS, fully taxed $0.64
$0.34
$0.23
Year Ended December 31, 1993 Compared to Year Ended
December 31, 1992
Net Sales
The Corporation's net sales for the year ended December
31, 1993 were $48.0 million, an increase of $5.9
million, or 14.1%, compared to 1992.
Net sales in the industrial minerals segment for 1993
were $31.1 million, an increase of $1.7 million, or
5.8%, compared to 1992. This increase was primarily due
to an increase in sales volume of feldspar to the
ceramics industry. Increased sales of feldspar in 1993
offset the effect of the loss of two months of net sales
from the Virginia aplite facility, which was sold in
November 1993.
Net sales in the metal powders segment for the year
ended December 31, 1993 were $16.9 million, an increase
of $4.2 million, or 33.5%, from 1992. The increase was
primarily due to the CorporationOs success in increasing
sales from its copper powder production facility, which
was purchased in 1992, and to increased sales of other
metal powder products, particularly the Corporation's
new atomized product line, which commenced production in
1992.
Cost of Goods Sold
Cost of goods sold for the year ended December 31, 1993
was $36.7 million, an increase of $4.7 million, or
14.6%, from 1992. As a percentage of net sales, cost of
goods sold remained relatively unchanged at 76.6%.
Selling, General and Administrative Expense
SG&A expense for the year ended December 31, 1993
increased by 10.2% from 1992 to $6.3 million. As a
percentage of net
sales, SG&A expense decreased from 13.7% in 1992 to
13.2% in 1993. General corporate expenses declined as a
result of staff reductions and the CorporationOs
strategic decision to decentralize its operations by
increasing responsibility and authority at the
divisional level. The decrease in corporate expenses
during 1993 was offset by increased SG&A expense in the
CorporationOs operating divisions.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization for the year
ended December 31, 1993 decreased by 3.2% from 1992, to
$2.4 million.
Restructuring Charges
During 1993, the Corporation incurred $1.3 million in
restructuring charges. The charges related to severance
payments made to a former executive officer, additional
write-downs taken on property owned in Connecticut which
was held for resale, the closure of the Asheville, North
Carolina office and the relocation of certain senior
management to Atlanta, Georgia.
Operating Income
Operating income for the year ended December 31, 1993
was $1.2 million, a decrease of $0.5 million, or 28.8%,
from 1992. Prior to restructuring charges, operating
income was $2.5 million, an increase of $0.8 million, or
43.2%, from 1992. The market for mica and feldspathic
materials gained strength throughout 1993 and this
segment was able to maintain its operating profit.
During 1993, the metal powders segment experienced a
decline in operating income of $0.3 million, or 20.3%,
which was due to expenses incurred in the start-up of
the atomization plant. The profitability of the metal
powder operations improved slightly but was insufficient
to compensate for the startup expenses incurred.
Interest Expense, Net
Interest expense for the year ended December 31, 1993
increased by 2.3% from 1992 to $0.9 million as a result
of a modest increase in the average amount of total debt
outstanding.
Other Income
The Corporation had other income of $3.3 million in
1993, resulting primarily from a gain on the sale of the
Virginia aplite facility of $3.7 million, which was
partially offset by costs related to the acquisition of
Suzorite and other miscellaneous income and expense
items.
Provision for Income Taxes
The Corporation's provision for income taxes for the
year ended December 31, 1993 was $0.5 million, an
increase of 10.8%, from 1992. This increase related
entirely to an increase in foreign income taxes. Income
taxes on domestic income in 1993 and 1992 were offset by
the recognition of the benefit of operating loss
carryforwards in each year.
Loss from Discontinued Operations
The Corporation recorded a loss of $1.3 million from
discontinued operations in 1993, which consisted of the
CorporationOs 70% interest in a Malaysian tin dredging
company, PPSB. The loss consisted of two components: (i)
$0.1 million from operations during the year; and (ii)
$1.2 million from the disposal of these operations.
Net Income
As a result of the factors discussed above, net income
for the year ended December 31, 1993 was $1.9 million,
an increase of $0.9 million, or 95.2%, from 1992.
Liquidity and Capital Resources
The Corporation has principally funded its extraction
and processing activities through cash flow from
operations, bank debt and the sale of common stock and
warrants. During the most recent three-year period ended
December 31, 1994, the Corporation funded all capital
acquisitions and debt reduction from a combination of
additional debt, cash flow from operations, proceeds
from the sale of operations not considered consistent
with its strategic focus and, in addition, in September
1994 the Corporation completed a public offering,
raising net proceeds of approximately $18.5 million.
These funds were utilized in part to repay long term
debt and fund acquisitions.
In 1994 there were two asset aquisitions that
impacted liquidity. The September 15, 1994 acquisition
of the assets of Greenback Industries, Inc. and the
December 1, 1994 acquisition of certain assets of
Whittaker, Clark & Daniels Inc. have, at December 31,
1994, resulted in an increase in non-cash working
capital of approximately $5.0 million. In addition, the
prepayment of certain long term debt facilities resulted
in an increase of $3.4 million in working capital by
eliminating the related current portion of the long term
debt.
Cash Flow from Operations
The Corporation had $26.0 million of working capital at
December 31, 1994, compared to working capital of $9.3
million at December 31, 1993. Net cash provided by
operating activities for the year ended December 31,
1994 was $2.6 million, up $0.8 million or 50% relative
to 1993.
Financing Agreements
As a result of a successful public offering in September
1994, the Corporation raised $18.5 million net and paid
down more than 50% of its long term debt, including its
revolving credit loan and Suzorite Mica Products Inc.Os
term credit facility.
Pyron Metal Powders, Inc. has issued two promissory
notes to the former owners of Greenback in connection
with the acquisition of those operations. One promissory
note with an aggregate principal amount outstanding as
of December 31, 1994 of $650,000 bears interest at 7%
with principal due in two equal instalments of $325,000
on September 15, 1995 and 1996, respectively. A second
note with a principal amount outstanding as of December
31, 1994 of $413,913 is non-interest bearing with
monthly principal payments of $12,500 due commencing
October 15, 1994 until the final
payment of $12,313 due September 15, 1997.
Pyron Corporation (OPyronO) entered into a lease
agreement on November 29, 1989 with the Niagara County
Industrial Development Agency (the OAgencyO) to
partially finance the construction of a new
manufacturing facility, acquire and install equipment
and machinery, and renovate the existing Pyron facility
for the purpose of manufacturing atomized steel powders.
The agreements authorized the Agency to issue and sell
Industrial Development Revenue Bonds in the aggregate
principal amount of $7.7 million to provide funds for
the project. While the bonds are not the obligation of
Pyron, the lease agreement requires Pyron to make
quarterly rental payments to the Agency equal to the
debt service under the sinking fund requirements and
interest on the outstanding principal. The amount
outstanding at December 31, 1994 was $5.1 million.
PyronOs payments under the lease agreement are $0.5
million annually until paid. The bonds bear interest at
a variable rate not to exceed 15.0% per annum. The bond
rate at December 31, 1994 was 5.65%, at December 31,
1993 was 3.3% and at December 31, 1992 was 4.4%. Pyron
has the option to convert the bonds to a fixed interest
rate at any time during the lease term. Under the lease
agreement, Pyron may purchase the facility at any time
during the lease term, which expires November 1, 2004,
by paying the outstanding principal amount of the bonds
plus $1.
At December 31, 1994, the current portion of long
term debt for the Corporation was $1.1 million. In March
1995 the Corporation entered into a $25 million credit
agreement with two banks. The agreement provides for an
acquisition facility, a capital expenditure facility and
an operating facility. Outstanding amounts bear interest
at rates which can vary from Libor plus 1.25% to Libor
plus 2.25%, depending on certain financial statistics.
The credit agreement is secured by certain assets of the
Corporation. As of March 21, 1995, no draws had been
made under the facility.
Capital Expenditures
The Corporation's primary capital activities in the past
involved the acquisition and development of industrial
materials properties and facilities and necessary
capital investments to maintain
operating viability and meet environmental, health and
safety standards at its existing operations. During
1994, capital expenditures were $3.1 million compared to
$2.7 million and $1.4 million for the years ended
December 31, 1993 and 1992, respectively.
The Corporation currently has several major capital
programs underway: the expansion of the Spruce Pine,
North Carolina facility, the expansion of the
Boucherville, Quebec plant, and the
construction of a blending facility in St. Mary's,
Pennsylvania. The programs, which will require 1995
expenditures of approximately $16 million, will be
funded by cash on hand, cash flow from operations and
debt.
Although the CorporationOs capital budgets provide
for certain reclamation and environmental compliance
activities, management believes that it is
environmentally responsible and that the cost of the
CorporationOs environmental compliance should be minor
in nature and have no material adverse effect on the
Corporation's results of operations or financial
condition in 1995.
The Corporation is not currently party to any
definitive acquisition agreements with respect to
additional property or other acquisitions. The
Corporation will, however, continue to monitor potential
strategic acquisitions that would enhance its current
activities.
Seasonality and Inflation
Sales of the Corporation's products are moderately
seasonal. Inflation in recent years has not adversely
affected the Corporation's results of operations or
costs, and is not expected to adversely affect the
Corporation in the future unless it grows substantially
and the markets for industrial minerals and metal
powders suffer from a negative impact on the economy in
general.
Capital Stock.
The capital stock of Zemex Corporation is traded on the
New York Stock Exchange. Warrants, which were part of
the Stock
Rights Offering in 1990 (see Note 9 to the Corporation's
consolidated financial statements), are traded on the
National Association of Securities Dealers Automated
Quotation (ONASDAQO) system. The price range in which
the stock and warrants has traded is shown for the past
two years in the following tables.
Capital Stock Prices
1994 Q1 Q2 Q3 Q4 Year
High 7 11 7/8 12 1/4 11 12
1/4 Low 6 1/4 6 1/8 9 5/8
7 3/4 6 1/8
Close 6 3/8 11 1/2 10 3/4 8 5/8
85/8
1993 Q1 Q2 Q3 Q4
Year High 5 7/8 6 5/8 8 7
7/8 8 Low 4 1/2 5 7/8 6 5/8 6
3/4 4 1/2
Close 4 1/2 6 5/8 7 1/2 6 3/4
6 3/4
In the fourth quarter of each of 1994, 1993 and 1992,
the Corporation declared a 2 percent stock dividend.
As of December 31, 1994, there were
approximately 1,540 holders of record of the
Corporation's capital stock. This number includes
shares held in nominee name and, thus, does not reflect
the number of holders of a beneficial interest in the
stock.
Warrant Prices
1994 Q1 Q2 Q3 Q4 Year
High 7/8 2 1/2 2 3/4 2 1/2
2
3/4 Low 1/4 3/8 1 l/4
5/8 1/4
Close 3/8 2 1/4 2 1/4 5/8
5/8
1993 Q1 Q2 Q3 Q4
Year High 1/4 1/2 7/8
1 1 Low 1/4 1/4 1/2
7/8 1/4
Close 1/4 1/2 7/8 7/8
7/8
The warrants began trading on the NASDAQ under the
symbol OZMEXWO in July 1990 (see Note 9 to the
Corporation's consolidated financial statements).
Independent AuditorsO Report
To the Shareholders and the Board of Directors of Zemex
Corporation
We have audited the accompanying consolidated balance
sheets of Zemex Corporation and Subsidiaries as of
December 31, 1994 and 1993 and the related consolidated
statements of income, shareholdersO equity, and cash
flows for each of the three years in the period ended
December 31, 1994. These financial statements are the
responsibility of the CorporationOs management. Our
responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We
believe our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial
statements present fairly, in all material respects, the
financial position of Zemex Corporation and Subsidiaries
as of December 31, 1994 and 1993 and the results of
their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles
in the United States.
Deloitte & Touche
Chartered Accountants
Toronto, Ontario
February 15, 1995
Management Report
The Management of Zemex Corporation and Subsidiaries has
the responsibility for preparing the consolidated
financial statements presented in this Annual Report and
for their accuracy and integrity. The statements have
been prepared in conformity with generally accepted
accounting principles in the United States, and include
informed judgements and estimates as required. Other
financial information in this Annual Report is
consistent with the financial statements.
The Zemex Corporation system of internal controls
is designed to provide reasonable assurance, at a
justifiable cost, as to the reliability of financial
records and reporting and the protection of assets. This
system includes organizational arrangements with clearly
defined lines of responsibility.
Deloitte & Touche, independent auditors, have
audited the consolidated financial statements of Zemex
Corporation and their opinion is above.
Zemex Corporation has formal standards of corporate
conduct and policies regarding high standards of ethics
and financial integrity. These policies have been
disseminated to appropriate employees and internal
control procedures provide reasonable assurance that
violations of these policies, if any, are detected.
Allen J. Palmiere Richard L. Lister
Chief Financial Officer President and Chief Executive
Officer
Audit Committee Report
The Audit Committee of the Board of Directors is
composed of three independent directors, Patrick H.
O'Neill, Chairman, Thomas B. Evans, Jr. and John M.
Donovan. The Committee held four meetings during 1994.
The Audit Committee oversees the financial reporting
process of the Corporation on behalf of the Board of
Directors. In fulfilling its responsibility, the
Committee recommended to the Board of Directors, subject
to shareholder approval, the selection of the
CorporationOs independent auditors. The Audit Committee
met with Management and representatives of the auditors,
Deloitte & Touche, to review accounting, auditing and
financial reporting matters. The Committee met with
Deloitte & Touche representatives without Management
present.
Patrick H. OONeill
Chairman, Audit Committee
Zemex Corporation
Consolidated Balance Sheets
December 31
1994 1993
Assets
Current Assets
Cash and cash equivalents
$8,343,000
$3,796,000
Accounts receivable
(less allowance for doubtful
accounts of $414,000
at December 31, 1994
and $370,000
at December 31, 1993)
(Note 15) 10,678,000
6,949,000
Inventories (Note 3) 16,490,000
8,687,000
Prepaid expenses 660,000
480,000
36,171,000
19,912,000 Investment (Note 2) 2,286,000
D
Property, Plant and Equipment
(Notes 4 and 8) 29,020,000
25,358,000
Other Assets (Note 5) 3,387,000
3,144,000
$70,864,000
$48,414,000
Liabilities and ShareholdersO Equity
Current Liabilities
Bank indebtedness $180,000
$595,000
Accounts payable and accrued
liabilities 8,474,000
5,433,000
Accrued income taxes 397,000
70,000
Current portion of long term debt
(Note 8) 1,074,000
4,526,000
10,125,000
10,624,000 Long Term Debt (Note 8) 5,461,000
8,735,000
Other Non-Current Liabilities 549,000 482,000
Deferred Income Taxes (Note 6) 677,000 2,043,000
16,812,000 21,884,000
Commitments (Notes 4 and 11)
ShareholdersO Equity
Common stock (Note 9) 7,168,000 4,535,000
Paid-in capital 38,291,000 17,910,000
Retained earnings 11,668,000 6,738,000
Note receivable from shareholder
(Note 9) (1,749,000) (1,749,000)
Cumulative translation adjustment(1,326,000) (904,000)
54,052,000 26,530,000
$70,864,000 $48,414,000
See Notes to the Consolidated Financial Statements
Zemex Corporation
Consolidated Statements of ShareholdersO Equity
Years ended December 31
Note
Receivable CommonPaid-in-
Retained fromCumulative
Stock Capital
EarningsShareholderTranslationTotal
Balance at
December
31, 1991$3,988,000$16,765,000$7,508,000$D
$128,000$28,3
89,000
Stock
Issued
to
Shareholder
(Note 9)357,0001,392,000 D(1,749,000) D D
Stock
Dividend
(Note 9) 59,000 286,000(346,000) D D
(1,000)
Net Income
for the YearD D 949,000 D D
949,000
Translation
AdjustmentD D D D
(956,000)(956,000)
Balance at
December 31,
1992
4,404,00018,443,0008,111,000(1,749,000)(828,000)28,3
81,000
Stock
Issued
to Former
Officer 50,000 300,000 D D D
350,000
Stock Dividend
(Note 9) 81,000 520,000(604,000) D D
(3,000)
Cash Dividend
Paid by
Suzorite
Mica Products
Inc. (Note 9)D D (2,621,000) D D
(2,621,0 00)
Reduction of
Capital by
Suzorite
Mica Products
Inc. (Note 9) D(1,353,000) D D
D(1,353,0
00)
Net Income
for the YearD D 1,852,000 D
D1,852,000
Translation
AdjustmentD D D D
(76,000)(76,000)
Balance at
December 31,
1993
4,535,00017,910,0006,738,000(1,749,000)(904,000)26,5
30,000
Stock Issued
for Cash
(Note 9)2,348,00018,174,000D D D
20,522,000
Stock
Dividend
(Note 9)146,0001,171,000(1,320,000) D D
(3,000)
Stock
Options
and
Warrants
Exercised
(Note 9) 56,000 357,000 D D D
413,000
Stock
issued
in
Connection
with talc
Purchase
(Note 2)136,0001,091,000 D D D
1,227,000
Stock
Purchased
for
Cancellation
(Note 9)(53,000)(412,000) D D D
(465,000)
Net Income
for the YearD D 6,250,000 D D
6,250,000
Translation
AdjustmentD D D
D(422,000)(422,000)
Balance at
December 31,
1994
$7,168,000$38,291,000$11,668,000$(1,749,000)$
(1,326,000)$54,052,000
See Notes to the Consolidated Financial
Statements Zemex Corporation
Consolidated Statements of Income
Years ended December 31
1994 1993
1992 Net Sales
$55,306,000$47,958,000$42,020,000 Costs and Expenses
Cost of goods sold
40,552,00036,742,00032,061,000
Selling, general and
administrative 6,598,000 6,331,000
5,745,000
Depreciation, depletion and
amortization 2,315,000 2,398,000
2,477,000
49,465,00045,471,00040,283,000 Operating Income before
Restructuring Charges 5,841,000 2,487,000
1,737,000 Restructuring Charges (Note 10) D
1,250,000 D Operating Income 5,841,000 1,237,000
1,737,000
Other Income (Expenses)
Interest expense, net (Note
8)(425,000)(896,000)(876,000) Gain on sale of
investment
(Note 2) D D
205,000
Other, net (Notes 2 and 10) 163,000 3,317,000
196,000 (262,000) 2,421,000
(475,000)
Income before Provision
for Income Taxes 5,579,000 3,658,000
1,262,000
(Recovery of) Provision for
Income Taxes (Note 6) (671,000) 470,000
424,000
Income from Continuing Operations
6,250,0003,188,000838,000
Discontinued Operations (Note 2)
Income (loss) from operations,
net of income taxes:
1994 and 1993 D nil;
1992 D $120,000 D (89,000)
111,000
Loss on disposal D (1,247,000) D
Income (loss) from discontinued
operations D (1,336,000)
111,000
Net Income $6,250,000$1,852,000
$949,000
Income (Loss) per Share
Continuing operations $1.15 $.74
$.20
Discontinued operations D (.31)
.03
Net $ 1.15 $.43
$.23
Average Common Shares and
Common Share Equivalents
Outstanding 5,421,533 4,292,583
4,127,694
See Notes to the Consolidated Financial Statements
Zemex Corporation
Consolidated Statements of Cash Flows
Years ended December 31
1994 1993
1992 Cash Flows from Operating
Activities
Income from continuing
operations$6,250,000$3,188,000$838 ,000
Adjustments to reconcile income
from continuing operations
to net cash
flows from continuing
operating activities
Depreciation, depletion and
amortization 2,315,000 2,398,000
2,477,000 Loss on assets held for resale and gain
on investment (Notes 2 and 10)D 300,000
(205,000) (Decrease) increase in deferred income
taxes (1,366,000) 393,000
275,000 Share of net income of investee(267,000)
D D Loss (gain) on sale of property,
plant and equipment 15,000(3,689,000)
D Other assets (63,000) (48,000)
(152,000) Increase (decrease) in
non-current liabilities 67,000 62,000
(141,000) Changes in non-cash working
capital items (Note
14)(4,311,000)(844,000)(1,179,000)
Net cash provided by operating
activities 2,640,000 1,760,000
1,913,000
Cash Flows from Investing
Activities
Additions to property, plant and
equipment
(3,077,000)(2,670,000)(1,049,000) Assets acquired in
connection
with acquisitions (Note 2)(4,888,000)D
(344,000) Retirement of property, plant and
equipment D D
40,000
Proceeds from sale of assets
(Note 2) 78,000 5,479,000
681,000 Additions to assets held for resaleD
(134,000)(646,000) Investment (Note 15)
(2,019,000) D D
Promissory notes (371,000) D D
Net cash provided by (used in)
investing activities(10,277,000)
2,675,000(1,318,000)
Cash Flows from Financing
Activities
Proceeds from long term debt 266,000 4,827,000 D
Decrease in restricted cash D D
269,000 Proceeds (payments) net, on bank
indebtedness (415,000)
520,000(1,676,000) Repayment of long term
debt(8,094,000)(3,322,000)(811,000) Cash paid in lieu
of
fractional shares (3,000) (3,000)
(2,000)
Due to an affiliated company D
D(1,373,000)
Dividend paid (Note 9) D(2,621,000) D
Issuance of common stock (Note 9)20,935,000350,000 D
Purchase of common stock for ]
cancellation (Note 9) (465,000) D D
Reduction of common stock (Note 9)D (1,353,000) D
Net cash provided by (used in)
financing activities
12,224,000(1,602,000)(3,593,000)
Effect of Exchange Rate
Changes on Cash (40,000) (26,000)
(91,000)
Net Increase (Decrease) in
Cash from Continuing
Operations 4,547,000 2,807,000(2,907,000)
Net Cash Provided by (Used In)
Discontinued Operations D (207,000) 16,000
Net Increase (Decrease) in
Cash4,547,0002,600,000(2,891,000) Cash and Cash
Equivalents at
Beginning of Year 3,796,000 1,196,000 4,087,000
Cash and Cash Equivalents at
End of Year $8,343,000$3,796,000$1,196,000
Supplemental Disclosure of
Cash Flow Information
Income taxes paid $233,000 $D
$215,000 Interest paid 573,000
891,000 835,000
Supplemental Disclosure of
Non Cash Activities
Notes issued in connection
with purchase of assets
(Note 2) $1,102,000 $D
$43,000 Stock issued in connection with
talc purchase (Note 2) 1,227,000 D
D Assumption of liabilities in
connection with asset
purchases 793,000 D
1,015,000
See Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
1. Summary of Significant Accounting Policies
a. Principles of Consolidation
The consolidated financial statements include the
accounts of Zemex Corporation and its wholly-owned
subsidiaries (the "Corporation"). All material
intercompany transactions have been eliminated. As
discussed in Note 2, the acquisition of Suzorite Mica
Products Inc. ("Suzorite") has been accounted for as a
pooling of interests and the sale of the Corporation's
70% interest in Perangsang Pasifik Sdn. Bhd. ("PPSB"), a
tin dredging operation in Malaysia, has been reported as
a discontinued operation. The Corporation accounts for
its 42% equity interest in Alumitech, Inc. acquired in
June 1994 on an equity basis.
b. Inventories
Inventories are stated at the lower of cost or market
and are computed on the average cost method. It is not
practical to segregate finished products from ore and
concentrates. Supplies are stated at cost on the first-
in, first-out or average cost method.
c. Property, Plant and Equipment
Property, plant and equipment are recorded at cost.
Repairs and maintenance are charged to expense as
incurred. Expenditures for major renewals and
improvements are capitalized. When assets are sold or
otherwise retired, the cost and accumulated depreciation
or depletion are removed from the accounts and any gain
or loss is included in results of operations. Provisions
for depreciation are based upon estimated useful lives,
using principally the straightline method. Depletion of
mining properties and depreciation of other mining
assets are computed on the unit-ofproduction method,
except in the case of the Corporation"s Suzorite
operation where the estimated reserves exceed the
expected production during the term of the mining lease.
The Suzorite mining lease rights and deferred costs,
including all preproduction and set-up costs, are
amortized using the straight-line method over the term
of the mining lease.
d. Postretirement Benefits
Pension Plans
The funding policy of the Corporation, generally, is to
contribute annually at a rate that is intended to
provide for the cost of benefits earned during the year
and which will amortize prior service costs over periods
of 10 to 30 years, subject to Internal Revenue Service
limits for deductible contributions.
Healthcare and Other Postretirement Benefits Other Than
Pensions
Effective January 1, 1993, the Corporation adopted
Statement of Financial Accounting Standards (SFAS) No.
106 D "Employees" Accounting for Postretirement Benefits
Other Than PensionsO. This Statement requires the
accrual of all postretirement benefits other than
pensions during the years in which employees render the
necessary services to be entitled to receive such
benefits. In prior years, the expense was recognized by
expensing annual insurance premiums when paid. The 1994
and 1993 amounts include the present expense and the
transition liability which is being amortized over
twenty years as allowed by the SFAS No. 106 (Note 7).
e. Foreign Currency Translation
The functional currency for the CorporationOs foreign
operations is the local currency. Foreign currency
assets and liabilities are translated using the exchange
rates in effect at the balance sheet date. The effect of
exchange rate fluctuations on translating foreign
currency assets and liabilities into U.S. dollars is
accumulated as part of the cumulative translation
adjustment component of shareholders' equity. Results of
operations and cash flows are translated using the
average exchange rates during the year. Gains and losses
from foreign currency transactions are included in net
income for the year.
f. Research and Development Expense
Research and development expense was $315,000 in 1994,
$371,000 in 1993 and $280,000 in 1992.
g. Provision for Future Reclamation Costs
Costs for future reclamation have been provided for
based upon estimated future reclamation costs allocated
over the expected productive life of the quarries.
h. Income Taxes
Effective January 1, 1993, the Corporation adopted
Statement of Financial Accounting Standards (SFAS) No.
109 D "Accounting for Income Taxes". This Statement
requires the liability method of accounting for income
taxes rather than the deferral method previously used.
Because of the valuation reserves established on the
deferred tax asset related to the net operating loss
carry-forwards, the cumulative effect of this accounting
change and the impact on the 1993 income tax provision
was not material.
i. Earnings Per Share
Earnings per share is based upon the weighted average
number of common share and common share equivalents
outstanding. Common share equivalents include stock
options issued under employee stock option plans (Note
9), warrants issued under a stock rights offering in
1990 (Note 9), warrants issued as partial consideration
for the acquisition of Suzorite (Note 2) and stock
issued under the Key Executive Stock Purchase Plan (Note
9).
j. Bond Issuance Costs
Costs associated with the issuance of Industrial Revenue
Bonds were deferred, are being amortized over the term
of the bonds on a straight-line basis and the
unamortized balance is included in other assets.
k. Other Assets
Other assets include assets held for sale which are
stated at the lower of cost or estimated net realizable
value. In determining the estimated net realizable
value, the Corporation deducts from the estimated
selling price the projected costs to bring the assets
into a saleable condition, to dispose of the assets and
to hold the property to an expected date of sale.
Intangible assets are evaluated periodically and, if
conditions warrant, an impairment valuation is provided.
l. Cash Equivalents
For purposes of the consolidated statement of cash
flows, highly liquid investments with original
maturities of three months or less, when purchased, are
considered as cash equivalents.
2. Acquisitions and Dispositions
Acquisitions
Investment in Alumitech, Inc.
In June 1994, the Corporation acquired 42% of the
outstanding capital stock of Alumitech, Inc.
("Alumitech") by investing $2,000,000 to acquire
treasury stock of Alumitech. Alumitech, an aluminum
dross processor, has developed proprietary technology
that enables it to convert 100% of its dross feed into
marketable products. As part of the transaction the
Corporation acquired call options which enable it to
acquire an additional 30% of the outstanding capital
stock of Alumitech for 412,500 shares of common stock of
Zemex. The Corporation has granted a put option whereby
it may be obligated to purchase an additional 30% of the
outstanding capital stock of Alumitech for 105,000
shares of common stock of Zemex. Puts and calls
representing 15% of the capital stock of Alumitech have
been granted to or received from Dundee Bancorp Inc.
("Dundee"), which owns approximately 30% of the
outstanding common stock of the Corporation (Note 17).
Acquisition of the assets of Greenback Industries, Inc.
In September 1994, the Corporation, through its wholly
owned subsidiary, Pyron Metal Powders, Inc., acquired
the assets and assumed certain liabilities of Greenback
Industries, Inc. ("Greenback"). Consideration for the
purchase was $500,000 in cash, the issuance of two
promissory notes having principal amounts of $650,000
and $451,563, respectively, and the assumption of
certain current liabilities aggregating $526,000. The
Greenback facilities provide the Corporation with
increased capacity to produce powdered copper as well as
powdered tin and powdered copper and tin alloys.
Acquisition of the talc operations of Whittaker, Clark &
Daniels, Inc.
In December 1994, the Corporation acquired from
Whittaker, Clark & Daniels, Inc. ("WCD") certain assets
including its talc operations. Consideration for the
purchase included $4,388,000 in cash, 136,360 shares of
common stock of Zemex with an ascribed value of
$1,227,000 and the assumption of certain current
liabilities directly relating to the operations acquired
aggregating $267,000. Concurrent with the purchase, the
Corporation entered into an agreement with WCD whereby
WCD agreed to act as the exclusive marketing,
distribution and sales agent for the CorporationOs
premium talc products.
Acquisition of Suzorite Mica Products Inc.
In September 1993, the Corporation, through a wholly-
owned subsidiary, acquired 100% of the outstanding
capital stock of Suzorite from a subsidiary of Dundee.
Suzorite mines and processes mica, which is used in
various applications in the automotive, construction and
oil drilling industries. In connection therewith, the
Corporation issued 1,400,000 shares of common stock and
a transferable warrant entitling the holder to purchase
up to an additional 100,000 shares of common stock at
$7.00 per share, exercisable no later than July 15,
1995.
As this transaction was between companies which were
then under common control, it has been accounted for as
a pooling of interests and, accordingly, the
CorporationOs financial statements for periods prior to
the acquisition
have been restated to include the accounts of Suzorite
for all periods presented. There were no adjustments
necessary to conform the accounting policies of the two
companies. Net sales and net income (loss) from
continuing operations of the separate companies for the
periods preceding the acquisition are as follows:
Period from January 1, 1993
to September 30, 1993 1992
(unaudited)
Net sales
Suzorite $5,586,000 $6,712,000
Zemex 30,628,000 35,308,000
Combined $36,214,000 $
42,020,000
Income (loss) from continuing
operations
Suzorite $649,000 $788,000
Zemex (240,000) 50,000
Combined $409,000 $838,000
Dispositions
Discontinued Operations
During the fourth quarter of 1993, the Corporation sold
its 70% owned subsidiary, PPSB, which was involved in
the mining of tin oxide in Malaysia. Accordingly, the
consolidated financial statements of the Corporation
have been reclassified to report separately from
continuing operations the net assets and operating
results of this discontinued operation.
Sales applicable to the discontinued Malaysian
operation prior to its sale were $2,313,000 and
$3,285,000 in 1993 and 1992, respectively.
The proceeds on sale included:
(i) the elimination of an obligation owed by the
Corporation to PPSB in the amount of $500,000; (ii)
a cash payment by the purchaser of $50,000; and
(iii) a promissory note issued by the purchaser to
the Corporation in the face amount of
$379,668. The
promissory note is to be repaid from 50% of the net
income generated by PPSB. If PPSB is liquidated in whole
or in part and the proceeds of liquidation
exceed $250,000, then 50% of such proceeds will be
paid to the Corporation and will constitute full
repayment of the promissory note. The promissory note
bears simple interest at the United States prime
interest rate as published from time to time in the Wall
Street Journal and matures on November 15, 2003. Due to
the contingent nature of the promissory note, it has
been ascribed no value.
Other Dispositions
In November 1993, the Corporation sold its aplite plant
and operations in Montpelier, Virginia for aggregate net
proceeds of $5,470,000, resulting in a pre-tax gain of
$3,683,000 which is included in other income (expenses).
In May 1992, the Corporation completed the sale of its
49% interest in Sierra Mining Company, Ltd., based in
Thailand, for aggregate proceeds of $680,000. Other
income (expenses) in 1992 includes a gain of $205,000
arising on this disposition after the recognition in
1991 of a loss on write-down of such investment of
$800,000.
3. Inventories
1994 1993
Ore, concentrates and finished products
Industrial minerals
$7,158,000$1,880,000
Metal powders 3,655,000
2,708,000
10,813,000 4,588,000
Materials and supplies
Industrial minerals 4,252,000
3,066,000
Metal powders 1,425,000
1,033,000
5,677,000
4,099,000
$16,490,000$8,687,00
0
4. Property, Plant and Equipment
1994
1993 Land
$2,937,000$1,865,000
Mining properties and deferred costs4,890,000
4,131,000 Buildings 10,925,000
9,872,000
Machinery and equipment
34,928,00030,832,000
Construction in progress 2,317,000
854,000
Total property, plant and equipment,
at cost 55,997,000
47,554,000
Less: Accumulated depreciation, depletion
and amortization
26,977,00022,196,000
Net property, plant and equipment
$29,020,000$25,358,000
As of December 31, 1994, the Corporation
estimates that approximately $14,000,000 will be
expended to complete its construction in progress.
5. Other Assets
1994
1993 Prepaid pension cost (Note 7)
$1,518,000$1,486,000
Assets held for resale (Note 10) 734,000
734,000
Bond issuance costs D net 442,000
484,000
Other deferred charges 471,000
440,000
Promissory notes receivable D non-current
portion (Note 15) 222,000 D
$3,387,000$3,144,000
6. Income Taxes
The provision for income taxes consists of the
following components:
1994 1993
1992 Income from continuing operations
before provision for income
taxes
Domestic $3,631,000$2,331,000
$50,000 Foreign 1,948,000 1,327,000
1,212,000 Total pre-tax income
$5,579,000$3,658,000$ 1,262,000
Current tax provision
Federal $880,000 $985,000 $D
State and local 258,000 116,000 D
Foreign 425,000 D D
Total
$1,563,000$1,101,000
$D
Deferred tax provision
Federal D D D
State and local D D D
Foreign 256,000 470,000
424,000
Total 256,000
470,000
424,000
Benefit of operating loss
carryforwards (2,490,000)(1,101,000) D
(Recovery of) provision for
income taxes $(671,000) $470,000 $
424,000
The following tabulation reconciles the U.S. federal
statutory income tax rate to the federal, state and
foreign overall effective income tax rate.
1994 1993
1992 % %
%
Statutory federal rate 34.0 34.0
34.0
Benefit of operating loss carryforwards
(net of foreign income taxes)(46.0) (22.0)
(0.4) Other D
0.8
D
Effective income tax rate (12.0) 12.8
33.6
Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. At
December 31, 1994, the Corporation had unused tax
benefits of $ 4,132,000 related to U.S. net operating
loss and tax credit carryforwards. Valuation allowances
of $1,645,000 and $4,389,000 as at December 31, 1994 and
1993, respectively, have been recognized to offset the
related deferred tax assets due to the uncertainty of
realizing the full benefit of the loss and tax credit
carryforwards. Significant components of the
CorporationOs deferred tax assets and liabilities as of
December 31 are as follows (dollars in thousands):
1994
1993 U.S.Foreign Total
U.S.ForeignTotal
Deferred tax assets
Net operating loss
and tax credit
carryforwards $ 4,132 $D $4,132$5,122
$D$5,122] Accrued expenses 414 D 414 658
D
658
Bad debt allowances124 D 124 105 D
105
Inventories 132 D 132 81 D
81 Other 397 D 397 166 D
166
Gross deferred tax assets5,199 D 5,199 6,132 D
6,132 Valuation allowance for
deferred tax assets(1,645) D(1,645)(4,389) D
(4,389) Total 3,554 D 3,554 1,743 D
1,743
Deferred tax liabilities
Property, plant and
equipment 1,223 2,177 3,400 957 2,043
3,000 Pension contributions553D 553 508 D
508 Assets held for resale 278 D 278
278
D
278
Total 2,054 2,177 4,231 1,743
2,043
3,786
Net deferred tax
(assets)
liabilities $(1,500)$2,177 $677 $D$2,043$2,043
The net change in the valuation allowance for
deferred tax assets was a decrease of $2,744,000 and
$646,000 in the years ended December 31, 1994 and 1993,
respectively, related primarily to benefits arising from
recognition of the benefit of net operating loss
carryforwards. In 1994, in addition to the reduction in
the valuation allowance relating to the benefit of net
operating loss carry forwards utilized, the valuation
allowance has been reduced by, and the benefit of net
operating loss carryforwards increased by, an additional
$1,500,000 with respect to the amount of net operating
loss carryforwards which management believes that it is
more likely than not will be utilized in subsequent
years.
At December 31, 1994, the Corporation had $11,630,000
of operating loss carryforwards available to reduce
future taxable income which will expire between 1999 and
2006 if not previously utilized. Additionally, the
Corporation has $289,000 of unused general business tax
credits which expire between 1995 and 2001 and $142,000
of alternative minimum tax credits.
7. Pension Plans and other Postretirement Benefits
Pension Plans
The Corporation has several pension plans covering
substantially all domestic employees. The plans covering
salaried employees provide pension benefits that are
based on the compensation of the employee. In all plans,
the plan assets exceed the benefit obligations and hence
the plans are overfunded.
Net periodic pension cost (income) included the
following components:
1994 1993
1992
Current service costs $422,000 $338,000
$331,000 Interest cost on projected
benefit obligations 882,000 846,000 793,000
Actual return on assets 368,000 (1,249,000) (967,000)
Net amortization and
deferral (1,704,000) 29,000
(204,000) Net pension income $ (32,000) $ (36,000)
$ (47,000)
Net amortization and deferral consists of
amortization of net assets at transition and deferral of
subsequent net gains and losses. The assumptions used to
determine
projected benefit obligations were (i) a discount rate
of 7.5% in 1994 and 1993 and 8.75% in 1992; (ii) an
expected long term rate of return on assets of 8.75% in
1994, 1993 and 1992; and (iii) an increase in the level
of compensation of 6% for all three years.
The status of the plans and the amounts recognized in
the consolidated balance sheets of the Corporation for
its pension plans as of December 31, 1994 and 1993 are
tabulated below:
1994
1993 Actuarial present value of benefit obligations
Vested benefit obligation $9,404,000 $
9,414,000 Accumulated benefit obligation
$9,555,000
$ 9,564,000
Projected benefit obligation $(12,760,000)
$(12,808,000) Plan assets at fair value
14,675,000 15,594,000 Plan assets in excess of
projected benefit obligation 1,916,000
2,786,000
Unrecognized net gain (42,000)
(820,000) Prior service cost not yet recognized
in net periodic pension cost 276,000
304,000
Unrecognized net asset at year end (633,000)
(784,000)
Prepaid pension cost included in
consolidated balance sheets $
1,518,000 $ 1,486,000
Other Postretirement Benefits
The Corporation provides healthcare and life insurance
benefits for certain retired employees which, effective
January 1, 1993, are accrued as earned (Note 1). The
cost of such benefits was $73,000 in 1994, $51,000 in
1993 and $44,000 in 1992.
8. Long Term Debt 1994
1993 Zemex Corporation
Revolving credit facility (a) $D$
3,500,000 Suzorite Mica Products Inc.
Term credit facility (b) D
3,187,000 The Feldspar Corporation
Lease agreement (c) 280,000 389,000
Pyron Corporation
Industrial Revenue Bonds (d) 5,100,000 5,780,000
Pyron Metal Powders, Inc. (e)
Promissory notes 1,064,000 D
Term loans 91,000 405,000
Total debt 6,535,000
13,261,000 Less current portion 1,074,000
4,526,000 Long term debt $
5,461,000$ 8,735,000
(a) The revolving credit loan was repaid in full in
1994 and the credit facility terminated at the
Corporation's request.
(b) The Suzorite term credit facility was repaid in
full in 1994.
(c) The Feldspar Corporation has a long-term capital
lease agreement at a variable rate for equipment used in
its operations. This is a six year lease with a maturity
in 2000. The carrying value of the leased equipment as
of December 31, 1994 was $267,000.
(d) Pyron Corporation entered into a lease agreement on
November 29, 1989 with the Niagara County Industrial
Development Agency to partially finance the construction
of a manufacturing facility, acquire and install
equipment and machinery, and renovate the existing Pyron
facility for the purpose of manufacturing atomized steel
powders. The agreement authorized the Agency to issue
and sell Industrial Development Revenue Bonds in the
aggregate principal amount of $7,650,000 to provide the
funds for the project.
While the bonds are not the obligation of Pyron, the
agreement requires Pyron to make quarterly rental
payments equal to the debt service under the sinking
fund requirements and interest on the
outstanding principal to the Agency. The amount
outstanding at December 31, 1994 and 1993 was $5,100,000
and $5,780,000, respectively. Commencing in 1995 Pyron's
payment under the agreement was $680,000 in 1994 and is
$510,000 annually thereafter until paid.
The bonds bear interest at a variable rate not to
exceed 15% per annum. The rate at December 31, 1994 was
5.65% and at December 31, 1993 was 3.3%. Pyron has the
option to convert the bonds to a fixed interest rate at
any time during the term. Under the lease agreement,
Pyron may purchase the facility at any time during the
lease term, which expires November 1, 2004, by paying
the outstanding principal amount of the bonds plus $1.
The bonds are collateralized by a mortgage on the
land, the new facility and the existing facility which
have an aggregate book value of approximately $9,155,000
at December 31, 1994.
A bank has provided Pyron with a letter of credit
which is available to support Pyron's obligations under
the lease agreement. If the bondholders tender their
bonds for repayment, the letter of credit would be
utilized to pay the bondholders. The letter of credit is
collateralized by all equipment, fixtures, spare parts
and tools of the facility. The letter of credit expires
on October 1,1999. At that time, Pyron can either apply
for
a five-year extension or find a substitute bank to
provide the letter of credit.
The lease agreement as well as various other
agreements
executed in connection with this financing contain
restrictive covenants which require, among other things,
the maintenance of minimum working capital and tangible
net worth and limitations on total liabilities for both
Pyron and Zemex consolidated.
(e) Pyron Metal Powders, Inc. has issued two promissory
notes to former owners in connection with the
acquisition of its two operations. One promissory note
with an aggregate principal amount outstanding as of
December 31, 1994 of $650,000 bears interest at 7% with
principal due in two equal instalments of $325,000 due
September 15, 1995 and 1996, respectively. A second note
with an aggregate principal amount outstanding as of
December 31, 1994 of $413,913 is non-interest bearing
with principal payments of $12,550 due monthly
commencing October 15, 1994 until the final payment of
$12,313 due September 15, 1997.
Principal repayments are as follows:
1995 $1,074,000
1996 1,078,000
1997 676,000
1998 557,000
1999 562,000
Thereafter 2,588,000
$6,535,000
Interest
Interest earned and expensed in each of the past three
years is summarized below:
1994 1993
1992 Interest income $ 246,000 $ 22,000
$D Interest expense (671,000) (918,000)
(876,000) Net interest expense $ (425,000) $
(896,000) $ (876,000)
9. Capital Stock, Stock Options and Warrants
Shares Outstanding
During 1993, the Corporation increased its authorized
capital stock from 5,000,000 to 10,000,000 shares, par
value one dollar ($1.00) per share. There were 7,168,153
shares issued and outstanding as of December 31, 1994
and 4,535,283 shares as of December 31, 1993.
In March 1993, Suzorite reduced its stated capital by
way of a cash distribution to its then sole shareholder,
Dundee, by $1,353,000. This reduction in stated capital
did not reduce the number of shares outstanding. As the
acquisition of Suzorite has been accounted for as a
pooling of interest, this distribution is reflected in
the consolidated statement of shareholdersO equity.
On May 5, 1994, the Corporation issued 347,826 shares
of common stock in a private placement transaction for
aggregate proceeds of $2,000,000.
In September 1994, the Corporation issued 2,000,000
shares of its common stock pursuant to a public offering
of shares for net proceeds, after underwriting fees and
expenses of issue, of $18,522,000.
During 1994 the Corporation purchased 53,000 shares
of common stock for cancellation for an aggregate cost
of $465,000.
Dividends
On November 14, 1994, the Corporation declared a 2%
stock dividend to shareholders of record on November 28,
1994, which was paid December 19, 1994. Retained
earnings were charged $1,320,307 as the result of the
issuance of 145,708 shares of the CorporationOs common
stock, and cash payments of $3,218 in lieu of fractional
shares.
On November 7, 1993, the Corporation declared a 2%
stock dividend to shareholders of record on November 24,
1993, which was paid December 6, 1993. Retained earnings
were charged $604,276 as a result of the issuance of
81,573 shares of the CorporationOs common stock, and
cash payments of $2,672 in lieu of fractional shares.
In March 1993, Suzorite paid a cash dividend of
$2,621,000 to its then sole shareholder, Dundee. This
dividend, because of the pooling of interest accounting
referred to above, is also reflected in the consolidated
statement of shareholders' equity.
On November 6, 1992, the Corporation declared a 2%
stock dividend to shareholders of record on December 14,
1992, which was paid December 23, 1992. Retained
earnings were charged $346,066 as a result of the
issuance of 58,546 shares of the Corporation's common
stock, and cash payments of $1,105 in lieu of fractional
shares.
Stock Options
The Corporation provides a Stock Option Incentive Plan
and has, with shareholder approval, issued options to
certain directors outside of the Plan. The Plans are
intended to provide long term
incentives and rewards to executive officers, directors
and other key employees contingent upon an increase in
the market value of the CorporationOs common stock.
Options for 716,815 shares are issuable under the Plans.
Stock option transactions are summarized as follows:
Number Exercise
of Options Price per
Option
Outstanding at December 31, 1991 248,000 $5.00
Granted 12,000 $5.00
Outstanding at December 31, 1992 260,000
Granted 372,500 $5.50
Granted 60,000 $7.125
Cancelled or expired (120,000) $5.00
Outstanding at December 31, 1993 572,500
Granted 25,000 $11.50
Cancelled (9,750) $5.50
Cancelled (8,000) $5.00
Exercised (12,000) $5.00
Exercised (11,200) $5.50
Outstanding at December 31, 1994 556,550
The options expire from 1996 to 2000. During 1994
options for 23,200 shares of common stock were exercised
for proceeds of $121,600. At December 31, 1994 there
were 333,550 options exercisable.
Warrants
During 1993, in connection with the acquisition of
Suzorite (Note 2), the Corporation issued a transferable
warrant to Dundee to purchase at any time prior to July
15, 1995 up to 100,000 shares of common stock at $7.00
per share.
As a result of a stock rights offering in 1990,
725,769 warrants were issued. Each warrant entitles the
holder to purchase at any time prior to July 15, 1995
1.08 shares of common stock at an exercise price of
$8.56 which was repriced from $9.25 as a result of stock
dividends. The warrants can be redeemed at any time
prior to the close of business on the warrant expiration
date in whole or in part by the Corporation at a
redemption price of $.10 per warrant, if the closing
price on the New York Stock Exchange for the common
stock is at least $11.11 for each trading day within any
period of 20 consecutive trading days. Holders of
warrants will be entitled to exercise such warrants
until the date fixed for redemption. During 1994, 31,514
warrants were exercised resulting in the issuance of
32,771 shares of common stock at an exercise price of
$8.88 per share for aggregate proceeds of $291,000. No
warrants were exercised in 1993.
Note Receivable from Shareholder
The note receivable from shareholder of $1,749,000
represents amounts due from the CorporationOs President
and Chief Executive Officer pursuant to the Key
Executive Common Stock Plan. The loan, which was used to
acquire 357,000 shares of common stock of the
Corporation, is noninterest bearing, is secured by a
pledge of the shares acquired and is due on the earlier
of November 26, 1996 or 30 days after the termination of
employment. Since the loan arose from the sale of stock,
it is classified as a reduction of shareholders' equity.
10. Restructuring Charges and Unusual Items
Restructuring Charges
In 1993, the Corporation reorganized certain of its U.S.
operations. This has resulted in a charge to operations
of $950,000 in 1993 which includes the cost of closing
an office, severance and relocation costs.
In December 1991, the Corporation closed its
industrial minerals plant located in Connecticut. The
assets of this operation were reclassified to assets
held for resale and written down in 1991 by $430,000 to
their estimated net realizable value. These assets were
written down by a further $300,000 in 1993.
Unusual Items
Other income (expenses) for 1993 includes a gain on sale
of the Montpelier, Virginia aplite plant and operation
of $3,683,000 (Note 2) as well as $616,000 of legal and
other costs primarily associated with the acquisition of
Suzorite.
11. Operating Leases and Other Commitments
Operating Leases
The Corporation has a number of operating lease
agreements primarily involving equipment, office space,
warehouse facilities and rail sidings. The operating
lease for equipment provides that the Corporation may,
after the initial lease term, renew the lease for
successive yearly periods or may purchase the equipment
at the fair market value. An operating lease for office
facilities contains escalation clauses for increases in
operating costs and property taxes. The majority of the
leases are cancellable and are on a yearly basis.
Future minimum rental payments required by
operating leases that have initial or remaining non-
cancellable lease terms in excess of one year as of
December 31, 1994 are as follows:
Minimum
Years Lease Payments
1995 $508,000
1996 478,000
1997 409,000
1998 339,000
1999 236,000
Thereafter 468,000
Total minimum lease payments $2,438,000
Rent expense, including contingent rents, was
$281,000, $88,000 and $396,000 in 1994, 1993 and 1992,
respectively. Contingent rents, which are paid for
warehouse facilities and are based on quantities stored,
were nil in each of 1994 and 1993 and $80,000 in 1992.
Other Commitments
The Corporation has a mining contract with an
independent contractor expiring on September 30, 1998 to
extract minerals from its open pit mine in Suzor
Township, Quebec. This contract specifies the mining and
delivery of approximately 50,000 tons of ore per year to
the mine site rail siding at a rate of Cdn. $17.50 per
ton.
12. Quarterly Financial Data
(Unaudited)
The following is a summary of certain unaudited
quarterly financial data from continuing
operations:
1994
1993
Net sales
First quarter $ 12,399,000
$ 12,004,000
Second quarter 13,388,000
12,257,000
Third quarter 13,333,000
11,953,000
Fourth quarter 16,186,000
11,744,000
$ 55,306,000 $
47,958,000
Operating income (loss)
First quarter $ 1,065,000 $ 512,000
Second quarter 1,426,000 154,000
Third quarter 1,636,000 990,000
Fourth quarter 1,714,000 (419,000)
$ 5,841,000 $ 1,237,000
Income (loss) from continuing
operations
First quarter $ 764,000 $ 338,000
Second quarter 1,128,000 (226,000)
Third quarter 1,314,000 297,000
Fourth quarter (A) 3,044,000 2,779,000
$ 6,250,000 $ 3,188,000
Income per share from continuing
operations
First quarter $ .17 $ .08
Second quarter .24 .04
Third quarter .24 .07
Fourth quarter .43 .62
(A) See Note 2.
13. Financial Instruments
Financial instruments which potentially subject the
Corporation to concentrations of credit risk consist
principally of trade receivables. Concentrations of
credit risk with respect to trade receivables are
limited due to the large number of customers comprising
the Corporation's customer base and their dispersion
across a number of different industries, principally
construction, glass, electrical and automotive.
Suzorite's U.S. dollar accounts receivable are
hedged by foreign exchange contracts totalling $800,000
and $3,700,000 as at December 31, 1994 and 1993,
respectively at Canadian dollar exchange rates ranging
from U.S. $1.00 = Cdn $1.3025 to Cdn $1.4051.
14. Changes in Non-Cash Working Capital Items
The changes in non-cash working capital items are as
follows:
1994 1993
1992
(Increase) decrease in
accounts receivable$(2,384,000) $(471,000)
$(1,036,000)
(Increase) decrease in
inventories (4,471,000) 728,000
(586,000)
(Increase) decrease in
prepaid expenses (31,000) (162,000)
(174,000) Increase (decrease) in
accounts payable and
accrued liabilities 2,248,000 (981,000)
626,000 Increase (decrease) in
accrued income taxes 327,000 42,000 (9,000)
$(4,311,000) $ (844,000) $
(1,179,000)
15. Related Party Transactions
Related party transactions not otherwise disclosed in
the consolidated financial statements include:
Suzorite was charged the following amounts by Dundee:
1994 1993
1992
Management fees $D $ 219,000
$171,000
Interest D D
45,000
Effective July 1, 1993, the deemed date of
acquisition by Zemex, Dundee discontinued charging
management fees to Suzorite.
As at December 31, 1994 and 1993, accounts receivable
included amounts due from directors of $350,000 and nil,
respectively. These amounts are non-interest-bearing
with no fixed terms of repayment.
Also included in accounts receivable as at December
31, 1994 and 1993 is $149,000 and nil, respectively,
representing the current portion of promissory notes
receivable from Alumitech totalling $371,000. The notes
receivable bear interest at 11% and are repayable in
monthly principal payments of approximately $12,000
until October 1997.
16. Segment Information
Zemex Corporation has two principal lines of business
and is organized into two operating units based on its
product lines: industrial minerals and metal powders.
Industrial minerals include feldspar, kaolin, mica,
talc, feldspathic sand and industrial sand. These
products are marketed principally to the automotive,
housing and ceramics industries in North America. They
are produced from mines and processing plants located
near Edgar, Florida; Monticello, Georgia; Spruce Pine,
North Carolina; Diana, New York; Murphy, North Carolina;
Van Horn, Texas; and Boucherville, Quebec. Metal powders
are produced in Niagara Falls, New York, Maryville,
Tennessee and Greenback, Tennessee and marketed
primarily in North America to manufacturers of powder
metallurgy parts used in the automotive and
transportation industries. Corporate assets principally
include cash, term deposits, the investment in Alumitech
and furniture and fixtures.
Information pertaining to sales and earnings from
continuing operations and assets by business segment
appears below:
1994 1993 1992
Net sales (A)
Industrial minerals $30,378,000 $31,104,000 $ 29,392
,000
Metal powders 24,928,000 16,854,000
12,628,000
Total $55,306,000 $47,958,000
$42,020,000
Operating income (loss)(A)
Industrial minerals $3,865,000$ 2,424,000
$2,208,000 Metal powders 2,202,000
1,046,000 1,313,000 Restructuring
charges(B) D (1,250,000) D General
unallocated
corporate expenses (226,000) (983,000)
(1,784,000) Total 5,841,000
1,237,000 1,737,000
Interest expense, net (425,000) (896,000) (876,000)
Gain on sale of investment (C) D D 205,000 Other
income, net (B) 163,000 3,317,000 196,000 Income
before provision for
income taxes $5,579,000 $3,658,000
$1,262,000 Capital expenditures (D)
Industrial minerals $2,050,000 $2,209,000 $814,000
Metal powders 878,000 391,000 235,000
Corporate 149,000 70,000 D Total
$3,077,000 $2,670,000 $1,049,000
Depreciation, depletion and amortization
Industrial minerals $1,456,000 $1,494,000
$1,572,000 Metal powders 828,000
834,000 832,000 Corporate 31,000 70,000
73,000 Total $2,315,000 $2,398,000
$2,477,000
Identifiable assets at year end (A)
Industrial minerals $36,853,000 $30,170,000
$29,258,000 Metal powders 22,603,000
16,687,000 16,867,000 Corporate(E) 11,346,000
1,557,000 4,648,000 Total
$70,864,000$48,414,000 $50,773,000
(A) The CorporationOs industrial minerals and metal
powders businesses are in the United States and Canada,
which the Corporation considers one geographic segment.
(B) See Note 10.
(C) See Note 2.
(D) Capital expenditures for 1994 exclude property,
plant and equipment of $3,264,000 acquired in
connection with the Corporation's 1994 acquisitions
(Note 2).
(E) 1992 corporate assets include assets of
discontinued operations, 1994 includes investment in
Alumitech, Inc. and includes cash and cash equivalents
for all years presented.
17. Subsequent Event
On February 15, 1995, the Corporation exercised an
option, obtained pursuant to the agreement whereby it
acquired its initial investment in Alumitech (Note 2).
By the issuance of 412,500 unregistered common shares of
the Corporation from treasury, Zemex increased its
ownership interest in Alumitech from 42% to 73%. The
shares were issued as to 206,250 to Dundee Bancorp
International Inc., the Corporation's largest
shareholder, and as to 206,250 to Clarion Capital
Corporation, a corporation controlled by a director of
Zemex.
Zemex Corporation
Selected Financial Data
(dollars in thousands except per share amounts)
For the Years
Ended December 311994 1993 1992 1991
1990
Summary of
Operations
Net Sales
$55,306,000$47,958,000$42,020,000$37,870,000$42, 855,000
Restructuring
Charges 1,250,000
815,000
Operating
Income (Loss) 5,841,0001,237,000 1,737,000 (1,751,000)
(2, 772,000)
Other Income
(Expenses) (262,000)2,421,000 (475,000) (1,156,000)
(549,0 00)
Net Income
(Loss) from
Continuing
Operations6,250,0003,188,000
838,000(3,215,000)(3,562,000)
Net Income
(Loss) 6,250,000 1,852,000
949,000(3,152,000) (3,332,000)
Financial
Position
Working
Capital $26,046,000$9,288,000$9,431,000
$8,763,000$6,433, 000
Total Assets 70,864,00048,414,000 50,773,000 56,620,000
58 ,459,000
Long Term Debt
(Non-Current
Portion) 5,461,0008,735,000
9,593,00010,181,0007,140,000 Common Stock
Average Common
Shares
Outstanding5,421,5334,292,5834,127,694
4,120,777 3,699,102 Actual Common
Shares
Outstanding
at Year End7,168,1534,535,283
4,491,8344,120,777 4,016,549
Per Share of
Common Stock
Net Income
(Loss) as
reported $1.15 $0.43 $0.23
$(0.76) $(0.90)
Net Income (Loss)
without
accelerated
recognition of
the benefit of
tax loss
carryforwards 0.880.43
0.23 ( 0.76) (0.90)
Net Income (Loss)
excluding the
benefit of tax
loss carryforwards
(ie. fully taxed)0.64 0.43 0.23
(0.76) (0.90)
Common Stock Prices
High 121/480/0 63/8 67/8
85/8 Low 61/8 41/2 27/8 33/8
30/0 Year End 85/8 63/4 53/8
33/8 37/8
Corporate Directory
Board of Directors
Paul A. Carroll
Partner, Smith, Lyons,
Torrance, Stevenson
& Mayer (1)
Morton A. Cohen
Chairman, President and
Chief Executive Officer,
Clarion Capital Corporation; Chairman
of Cohesant Technologies Inc.
John M. Donovan
Corporate Consultant (1) (2)
Thomas B. Evans, Jr.
President, The Evans Group,
Ltd. (2)
Ned Goodman
Chairman and Chief Executive Officer, Dundee Bancorp
Inc.; President and Director, Dundee Bancorp
International Inc.; Chairman, Dynamic Fund Canada Ltd.
Peter Lawson-Johnston
Chairman and Trustee,
Solomon R. Guggenheim Foundation; Chairman,
The Harry Frank Guggenheim Foundation; Director,
McGrawHill, Inc.; President and Director, Elgerbar
Corporation (1) (3)
Richard L. Lister
President and Chief Executive
Officer of the Corporation; Director, Dundee Bancorp
Inc. (3)
Patrick H. O'Neill
Corporate Consultant (2)
William J. vanden Heuvel
Counsel, Strook, Strook &
Lavan; Senior Advisor,
Allen & Company,
Inc.; Chairman, IRC Group,
Inc. (3)
Officers
Peter Lawson-Johnston
Chairman of the Board
Richard L. Lister
President and
Chief Executive Officer
Allen J. Palmiere
Vice President, Chief Financial Officer
and Assistant Secretary
Peter J. Goodwin
Vice President;
President, Suzorite Mineral Products,
Inc.
Robert W. Morris
Secretary;
President, The Feldspar Corporation
G. Russell Lewis
President, Metal Powders
(1) Member of the Executive
Compensation/Stock Option/
Pension Committee of the Corporation
(2) Member of the Audit Committee of
the Corporation
(3) Member of the Executive Committee
of the Corporation
Shareholder Information
Executive Office
Zemex Corporation
Canada Trust Tower
BCE Place, 161 Bay Street
Suite 3750, P.O. Box 703
Toronto, Ontario
Canada M5J 2S1
Telephone: (416) 365-8080
Fax: (416) 365-8094
Independent Public Accountants
Deloitte & Touche
Toronto, Ontario, Canada
Transfer Agent and Registrar
Capital Stock
First Union National Bank
of North Carolina
Shareholder Services Group
230 South Tryon Street
Charlotte, N.C. 28288
Attention: Eleanor Autry
Telephone: (704) 374-2699
Form 10-K
Copies of Form 10-K filed with the Securities and Exchange
Commission
for the year ended December 31, 1994 will be available after
April 1,
1995 by writing to Shareholder Relations at the Executive Office
